wednesday update

SHORT TERM: market rally continues, DOW +186

Overnight the Asian markets were mostly higher, Europe opened higher and closed +1.40%. US index futures were higher overnight, when the SEC reported at 6:30 that the naked short selling ban on Primary’s/GSE’s had been extended until August 12th. At 8:15 ADP reported private sector job growth was up 9,000. Then at 8:45 the FED announced that they were extending the terms their "swaps": http://www.federalreserve.gov/newsevents/press/monetary/20080730a.htm. Lots of good news for a market that was already in rally mode. At the open the market gapped up to 1267 and continued to rally to 1280 by 10:30. When gasoline inventories were reported lower, and Crude began to rally, the market pulled back to 1265 by 2:00. After that the rally resumed right into the close as the SPX made new highs for the day. At the close the SPX/DOW were +1.65%, and the NDX/NAZ were +0.40%. Bonds were flat, Crude rallied $4.70, Gold lost $9.50, and the Euro was lower. Support for the SPX remains at 1261 and then 1240, with resistance at 1287 and then 1316. Short term momentum, after getting extremely overbought this morning, was again overbought at the close. The near term indicators are rising and getting overbought as well. Tomorrow Q2 GDP at 8:30 and weekly jobless claims. Then at 10:00 the Chicago PMI. Just a reminder, non-farm payrolls friday, along with ISM manufacturing and auto sales.

The rally from mondays SPX 1234 low reached 50 points (4.0%) in just two days at todays close. The potential double top at 1290 seems unlikely at this point, and the 1327 pivot appears to be the next likely target. Staying with the Intermediate wave B projection: 1287 – 1240 – 1327. Best to your trading!

MEDIUM TERM: downtrend bottomed at SPX 1200

LONG TERM: bear market

CHARTS:  http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1606987