SHORT TERM: fiscal cliff drama continues, DOW +166
Overnight the Asian markets were mixed. Europe opened lower and closed -0.7%. US index futures were sharply lower after hours on friday, then rallied sunday night. At the open the SPX hit exactly 1398, set up a positive divergence, and began to rally. The market had closed at SPX 1402 on friday. By 10:30 the SPX had hit 1409, pulled back to 1404 just before 11:00, then rallied to 1416 just before 1:00. A pullback followed to SPX 1409 just after 1:00. Then the market rallied to 1418 just past 1:30, only to pullback to 1409 again just before 2:00. Then the market rallied again. At 3:00 the SPX hit 1425, pulled back to 1417 by 3:30, then rallied again to close at 1426. Nice rally.
For the day the SPX/DOW were +1.50%, and the NDX/NAZ were +2.05%. Bonds lost 18 ticks, Crude rallied 95 cents, Gold rose $15, and the USD was higher. Medium term support remains at the 1386 and 1372 pivots, with resistance at the 1440 and 1499 pivots. Tuesday the markets are closed for New Years Day.
The market opened lower today, found support right at SPX 1398, setup a positive divergence, then rallied for the rest of the day. While the market did bounce around quite a bit today we can still see five waves up to SPX 1418, a decline to 1409, then a rally/pullback to 1425/17. The SPX ended the day just off a rally to 1427.
This 29 point rally is the best one since the decline began at SPX 1448. This suggests either the bullish Minor wave 2 ended at SPX 1398, or the first wave of the next downtrend. If the rally continues, the next attempt at the SPX 1434-1462 inflection range should be the key to 2013.
Short term support jumps to SPX 1422/27 and the 1413/16, with resistance at the 1440 pivot and SPX 1463/64. Short term momentum rallied from a positive divergence to quite overbought. The short term OEW turned positive today with the swing level now around SPX 1419. Have a happy/safe new year, and all the best in the coming year!
MEDIUM TERM: uptrend in jeopardy
LONG TERM: bull/bear inflection point continues