SHORT TERM: pullback then rally continues, DOW +24
Overnight the Asian markets were mostly higher gaining 0.2%. European markets opened lower, but turned higher gaining 0.8%. US index futures were lower, then higher, overnight. At 8:30 Q1 GDP was reported lower than expected: +2.2% vs +3.0%. The market opened higher, however, at SPX 1404 and hit 1405 in the first few minutes. The SPX had closed at 1400 yesterday. After the open the market started to pullback. At 10:00 Consumer sentiment was reported slightly higher: 76.4 vs 76.2. The market made a low at SPX 1397 right after the report, then started to work its way higher. At 1:30 the SPX hit a higher high for the day at 1407. Then it pulled back some to SPX 1402 just before the close, and ended the week at 1403.
For the day the SPX/DOW were +0.20%, and the NDX/NAZ were +0.60%. Bonds gained 7 ticks, Crude added 15 cents, Gold rose $4.00, and the USD was lower. Support for the SPX remains at the 1386 and 1372 pivots, with resistance at the 1440 and 1499 pivots. Short term momentum hit the highest overbought condition since mid-March. Last night the FED reported the M1-multiplier declined, but the Monetary base rose.
Today the market opened higher again, pulled back, then made a higher high. It is interesting in that we can now count five waves up from monday’s SPX 1359 low: 1376-1368-1405-1397-1407. Interesting times for EW’ers. While still believe this is a B wave rally within an overall correction. The market is likely to pullback into early next week from the extremely overbought condition earlier today. We will provide our objective view on this somewhat fragmented market, using recent historical wave patterns, in our weekend update. Regardless of the eventual outcome to the medium term trends it’s still a bull market. Best to your weekend!
MEDIUM TERM: DOW downtrending, SPX still uptrending
LONG TERM: bull market