SHORT TERM: new uptrend high then pullback, DOW -3
Overnight the Asian markets gained 1.5%. Europe opened higher and gained 1.2%. US index futures were lower overnight, and the market opened at SPX 1385 – one point lower than friday’s close. The market then started to rally, hitting SPX 1392 around 10:30. Then with an extremely overbought condition it started to pullback. At 11:00 the FED issued the following: http://www.federalreserve.gov/newsevents/press/bcreg/20120730a.htm. At 11:30 the SPX hit 1381, rallied to 1386 by 1:30, and then stayed within those two levels into a 1385 close.
For the day the SPX/DOW were -0.05%, and the NDX/NAZ were -0.30%. Bonds gained 15 ticks, Crude slipped 60 cents, Gold lost $1, and the USD was higher. Medium term support remains at the 1372 and 1363 pivots, with resistance at the 1386 and 1440 pivots. Short term momentum declined from extremely overbought heading toward neutral. Tomorrow, the FED starts its two day FOMC meeting. At 8:30 Personal income/spending and PCE prices. At 9:00 Case-Shiller housing prices. Then Chicago PMI at 9:45 and Consumer confidence at 10:00.
Today the market opened 1 point lower, rallied 4 points above friday’s high, then pulled back 11 points before ending the day where it opened SPX 1385. Today’s pullback was not surprising considering how overbought the market was after friday’s close. In fact, a further pullback to either the 1372 or 1363 pivot would be considered quite normal after a 60+ point rally in the SPX, (1329-1392). With the FED and the ECB meeting over the next few days some volatility should be expected. While we do not expect the FED to do anything substantial, except to mention they are ready to purchase additional Bonds, if need be. The ECB, on the other side of the pond, is expected to make an important announcement.
Short term support remains at the 1372 and 1363 pivots, with resistance at the 1386 pivot and SPX 1402/03. Short term momentum is declining from extremely overbought. The short term OEW charts remain positively biased with the swing level now around the OEW 1363 level. Best to your trading!
MEDIUM TERM: new uptrend high
LONG TERM: bull market