SHORT TERM: market gaps up and keeps going, DOW +208
Overnight the Asian markets gained 0.6%. Europe opened lower, but gained 1.3%. US index futures were higher overnight, and the market gapped up at the open to SPX 1370. The SPX had closed at 1360 on friday. The rally continued to SPX 1382 by 10:00. Then the NAHB was reported at a six year high: 46 vs 41, and Existing home sales were reported higher: 4.79 mln, vs 4.75 mln. The market quickly pulled back to SPX 1378, then resumed its rally. At 12:30 the SPX hit 1383, pulled back to 1380 by 1:30, then turned higher again. Notice all these pullbacks are smaller than five points. Heading into the close the SPX hit 1387 and closed there. Guess traders reached the fiscal cliff and found a hand glider.
For the day the SPX/DOW were +1.80%, and the NDX/NAZ were +2.30%. Bonds lost 10 ticks, Crude gained $2.25, Gold rallied $19, and the USD was lower. Medium term support jumps to the 1386 and 1372 pivots, with resistance at the 1440 and 1499 pivots. Tomorrow: Housing starts and Building permits at 8:30, then a speech from FED chairman Bernanke around 12:15.
The market gapped up today, over the OEW 1363 pivot, rallied past the OEW 1372 pivot, and then ran into resistance at the OEW 1386 pivot. Then it cleared the 1386 pivot at the close. The gap up today was the first one that was not immediately sold off since October 16th – during the Minor B wave rally to SPX 1464. Counting from the uptrend price high, SPX 1475, the two biggest rallies have been 40 points and 38 points: 1431-1471 (when the DOW topped) and 1426-1464 Minor wave B. At today’s high, SPX 1387, the market has now rallied 44 points from friday’s 1343 low. This is the best rally since the uptrend high.
Short term support jumps to the 1386 and 1372 pivots, with resistance at SPX 1396/98 and 1402/03. Short term momentum hit extremely overbought today, after friday’s positive divergence. The short term OEW charts turned positive in the first half hour of trading, with the swing level now around SPX 1377. The next important objective, as noted in the weekend update, is for the SPX to clear 1400. Best to your trading!
MEDIUM TERM: downtrend may have bottomed
LONG TERM: bull market