SHORT TERM: gap up and go, DOW +263
Overnight the Asian markets lost 0.2%. Europe opened higher and gained a huge 2.6%. US index futures were much higher overnight. At 8:30 Housing starts were reported higher: 1017k v 956k, Building permits were reported higher: 1018k v 998k, and FED chair Yellen gave a speech: http://www.federalreserve.gov/newsevents/speech/yellen20141017a.htm. The market gapped up at the open to SPX 1879 and continued to rally. The SPX had closed at 1863 yesterday. As the market continued to rally at 10am Consumer sentiment was reported at a seven year high: 86.4 v 84.6. The market continued to rally until around noon when the SPX hit 1898. Then it started to pullback. Around 2pm the SPX hit 1878 and then tried to rally. The rally carried the SPX to 1892 by 3:30, then a pullback ended the week at 1887.
For the day the SPX/DOW were +1.45%, and the NDX/NAZ were +1.15%. Bonds lost 13 ticks, Crude gained 35 cents, Gold lost $2, and the USD was higher. Medium term support rises to the 1869 and 1841 pivots, with resistance at the 1901 and 1929 pivots. Last night the FED reported a rise in the Monetary base: $4.114tn v $4.036tn. Today the WLEI was reported lower again: 51.0% v 51.6%.
The market gapped open for the fourth day this week on Options expiration Friday. Been a wild week. The gap up jumped right over the 1869 pivot range, which was resistance yesterday, and the rally carried the SPX right to the 1901 pivot range. Where it ran into some resistance. Today was actually a quieter day, wave-wise, than any day this week. This market has been making triple digit moves in the DOW, on a daily basis, for quite some time. Volatility like this often indicates an ongoing correction. While we may have ended the Major wave A downtrend at SPX 1821, volatility is likely to continue during this potential Major wave B uptrend. Will cover where we think we are in the weekend update. Best to your weekend!
MEDIUM TERM: Major A downtrend may have bottomed
LONG TERM: bull market in Primary IV