SHORT TERM: quiet opening, DOW +45
Last night FED chair Yellen gave a speech in Washington, DC: http://www.federalreserve.gov/newsevents/speech/yellen20140515a.htm. Asian markets ended 0.2% lower. European markets opened higher but lost 0.4%. US index futures were lower overnight. At 8:30 Housing starts were reported higher: 1072k v 946k, and Building permits were reported higher: 1080k v 990k. The market opened unchanged at SPX 1871, ticked up to 1872, then pulled back to 1865 by 10:30. At 10am Consumer sentiment was reported lower: 81.8 v 84.1. After a rally to SPX 1873 by 11:30, the market pulled back to 1868 by 1pm, then it started to rally. Heading into the close the SPX hit 1878 and closed there.
For the day the SPX/DOW were +0.30%, and the NDX/NAZ were +0.55%. Bonds lost 7 ticks, Crude added 55 cents, Gold slipped $3, and the USD was flat. Last night the FED reported a rise in the Monetary base: $3.928tn v $3.927tn. Today the WLEI was reported at nearly a one year high: 54.9% v 54.5%.
The market opened flat this morning, dipped down to SPX 1865 in the first hour, then turned Options expiration into a positive day. Today the market held above yesterday’s extremely oversold SPX 1862 low. Then took out yesterday’s rebound high at 1872. Thus far, the market has held the SPX 1860 and 1851 levels noted yesterday. While a test of SPX 1860 is still possible, it would certainly create a positive RSI divergence on the hourly chart. Possibly setting the market up for a more sustainable rally. An interesting sector/index relationship will be offered in the weekend update.
Short term support remains at the 1869 pivot and SPX 1860, with resistance at the 1901 and 1929 pivots. Short term momentum hit overbought after yesterday’s very extreme oversold level. The short term OEW charts turned positive today with the reversal level now at SPX 1873. Best to your weekend!
MEDIUM TERM: uptrend
LONG TERM: bull market