SHORT TERM: stocks gap up on a good core PCE number
Overnight the Asian markets were mostly higher, with only China’s SSEC declining. Europe came in about flat, and the stock index futures were quiet until the core PCE number was released at 8:30: +0.1%, and +1.9% for the past 12 months. At the open stocks gapped up, and by 10:00 the SPX hit 1518. Buying has slowed now, and the market has pulled back some. Support for the SPX remains at 1505, and resistance at 1522, the short term pivots. Short term momentum is a bit overbought, but easing back as well. Bonds are up over 1/2 point, Crude is 65 cents higher, Gold is up $2.50 and the Euro is higher. Techs have been leading the rally for the past several weeks. RIMM reported sharply higher earnings last night, and is soaring. AAPL releases its much anticipated iPhone today through AT&T retail outlets. However, our concern is the negative potential diagonal triangle forming on the NDX/NAZ daily charts. The two converging trend lines that have formed, allow for a potential breakout if the upper one is exceeded, or a breakdown if the lower one is broken. This range suggests NDX 1900 as the lower limit, and NDX 1965 as the upper. A break below 1900, would create the first full tracement of a rally since the uptrend began. A breakout above 1965 would allow for a slight overshoot which often occurs in diagonals. Let’s watch this closely for signs of future weakness, or strength in the Techs. Best to your trading!
MEDIUM TERM: neutral
LONG TERM: bullish.