SHORT TERM: inflection range breakout, DOW -21
Overnight the Asian markets gained 0.3%. European markets opened lower and lost 0.1%. US index futures were lower overnight. At 8:15 the ADP was reported higher: 215K vs 118K, and at 8:30 weekly Jobless claims were reported higher: 372K vs 350K. The market opened one point below yesterday’s SPX 1462 close, and dipped down to 1458 in the first few minutes. After that the market started to work its way higher. Just past 11:00 the SPX broke out of the 1434-1462 inflection range, and we raised the bullish scenario to a 75% probability. At 2:00 the SPX hit 1465 and then began to pullback after the FOMC minutes: http://www.federalreserve.gov/newsevents/press/monetary/20130103a.htm. At 3:30 the SPX hit 1456, and then bounced into a 1459 close.
For the day the SPX/DOW were -0.20%, and the NDX/NAZ were -0.45%. Bonds lost 19 ticks, Crude slipped 45 cents, Gold dropped $20, and the USD was higher. Medium term support remains at the 1440 and 1386 pivots, with resistance at the 1499 and 1523 pivots. Tomorrow: monthly Payrolls at 8:30, then Factory orders and ISM services at 10:00. There is also a speech tomorrow, from FED vice chair Yellen at 3:30.
The market opened slightly lower, touched SPX 1458, then broke through the historical bull/bear inflection range (1434-1462). This suggests the bull market remains intact for 2013, and the waves should continue to unfold as expected. As a result we lowered the bear market scenario to a 25% probability, pending a breakout by the DOW of its similar range.
After hitting SPX 1465, right before the FOMC minutes were released, the market then pulled by for the rest of the afternoon. Thus far, the largest pullback since monday’s SPX 1398 low has been 9 SPX points. As long as this pattern continues this rally should continue. Once a 10 points range is hit, then a larger, (20+ points), pullback is possible.
Short term support remains at the 1440 pivot and SPX 1422/27, with resistance at SPX 1462/64 and 1471/75. Short term momentum declined after a negative divergence appeared near the highs. The short term OEW charts remain positive with the swing level now around SPX 1435. Best to your trading this bull market!
MEDIUM TERM: uptrend makes new high
LONG TERM: inflection range cleared, bull market resumes