thursday update

SHORT TERM: market rebounds, DOW +136

Overnight the Asian markets were mostly lower losing 0.5%. Europe opened higher and closed +1.40%. US index futures were higher overnight. At 8:30 weekly Jobless claims were reported higher: 381K vs 364K. The market opened higher at SPX 1253 and continued to rally. At 9:45 the Chicago PMI came in slightly lower: 62.5 vs 62.6. Then at 10:00 Pending homes sales were reported positive: +7.3% vs +10.4%. The rally continued until just before 11:00 when the SPX hit 1260. A pullback just past 11:00 to SPX 1257 followed, and then the market moved higher. Nearing the close the SPX hit 1264, and ended the day at 1263.

For the day the SPX/DOW were +1.10%, and the NDX/NAZ were +0.85%. Bonds gained 3 ticks, Crude added 35 cents, Gold slid $7.00, and the USD was lower. Support for the SPX moves back to 1261 and then 1240, with resistance at 1291 and then 1303. Short term momentum rose from extremely oversold yesterday to overbought today. Tomorrow, nothing on the economic calendar. Happy new year!

Inflection points long, medium, and short term. Reviewing the charts after yesterday’s new uptrend high, and pullback, we found the major indices at a very interesting juncture. Under a bearish scenario we can count the DOW having completed five waves down from May11 to Oct11 to end a Major A. Then a three wave, abc, Major B wave possibly completing at the recent highs. The recent DOW highs exceeded the October highs for a clean abc advance. A five wave Major C down would be next. The SPX offers a similar view, yet with the Intermediate c wave, of the abc Major B advance, ending with a failed c. As the current uptrend high is about 2% shy of the October high. The NDX/NAZ uptrend fell short on two parameters. The high occurred early in December, not late, at about 3% shy of the October high. And the entire advance from the early October low looks like a triangular Major B wave. Under a bullish scenario the SPX and NDX/NAZ have a lot of catching up to do. The first few weeks of January are likely to be quite telling.

Short term OEW charts remain positive, as they have since a week ago tuesday. Support here remains in the upper end of the OEW 1240 pivot. Short term support is at SPX 1261 pivot range, then SPX 1250. Short term resistance is at SPX 1278, then the 1291 pivot range. Short term momentum continues to rise after yesterday’s extremely oversold condition and ended overbought. Tomorrow ends the week, month and year. Happy holidays!

MEDIUM TERM: uptrend

LONG TERM: inflection point

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