SHORT TERM: market stages an oversold rally, DOW +95
On sunday FED chairman Bernanke’s speech in Japan was released: http://www.federalreserve.gov/newsevents/speech/bernanke20121014a.htm. Overnight the Asian markets gained 0.3%. European markets opened higher and gained 0.5%. US index futures were higher overnight as well. At 8:30 the NY FED was reported still contracting: -6.2 vs -10.4, but Retail sales were higher: +1.1% vs +0.9%. The market opened two points above friday’s close to SPX 1431. Then after a further push higher to SPX 1433 the market pulled back. At 10:00 Business inventories were reported positive: +0.6% vs +0.8%. Around 10:30 the market hit SPX 1427, right at the 1422/27 support zone, and then began to rally. The rally continued until 1:00 when the SPX hit 1439, was slightly overbought, and it began to pullback again. By 3:00 the SPX hit 1434 then rallied into a 1440 close.
For the day the SPX/DOW were +0.75%, and the NDX/NAZ were +0.70%. Bonds lost 1 tick, Crude slipped 20 cents, Gold lost $17, and the USD was higher. Medium term support remains at the 1386 and 1372 pivots, with resistance at the 1440 and 1499 pivots. Tomorrow: the CPI at 8:30, Industrial production at 9:15, then the NAHB index at 10:00.
The market opened a bit higher today, pulled back to support again at the SPX 1422/27 zone, then staged an oversold rally. The recent decline from SPX 1471-1426 can be counted as a five, or even a three, as there was only one significant rally before that low: 1431-1444. Today’s rally can be counted from that SPX 1426 low and advanced to 1441 today. Making it the best rally since the decline began. If this entire pullback was a C wave of Intermediate wave iv, as some have noted, the market should make new uptrend highs soon. If not, and this is just an oversold bounce in an ongoing downtrend, considering the confirmed downtrends in the NDX/NAZ, then the OEW 1440 pivot range should again offer resistance to any further upside progress.
Short term support is at SPX 1422/27 and then 1413/16, with resistance at the 1440 pivot and SPX 1463/64. Short term momentum hit overbought today, and closed there. The short term OEW charts ended the day at neutral, with the swing level now SPX 1441. Best to your trading!
MEDIUM TERM: uptrend in jeopardy
LONG TERM: bull market