SHORT TERM: budget agreement rally fades, DOW +16
Overnight the House passed a two year bipartisan budget, Senate voting and Presidential signing next week. Asian markets lost 0.2%. Europe opened lower and lost 0.1%. US index futures were much higher overnight but faded into the open. At 8:30 the PPI was reported lower: -0.1% v -0.2%. The market opened four points above Thursday’s SPX 1776 close, hit 1781, and then began to pullback. Around 10:30 the market retested yesterday’s low at SPX 1772 and tried to rally with a short term positive divergence. At 1:30 the SPX hit 1779, pulled back to 1773 by 2:30, bounced back to 1779 by 3:30, then end the week at 1775.
For the day the SPX/DOW were mixed, and the NDX/NAZ were mixed. Bonds ended flat, Crude slid $1.00, Gold rose $11, and the USD was higher. Medium term support remains at the 1699 and 1680 pivots, with resistance at the 1779 and 1828 pivots. Last night the FED reported an increase in the Monetary base: $3.716tn v $3.689tn. Today the WLEI was reported lower: 52.8% v 52.9%.
The market opened higher today, then, simply put, traded within the OEW 1779 pivot range for the rest of the day. Today’s low, SPX 1772 could have ended the first part of a larger ABC structure from the SPX 1814 high. Thus far we can count an A: 1786-1800-1779, a B: 1796-1783-1812, and a potentially completed C: 1772-1783-1772. If so, we should see a decent rally next: possibly into the 1790’s. If not, once 1772 is broken the decline will continue on the downside.
Short term support is at SPX 1746 and SPX 1730, with resistance at the 1779 pivot and SPX 1814. Short term momentum displayed a positive divergence at today’s low and rose to neutral. The short term OEW charts are still negative with the reversal level now SPX 1786. Best to your weekend!
MEDIUM TERM: uptrend weakening
LONG TERM: bull market