SHORT TERM: volatility works both ways, DOW +889
Overnight the Asian markets mostly rebounded strongly, Europe open higher and closed +6.6%. US index futures were sold off early overnight then rallied strongly heading into the morning. At the open the market gapped up to SPX 864 and continued to rally to 882 by 10:00. The Conference board then reported consumer confidence at a record low of 38, the lowest reading in the 41 year history of the agency. Stocks sold off on the news making a slightly lower low than yesterday at SPX 845 by 11:00. A rally by 1:00 to 875 was followed by a pullback to 860 by 2:00, and then the market soared 80 points to SPX 940 heading into the close. With the FOMC meeting underway this market may be front running an important announcement tomorrow. At the close the SPX/DOW were +10.85%, and the NDX/NAZ were +10.20%. Bonds dropped more than 3/4 points, Crude gained $1.25, Gold added $6.75, and the Euro was higher. Support for the SPX jumps to 935 and then 912, with resistance at 961 and then 990. Short term momentum was slightly oversold at this morning’s lows, put in a positive divergence, and is now overbought at the close. Tommorow the FED will announce its FOMC determination around 2:00, and in the morning Durable goods will be reported at 8:30.
Thus far the SPX continues to hold the 848 pivot, even retested it today before rallying. Either a diagonal triangle 5th wave was completed today, or one is in progress with today’s rally the 4th wave. The SPX pivot at 990 now becomes the determining factor. Should the market rally above this level it is then likely a new uptrend is underway. If the market fails to break through, then a retest of the 840 pivot will be needed to finish the diagonal triangle 5th wave. With the VIX at current levels it might not take long for the market to rally up to major resistance at SPX 1179. This is the level from where it broke down in late September. SPX 990 and 840 are the two controlling pivots. Best to your trading!
MEDIUM TERM: downtrend holds SPX 840 again
LONG TERM: bear market, expecting an uptrend soon