SHORT TERM: gap down opening but market recovers, DOW +107
Overnight the Asian markets lost 0.6%. Europe opened lower but gained 0.2%. US index futures were lower overnight, and the market gapped down to SPX 1393 at the open. The SPX had closed at 1399 yesterday. The market continued to decline until around 10:00 when the SPX hit 1385. Then it started to rally. Also at 10:00 New home sales were reported lower: 368K vs 389K. The market continued to rally until 11:30 when the SPX hit 1401. Then after a pullback to SPX 1395, the market moved higher again. At 12:15 FED governor Tarullo’s speech was released: http://www.federalreserve.gov/newsevents/speech/tarullo20121128a.htm. Then at 2:00 the FED’s Beige book was released: http://www.federalreserve.gov/monetarypolicy/beigebook/beigebook201211.htm. The market consolidated a bit after the Beige book, and rallied to a new high at SPX 1410 and closed there.
For the day the SPX/DOW were +0.80%, and the NDX/NAZ were +0.85%. Bonds gained 6 ticks, Crude slid 45 cents, Gold dropped $21, and the USD was lower. Medium term support remains at the OEW 1386 and 1372 pivots, with resistance at the 1440 and 1499 pivots. Tomorrow: Q3 GDP (est. +2.8%) and weekly Jobless claims at 8:30, then Pending home sales at 10:00. Also at 10:00 Congressional testimony from FED director Gibson.
Interesting day. After the friday/tuesday triple top at SPX 1409, with a negative divergence, the market looked poised to head lower. And, it did. It gapped down at the open, jumping below short term support, and reached the OEW 1386 pivot range. Then from a quite oversold short term condition, the market literally spiked higher to close the opening gap, and rallied to a new high SPX 1410 high. This recent decline (1409-1385) is the biggest pullback since the rally began at SPX 1343. Yet, it was not enough to convince us that Minor wave 1 had indeed ended. As a result we have downgraded the recent SPX 1409 high to a green tentative Minute wave i, and today’s low to Minute wave ii … of Minor wave 1.
Short term support jumps back up to SPX 1402/03 and 1396/98, with resistance again at 1413/16 and 1422/27. Short term momentum hit quite oversold this AM, then ended the day at overbought. The short term OEW charts turned negative early, then positive again when the SPX crossed 1394 – the current swing level. Best to your trading!
MEDIUM TERM: uptrend probably underway
LONG TERM: bull market