SHORT TERM: another new high, DOW +123
Overnight the Asian markets were mostly lower, losing 0.6%. Europe opened lower and were mostly lower, losing -0.2%. US index futures were lower overnight as well. At 8:30 weekly Jobless claims were reported lower: 348K vs 358K, Housing starts were reported higher: 699K vs 657K, Building permits were reported lower: 671K vs 679K, and the PPI was reported higher +0.1% vs -0.1%. At 9:00 FED chairman Bernanke’s speech: http://www.federalreserve.gov/newsevents/speech/bernanke20120216a.htm. The market opened one point higher than yesterday’s SPX 1343 close. By 10:00 it dipped down to yesterday’s low at SPX 1341 and started to rally. Also at 10:00 FED director Kamin’s Senate testimony was released: http://www.federalreserve.gov/newsevents/testimony/60A6241249DC44279EAB48B7EF53E336.htm, and the Philly FED was reported higher: 10.2 vs 7.3. The rally continued to work its way higher with only small pullbacks along the way until 3:30 when the SPX hit 1359. A small dip into the close ended the day at SPX 1358.
For the day the SPX/DOW were +1.00%, and the NDX/NAZ were +1.45%. Bonds lost 18 ticks, Crude added 50 cents, Gold slipped $1, and the USD was lower. Support for the SPX remans at 1313 and then 1303, with resistance at 1363 and then 1372. Short term momentum rose from oversold yesterday to overbought today. Tomorrow, CPI at 8:30, then Leading indicators at 10:00. It is also Options expiration friday.
Tuesday night the futures market looked like it was setting up for a breakout. The rally faded as the market neared the open, and the market actually sold off after making a slightly higher high on wednesday. Last night the opposite occurred, futures were heading lower and looked like they were setting up for a breakdown. And, of course, futures improved heading into the open, and the market rallied to a new uptrend high. Two overnight fakeouts in a row. Now to the cash market.
Today the SPX retested yesterday’s 1341 low and then rallied to a new uptrend high. While the short term wave count is getting a bit complicated we thought we’d review the entire uptrend to put it into perspective. This uptrend started in late November, and has thus far rallied in five Minor waves. These waves, 1 – 4, are marked in dark blue on the chart below. Minor wave 5 is still underway. Within Minor 5 we have had five Minute waves, i -iv, labeled in dark green. Minute wave v is still underway. After the Minute wave iv low at SPX 1337 this market has bounced around a bit without making a whole lot of upside progress. Minute iii topped last thursday at SPX 1354, and a week later Minute wave v has only made it to 1359. We can now count the internal waves of Minute wave v as either an unfolding diagonal triangle, or Micro waves 1 and 2 complete with wave 3 underway now. Either way we still expect the OEW 1363 pivot range to contain this uptrend. Short term support is at SPX 1337/41 and then the 1313, 1303 pivots. Overhead resistance is at the 1363, 1372 and 1386 pivots. Short term momentum is quite overbought. Best to your trading!
MEDIUM TERM: uptrend high SPX 1359
LONG TERM: bull market