SHORT TERM: FED disappoints, DOW -13
Overnight the Asian markets gained 0.6%. European markets opened lower but gained 0.5%. US index futures were slightly higher overnight, and the market opened at SPX 1360. The market had closed at SPX 1358 yesterday. Continuing with yesterday’s afternoon pullback the market declined moderately heading into the FED’s FOMC statement at 12:30. At 12:30 the market sold off immediately after the statement: http://www.federalreserve.gov/newsevents/press/monetary/20120620a.htm, hitting SPX 1346. Then it began to rally. Just past 1:00 the SPX hit 1362, a point under yesterday’s high, and then began to pullback again in a volatile post FOMC market. At 2:00 the FED released the following, ahead of chairman Bernanke’s press conference: http://www.federalreserve.gov/newsevents/press/monetary/20120620b.htm. Around 3:30 the market found support at SPX 1347, and then rallied to end the day at 1356.
For the day the SPX/DOW were -0.15%, and the NDX/NAZ were +0.05%. Bonds lost 11 ticks, Crude dropped $3.20, Gold slid $12.00, and the USD was higher. Support for the SPX remains at the 1313 and 1303 pivots, with resistance at the 1363 and 1372 pivots. Short term momentum declined from extremely overbought yesterday to nearly oversold today. Tomorrow, weekly Jobless claims at 8:30. Then Existing home sales, the Philly FED, Leading indicators, and the FHFA housing index at 10:00.
The market opened slightly higher today but gradually drifted down ahead of the FOMC statement. After the FED announced Operation Twist would be extended until year end, and they added $267 bln to the original $400 program, the market sold off rapidly to SPX 1346. But just as quickly it reversed and hit SPX 1362, one point under yesterday’s rally high, a half hour later. Keeping with the volatility of an FOMC statement, the market reversed again, and again.
Today’s FED action, or FED inaction to some, and the resulting market activity. Suggests Minor wave 3 may have ended at SPX 1363/1362 and the current pullback is Minor 4. Under this scenario Minor 4 should not overlap the Minor wave 1 high at SPX 1336, or worse case SPX 1329. Should this occur the entire move from SPX 1267-1363 was likely an ABC rally in an ongoing downtrend. Should the pullback hold support, SPX 1342/47 or 1335/36, and move to new rally highs. Then we can count five waves up from the SPX 1267 low, and the potential uptrend remains intact.
Short term support is at SPX 1342/47 then 1335/36, with resistance at the OEW 1363 and 1372 pivots. Short term momentum neared oversold but ended at neutral. The short term OEW charts remain with a positive bias with the swing point now around SPX 1338. Best to your trading!
MEDIUM TERM: uptrend may be underway
LONG TERM: bull market