SHORT TERM: markets upbeat entering Q4, DOW +78
Overnight the Asian markets were flat. European markets opened higher and gained 1.8%. US index futures were higher overnight, and the market opened higher at SPX 1445. The SPX had closed at 1441 on friday. At 10:00 ISM manufacturing was reported higher: 51.5 vs 49.6, and Construction spending was reported lower: -0.6% vs -0.9%. The rally continued until past 10:00 when the SPX hit 1457. After that it started to pullback. The pullback continued into the early afternoon, and then accelerated to the downside after FED chairman Bernanke’s speech was released: http://www.federalreserve.gov/newsevents/speech/bernanke20121001a.htm. Around 1:30 the SPX had pulled back to the opening level, SPX 1445, and tried to rally. The bounce lasted until 2:00 when the SPX hit 1450, and then it turned lower again. At 3:30 the SPX dipped to unchange at 1441, and then bounced into a 1444 close.
For the day the SPX/DOW were +0.40%, and the NDX/NAZ were -0.15%. Bonds gained 4 ticks, Crude added 15 cents, Gold rose $4, and the USD was lower. Medium term support remains at the 1440 and 1386 pivots, with resistance at the 1499 and 1523 pivots. Tomorrow: monthly Auto sales.
The market opened higher to start the month. Rallied to SPX 1457 in the first hour of trading: +16 points. Then gave it all back, during the rest of the day, before bouncing into the close. It appears volatility has returned to this market. With this morning’s advance moving above the SPX 1450 level it turned the short term charts positive, suggesting the Intermediate wave iv pullback ended on wednesday at SPX 1431. With this afternoon’s pullback, however, the short term charts turned negative again.
This morning we posted an Intermediate wave iv low on the public charts. The recent market action from wednesday’s SPX 1431 low, (1450-1436-1457-1441), suggests Intermediate wave v may be subdividing during its initial advance. As long as SPX 1436 holds support we will assume this is the proper short term count.
Short term support remains at the 1440 pivot and SPX 1422/27, with resistance at SPX 1463/64 and the 1499 pivot. Short term momentum hit overbought this morning and then dropped below neutral during the pullback. The short term OEW charts turned positive, then negative again, (we’ll consider this neutral), with the swing level now at SPX 1448. Best to your trading!
MEDIUM TERM: uptrend
LONG TERM: bull market