SHORT TERM: gap up rally monday, DOW +255
Overnight the Asian markets were mostly higher. Europe opened higher and closed +2.4%. US index futures were higher overnight as well. At 8:30 Personal income (+0.3% vs +0.1%), Personal spending (+0.8% vs -0.2%), and PCE core prices (+0.2% vs +0.1%) were all reported higher. The market gapped up at the open to SPX 1189, above the OEW 1187 pivot, and continued to rally. At 10:00 Pending home sales were reported lower: -1.3% vs +2.4%. The rally continued until 10:30 when the SPX hit 1200. After a pullback to SPX 1194 by 11:00 the rally resumed. Heading into the close the market ended the day at its high: SPX 1210.
For the day the SPX/DOW were +2.55%, and the NDX/NAZ were +3.10%. Bonds lost 19 ticks, Crude rallied $2.05, Gold dropped $45.00, and the USD was lower. Support for the SPX rises to 1187 and then 1176, with resistance now at 1222 and then 1240. Short term momentum is getting extremely overbought. Tomorrow, Case-Shiller at 9:00, and Consumer confidence at 10:00. Then at 2:00 the FOMC minutes.
The gap up this morning jumped over the OEW 1187 pivot, rallied well past the recent SPX 1191 high, and then pulled back to retest the pivot. This has been the typical price activity for this market the past few years. Gap over resistance/support, and then retest. In the afternoon the market exceeded the SPX 1208 high posted in mid-August. Short term resistance is now at the 1222 and 1240 pivot ranges. Short term support would be the 1187 and 1176 pivot ranges. Short term the market is extremely overbought and a significant pullback can occur at any time. Short term OEW charts remains positive as long as the 1187 pivot holds. The market is certainly acting like it’s in an uptrend. Best to your trading!
MEDIUM TERM: downtrend may have bottomed at SPX 1102
LONG TERM: bear market highly probable