SHORT TERM: rally makes new high, DOW +54
Overnight the Asian markets were all higher. Europe opened higher and closed +2.45%. US index futures were higher overnight as well. At 8:15 the ADP jobs index came in positive: +91K vs +114K. The market opened higher at SPX 1219 and continued to rally. The SPX had closed at 1213 yesterday. At 9:45 the Chicago PMI came in better than expected, but lower: 56.5 vs 58.8. At 10:00 Factory orders swung to the positive: +2.4% vs -0.8%. Just past 10:00 the FED released the following: http://www.federalreserve.gov/newsevents/press/bcreg/20110831a.htm. Around 10:30 the SPX hit its high for the day at 1231, then started to pullback. Around noon the SPX found support at 1219, rallied to 1227 by 1:00, and then headed lower again. At 2:00 the FED issued: http://www.federalreserve.gov/newsevents/press/orders/20110831a.htm. Nearing 3:30 the SPX declined to 1209 before rally into the a 1219 close.
For the day the SPX/DOW were +0.50%, and the NDX/NAZ were +0.15%. Bonds lost 14 ticks, Crude dipped 5 cents, Gold slipped $13.00, and the USD was higher. Support for the SPX remains at 1187 and then 1176, with resistance at 1222 and then 1240. Short term momentum displayed a negative divergence at today’s high. Tomorrow, weekly Jobless claims at 8:30 along with Q2 Productivity. At 10:00 ISM manufacturing and Construction spending. Then around noon a speech by FED governor Duke on housing, and monthly Auto sales. The monthly Payrolls report is on friday.
The market made a higher daily high for the third day in a row off of friday’s SPX 1136 low. At today’s high, SPX 1231, this rally (Intermediate wave c) now has a 1.382 (SPX 1233) relationship to its predecessor (Intermediate wave a). The previous rally rose from SPX 1121 to 1191. Should it continue higher there will be a 1.50 relationship at SPX 1240, and a 1.618 relationship at SPX 1249. Today’s negative divergence, however, started the biggest pullback since this rally began.
Short term OEW charts remain positive. The threshold is now just under SPX 1200. Short term support is in the low 1200’s then the 1187 pivot. Short term resistance is again at the 1222 pivot, 1231 and then the 1240 pivot. If this market pulls back into the 1187 pivot again it should set up another rally. Best to your trading!
MEDIUM TERM: downtrend may have bottomed at SPX 1102
LONG TERM: bear market highly probable