SHORT TERM: Crude oil drops – market rallies, DOW +69
Overnight the Asian markets were mostly higher, with only India’s BSE displaying a loss. Europe traded higher most of the day and ended mixed. US index futures traded flat for most of the two days and edged higher after FED governor Kroszner’s speech: http://www.federalreserve.gov/newsevents/speech/kroszner20080522a.htm. But at 9:00 Case-Shiller reported that housing prices dropped further, now at a 14.4% rate just in the last twelve months. The market opened slighty higher, nevertheless, and rallied to SPX 1384 by 10:00. Two other reports were released around that time. First the Conference board reported that consumer confidence high a 16 year low in May. Then the Commerce Department reported that new homes sales increased by 3.3% in April, the first rise in six months. While April sales were down 42% in the past twelve months. The market pulled back to a slightly lower low than friday at SPX 1373 by 12:00. While Crude oil continued to decline on the day, and with the market sitting at its most oversold short/near term levels since March. The market started to rally. Nearing 3:00 the SPX broke through the early morning high at 1384 and edged higher into the close. At the close the SPX/DOW were +0.60%, and the NDX/NAZ were +1.70%. Bonds dropped about 3/4 points, Crude lost $3.60, Gold slid $20.00, and the Euro was lower. Support for the SPX now notches up to 1383 and then 1364, with resistance at 1410 and then 1438. Short term momentum was oversold this morning but rose past neutral heading into the close. The near term indicators were the most oversold they had been since March, and moved higher as well. Not totally certain that this short term decline ended at SPX 1373 today, as it appears in between pivots. If it hasn’t 1364 should be tested next, if it has 1410 is overhead resistance. Tomorrow at 10:00 April durable goods orders. Best to your trading!
MEDIUM TERM: uptrend should have topped at SPX 1440
LONG TERM: bear market