SHORT TERM: morning rally fades, DOW +32
Overnight the Asian markets gained 0.5%. European markets opened higher and gained 1.0%. US index futures were mixed overnight, and at 8:30 weekly Jobless claims were reported lower: 319k v 344k. The market opened one point below yesterday’s SPX 1878 close, dipped to 1875, and then started to rally. At 9:30 FED chair Yellen gave her second day of testimony, and FED governor Tarullo’s speech was released: http://www.federalreserve.gov/newsevents/speech/tarullo20140508a.htm. The market continued to rally until noon when it hit SPX 1889. Then it began to pullback. At 2pm the FED released: http://www.federalreserve.gov/newsevents/press/bcreg/20140508a.htm. Just past 3pm the SPX hit 1870. Then bounced to SPX 1877 just before a 1876 close.
For the day the SPX/DOW were mixed, and the NDX/NAZ were -0.30%. Bonds gained 5 tick, Crude slid 50 cents, Gold was flat, and the USD was higher. Medium term support remains at the 1869 and 1841 pivots, with resistance at the 1901 and 1929 pivots. Tomorrow: Wholesale inventories at 10am.
This market continues to display a start-stop pattern ever since the early April low at SPX 1814. However, unlike the early-February to early-April choppy/corrective activity, this market still looks constructive. Since that low we have had a the following action: 1885-1851-1891-1860-1889-1870. Until SPX 1860 is revisited again we have to consider this activity as a nesting of first and second waves of a lesser and lesser degree. Today the pullback, for a change, was led by the SPX and not the NDX. The NDX actually was looking constructive for the first time in a while. But this has happened before over the past few months. The next few days should tip us off as to what to expect in the coming weeks.
Short term support remains at the 1869 and 1841 pivots, with resistance at SPX 1889/1891 and the 1901 pivot. Short term momentum declined from quite overbought this morning. The short term OEW charts are still flip-flopping, ending the day negative, with the reversal level now at SPX 1878. Best to your trading!
MEDIUM TERM: uptrend probable
LONG TERM: bull market