SHORT TERM: FED cuts rates, market rallies, DOW +137
Stocks opened higher this morning on a better than expected Q3 GDP report, and ADP employment report. By noon the SPX had rallied to 1544 and went into a holding pattern awaiting the FED announcement. At 2:15 the FED announced it was lowering both the fed funds and discount rates 25 bps: http://www.federalreserve.gov/newsevents/press/monetary/20071031a.htm. Stocks sold off on the news. Within 15 minutes the SPX dropped to support at 1530. Then rallied a full EW pivot within the next 30 minutes to SPX 1553, the high for the day. Some choppiness in the last hour found the market closing near its highs for the day. At the close the SPX/DOW were +1.10%, and the NDX/NAZ were +1.45%. Bonds lost nearly one point, Crude rebounded gaining $4.10, Gold was up $10.50, and the Euro was higher. With the SPX closing at 1549, support remains at 1530 and resistance is at 1556 and then 1576. Short term momentum is overbought. The short term wave pattern is still unclear, whether or not, today’s rally ended the first wave of Minute 5, or we are already in the third wave up for Minute wave 5. The next day or so should clear that up. In the mean time the uptrend continues to look good as growth stocks remain the market leaders. Tomorrow before the open, the core PCE and unemployment claims. To be followed at 10:00 by the ISM manufacturing report. The FED provided the market with a treat on this Halloween. Best to your evening!
MEDIUM TERM: bullish
LONG TERM: bullish.