SHORT TERM: another gap up and go day, DOW +229
Overnight the Asian markets gained 0.7%. Europe opened higher and gained 1.8%. US index futures were much higher overnight, and the market gapped up to SPX 1935 at the open. The SPX had closed at 1918 on Friday. Within the first 1/2 hour the market rallied to SPX 1946, then pulled back to 1939 by 11am. After that the market moved even higher. At 1:30 the SPX hit 1947, then after a small pullback it closed at 1946.
For the day the SPX/DOW gained 1.40%, and the NDX/NAZ gained 1.55%. Bonds lost 4 ticks, Crude rallied $1.65, Gold dropped $21, and the USD was higher. Medium term support rises to the 1929 and 1901 pivots, with resistance at the 1956 and 1973 pivots. Tomorrow: Case-Shiller at 9am, Consumer confidence and Existing home sales at 10am. Then there is a speech by FED vice chair Fischer at 8pm.
The market had a gap up opening for the fourth time since this rally began at SPX 1810, a bit over a week ago. Each of the gap up openings, oddly enough, jumped over the next OEW resistance pivot: 1841, 1869, 1901 and 1929. This suggests, when the market stops gapping over the pivots the rally will likely end. We suspect this will be sometime next week. After today’s opening we labeled Friday’s SPX 1902 low Intermediate wave B. The 29 point decline from SPX 1931 was clearly the largest decline since the rally began. The others were 14 and 13 points respectively. With Int. wave C underway we would expect another five waves up to complete a 5-3-5 zigzag from the SPX 1810 low. The OEW 1956 pivot range remains the minimum target, with the 1973 pivot, SPX 1999, and maybe even the 2019 pivot as the upper targets. Best to your trading this volatile market!
MEDIUM TERM: uptrend likely underway
LONG TERM: bear market