SHORT TERM: early pullback ends positive, DOW +5
Overnight all the Asian markets were modestly lower. Europe opened lower and closed -0.60%. US index futures were lower overnight, and at 9:00 Case-Shiller reported a less positive annual gain in housing prices: +1.7% v +3.2%. The market gapped down at the open to SPX 1181. It had closed at SPX 1186 yesterday. Within the opening minutes the SPX dipped to 1178, the low for the day, and then began to recover. At 10:00 Consumer confidence was reported higher: 50.2% v 48.6%, and FHFA home prices were reported positive: +0.4% v -0.5%. Around 10:30 the SPX hit 1186, yesterday’s close, and then traded in a narrow four point range while it tried to move higher. At 11:00 the FED made the following press release: http://www.federalreserve.gov/newsevents/press/bcreg/20101025b.htm. Just past 1:00 the SPX hit the OEW 1187 pivot and then started to pullback again. At 2:00 the FED made another press release: http://www.federalreserve.gov/newsevents/press/bcreg/20101026a.htm. Just past 2:00 the market traded down to 1182, then made its final attempt at SPX 1187 for the day and closed at 1186.
For the day the SPX/DOW were +0.05%, and the NDX/NAZ were +0.25%. Bonds lost 24 ticks, Crude added 10 cents, Gold gained $1.00, and the USD was higher. Support for the SPX remains at 1176 and then 1168, with resistance at 1187 and then 1222. Short term momentum hit slightly oversold this morning and then worked its way back to neutral. Tomorrow, Durable goods orders at 8:30, then New home sales at 10:00.
The market opened lower this AM and created another one of those ‘about 20 point’ pullbacks from a new uptrend high. Since the second week of October we have seen four successive pullbacks of this type after every marginal new high. We had a congestion period like this during the last two weeks of September, when the market was trying to clear the SPX 1150 Major wave 3 high. Once the SPX finally closed above that level the rally resumed. This time we are dealing with the OEW 1187 pivot. Looks like the market will need to close above this level to finally clear it. The SPX closed at 1186 yesterday and 1186 again today. The NDX, btw, is only about 5% from its 2007 high. Best to your trading!
MEDIUM TERM: uptrend
LONG TERM: bull market