SHORT TERM: higher opening rally continues, DOW +35
Overnight the Asian markets lost 0.2%. Europe opened lower and lost 0.4%. US index futures were higher overnight, and at 8:30 the CPI was reported higher: +0.1% vs 0.0%. The market opened two points above yesterday’s SPX 1698 close and continued to drift higher. At 10:00 the NAHB housing index was reported lower: 58 vs 59. The rally continued into the afternoon when the SPX hit 1706. After a dip to SPX 1704 the market closed at 1705.
For the day the SPX/DOW were +0.35%, and the NDX/NAZ were +0.75%. Bonds gained 6 ticks, Crude dropped $1.50, Gold added $1, and the USD was lower. Medium term support moves up to the 1699 and 1680 pivots, with resistance at the 1762 and 1779 pivots. Tomorrow: Housing starts and Building permits at 8:30, the FOMC statement at 12:30, then a FED press conference.
The market opened higher today, and continued to rally, with only two point pullbacks along the way, and made a new rally high at SPX 1706. Not much volatility heading into the FOMC statement tomorrow. Which is often accompanied by lots of volatility. Consensus suggests a $10bln tapering announcement tomorrow, but no additional tapering for three months. We think the FED may taper $10bln at each of the next four FOMC meetings. But this is only a guesstimate. There is also a good chance the inflection point will be resolved before week’s end.
Short term support is at the 1699 and 1680 pivots, with resistance at SPX 1710 and 1717. Short term momentum is displaying a negative divergence at today’s high, but no pullback yet. The short term OEW charts remain positive with the reversal level SPX 1686. Best to your trading tomorrow!
MEDIUM TERM: inflection point continues
LONG TERM: bull market