thursday update

SHORT TERM: consolidation pullback continues, DOW -17

Overnight the Asian markets were mixed. Europe opened higher and closed +0.50%. US index futures were higher overnight, and at 8:30 weekly Jobless claims improved: 434K v 452K. The market gapped up at the open to SPX 1187. It had closed at SPX 1182 yesterday. Within the first few minutes the SPX rallied to 1190, the high for the day, and then started to pullback after getting slightly overbought. This pullback continued until about 10:30 when the SPX hit 1179. A rally attempt followed, but ended at SPX 1184 around 11:30. By 12:30 the market had pulled back to SPX 1177, the low for the day, and another rally attempt followed. Heading into the close the SPX hit 1185 and then closed at 1184.

For the day the SPX/DOW were mixed and the NDX/NAZ were +0.15%. Bonds gained 21 ticks, Crude was flat, Gold rallied $21.00, and the USD was lower. Support for the SPX remains at 1176 and then 1168, with resistance at 1187 and then 1222. Short term momentum hit overbought this AM and then pulled back to neutral. Tomorrow kicks off an important series of events over the next few workdays. Q3 GDP at 8:30, then Chicago PMI and UofM Consumer sentiment around 10:00. Tuesday is election day. Then wednesday the FED concludes a two day FOMC meeting with their afternoon statement.

For the third day in a row the market pulled back early and then recovered in the afternoon. Since this activity is occurring after a new uptrend high on monday, at SPX 1196, it appears to be an ordinary pullback after a new high. The weekly RSI is overbought and we are noticing a negative divergence on the daily charts at the recent high. This would suggest that Intermediate wave three did top at SPX 1196. Yet, due to the continuing choppiness of the past couple of weeks it is not a definitive count. We’ll need to break out of this trading range, (OEW pivots 1168 to 1187), to get a more probable short term count. Tomorrow’s Q3 GDP report, (estimates between 1.5% and 2.0%) may do the trick. Today the SPX closed above 1180 for the sixth day in a row without closing above 1187 once. A close above this pivot should also clear thing sup. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: bull market

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