SHORT TERM: market rallies despite Q1 GDP revision down to 0.6% growth
Overnight the Asian markets all rallied, and this morning Europe came in about 1.0% higher as well. Stocks continued where they left off at the close yesterday, and rallied to new bull market highs in the SPX/DOW/NDX/NAZ/R2K/NYA/TRAN. The uptrend is extending. Short term momentum, however, is overbought and the market is due for a breather. It certainly appears that Minor wave 5 is subdividing into five Minute waves. Minute wave one ended at SPX 1532, Minute two at SPX 1505, and Minute wave three is underway. With this uptrend extension, the medium term target has now been raised to SPX 1553, the all time high. Short term support now appears at the resistance level where this breakout occurred SPX 1522. Bonds are over 1/4 point lower, Crude is 50 cents lower, Gold is up $5.00 and the Euro is up. Since the market is still in Minor wave 5, it could unfold in either of two EW forms: a normal impulse wave, or a diagonal triangle. The rallies from the SPX 1491 low both appear a bit sloppy, therefore either pattern could unfold. Since the medium term SPX target is only about 1.5% from current levels, I still feel it pays to be cautious medium term. Let’s see how Minor wave 5 unfolds over the coming days/weeks. Best to your trading!
MEDIUM TERM: cautious, and targeting SPX 1553
LONG TERM: bullish.