SHORT TERM: market rallies after holding 1090 pivot, DOW +92
Overnight most of the Asian markets were lower. Europe opened higher and closed +0.35%. US index futures were lower overnight, but moved higher into the open as the SPX opened at 1098. By 10:00 the SPX had rallied to 1103 when New home sales were reported at record lows: 309K v 348K. Also at 10:00 FED chairman Bernanke’s Congressional testimony was released: http://www.federalreserve.gov/newsevents/testimony/bernanke20100224a.htm. The market responded by selling off to SPX 1096, near yesterday’s close, by 10:30. After that the market rallied again hitting SPX 1106 by 11:00. After a pullback to 1102 by 11:30 it rallied back to 1106 by 1:30. Then another pullback followed in this somewhat choppy day, and the SPX closed near the highs at 1105.
For the day the SPX/DOW were +0.95%, and the NDX/NAZ were +1.05%. Bonds were up 3 ticks, Crude gained $1.20, Gold lost $8.00, and the USD was lower. Support for the SPX remains at 1090 and then 1061, with resistance at 1107 and then 1168. Short term momentum moved higher, from yesterday’s oversold condition, throughout the day. Tomorrow, the weekly Jobless claims at 8:30 along with Durable goods orders. At 10:00 FED chairman Bernanke testifies before the Senate. Then at 2:00 FED counsel Alvarez testifies about incentive compensation to Congress.
The rally which started late yesterday and continued into today, after holding the OEW 1090 pivot, keeps this market on a positive bias since the SPX 1045 low. If you recall, after the DOW hit 10,730 uptrend high in mid-January and entered a correction, it has only closed under 10,000 once. This was the day after the SPX 1045 low. Since that 8.3% decline in the DOW, 9.1% in the SPX, it has recovered about 67% of the total decline. This continues to fit within the 10% maximum managed market for a managed economy scenario. Despite the corrections of Jun-July and Jan-Feb looking like similar zigzags, this market continues to work its way higher off those lows. The OEW charts are starting to display a bullish bias medium term. We continue to stay with the OEW 1107 (breakout) and 1090 (breakdown) pivot scenario noted yesterday. Best to your trading!
MEDIUM TERM: downtrend in question
LONG TERM: bear/bull inflection point