SHORT TERM: gap up and go kind of day, DOW +129
Stock index futures took a sharp drop overnight but then gradually recovered. Asian markets lost 0.8%. European markets opened lower, but reversed and gained 1.4%. At 8:30 the NY FED was reported higher: +1.0% v -2.2%. At 9:15 Industrial production was reported higher: +1.1% v -0.1%. The market gapped up at the open to SPX 1783 and continued to rally. The SPX had closed at 1775 on Friday. By 10am the SPX had hit 1792 and began to pullback. At 1:30 the SPX had pulled back to 1784, and then tried to rally. At 2:15 FED chairman Bernanke’s opening and closing remarks were published: http://www.federalreserve.gov/newsevents/speech/bernanke20131216a.htm, and http://www.federalreserve.gov/newsevents/speech/bernanke20131216b.htm. At 2pm the SPX hit 1790 then pulled back into a 1787 close.
For the day the SPX/DOW were +0.75% and the NDX/NAZ were +0.65%. Bonds lost 1 tick, Crude gained 65 cents, Gold added $3, and the USD was lower. Medium term support jumps back up to the 1779 and 1699 pivots, with resistance at the 1828 and 1841 pivots. Tomorrow: the FED starts its two day FOMC meeting. Also the CPI and Current account deficit will be reported at 8:30, then the NAHB at 10am.
The market gapped up at the open today after last week’s first significant weekly decline in months. With the SPX rallying past 1783 in the opening minutes it appears Intermediate wave a ended early Friday at SPX 1772. The current advance should be Int. wave b. Today’s initial surge carried the SPX to 1792, then it pulled back to 1784. These two movements could have been Minor waves a and b, with Minor c underway now. We noted in the weekend update a potential rally could unfold into the mid-1790’s for Int. b. As long as the market remains below SPX 1800 this appears to be the ongoing count.
Short term support moves up to the 1779 pivot and SPX 1746, with resistance at SPX 1814 and the 1828 pivot. Short term momentum hit quite overbought today, after Friday’s positive divergence. The short term OEW charts turned positive shortly after the open with the reversal level now SPX 1786. Best to your trading!
MEDIUM TERM: uptrend trying to re-establish
LONG TERM: bull market