SHORT TERM: market gaps up to end week, DOW +198
Overnight the Asian markets were mixed. Europe opened lower but closed +1.40%. US index futres were higher overnight, and at 8:30 Durable goods orders were reported lower, but better than expected: -1.3% v +0.4%. Last night the FED’s general counsel Alvarez’s congressional testimony was released: http://www.federalreserve.gov/newsevents/testimony/alvarez20100924a.htm. The market gapped up at the open to SPX 1132, it had closed at SPX 1125 yesterday. The market then continued to rally. Near 10:00 FED governor Duke’s speech was released: http://www.federalreserve.gov/newsevents/speech/duke20100924a.htm. Also at 10:00 New homes sales were reported higher: 288K v 276K. The market continued higher until around 11:30 when the SPX hit 1148. After a pullback to 1144 by 12:00 the market started to move higher yet again. For the rest of the day the SPX traded in a narrow range between 1146 and 1149, closing at 1149.
For the day the SPX/DOW were +2.00%, and the NDX/NAZ were +2.20%. Bonds lost 11 ticks, Crude rallied $1.40, Gold added $2.00, and the USD was lower. Support for the SPX jumps to 1146 and then 1136, with resistance at 1168 and then 1176. Short term momentum displayed a small positive divergence at yesterday’s close and the market is now slightly overbought. Last night the FED reported the Monetary base continues to go sideways, but the M1 Multiplier continues to rise. Today the WLEI was reported improving: 41.3% v 40.8%, but still in contraction mode.
The gap up today and followup rally took the SPX right back to the uptrend high at 1149. If you recall the high for Major wave 3 in January was at SPX 1150. This uptrend is understandably having a bit of trouble getting through this level and clearing the OEW 1146 pivot. After a two day pullback of 26 points (2.3%), to end Minor wave 2, the market appears ready to resume the uptrend. We’ve added several charts to the stockcharts link: Platinum, the Dow Utilties, the Dow World Index (DJW) and two additional technical indicators. Enjoy the weekend!
MEDIUM TERM: uptrend
LONG TERM: bull market