tuesday update

SHORT TERM: market rallies from oversold levels, DOW +236

Overnight the Asian markets were all lower. Europe opened lower and closed -0.95%. US index futures traded higher overnight, and at 9:00 Case-Shiller reported housing prices were dropping at a rate/year of 18.5% v 18.3% the month earlier. Stocks gapped up slightly at the open to SPX 747. The index closed at 743 yesterday. By 10:00 the SPX hit 754 when FED chairman Bernanke’s testimony was released: http://www.federalreserve.gov/newsevents/testimony/bernanke20090224a.htm, and Consumer confidence was reported at 25.0% v 37.7%. After that the market pulled back to its low for the day at 745. After a rally to 757 by 11:00, and a pullback to 748 by noon, FED governor Duke’s speech was released: http://www.federalreserve.gov/newsevents/speech/duke20090224a.htm. The market started rallying right around that time. By 2:30 the SPX rallied above the 768 pivot, held, and then moved higher into the close. For the day the SPX/DOW were +3.65%, and the NDX/NAZ were +3.85%. Bonds were down 10 ticks, Crude gained $1.45, Gold lost $31.00 and the Euro was higher. Support for the SPX moved back to 768 and then 734, with resistance at 789 and then 848. Short term momentum rallied off that positive divergence, but was getting overbought at the close. Tomorrow, FED chairman Bernanke’s testimony continues, and at 10:00 Existing home sales are reported.

With today’s rally it does appear that Minor wave 3 could be over with yesterday’s low at SPX 742. Overhead resistance is at SPX 789 and then 804, the end of wave 1. Not expecting much more upside than that. Best to your trading!

MEDIUM TERM: downtrend

LONG TERM: bear market

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