friday update

SHORT TERM: another gap up opening, DOW +157

Overnight the Asian markets were mixed and ended flat. European markets opened lower, but turned higher prior to the Payroll report and gained 1.6%. US index futures were higher overnight, but spiked up at 8:30 when the Payroll report came in higher: +243K vs +200K, and the Unemployment rate dropped: 8.3% vs 8.5%. At the open the market gapped up to SPX 1335 and continued to rally. The SPX had closed at 1326 yesterday. At 10:00 Factory orders were reported positive but lower: +1.1% vs +1.8%, but ISM services were reported higher 56.8 vs 52.6. The rally continued until 1:00 when the SPX hit 1345. A minor pullback followed to 1342 by 3:30. Then the market moved back up into the close to end the day at SPX 1345.

For the day the SPX/DOW were +1.35%, and the NDX/NAZ were +1.50%. Bonds lost 23 ticks, Crude gained $1.40, Gold dropped $34, and the USD was flat. Support for the SPX remains at 1313 and then 1303, with resistance at 1363 and then 1372. Short term momentum hit extremely overbought during today’s rally. Today the WLEI was reported higher: 44.8% vs 43.4%.

Today’s gap up opening, the third one this week, jumped right over the uptrend high at SPX 1333 confirming the Minor wave 4 low at 1300. We are now counting Minor wave 5 completing Minute wave i at SPX 1321 and Minute wave ii at 1307. The rally from tuesday’s low is part of Minute wave iii. We expect this Minute wave to subdivide a bit, just like the other Minute wave iii’s during this uptrend. When our short term OEW charts turned positive on tuesday we did some fibonacci calculations using SPX 1300 as Minor 4 low. We arrived at four price levels for a potential Minor wave 5/uptrend high: SPX 1367, 1381, 1408 and 1432. The first two, and last one, are near the 1363, 1386 and 1440 OEW pivots respectively. The SPX 1408 level is in between the two higher pivots, but was clustered with another fibo relationship which increases its importance. Therefore, we expect this uptrend, from the November SPX 1159 low, to end at or near one of these levels. We posted these fibo’s on the SPX hourly chart.

Short term support now rises to SPX 1333, 1321 and then the 1313 pivot. Overhead resistance is now at 1345/47, plus the 1363 and 1372 pivots. Short term momentum is extremely overbought. Best to your weekend!

MEDIUM TERM: uptrend hit SPX 1345

LONG TERM: bull market

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