SHORT TERM: market higher on Paulson’s financial blueprint, DOW +46
Overnight the Asian markets were mostly lower, with only the ASX bucking the trend by gaining a few points. Europe came in about -0.55%, and closed at -0.10%. Stocks opened mixed as the Chicago PMI was reported under 50 again, indicating continued manufacturing contraction in the midwest. By 10:00 the SPX rallied to 1322, and then retested support at 1316 by 11:00, while Treasury Secretary Paulson was reporting the administration’s broad scoping plan to overhaul the financial sector: http://www.treasury.gov/press/releases/hp897.htm. Stocks rallied on the news. By 1:30 the SPX rallied to 1329, then pulled back top 1320 by 3:00, before bouncing around into the close. All in all, the SPX stayed within the 1316 and 1327 EW pivots all day. At the close the SPX/DOW were +0.50%, and the NDX/NAZ were +0.80%. Bonds gained about 1/4 point, Crude lost $3.90, Gold dropped $14.00, and the Euro was lower. Support for the SPX notches back up to 1316 and then 1287, with resistance at 1327 and then 1344. Short term momentum was oversold at today’s lows of SPX 1313, and was rising into the close. Tomorrow ISM manufacturing will be reported at 10:00, along with construction spending. Near term momentum did not get fully oversold at today’s lows. So there is still a possibly for another pullback into the 1316 pivot. Best to your trading!
MEDIUM TERM: rally from the SPX 1257 low still underway
LONG TERM: bear market