SHORT TERM: market rebounds, DOW +62
Overnight the Asian markets were all higher. Europe opened higher and closed +1.05%. US index futures were higher overnight as well. At 8:30 Q4 GDP was lowered to +2.8% vs 3.2%. Nevertheless, the market gapped up at the open to SPX 1311. It has closed at 1306 yesterday. The market continued to rally from the opening bell, and at 10:00 Consumer sentiment was reported at a 3-yr high: 77.5 vs 75.1. The rally continued until about 11:00 when the SPX hit 1319. When the market hit slightly overbought, on the hourly charts, a pullback began. By 11:30, however, the SPX hit the 1313 pivot and started to rally again. At 1:30 Fed vice chairman Yellen’s interesting speech was released: http://www.federalreserve.gov/newsevents/speech/yellen20110225a.htm. The market then moved to a higher high on the day at SPX 1321. Then a small pullback into the close ended the week at SPX 1320.
For the day the SPX/DOW were +0.80%, and the NDX/NAZ were +1.50%. Bonds gained 7 ticks, Crude added 95 cents, Gold rose $7.00, and the USD was higher. Support for the SPX jumps back up to 1313 and then 1303, with resistance at 1363 and then 1372. Short term momentum rose from a positive divergence yesterday to slightly overbought today. Last night the FED reported the M1-multiplier slipped a bit lower, but the Monetary base made a new high. Today the WLEI rose to its highest level in many months at 56.1%, and Public sentiment continued its rise toward neutral at 42.5%.
The market continued to take advantage of yesterday’s positive divergence on the hourly charts, and a quiet Crude market, to continue yesterday afternoon’s rally. After dropping 50 SPX points to start the week, (1344-1294), the market has rebounded 27 points, (1294-1321), or a bit more than 50%. This week’s failure to make new uptrend highs ended the winning streak at eleven weeks. The upside momentum since the November low is waning. Short term OEW charts turned positive today, however, with the push up to the 1320 level. With the Crude market still in an uptrend, a civil war in Libya, and waning upside momentum the potential upside currently looks limited. Best to your weekend!
MEDIUM TERM: uptrend remains in jeopardy
LONG TERM: bull market