SHORT TERM: rally remains under pressure, DOW +9
Overnight all the Asian markets were higher. Europe opened lower and closed -0.20%. US index futures were higher overnight and at 8:30 Q4 GDP was revised lower: +5.6% v +5.9%. The market opened higher at SPX 1167, and rallied to 1174 by 10:30 – the high for the day. At 10:00 Consumer sentiment was reported higher: 73.6 v 72.5. During the rally short term momentum only hit neutral. From the SPX 1174 high the market started to pull back. Around 11:00 the SPX broke through yesterday’s low at 1165 and continued lower to 1161 – the low for the day. At that point the market became a bit oversold and started to rally. At 11:30 FED governor Warsh’s speech was released: http://www.federalreserve.gov/newsevents/speech/warsh20100326a.htm. After a rally to the 1168 pivot by 2:30 the market drifted for the rest of the day to close at 1167.
For the day the SPX/DOW were +0.10%, and the NDX/NAZ were mixed. Bonds gained 14 ticks, Crude slid 40 cents, Gold rallied $16.00 and the USD was lower. Support for the SPX remains at 1146 and then 1136, with resistance at 1168 and then 1176. Short term momentum moved moved to neutral during today’s rally then hit slightly oversold at the 1161 low. Tonight a speech from FED governor Tarullo at 6PM.
Following yesterday’s rally to the uptrend high at SPX 1181 we’re starting to see some weakness in the market. Over the past week or so the market has displayed a willingness to decline. This is quite different from the consistent rally mode since the SPX 1086 February low. Currently we can now count a completed Intermediate wave one into yesterdays high and a potential Intermediate wave two underway. The pullback between yesterday and today has been 20 SPX points (1181-1161). This is the second largest pullback since the uptrend began in early February. As we noted yesterday a solid break below the OEW 1168 pivot range would be needed to confirm this view. Thus far the SPX has only managed to hit the lower limit at 1161. Should the break occur, there are negative divergences up to the daily level, we would expect a pullback between 3.8% and 6.5%. These levels coincide with the OEW 1136 and 1107 pivots. The daily charts suggest the market could be sufficiently oversold at the OEW 1136 pivot to conclude an Intermediate wave two. The OEW 1107 pivot would be a worse case scenario. Best to your trading!
MEDIUM TERM: uptrend
LONG TERM: bull market