SHORT TERM: volatile two days, DOW +186
Overnight the Asian markets lost 1.4%. Europe opened much lower but recovered to lose 0.4%. US index futures were sharply lower overnight (SPX 1895 equivalent) but turned positive heading into the open. The market opened three points above yesterday’s SPX 1910 close, ticked up to 1915, pulled back to 1909, then hit 1915 again by 10am. At 10am Wholesale inventories were reported higher: +0.3% v +0.5%. Then after a pullback to SPX 1909 again by 10:30, the market took off to the upside. With only three point pullbacks along the way the SPX hit 1932 near the close and ended there.
For the day the SPX/DOW were +1.15%, and the NDX/NAZ were +0.85%. Bonds lost 2 ticks, Crude added 25 cents, Gold was flat, and the USD was lower. Medium term support rises to the 1929 and 1901 pivots, with resistance at the 1956 and 1973 pivots. Last night the FED reported a record high in the Monetary base: $4.121tn v $4.041tn. Today the WLEI was reported lower: 53.8% v 54.2%.
After a sharp selloff overnight the market opened higher, bounced around a bit after the open, then continued higher for its best single wave rally since the downtrend began: 1905-1932. Also, there are now daily positive divergences on all four major indices. It is possible the overnight washout was what was needed to establish a low, just like the overnight washout in April. For the past few days the OEW 1929 pivot has been the overhead resistance for this market. Once it is cleared probabilities suggest SPX 1905 was the low for the downtrend.
Short term support is at the 1929 and 1901 pivots with resistance at SPX 1943 and the 1956 pivot. Short term momentum hit slightly overbought after yesterday’s positive divergence. The short term OEW charts turned positive at SPX 1917, with the reversal level now 1921. Best to your weekend!
MEDIUM TERM: downtrend may have bottomed
LONG TERM: bull market