SHORT TERM: gap up opening, DOW +196
Overnight the Asian markets lost 0.3%. Europe opened higher and gained 0.3%. US index futures were higher overnight. At 8:30 Personal income was report higher: +0.3% v +0.4%, Personal spending was reported lower: -0.3% v+0.6%, and the PCE was reported unchanged: 0.0% v 0.0%. Just before the open the FED released this: http://www.federalreserve.gov/newsevents/press/monetary/20150202a.htm. The market gapped up at the open to SPX 2003. The market had closed at SPX 1995 on Friday. It then quickly sold off to SPX 1981 by 10am. At 10am ISM manufacturing was reported lower: 53.5 v 55.5, and Construction spending was reported higher: +0.4% v -0.3%. The market then rallied to SPX 2010 just before 11am. After that, on this volatile day, the SPX dropped to 1993 by 1pm, rallied to 2003 by 1:30, then dropped to 1991 by 2pm. Then the market took off to the upside, hitting SPX 2022 just before a 2021 close.
For the day the SPX/DOW were +1.25%, and the NDX/NAZ were +1.10%. Bonds ended flat, Crude rose $1.55, Gold dropped $10, and the USD was lower. Medium term support rises to the 2019 and 1973 pivots, with resistance at the 2070 and 2085 pivots. Tomorrow: Factory orders and Auto sales by 10am.
The market gapped up at the open, then was immediately sold off to the low for the day at SPX 1981. After that the market rallied to SPX 2010, pulled back to 1991, then rallied to 2022. Another a-b-c or a 1-2-3? Since we have not seen five waves up from the low yet, and the market did not quite reach the oversold level expected, we think there is another a-b-c down left in this correction. The fact that we are seeing a-b-c rallies, instead of one wave rallies, may suggest we are getting closer to ending this downtrend. Short term support is at the 2019 and 1973 pivots, with resistance at SPX 2042/43 and the 2070 pivot. Short term momentum displayed a positive divergence at this morning’s low and rallied about 40 points to barely overbought. Best to your trading!
MEDIUM TERM: downtrend
LONG TERM: bull market