SHORT TERM: gap up and go opening, DOW +223
Over the holiday the Asian markets gained 4.3%. Europe gained 2.5% over the two days. US index futures were higher yesterday, and overnight, and at 8:30 NY FED was reported lower: -16.6 v -19.4. The market gapped up to SPX 1883 at the open, moved to 1888 in the opening minutes, and then started to pullback. The market had closed at SPX 1865 on Friday. At 10am the NAHB was reported lower: 58 v 60. Around 11am the SPX hit 1875 and then resumed its rally. Heading into the close the SPX hit 1896 and closed there.
For the day the SPX/DOW gained 1.50%, and the NDX/NAZ gained 2.20%. Bonds lost 7 ticks, Crude slipped 35 cents, Gold dropped $35, and the USD was higher. Medium term support rises to the 1869 and 1841 pivots, with resistance at the 1901 and 1929 pivots. Tomorrow: the PPI, Building permits and Housing starts at 8:30, then Industrial production (est. +0.2%) at 9:15, and the FOMC minutes at 2pm. Busy day!
The gap up opening took the SPX over the 1869 pivot to start the day. Then after a pullback to within its upper range the market rallied to the lower range of the 1901 pivot and ended the day there. We can now count five waves up from last week’s SPX 1810 low: 1836-1822-1888-1875-1896. Thus far this looks like Intermediate wave a of a Major B uptrend. Tomorrow’s Industrial production report and FOMC minutes could create some volatility. With short term momentum extremely overbought would expect a pullback soon. Short term support is at the 1869 and 1841 pivots, with resistance at the 1901 and 1929 pivots. Best to your trading!
MEDIUM TERM: potential uptrend underway
LONG TERM: bear market