SHORT TERM: market rebound is now a rally, DOW +287
Last night the FED released governor Tarullo’s Senate testimony: http://www.federalreserve.gov/newsevents/testimony/tarullo20120606a.htm. Asian markets were higher and rallied +2.0%. European markets also rallied gaining 2.2%. US index futures were higher overnight, and at 8:30 Productivity was reported lower: -0.9% vs -0.5%. Also the ECB left rates unchanged and took no action at their monthly meeting. The stock market gapped up anyway at the open to SPX 1294 and continued to rally. The SPX has closed at 1286 yesterday. With hardly a 3 point pullback along the way the SPX cleared the OEW 1291 pivot, the 1303 pivot and hit the 1313 pivot range. Around 12:30 the SPX hit 1311 and then began to pullback in anticipation of the FED’s Beige book. At 2:00 the FED released the report: http://www.federalreserve.gov/monetarypolicy/beigebook/beigebook201206.htm. The market hit SPX 1306 and then began to rise again. Heading into the close the SPX hit 1315 and closed there. Quite a strong rally from monday’s low.
For the day the SPX/DOW were +2.35%, and the NDX/NAZ were +2.40%. Bonds lost 24 ticks, Crude gained $1.15, Gold added $1, and the USD was lower. Support for the SPX jumps to the 1313 and 1303 pivots, with resistance now at the 1363 and 1372 pivots. Short term momentum hit extremely overbought. Tomorrow, weekly Jobless claims at 8:30 and then Consumer credit at 3:00. FED chairman Bernanke testifies before the Senate at 10:00.
The market gapped up at the open for the first time since last tuesday. Then the market was rallying into a B wave top. This time it looks more important. At today’s high the SPX hit 1315, 48 points from monday’s low at 1267. This is now the best rally since the decline began in early May at SPX 1415. The DOW also rallied to 200+ points, for its best advance since it was last in an uptrend. The downtrend may have bottomed.
We use two techniques to track the short term waves. One involves point movement and the other moving averages. We have been posting the results of our moving averages on the public charts and commenting about it. This technique offered the SPX  1299-1320-1267 Minor wave 1-2-3 count. In the mean time we failed to post, or even mention, the results of the point movement: SPX  1323-1333-1299-1320-1267. This is completely my fault as I neglected to track it in recent days. This count suggests the downtrend zigzag potentially ended at SPX 1267.
The market is also providing an opportunity for an important broader observation. If one reviews the SPX hourly chart over the past few months. They will see a price high at SPX 1422, then a five wave decline:  1357-1415-1292-1335-1267. But if they review the DOW hourly chart they will observe only a three wave decline from its high:  12312-12611-12035. A five wave decline usually implies a bear market has begun. While a three wave decline implies only a correction within a bull market. The market will soon show which of these two is the most important index. We believe we already know the answer.
MEDIUM TERM: downtrend may have bottomed
LONG TERM: bull market