SHORT TERM: markets puts a 4-day rally together for the first time in six months: DOW +247
Overnight the Asian markets were mixed for the third day in a row. Europe opened lower, but closed mixed as well. US index futures were lower overnight, then at 8:30 the first of today’s deluge of economic data hit the street. Consumer spending dropped 1%, the largest monthly decline since 2001. October durable goods orders dropped 6.2%, personal income was +0.3%, the Core PCI remained unchanged at 0.0%, and the weekly Jobless claims dropped to 529K v. 543K. The market responded by gapping down at the open to SPX 841, it closed at 857 yesterday. But that was the low for the day. By 10:00 as the market started to rally, October new home sales were reported -5.3% to an annual rate of 433K, and the U of M reported Consumer sentiment slipped to 55.3% v. 57.9%. Nevertheless, the bulls took advantage of the light volume and pushed the market higher. By 1:00 the SPX hit 873, pulled back to 863 by 2:00, and then continued to rally. By 3:00 the SPX hit 887 the highest it has been since Nov 14th. For the day the SPX/DOW were 3.20%, and the NDX/NAZ were +4.50%. Bonds gained over one point, Crude added $3.75, Gold slipped $4.25 and the Euro was lower. Support for the SPX remains at 848 and then 789, with resistance at 912 and then 935. Short term momentum was rising into the close and appeared to put in a slight negative RSI divergence. Tomorrow is a holiday in the US, Thanksgiving. Friday the equity market is open. Happy Holiday!
One would have to be encouraged by a 4-day rally in a period when the economic reports were certainly negative. A new uptrend would be quite welcome by many. Unfortunately, there have been so many false starts in the past two months one has to wonder about this one as well. Especially since the short term wave patterns do not look complete. Yesterday, however, the Techs lagged while the general market kept positive. Then today while the general market was turning negative, the Techs led. This is another positive turn of events. In the past week I have received several emails displaying a large wedge formation into the recent lows. Possibly that count is at work. As you know, the short term action over the past few weeks has been difficult. Enjoy the holiday!
MEDIUM TERM: downtrend lo at SPX 741
LONG TERM: bear market