SHORT TERM: market rallies on positive economic news, DOW +86
Overnight the Asian markets were everywhere, from Australia’s 1% loss to China’s 9% gain. Europe ended mixed as well. At 8:30 the DOL announced that the weekly unemployment claims dropped by about 10% to 342K. The market reacted favorably to the news opening slightly higher at SPX 1383. By 10:30 the market pulled back to 1371, close to tuesday’s lows. Then holding that level the market rallied over the next several hours to new highs for the uptrend at SPX 1398 by 3:00. A small pullback followed in the last hour and the SPX settled at 1388. For the day the SPX/DOW were +0.65%, and the NDX/NAZ were +0.95%. Bonds lost about 3/4 points, Crude was off $2.35, Gold lost $21.50, and the Euro was lower. Support for the SPX now notches back up to 1383 and then 1364, with resistance at 1410 and then 1438. Short term momentum got a bit overbought at the highs, and is displaying a negative RSI divergence. The near term indicators edged up a bit, and are displaying negative divergences as well. The rally today was fairly broadbased, but seemed inspired by the pullback in commodities. At today’s highs the DOW reached a 50% retracement of the entire bear market, and the SPX moved closer to the 1410 OEW pivot, which is effectively its 50% retracement level. Despite the major indices moving higher, the larger indices and some important sectors such as, the WLSH/NYA/XLF/KBE/HGX failed to make new uptrend highs. Since this rally from the 1257 low still looks corrective we expect a medium term top fairly soon. Possibly as early as tomorrow. Best to your trading!
MEDIUM TERM: uptrend still in place reaching SPX 1398 today
LONG TERM: bear market