SHORT TERM: market rallies from oversold condition, DOW +87
Overnight the Asian markets were mixed. Europe opened higher and closed +3.40%. US index futures were higher overnight, and before the open Case-Shiller reported housing prices -19.0% v -18.5% for the last 12 months. Prices continue to decline, unlike recent government reports, but the rate of decline has been slowing down over the past few months. At the open stocks gapped higher to SPX 797, the market closed at 788 yesterday. The market then pulled back to 791 while the Chicago PMI was reported at 31.4% v 34.2%, and Consumer confidence 26.0% v 25.3%. After that the SPX resumed its opening upward movement and rallied to 810 by 3:00. After getting a bit overbought short term the market pulled back into the close. For the day the SPX/DOW were +1.25%, and the NDX/NAZ were +1.55%. Bonds were up about 13 ticks, Crude gained 65 cents, Gold added $3.00, and the Euro was higher. Support for the SPX now notches up to 789 and then 768, with resistance at 848 and then 912. Short term momentum was a bit overbought at todays highs and pulled back to neutral during the last hour. Tomorrow, ADP employment before the open, then ISM, Construction spending, and Pending homes sales at 10:00. Later in the day the monthly Auto sales.
After yesterdays sharp selloff to SPX 780 the market rebounded from oversold levels near the close, and continued that rebound today. Again nearing the close the market reversed, only this time from overbought levels and headed lower into the close. This all appears to be part of a B wave pullback from the recent high at SPX 833. Ideally this market will again get oversold short term, while setting up a positive divergence at lower lows. Support for the entire move remains at SPX 768 and worse case 734. Todays action was encouraging for the medium term uptrend. Best to your trading!
MEDIUM TERM: still awaiting uptrend confirmation
LONG TERM: bear market