SHORT TERM: Q3 GDP -0.3% market rallies, DOW +190
Overnight the Asian markets soared after the FED announced late yesterday temporary currency dollar swap arrangements with several countries: http://www.federalreserve.gov/newsevents/press/monetary/20081029b.htm. Europe opened higher and closed +1.2%. US index futures were sharply higher overnight, and at 8:30 the Commerce dept. reported the GDP dropped to -0.3% from 2.8% in Q2. Unemployment claims remained steady at 479K. The market gapped up nonetheless to SPX 947 at the open and continued to 963 in the opening minutes. That was the high for the day. A pullback to 929 followed by 12:00, the low for the day. After that the SPX rallied to 955 by 3:00, dropped to 938 by 3:30 and rallied to finish the day at 954. After the gap up this morning the SPX traded between the 935 and 961 pivots for the rest of the day. At the close the SPX/DOW were +2.35%, and the NDX/NAZ were +2.45%. Bonds dropped 21 ticks, Crude lost $2.00, Gold slid $16.00, and the Euro was flat. Support for the SPX notches up to 935 and then 912, with resistance at 961 and then 990. Short term momentum stayed above neutral all day. Tomorrow is the non-farm payrolls report, and core PCE at 8:30. Then the Chicago PMI and a Consumer sentiment reading around 10:00. FED chairman Bernanke also gives a speech at 2:00. Happy Halloween. October has certainly been more trick, than treat.
The rally from tuesday’s morning low at SPX 845 continues to look encouraging. The market rallied from the 848 pivot right to the 935 pivot, and has spent the past two days trading higher: between the 935 and 961 pivots. The SPX has still not broken through the recovery Oct 21st high at 985, but the DOW has done so. Tuesday’s low continues to look like the end of an ending diagonal triangle 5th wave for the downtrend. And the market continues to make progress from that low. The next objective is to break through the 990 pivot, while holding the 912 and 935 pivots. Should 990 be exceeded, the likelihood of a new uptrend looks probable. If 912 is exceeded on the downside, this rally is in jeopardy. Market breadth continues to rise, while market volatility continues to decline. Commodities pulled back today and are worth watching going forward. Best to your trading!
MEDIUM TERM: downtrend low SPX 840
LONG TERM: bear market, trying to establish an uptrend