SHORT TERM: new uptrend highs after FOMC statement, DOW +7
Overnight the Asian markets were mixed. Europe opened lower and closed -0.40%. US index futures were relatively flat overnight, and at 8:30 both Housing starts (596K v 548K) and Building permits (569K v 565K) reported improvement. The market opened about unchanged at SPX 1142. It had closed at SPX 1143 yesterday. For the first hour and a half of trading the SPX remained in a two point range (1141-1143). After 10:30 it started to ease lower awaiting the FED’s FOMC statement. Right after the statement the SPX hit 1136 and then started to rally. FED FOMC statement: http://www.federalreserve.gov/newsevents/press/monetary/20100921a.htm. It then spiked to SPX 1149 before 3:00, spiked down to 1136 by 3:30, and closed at 1140.
For the day the SPX/DOW were mixed, and the NDX/NAZ were -0.15%. Bonds gained 32 ticks, Crude slid $1.35, Gold added $9.00, and the USD was lower. Support for the SPX remains at 1136 and then 1107, with resistance at 1146 and then 1168. Short term momentum pulled back to near neutral during the day, then pushed to slightly overbought before hitting neutral at the close. Tomorrow, there is nothing on the economic calendar, a likely technical trading day.
In the weekend report of Sept 11th we noted that the end/continuation of the multi-month trading range would likely be determined within the Sept 16th to Sept 21st timeframe. There had been a recurring negative pattern after rallies for the past several months. This rally from SPX 1040 was heading into that potential negative again during this time period. With today’s new uptrend high at SPX 1149 the negative pattern has been broken. The uptrend from the early July SPX 1011 low should now continue higher with pullbacks along the way. Today’s wild late day swing is one of those pullbacks. From the recent late August low at SPX 1040 the market had only two pullbacks one of 14 and the other 12 points, respectively. Today’s pullback from SPX 1149 to 1136 is the third. Since we can count five waves up from the SPX 1040 low into today’s high, should this pullback breakdown through the OEW 1136 pivot range the market could retest the 1107 pivot. A further rally to breakout above the 1146 pivot range should help the market to rally into the 1160’s and the 1168 pivot. Technical day tomorrow, could be quite interesting. Best to your trading!
MEDIUM TERM: uptrend
LONG TERM: bull market