SHORT TERM: disappointing Payrolls report, DOW +68
Last night FED governor Powell gave a speech: http://www.federalreserve.gov/newsevents/speech/powell20140904a.htm. Overnight the Asian markets lost 0.2%. European markets opened lower and lost 0.1%. US index futures were quite volatile overnight. At 8:30 monthly Payrolls were reported lower: +142k v +209k, but the Unemployment rate ticked down: 6.1% v 6.2%. The market opened unchanged from yesterday at SPX 1998. It immediately pulled back to SPX 1991 in the opening minutes, then rallied back to 1998 by 10am. Another pullback took it to SPX 1990 by 10:30, and then the market started to rally. The rally carried into the afternoon with only small pullbacks, and the SPX closed at the high of the day 2008.
For the day the SPX/DOW were +0.45%, and the NDX/NAZ were +0.50%. Bonds gained 3 ticks, Crude lost $1, Gold rose $6, and the USD was lower. Medium term support remains at the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots. Last night the FED reported a decrease in the Monetary base: $4.084tn v $4.125tn. Today the WLEI was reported lower again: 51.8% v 52.3%.
After the disappointing Payrolls report the market opened flat, then dropped to SPX 1990 in the first hour of trading. The pullback from yesterday’s all time high at SPX 2011 to 1990 nearly equalled the largest of this entire uptrend, (1964-1942). As noted yesterday, we can count five waves up from SPX 1905 to 2011. Today’s low, and subsequent rally, is probably the early stages of an even larger pullback. Some suggest a 38.2% retracement to the 1973 pivot, and others a 50.0% retracement to the 1956 pivot. As long as the market holds one of these levels we can expect an extension of the current uptrend to follow. Should the market break below and hit SPX 1905, Primary III probably ended and Primary IV is underway.
Short term support is now at SPX 1990 and the 1973 pivot, with resistance at SPX 2011 and the 2019 pivot. Short term momentum was quite oversold this morning then ended the day overbought. The short term OEW charts turned positive with the reversal level now SPX 2002. Best to your weekend!
MEDIUM TERM: uptrend
LONG TERM: bull market