monday update

SHORT TERM: market consolidates above friday’s lows, DOW -5

Overnight the Asian markets were mixed. Europe opened higher and closed +0.95%. US index futures were relatively flat overnight. At 8:30 Personal income was reported positive: +0.4% v +0.5%, Personal spending was positive: +0.2% v 0.0%, and PCE prices were also positive: +0.2% v +0.1%. The market opened slightly higher to SPX 1080 but immediately began to pullback. It has closed at SPX 1077 on friday. By 10:00 the SPX hit 1071, the low for the day, and then began to rally. At 10:00 the FED issued the following press release: http://www.federalreserve.gov/newsevents/press/other/20100628a.htm. The rally continued until about 11:30 when the SPX hit 1083, the high for the day. At 1:00 FED governor Warsh’s interesting speech was released: http://www.federalreserve.gov/newsevents/speech/kevin20100628a.htm. After the morning range was set, (SPX 1071-1083), the market stayed within that range for the rest of the day and closed at 1075. 

For the day the SPX/DOW were -0.15%, and the NDX/NAZ were -0.15%. Bonds were up 22 ticks, Crude lost 85 cents, Gold dropped $17.00, and the USD was higher. Support for the SPX remains at 1058 and then 1041, with resistance at 1090 and then 1107. Short term momentum rose throughout the day, before dipping late, with little price gain. Tomorrow, Case-Shiller at 9:00, and then Consumer confidence at 10:00.

This rally, from friday’s low with a positive divergence, is certainly lackluster as best. From that 1068 low the SPX has only managed to rally 16 points while working off a short term oversold condition. The short term OEW charts are still negative and the SPX needs to get to the OEW 1090 pivot to turn them positive again. The OEW 1090 pivot, however, is again doing its swing pivot function, (above positive-below negative), for this correction. After the SPX broke through this pivot during the decline last week, all rallies have run into overhead resistance at this pivot: thursday 1086, friday 1084 and today 1083. In the meantime, Asian and European markets continue to display the positive medium term bias we noted in the weekend report. Again today the uptrending BSE, DAX and HSI were all higher, but the others were mixed. If the foreign markets continue to display strength the US market should be making a low soon. SPX 1058 is the support pivot. Best to your trading!

MEDIUM TERM: downtrend low at SPX 1041

LONG TERM: bull market in correction

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