SHORT TERM: gap up and go rally, DOW +215
Overnight Asian markets lost 0.4%. Europe opened lower but rallied 2.0%. US index futures were higher overnight, and the market gapped up at the open to SPX 1916. The SPX had closed at 1904 yesterday. At 10am, as the rally continued, Existing home sales were reported higher: 5.17mn v 5.05mn. Also around this time NY FED Dudley’s speech was released from the closed door meeting yesterday: http://www.ny.frb.org/newsevents/speeches/2014/dud141020a.html. The rally continued, with just small pullbacks, until the SPX hit 1934 at 12:30. Then after a five point pullback the market headed higher again. At 3:30 the SPX hit 1942, then dipped to close at 1941.
For the day the SPX/DOW were +1.60%, and the NDX/NAZ were +2.50%. Bonds lost 9 ticks, Crude added 55 cents, Gold rose $2, and the USD was higher too. Medium term support now rises to the 1929 and 1901 pivots, with resistance at the 1956 and 1973 pivots. Tomorrow: the CPI at 8:30, then at 3:30 a FED open board meeting on Dodd-Frank.
The market gapped up at the open, following AAPL’s earnings beat, various rumors involving the ECB/FED, and the rally in Europe. The rally continued from the open throughout most of the day, except for a 5 point pullback around lunch time. Since yesterday’s SPX 1882 low the market has rallied 60 points. Quite impressive! What is also interesting is that the market took five trading days to drop from SPX 1970 to 1820. And now, has retraced from SPX 1820-1940 in just four days. Volatility continues. We are still counting the entire rally as Int. wave A of a Major wave B uptrend. The Int. A price targets we provided in the weekend update were either the 1929 pivot or the 1956 pivot. After that we expect a very sharp pullback for Int. wave B, followed by another sharp rally to end Major wave B. Short term support now rises to the 1929 and 1901 pivots, with resistance at the 1956 and 1973 pivot. Short term momentum is extremely overbought, with a very slight negative divergence. Best to your trading this wild market!
MEDIUM TERM: Major A downtrend probably bottomed
LONG TERM: bull market