SHORT TERM: gap up opening stirs hope, DOW +110
Overnight the Asian markets lost 1.2%. European markets opened lower but gained 0.3%. US index futures were higher overnight. At 8:30 Q4 GDP was reported positive: +3.2% v +4.1%, and weekly jobless claims were reported higher: 348k v 326k. The market gapped up at the open to SPX 1786, then hit 1791 in the opening minutes. The SPX had closed at 1774 yesterday. At 10am Pending home sales were reported lower: -8.7% v +0.2%. Then after a pullback to SPX 1784 by 10:30 the market rallied to 1799 by 1:00. Another pullback followed to SPX 1792 just past 2pm, a rally to 1798 by 3:30, then a pullback to 1794 to end the day.
For the day the SPX/DOW were +0.90%, and the NDX/NAZ were +1.80%. Bonds lost 6 ticks, Crude added 60 cents, Gold dropped $26, and the USD was higher. Medium term support notches back up to the 1779 and 1699 pivots, with resistance back to the 1828 and 1841 pivots. Tomorrow: Personal income/spending and PCE prices at 8:30, then the Chicago PMI and Consumer sentiment before 10am.
A gap up opening started the day after yesterday’s selloff, which ended in a small diagonal triangle fifth wave. The gap up took the SPX over 1779 pivot and then it acted as support for the rest of the day. The rally, thus far, from SPX 1771-1799 is the best one since the 1851 all time high. Today’s market reaction looks quite normal after a terminating fifth wave diagonal. This morning we labeled yesterday’s low with a tentative ‘green’ a. It is too early to tell if this is a Minor a of an Intermediate wave ii correction, or an Intermediate a of a Major wave a correction. Parameters for both will be discussed in the weekend update. For now it would be normal for the market to do a small abc up, of which, wave a is underway.
Short term support is at the 1779 pivot and SPX 1768, with resistance at SPX 1800 and SPX 1814. Short term momentum did get overbought today, before dipping late. The short term OEW charts vacillated today, ending negative, with the reversal level SPX 1795. Quite a week. Best to your trading!
MEDIUM TERM: downtrend
LONG TERM: bull market