SHORT TERM: market rebounds, DOW +109
Overnight the Asian markets lost 1.3%. European markets opened lower but finished flat. US index futures were lower overnight. At 8:30 weekly Jobless claims were reported higher (320k v 315k), and at 9:30 the market opened two points below yesterday’s SPX 1861 close. After a nudge up to SPX 1860, the market pulled back to 1855 just before 10am. At 10am the Philly FED was reported higher (+9.0 v -6.3), Leading indicators were reported higher (0.5% v 0.3%), and Existing home sales were reported lower (4.60m v 4.62m). The market then rallied to SPX 1868 by 10:30, pulled back to 1863 by 11:30, then moved even higher. At 2pm the SPX hit 1873. A pullback to SPX 1868 followed by 3:30, then a bounce to 1872 ended the day.
For the day the SPX/DOW were +0.60%, and the NDX/NAZ were +0.30%. Bonds lost 3 ticks, Crude slipped 45 cents, Gold dipped $2, and the USD was higher. Medium term support rises back to the 1869 and 1841 pivots, with resistance at the 1901 and 1962 pivots. Tomorrow is Options expiration, and FED governor Stein gives a speech in the evening.
The market opened lower today, pulled back to SPX 1855, then nearly made it back to where it was just before the FOMC statement at 2pm yesterday: SPX 1874. While the post-FOMC pullback yesterday was blamed on the mention of raising rates in 2015. Long term rates have more than doubled since mid-2012: 10YR 1.39% to 3.36% recently. Also, historically the FED does not lead in raising/lowering rates – they follow the one year rate. Currently it is at 0.17%, and it has been in a 0.08% to 0.22% trading range for three years. There will be no signs of any short term rate increases until the one year gets well over 0.50%. We are still holding to the above SPX 1884 Minor 3 underway, below SPX 1840 uptrend may have ended at SPX 1884 scenario.
Short term support is at the 1869 and 1841 pivots, with resistance at SPX 1884 and the 1901 pivot. Short term momentum rose from quite oversold yesterday to nearly overbought today. The short term OEW charts turned positive again with the reversal level now SPX 1866. Best to your trading on Opex day.
MEDIUM TERM: uptrend
LONG TERM: bull market