SHORT TERM: gap up opening, DOW +118
Last night FED governor Stein’s speech was released: http://www.federalreserve.gov/newsevents/speech/stein20140506a.htm. Asian markets lost 1.6% overnight. Europe opened lower but gained 0.3%. US index futures were higher overnight and the market gapped up to SPX 1874 at the open. The market had closed at SPX 1868 yesterday. In the first few minutes the market hit SPX 1876, and then began to pullback. The pullback continued, led by the NDX/NAZ, even after FED chair Yellen’s testimony: http://www.federalreserve.gov/newsevents/testimony/yellen20140507a.htm. Around 10:30 the SPX hit 1860, was quite oversold, and began to rally as the chairwoman spoke. At noon the SPX was back to the highs for the day at SPX 1876. Yet it pulled back again. At 2pm the SPX hit 1868 and began to rally. At 3pm Consumer credit was reported higher: $17.5bn v $16.5bn. Heading into the close the SPX hit 1879, then dipped to close at 1878.
For the day the SPX/DOW were +0.65%, and the NDX/NAZ were -0.30%. Bonds gained 7 ticks, Crude rallied $1.20, Gold dropped $17, and the USD was higher. Medium term support notches back up to the 1869 and 1841 pivots, with resistance at the 1901 and 1929 pivots. Tomorrow: weekly Jobless claims at 8:30, FED chair Yellen testifies before the Senate at 9:30, and FED governor Tarullo gives a speech at 9:30.
Odd week. Monday gap down then rally. Tuesday gap down then decline. Wednesday gap up then decline. Will Thursday be a gap up then rally? Today’s gap up was sold and completely retraced just past 10am. The decline dropped a bit more than expected, as the SPX fell two points under the OEW 1869 pivot range. But it spent only a minute or two under it, and quickly snapped right back. The decline from SPX 1891 certainly looks like a zigzag: 1867-1886-1860. With waves ‘a’ and ‘c’ within two points of being equal. Once this market clears SPX 1891 it should make a serious move to the upside. But it is going to require the assistance of the NDX/NAZ.
Short term support is at the 1869 and 1841 pivots, with resistance at the 1901 and 1929 pivots. Short term momentum hit quite oversold this morning, then turned higher. The short term OEW charts turned positive near the close, with the reversal level now SPX 1876. Best to your trading!
MEDIUM TERM: uptrend probable
LONG TERM: bull market