SHORT TERM: market rallies to new highs, DOW +72
Overnight the Asian markets were mostly higher. Europe opened higher and closed +1.0%. US index futures were higher overnight as well. At 8:15 the ADP employment index reported expansion: +201K vs +217K. The market gapped up at the opening to SPX 1325. The SPX had closed at 1319 yesterday. By 10:00 the SPX reached 1328, a new rally high, and then pulled back a bit. Also at 10:00 the FED released the following: http://www.federalreserve.gov/newsevents/press/other/20110330a.htm. The SPX pulled back to 1324 by 10:30 and then started to rally again. Around 1:00 the SPX hit 1332 then another pullback followed. At 2:00 the FED issued the following: http://www.federalreserve.gov/newsevents/press/bcreg/20110330a.htm. The pullback continued into a SPX 1328 close.
For the day the SPX/DOW were +0.60%, and the NDX/NAZ were +0.60%. Bonds gained 13 ticks, Crude slipped 50 cents, Gold added $4.00, and the USD was lower. Support for the SPX remains at 1313 and then 1303, with resistance at 1363 and then 1372. Short term momentum hit extremely overbought today with a slight negative divergence. Tomorrow, weekly Jobless claims at 8:30, then Chicago PMI and Factory orders at 10:00. Also, there is a speech by FED governor Tarullo at 12:45 in N.C.
The market gapped up at the open today, it’s fourth gap up opening since the SPX 1249 low. The rally from yesterday’s early SPX 1305 low continued into this afternoon when the SPX hit 1332. SPX 1332, btw, was the level of the double top formed in early March before it declined to 1249. We had noted 1332 as the first level of resistance after the 1313 pivot, and before the 1344 high and the 1363 pivot. With a slight short term negative divergence at today’s high this may be a good area for the end of Intermediate wave one. Overall, this rally looks more and more like a new uptrend. It has certainly been impulsing higher, the NYAD has already made new highs in market breadth, and a couple of SPX sectors are in confirmed uptrends. Best to your trading!
MEDIUM TERM: downtrend likely bottomed
LONG TERM: bull market