thursday update

SHORT TERM: rebound continues, DOW +122

Overnight the Asian markets were mostly lower. Europe opened higher and closed +0.80%. US index futures were higher overnight and at 8:30 weekly Jobless claims were reported improving: 448K v 459K. After the close yesterday the FED issue the following report on the housing crisis: http://www.federalreserve.gov/pubs/bulletin/2010/pdf/hmda08final.pdf. At the open the market gapped up to SPX 1197 from yesterday’s close at 1191. The rebound rally continued, with small 2-3 point pullbacks, until 2:30 when the SPX hit 1209. For the rest of the day the SPX pulled back 4 points and then closed at 1207.

For the day the SPX/DOW were +1.20%, and the NDX/NAZ were +1.70%. Bonds were up 11 ticks, Crude rallied $2.10, Gold slipped $4.00, and the USD was lower. Support for the SPX remains at 1187 and then 1176, with resistance at 1222 and then 1240. Short term momentum continued its rise from yesterday’s oversold condition to overbought today. Tomorrow, Q1 GDP will be reported at 8:30. Then the Chicago PMI at 9:45 and Consumer sentiment at 10:00.

Today the rebound rally continued from yesterday’s retest of the recent SPX 1182 low. The entire two day decline, from SPX 1220-1182, was the largest of the uptrend and the biggest percentage drop: 3.1%. After setting up a negative RSI divergence on the daily charts the market became oversold for the first time since the uptrend began in February. This is a normal occurrence during uptrends as you can see on the SPX daily chart. It is also, sometimes, a signal of an impending downtrend. Price is the determining factor. Thus far, price has held support at the OEW 1187 pivot and rebounded 27 points from the 1182 low. As a result of today’s action our OEW charts have all turned positive. This suggests the uptrend is resuming, and we marked yesterday’s low with a tentative Intermediate wave two. Naturally anything is possible, but probabilites suggest the SPX 1182 low should have been the end of Intermediate wave two. Several notable tech stocks had gap up openings today, BIDU and FSLR, and of course there was the HPQ buyout offer of PALM. Potential hints of what’s ahead. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: bull market

CHARTS: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1606987