SHORT TERM: today did figure to be an interesting day
Overnight the Asian markets all rallied, after the news was leaked from the white house at midnight EDT, that the President was going to come to the aide of people having problems with their mortgages. US stock index futures surged on the news over night. Europe came in about 0.90% higher and the US market gapped up at the opening. By 10:00 the SPX had hit 1477, and the DOW was up 100+. FED chairman Bernanke’s speech was released by the FED, and the market started to pullback some. The tone of the speech was not optimistic, but concern. This is the link. http://www.federalreserve.gov/boarddocs/speeches/2007/20070831/default.htm Bonds are about 1/4 point lower, Crude is up 70 cents, Gold is $6.00 higher, and the Euro is flat. With today’s rally the SPX has cleared the 1462 pivot and resistance is now at 1484 and then 1506. Support is just underneath the market at 1462 and then 1438. Short term momentum is overbought, and again displaying a slight negative RSI divergence at this morning’s highs. At 11:00 President Bush will provide some details of his plan to help homeowners.
With the FED stepping in two weeks ago today with a discount rate cut, to support the market. And now, when it looked like the market was preparing to head lower again, the President stepping in. One has to wonder if all these tactics will force this correction to abort. This will not be clear until next week, when most of the players come back from holiday. Also, at this time the Banks and Hedge funds will need to deal with their problems as well. For now, the trend is down, and still expecting a retest before the correction is over. Best to your holiday!
MEDIUM TERM: correction
LONG TERM: bullish.