SHORT TERM: early market rally ends near highs, DOW +96
Overnight the Asian markets were mostly higher. Europe opened lower but closed mixed. US index futures started lower overnight but turned positive heading into today’s trading. At 8:30 Personal income was reported higher: +1.0% vs +0.4%, Personal spending was reported positive: +0.2% vs +0.7%, as were PCE prices +0.1% vs +0.0%. The market opened higher at SPX 1323 and continued to rally. It had closed at SPX 1320 on friday. At 9:45 the Chicago PMI was reported higher: 71.2 vs 68.8, then at 10:00 Pending home sales were reported lower: -2.8% vs +2.0%. The market continued higher until about 10:30 when the SPX hit 1329. A nice rebound from thursday’s afternoon low of SPX 1294. After the high for the day, and an overbought short term condition, the market started to pullback. Around 2:00 the SPX hit 1321, and then rallied into the close to end the day at 1327.
For the day the SPX/DOW were +065%, and the NDX/NAZ were +0.10%. Bonds gained 2 ticks, Crude lost 95 cents, Gold rose $5.00, and the USD was higher. Support for the SPX remains at 1313 and then 1303, with resistance at 1363 and then 1372. Short term momentum hit overbought this morning, pulled back some and was rising into the close. Tomorrow, Construction spending and ISM manufacturing at 10:00, then monthly Auto sales in the afternoon. Also at 10:00 FED chairman Bernanke gives Congressional testimony.
For the past three trading days uptrending Crude has stayed under $100 and the market has enjoyed a good rally from SPX 1294 to 1329. The SPX 1294 low was accompanied by a short term positive RSI divergence on the hourly chart. Today’s SPX 1329 high displayed a near extreme overbought condition on the same chart. One good trading signal after another.
When there has been weakness into the end of the month, during this uptrend, the pattern has been for strong buying in the beginning of the following month. Needless to state the beginning of March is tomorrow. Over the next few days we should get a good idea if this uptrend will continue, or shift into a confirmed downtrend is next. The situation in N. Africa and the Middle East will likely have an important influence, one way or the other. Short term OEW charts remain positive with support at SPX 1320, and then the 1313 and 1303 pivots below that. Short term resistance is at SPX 1344, and the 1363 and 1372 pivots above that. We’ve added another SPX uptrend alternate count, remaining objective, and posted it on the NDX daily chart. Best to your trading!
MEDIUM TERM: uptrend stable
LONG TERM: bull market