SHORT TERM: gap up opening faded, DOW -57
Overnight the Asian markets gained 1.2%. Europe opened higher and gained 1.7%. US index futures were higher overnight as well. At 8:30 Q4 GDP wad revised higher: +1.0% v +0.7%, Personal income (+0.5% v +0.3%)/spending (+0.5% v 0.0%) were reported higher, and PCE prices were reported higher: +0.3% v 0.0%. The market gapped up at the open to SPX 1961, ticked up to 1963, and then started to pullback. At 10am Consumer sentiment was reported lower: 91.7 v 92.0, and FED governor Powell’s speech was released: http://www.federalreserve.gov/newsevents/speech/powell20160226a.htm. The market pulled back to SPX 1952 by 10:30, rallied to 1961 by 11am, pulled back to 1949, rallied to 1959, then pulled back to 1946 by 2:30. At 1:30 FED governor Brainard’s speech: http://www.federalreserve.gov/newsevents/speech/brainard20160226a.htm. Then the market bounced to close at SPX 1948.
For the day the SPX/DOW lost 0.25%, and the NDX/NAZ were mixed. Bonds dropped 21 ticks, Crude slipped 25 cents, Gold slid $9, and the USD was higher. Medium term support remains at the 1929 and 1901 pivots, with resistance at the 1956 and 1973 pivots. Today the WLEI was reported lower: 46.6% v 46.9%, and Q1 GNP was lowered: +2.1% v +2.6%.
The market gapped up at the open today, hit its highest level since the rally began SPX 1963, then pulled back for the rest of the day. We can now count four waves up from Tuesday’s SPX 1891 low: 1938-1925-1963-1946. The market remains on schedule for a potential uptrend high next week. With today’s rally and pullback we noticed the market’s upside momentum is beginning to wane. The last four rallies of this uptrend have been: 66, 56, 45 and 48 points. The recent rally came in a bit shorter at only 38 points. Plus the daily RSI is beginning to build a negative divergence. Additional details will be covered in the weekend update. Best to your weekend!
MEDIUM TERM: uptrend likely underway
LONG TERM: bear market