tuesday update

SHORT TERM: market rebound extends, DOW +128

Overnight all the Asian markets were higher. The last time that occurred was April 21st. Europe opened higher and closed +1.35%. US index futures were much higher overnight. At 9:00 Case-Shiller reported the March reading at 138.16 vs 139.27. This represents a new low in housing prices, wave C started July 2010, from the July 2006 206.52 high. The market gapped up at the open to SPX 1341 and continued to rally to 1345 before beginning to pullback. The market had closed at SPX 1331 on friday. At 9:45 the Chicago PMI was reported lower: 56.6 vs 67.6. Then at 10:00 Consumer confidence was reported lower: 60.8 vs 65.4. The pullback continued until about 12:30 when the SPX hit 1335. After that the market rallied into the close to end the day at SPX 1345.

For the day the SPX/DOW were +1.05%, and the NDX/NAZ were +1.45%. Bonds gained 5 ticks, Crude rallied $2.05, Gold was unchanged, and the USD was lower. Support for the SPX remains at 1313 and then 1303, with resistance at 1363 and then 1372. Short term momentum stayed fairly overbought most of the day. Tomorrow, the ADP index at 8:15, then ISM manufacturing and Construction spending at 10:00. Auto sales will be reported in the afternoon. Also, there is Congressional testimony from FED general counsel Alvarez at 2:00.

The market gapped up at the open today on a strong showing in overseas markets. After the initial surge the market pulled back, but rallied to finish the day at the high. While this was transpiring OEW confirmed the uptrend high was indeed at SPX 1371, and the market has been in a downtrend since that high on the first trading day in May. This confirmation eliminated the count we had been carrying on the SPX and, as noted for the past week, the count has been updated to the first alternate posted on the DOW hourly/daily charts. Now both the SPX/DOW have the same count: an Intermediate wave one high in early May, and a downtrend low, (thus far), on May 25th at SPX 1312. We are still carrying two alternate counts on the NAZ/NDX charts with a much lower probability.

Today’s rally was quite impressive as it turned all the short term OEW charts positive. The NYAD made a new all time high. It never did confirm a downtrend. Short term support for the SPX is now at 1331 and then the 1313/1303 pivots, with resistance at 1347 then the 1363/1372 pivots. If this rally, from wednesday’s SPX 1312 low, can continue to work its way higher this week this market could kick off a new uptrend. As a result we are posting a tentative green Intermediate wave ii labeling on the SPX hourly chart. It has been a somewhat difficult market to trade for the past few weeks. For now SPX 1331 looks like a good stop loss level going forward. Best to your trading!

MEDIUM TERM: downtrend low SPX 1312

LONG TERM: bull market

CHARTS: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1606987