SHORT TERM: SPX late afternoon recovery materializes again, DOW -26
Overnight the Asian markets were mostly lower after a substantial selloff in China’s SEC (-5.0%). Europe opened lower but closed +1.15%. US index futures were lower overnight and at 8:30 Durable goods orders dropped -2.5% v +1.3%. The market opened lower at SPX 974, dipped to 970, and then rallied to 978 by 10:00. The market continued to follow the theme of the last two days and pulled back to SPX 970 by 11:30. Off that low the market rallied to 975 by 1:00, but pulled back to a lower low for the day SPX 969 at 1:30, slightly deviating from the afternoon recovery scenario of the past two days. At 2:00 the FED released the Beige book: http://www.federalreserve.gov/fomc/beigebook/2009/20090729/default.htm. The market then came off the low, and at 3:00 the FED released the following: http://www.federalreserve.gov/newsevents/press/other/20090729a.htm, five tips on shopping for a mortgage. The market responded by heading higher into the close. For the day the SPX/DOW were -0.40%, and the NDX/NAZ were -0.40%. Bonds lost 2 ticks, Crude dropped $4.25, Gold slip $9.00, and even the Euro was lower. Support for the SPX remains at 961 and then 935, with resistance at 990 and then 1018. Short term momentum slipped back to slightly oversold before moving to neutral, and negative RSI divergence remain. Tomorrow, the weekly Jobless claims at 8:30, and on friday Q2 GDP.
The market continued its five day trading range between the 961 and 990 pivots. Short term momentum remains weak, but still no breakdown in price. When the SPX approaches the 961 pivot again this current rally from the 869 is likely over. This will be labeled as Intermediate wave A, and the pullback Intermediate wave B. Best to your trading!
MEDIUM TERM: uptrend
LONG TERM: bear market