SHORT TERM: market consolidates after yesterday’s rally, DOW -47
Overnight the Asian markets were mostly higher. Europe opened lower and closed -0.25%. US index futures were lower overnight, and at 9:00 Case-Shiller reported housing prices rose for the third month in a row: +1.6% v +1.4%. At the open the market began to rally and hit SPX 1070 by 10:00. This cleared the OEW 1061 pivot, but it was the high for the day. Also at 10:00 Consumer sentiment was reported lower: 53.1% v 54.5%. The market pulled back on that news. Around 11:00 the FED issued the following press release: http://www.federalreserve.gov/newsevents/press/bcreg/20090929a.htm, regarding credit cards. At 12:00 the SPX hit 1058 and then started to rally. By 2:00 the SPX hit 1065 but faded to the 1061 pivot at the close. For the day the SPX/DOW were -0.35%, and the NDX/NAZ -0.35%. Bonds were up 3 ticks, Crude dipped 25 cents, Gold was flat, and the Euro was lower. Support for the SPX remains at 1061 and then 1041, with resistance at 1090 and then 1107. Short term momentum was getting extremely overbought at SPX 1070, and then dropped to neutral during the pullback. Tomorrow, the ADP employment index and the final Q2 GDP revision around 8:30. Then at 9:45 the Chicago PMI. Later FED vice chairman Kohn makes a statement at the Cato Institute at 12:45, and then testimony from FED governor Tarullo in the Senate at 2:30.
Todays rally pushed the SPX through the 1061 pivot, but it came back to test it a couple of times during the day. Friday’s low at SPX 1041, right at the OEW pivot, appears to be the low for Minor wave 4. Since Minor wave 4 (1041) did not overlap Minor wave 1 (1039) a potential ending diagonal has not formed. Would expect the OEW 1061 pivot to maintain support and the market to start working its way higher soon. Best to your trading!
MEDIUM TERM: uptrend
LONG TERM: bear market