SHORT TERM: markets gaps up on Euro rally, DOW +212
Overnight the Asian markets lost 0.1%. Europe opened lower but rallied, after ECB president Draghi’s comments, gaining 2.6%. US index futures responded, after the comments, with a surge. At 8:30 weekly Jobless claims were reported lower: 353K vs 386K, and Durable goods orders were reported higher: +1.6% vs +1.3%. Also, last night the FED reported lower New homes prices: $273.9K vs $278.0K. The market gapped up at the open to SPX 1350 and continued to rally. The SPX had closed at 1338 yesterday. At 10:00 the SPX hit 1362, the OEW 1363 pivot, and began to pullback. Around noon the SPX hit 1351, then the market began to rally again. Nearing the close the SPX hit 1363, then pulled back to close at 1360.
For the day the SPX/DOW were +1.65%, and the NDX/NAZ were +1.40%. Bonds lost 9 ticks, Crude added 50 cents, Gold rose $11, and the USD was lower. Medium term support for the SPX is at the 1313 and 1303 pivots, with resistance at the 1363 and 1372 pivots. Short term momentum was quite overbought today. Tomorrow Q2 GDP, estimates +1.2%, at 8:30. Then around 10:00 Consumer sentiment.
Today’s gap up opening started around 7:30 with this statement: “Within our mandate, the ECB is ready to do whatever it takes to preserve the Euro. And believe me, it will be enough,” Draghi told an investment conference in London. Futures surged on the comments. The market then gapped up and rallied right into the OEW 1363 pivot. This pivot has offered resistance, except for two several day pops above it, since mid-May. The market has hit an important inflection point: continue the uptrend or start a downtrend.
The market needs to clear the 1363 pivot, then the recent SPX 1375 and 1380 highs. Should the market fail here, and break through yesterday’s SPX 1344 high, a downtrend could be underway. Short term support is at SPX 1342/47 and SPX 1333/38, with resistance at the 1363 and 1372 pivots. Short term momentum hit quite overbought. The short term OEW charts swung positive at the open with the swing point now at SPX 1351. Best to your trading!
MEDIUM TERM: uptrend
LONG TERM: bull market