SHORT TERM: rebound continues, DOW +26
Overnight the Asian markets gained 0.5%. European markets also gained 0.5%. US index futures were lower overnight, and the market opened lower at SPX 1274. The SPX had closed at 1278 yesterday. Within the first few minutes the market started to rally. At 10:00 ISM services was reported higher: 53.7 vs 53.5. The rally continued until about 10:30 when the SPX hit 1285. A pullback followed to SPX 1278 by noon. Then the market tried to rally again. Heading into the close the SPX hit 1288, and settled at 1286.
For the day the SPX/DOW were +0.40%, and the NDX/NAZ were +0.50%. Bonds lost 8 ticks, Crude gained 25 cents, Gold slipped $2, and the USD was higher. Support for the SPX remains at the 1261 and 1240 pivots, with resistance at the 1291 and 1303 pivots. Short term momentum rose to slightly overbought from yesterday’s extremely oversold level. Tomorrow, Productivity at 8:30 then the FED’s Beige book at 2:00. Also tomorrow, FED governor Tarullo testifies before the Senate at 10:00, and Vice chair Yellen gives a speech at 7PM in Boston.
The market opened lower today but quickly resumed the rebound from yesterday’s SPX 1267 low. When the market entered the SPX 1280′s we posted a green tentative Minor wave 3 label at yesterday’s low. After the pullback and rally to a higher high we upgraded the label to dark blue. It appears Minor wave 3, of Intermediate wave C, ended at SPX 1267, and Minor wave 4 is currently underway. The upside limit for Minor 4 should be within the OEW 1291 pivot range, (+/- 7 points). Then, another decline should end with a Minor wave 5 low, Intermediate wave C low, and a Major wave 2 low. This could happen as early as this week.
Support for the SPX remains at the 1261 and 1240 pivots, with resistance at the 1291 and 1303 pivots. Short term momentum is slightly overbought. The short term OEW charts remain with a negative bias from SPX 1323, with the positive swing point now just under 1300. Best to your trading!
MEDIUM TERM: downtrend
LONG TERM: bull market