SHORT TERM: gap up opening, DOW +195
Overnight the Asian markets gained 2.8%. Europe opened higher and gained 1.9%. US index futures were sharply higher overnight. At 8:30 the PCE was reported higher: +0.1% v +0.1%, Personal income was reported higher: +0.2% v +0.3%, but spending was lower: -0.2% v +0.5%. The market gapped up at the open to SPX 2011. It had closed at SPX 1995 yesterday. Within the opening minutes it rose to SPX 2014, then dipped to 2009 just past 10am, before moving higher. At 9:45 the Chicago PMI was reported higher: 66.2 v 60.5. Then at 10am Consumer sentiment was also reported higher: 86.9 v 86.4. By 11:30 the SPX hit 2017. After a pull back to SPX 2011 by 3:30, it then rallied to 2018 to end the day.
For the day the SPX/DOW were +1.15%, and the NDX/NAZ were +1.40%. Bonds lost 8 ticks, Crude dropped 40 cents, Gold fell $25, and the USD was higher. Medium term support remains at the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots. Last night the FED reported a decline in the Monetary base: $3.976tn v $4.114tn. Today the WLEI was reported lower again: 48.8% v 49.9%.
Markets rallied overnight on a surprise increase in the monetary expansion by the Bank of Japan. The US market gapped up to SPX 2011, bounced around a bit, and then moved higher. The current uptrend has now gone 12 days of higher lows and equal/higher highs. Quite surprising considering we thought the probabilities suggested this to be a Major B wave rally of an ongoing Primary IV. We were obviously wrong as Primary III appears to be extending yet again. We spent most of the day attempting to unravel how the recent market action fits within the context of the overall bull market. We will report our findings in the weekend update.
Despite what appeared to be a highly probable setup for Primary IV. For the second year in a row it has eluded us again. We thought Primary III had topped around this time last year as well. The market extended higher then, and extended higher again this time as well. By the tone of some of the recent comments on the blog, there appears to be a misunderstanding on how to use the information we provide. We will be posting some general guidelines to hopefully prevent these misunderstandings from occurring in the future. For now, we can just say that we only trade, not day trade, what we post, and lost money during this unexpected rally beyond the OEW 1973 pivot. Also, keep in mind we are dealing with probabilities, not guarantees. The information we provide is not to be considered trading recommendations. We are just tracking the markets as they unfold. More on this over the weekend. Best to your weekend!
MEDIUM TERM: uptrend continues
LONG TERM: bull market