friday update

SHORT TERM: pullback underway, DOW -49

Overnight the Asian markets ended the week gaining 0.9%. Europe opened higher, but closed -0.4%. US index futures were lower overnight. At 8:30 the Trade deficit was reported higher: -$47.8 bln vs -$43.5 bln, Export prices remained negative: -0.2% vs -0.1%, and Import prices turned positive: +0.1% vs -0.2%. The market gapped down at the open to SPX 1288 and continued lower. The SPX had closed at 1296 yesterday. At 10:00 Consumer sentiment was reported higher: 74.0 vs 69.9. The market found support at our SPX 1278 level around 10:30, then started to rally. At 11:00 FED governor Duke’s speech was released: http://www.federalreserve.gov/newsevents/speech/duke20120113a.htm. At 11:45 this was reported: http://www.marketwatch.com/story/obama-to-propose-merging-agencies-reports-2012-01-13?siteid=bnbh. The market rallied to SPX 1287 by 12:00, and then began to pullback again. Around 1:30 the SPX hit 1281 and turned higher again. Heading into the close the market hit its best level of the day at SPX 1289, and closed there.

For the day the SPX/DOW were -0.45%, and the NDX/NAZ were -0.45%. Bonds gained 15 ticks, Crude added 10 cents, Gold dropped $11, and the USD was higher. Support for the SPX drops to 1261 and then 1240, with resistance back to 1291 and then 1303. Short term momentum hit slightly oversold after yesterday’s negative divergence at the uptrend high, then turned higher. Last night the FED reported a rise in the Monetary base. Today the WLEI was reported a bit lower: 41.6% vs 41.8%. We also initiated today another indicator: the MMIS. This measures long term investor sentiment, by observing what investors own rather than what they say. Above 50% is bullish and below bearish, just as the others. The current reading is 46.1%. All three of these indicators are posted on the SPX weekly chart.

After hitting a new uptrend high yesterday at SPX 1297 the market gapped down for the first time since January 5th. The pullback then broke through the previous two lows at SPX 1286/1285 respectively, and continued lower until it hit support at our 1278 level. Thus far it is a 19 point pullback. This is still within the range of normal pullbacks, within rallies, during this uptrend. Anything greater than a 20 point pullback would likely confirm Minor wave 4, of the five minor wave uptrend, is underway.

Short term OEW charts were tested this AM, but still remain positive. Short term support is at SPX 1278, the 1261 pivot and then SPX 1250. Overhead resistance at is the OEW 1291 and 1303 pivots. Short term momentum is rising after hitting oversold this AM. Best to you extended weekend!

MEDIUM TERM: uptrend high SPX 1297

LONG TERM: inflection point turning bullish

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