SHORT TERM: rally continues, DOW +89
Last night AAPL reported better than expected earnings. This pushed NQ (NDX futures) higher, which pulled up everything else with it. Overnight Asian markets were mostly lower but closed +0.2%. European markets opened higher and gained 1.3%, for the second straight day of good gains. US index futures were much higher overnight as well. At 8:30 durable goods orders were reported lower: -4.2% vs +2.4%. The market gapped up the open to SPX 1383, jumping over the 1372 pivot, and continued to rally. The SPX had closed at 1372 yesterday. By 10:00 the SPX hit 1391, neared extremely overbought, and began to pullback. At 12:30 the FED issued its FOMC statement: http://www.federalreserve.gov/newsevents/press/monetary/20120425a.htm, the market hit SPX 1385 and tried to rally. By 1:00 the SPX hit 1390, then pulled back to 1385 again by 2:00. At 2:00 the FED released the following: http://www.federalreserve.gov/newsevents/press/monetary/20120425b.htm. The market then rallied to SPX 1391 again, stayed within a narrow range, and closed there.
For the day the SPX/DOW were +1.05%, and the NDX/NAZ were +2.50%. Bonds lost 4 ticks, Crude added 55 cents, Gold rose $3.00, and the USD was lower. Support for the SPX jumps to the 1386 and 1372 pivots, with resistance at the 1440 and 1499 pivots. Short term momentum neared extremely overbought and ended with a slight negative divergence. Last night the FED reported New home prices rose dramatically: $291.2K vs $269.7K. Tomorrow at 8:30 weekly Jobless claims, then at 10:00 Pending home sales.
Today’s gap up opening pushed the SPX past 1387, a level we noted yesterday, and it hit 1391 in the first half hour of trading. This sharp rally from monday’s SPX 1359 low cleared out the Intermediate wave B count at SPX 1393. It now appears Int. B is still underway. There are two ways of counting this pattern. First, which we noted quite early on the blog this morning, an expanding abcde triangle. The touch points of the triangle would be: 1388, 1365, 1393, 1359 and the current rally. This would suggest a potential high again at SPX 1398. The second an inverted abc flat. The touch points here: 1393, 1359 and the current rally. This would suggest a potential high right around SPX 1393. There are other options open as well. But these two appear to be the most obvious at the moment.
Short term support is now at the two OEW pivots 1386 then 1372. Short term resistance is at SPX 1393, then around 1398-1402. Short term momentum displays a slight negative divergence. Best to your trading!
MEDIUM TERM: DOW in confirmed downtrend, SPX likely to follow
LONG TERM: bull market