SHORT TERM: stocks rally as Bernanke/Bush speeches fuel the market, DOW +120
Stocks gapped up at the opening as word was leaked that the President was coming to the rescue of homeowners caught in the subprime credit crunch. By 10:00 the SPX had rallied to 1477 when Bernanke’s speech was released. A pullback to about 1465 followed, and then another pullback to 1465 followed Bush’s speech. Having held support, (1462 is the pivot), the market rallied higher hitting 1481 just before the close. At the close the SPX/DOW gained 1.0%, and the NDX/NAZ added 1.25%. Bonds lost about 1/4 point, Crude was up 60 cents, Gold gained $7.50, and the Euro was flat. The SPX closed at 1474, and now has support at 1462 and then 1438. Resistance remains at 1484 and then 1506. Short term momentum is displaying a negative RSI divergence. Which usually indicates a pullback of some degree is next. Enjoy your holiday weekend!
MEDIUM TERM: correction
LONG TERM: bullish.