SHORT TERM: market rebounds on strong Q3 GDP report, DOW +200
Overnight night all the Asian markets were lower. Europe opened lower but closed +1.40%. US index futures were slightly higher overnight. At 8:30 Q3 GDP was reported at +3.5% v -0.7%, weekly Jobless claims came in at 530K v 531K, and at 9:00 FED governor Tarullo gave testimony before Congress: http://www.federalreserve.gov/newsevents/testimony/tarullo20091029a.htm. The market responded positively right after the reports and gapped up at the open to SPX 1048. That was the low for the day. By 12:30 the SPX had rallied back to the 1061 OEW pivot, consolidated for a while, and then rallied to the high for the day at 1067 by 3:00. It then pulled back a few points at about 3:30 before closing near the high for the day at SPX 1066. Quite a rally as the USD index declined as well. For the day the SPX/DOW were +2.15%, and the NDX/NAZ were +1.80%. Bonds dropped 15 ticks, Crude rallied $2.55, Gold jumped $16.00 and the EUR was higher. Support for the SPX now jumps back up to 1061 and then 1041, with resistance at 1090 and then 1107. Short term momentum was overbought at the close. Tomorrow, Consumer spending and Personal income at 8:30. Then the Chicago PMI at 9:45 and Consumer sentiment at 10:00.
Quite a rally today from extreme oversold levels and the OEW 1041 pivot. The USD index declined about 0.80%, and nearly everything that moves inversely to the USD rallied. Despite the sharp rally our short term count remains intact. Today’s rally appears to be a smaller fourth wave within the larger third wave decline from SPX 1096. We have been counting this decline as: wave 1 SPX 1074, wave 2 SPX 1096, and wave 3 underway. Within wave 3 we have been counting: wave 1 SPX 1075, wave 2 SPX 1092, wave 3 SPX 1042 and wave 4 underway today. Should the SPX rally above 1075 it would invalidate this count. The market continues to be quite choppy as sellers and buy the dip buyers battle it out. The DOW displays a much choppier downside pattern than the SPX. With the market close at SPX 1066 and today’s rally still within the range of the 1061 pivot one can still favor the downside from here with tight stops. Best to your trading!
MEDIUM TERM: uptrend in jeopardy
LONG TERM: bear market