SHORT TERM: OEW 1240 pivot straddle continues, DOW -7
Overnight the extension of the US tax cuts was approved awaiting the President’s signature. The Asian markets were mostly lower. Europe opened higher, but closed -0.40%. US index futures were slightly lower overnight and the market opened unchanged at SPX 1243. By 10:00 the SPX dipped to 1240 when the BEA leading indicator was released: +1.1% vs +0.5%. The market bounced a few points and then retested SPX 1240 by 11:00. After that the market tried to rally. Nearing 2:00 the SPX hit 1246, one point off the uptrend high, and began to pullback. The pullback was short lived and the SPX ended the week at 1244.
For the day the SPX/DOW were mixed, and the NDX/NAZ were +0.10%. Bonds gained 34 ticks, Crude added 35 cents, Gold rose $6.00, and the USD was higher. Support for the SPX remains at 1240 and then 1222, with resistance at 1261 and then 1291. Short term momentum continued to rise off of thursday’s oversold low, hit slightly overbought and then pulled back. Last night the FED reported the Monetary base rose to its highest level since August: now uptrending. Today the WLEI rose to an economic expanding 49.9% vs 48.5%.
The market opened unchanged today on Options expiration. After finding support exactly at the 1240 pivot the market rallied in the afternoon to SPX 1246, and for the third time this week could not break through this pivot’s range. With a slightly short term overbought condition the market pulled back into the close. Short term OEW charts remain positive, but a drop under SPX 1240 would swing them negative again. A preliminary review of the charts suggest either a pullback to SPX 1233 early next week, or the uptrend continues higher from current levels with the 1261 pivot next. Best to you and yours this holiday season.
MEDIUM TERM: uptrend high SPX 1247
LONG TERM: bull market