SHORT TERM: gap up opening, DOW +288
Overnight the Asian markets lost 0.1%. European markets opened lower but gained 0.2%. US index futures were higher overnight, and at 8:30 the CPI was reported lower: -0.3% v 0.0%. The market gapped up at the open to SPX 1978 and rallied to 1988 by 10am. Then after a pullback to SPX 1979 by 10:30, the market rallied to SPX 2000 by noon. Another pullback followed to SPX 1990 by 12:30. Then the market drifted higher ahead of the FOMC statement at 2pm: http://www.federalreserve.gov/newsevents/press/monetary/20141217b.htm. After that the market rallied to SPX 2012, then started to pullback again. While FED chair Yellen was giving her press conference the market pulled back to SPX 1992 by 3pm. Then it began to rally again. At 3:30 the SPX hit its high for the day at 2017, then dipped to close at 2013.
For the day the SPX/DOW were +1.85%, and the NDX/NAZ were +2.00%. Bonds lost 21 ticks, Crude added 10 cents, Gold dropped $7, and the USD was higher. Medium term support remains at the 1963 and 1956 pivots, with resistance at the 2019 and 2070 pivots. Tomorrow: weekly Jobless claims at 8:30, then the Philly FED and Leading indicators at 10am.
The market started off with another gap opening for the eight day in a row. The market gapped up to SPX 1978, rallied to 1988, then pulled back to 1979. It has closed at SPX 1973 yesterday. After that, by around 11:30, the market started making a higher high. This is something the market had not done during the entire downtrend: three waves up from a low. Every rally from a low had been straight up with no subdivisions. The rally then carried the market to SPX 2000. This was followed by a pullback to SPX 1990, holding above the 1988 high, then another rally, post-FOMC took the market to 2012. We now have not only three waves up from SPX 1973, but five waves. An interesting change of characteristics during this downtrend.
As we noted yesterday after the close. All the technicals we follow had met the minimum levels for a potential downtrend bottom. So if one was expecting just a 5% correction in a subdividing Intermediate wave v, that low may have been it. With this in mind, and after today’s impulsive looking activity, we are updating the hourly chart to display both counts: Major 3/Int. v or Minor 1/Int. v at the SPX 2079 high, and Int. A/Major 4 or Minor 2/Int. v at the recent SPX 1973 low. It may take a few days of market activity to confirm which is the most likely count. Right now, after the five waves up we will have to favor the subdivision of Int. v. Short term support is at the 1973 and 1956 pivots, with resistance at the 2019 pivot and SPX 2056. Short term momentum got overbought today, for the first time during this downtrend. Best to your trading!
MEDIUM TERM: downtrend, but interesting juncture
LONG TERM: bull market