SHORT TERM: market gaps up at the open on positive FED comments, DOW +125
Overnight the Asian markets were mostly higher with the exception of China’s SSEC. Europe came in +1.15% as well, as stock index futures were being bought early last evening after FED chairman’s Bernanke speech. Bernanke reinterated the same economic concerns that vice chairman Kohn had mentioned earlier this week. This will likely lead to another rate cut at the next meeting. Within the first few minutes the SPX rallied to 1489, it has pulled back a bit since then. Bonds are down 18 ticks, Crude is off $1.90, Gold is $12.00 lower, and the Euro is down. Support for the SPX remains at 1462 and then 1438, with resistance at 1484 and then 1506. Short term momentum is again overbought. The market internals, as measured by the OEW oscillator, are starting to improve. The Dow is now reading 27% bullish, after reaching a low of 17%. The NDX has just ticked up to 21%, and the SPX sector is now 25% after reaching a low of 12%. After tuesday’s low at 1407, the market has rallied strongly, techs and leading financials up today. This appears to have been fueled by the recent FED comments, new buying, short covering, and an oversold condition. A new uptrend is not confirmed yet, but the market certainly appears to be in a year end rally. At 8:30 the core PCE was reported to have risen 0.2%, for a 1.9% annual rate. Within FED acceptable levels. Also, it was just reported that banks may agree to put a freeze on rate increases to adjustable rate mortgages. Lots of positive news this week on the economic front. Best to your trading!
MEDIUM TERM: correction may be over for now, but new uptrend unconfirmed
LONG TERM: bullish