SHORT TERM: markets gaps up and rallies, DOW +72
Overnight the Asian markets were +0.4%. European markets opened higher and gained 0.4% as well. US index futures were higher overnight, but at 8:30 the final Q2 GDP was reported lower: +1.3% vs +1.7%. Also at 8:30 volatile Durable goods orders declined: -13.2% vs +4.2%, but weekly Jobless claims were lower: 359K vs 382K. The market gapped up at the open to SPX 1438, bounced to the 1440 pivot in the first few minutes, then pulled back to 1436 by 10:00. The SPX had closed at 1433 yesterday. At 10:00 Pending home sales were reported lower: -2.6% vs +2.4%. Then the market resumed its rally. Heading into the last hour of trading the SPX hit 1450, then pulled back to close at SPX 1447.
For the day the SPX/DOW were +0.75%, and the NDX/NAZ were +1.40%. Bonds lost 5 ticks, Crude gained $2.10, Gold rallied $25, and the USD was lower. Medium term support for the SPX jumps back to the 1440 and 1386 pivots, with resistance at the 1499 and 1523 pivots. Last night the FED reported New home prices at their highest level in four years: $295.3K vs $270.6K. Tomorrow: Personal income/spending and PCE prices at 8:30. Then the Chicago PMI and Consumer sentiment near 10:00.
The market gapped up at the open today off European news. Then it rallied to SPX 1450. This represents a 19 point gain from yesterday morning’s SPX 1431 low. It is also the best rally since the recent Intermediate wave iii at SPX 1475 high. While this was an impressive one day rally, we’re not convinced the low for Intermediate wave iv ended at SPX 1431.
In fact, the market activity since the FED’s QE 3 announcement continues to look very similar to the market activity after the FED’s QE 2 announcement. Then, the initial low was retested again before that Intermediate wave iv completed. Yes, the FED announced QE 2 just before the Int. wave iii high in Major wave 3 of Primary I. What followed, then, was an Int. wave iv flat. This timing is quite odd from an OEW perspective.
Short term support notches back up to the OEW 1440 pivot and SPX 1422/27, with resistance at SPX 1463/64 and the 1499 pivot. Short term momentum hit overbought today, from yesterday’s extremely oversold condition. The short term OEW charts remain negatively biased with the swing point now at SPX 1449. Best to your trading!
MEDIUM TERM: uptrend
LONG TERM: bull market