SHORT TERM: quiet market before Q2 GDP, DOW -23
Overnight the Asian markets were mixed. Europe opened higher but closed -0.30%. US index futures were modestly lower overnight, and at 7:00 Mortgage applications were reported lower: -0.8% v -1.4%. The market opened lower at SPX 1144. It had closed at SPX 1148 yesterday. Within the first half hour the SPX traded between 1142 and 1146. Then it dipped to SPX 1040 by 10:30. After that the market tried to rally and hit 1148 around noon. A small pullback to SPX 1144 by 1:30 followed. At 2:00 the FED made the following press release: http://www.federalreserve.gov/newsevents/press/bcreg/20100929a.htm. Another rally followed to the highs of the day at SPX 1149 by around 3:00. Then an even bigger pullback to SPX 1141 by 3:30 was followed by a bounce into a SPX 1145 close.
For the day the SPX/DOW were -0.25%, and the NDX/NAZ were -0.15%. Bonds lost 9 ticks, Crude rallied $1.60, Gold added $2.00, and the USD was lower. Support for the SPX slips back to 1136 and then 1107, with resistasnce at 1146 and then 1168. Short term momentum remained around neutral for most of the day. Tomorrow, another revision to Q2 GDP and the weekly Jobless claims at 8:30. Then at 9:15 the Chicago PMI. FED chairman Bernanke gives Senate testimony at 10:00, then a speech at the FED at 2:30.
Today’s market activity was quiet, ahead of the GDP report and speeches tomorrow, as the SPX stayed in the 1140’s the entire day. Short term OEW charts remain the same: a short term bias to the upside. The recent market activity can be considered as resistance at the SPX 1150 level, the Jan10 Major wave 3 high, or consolidation after a run up to those highs. Our short term wave count suggests consolidation. Yet, with estimates at +1.6% Q2 GDP tomorrow certainly some volatility is quite possible. A retest of tuesday’s low, (SPX 1132), would not be a surprise, nor would a breakout to the OEW 1168 pivot. Solid support remains at the 1090 and 1107 pivots. Overhead resistance, at the 1168, 1176 and 1187 pivots. Medium and long term, the equity markets are working their way higher. Best to your trading!
MEDIUM TERM: uptrend
LONG TERM: bull market