SHORT TERM: gap up opening, DOW +187
Overnight the Asian markets gained 2.6%. Europe opened higher and gained 2.6% as well. US index futures were higher overnight, and at 8:30 Retail sales were reported lower: -0.3% v -0.1%, and the PPI was reported lower: -0.1% v 0.0%. The market gapped up at the open to SPX 2073, and continued to rally. The SPX had closed at 2062 yesterday. At 10am Business inventories were reported lower: -0.1% v 0.0%. By 11:30 the SPX hit a new uptrend high at 2080, pulled back to 2074 by 1pm, then moved even higher. At 2pm the http://www.federalreserve.gov/monetarypolicy/beigebook/beigebook201604.htm was released. Heading into the final hour of trading the SPX hit 2083 and then dipped to close at 2082.
For the day the SPX/DOW gained 1.05%, and the NDX/NAZ gained 1.45%. Bonds gained 2 ticks, Crude lost 65 cents, Gold dropped $13, and the USD was higher. Medium term support rises to the 2070 and 2043 pivots, with resistance at the 2085 and 2131 pivots. Tomorrow: weekly Jobless claims and the CPI at 8:30, then Senate testimony from FED governor Powell at 10am.
The market gapped up at the open for the second day this week, then hit a new uptrend high within the first half hour of trading. This uptrend continues to extend. From Thursday’s SPX 2034 low we can now count three waves higher: 2061-2040-2083. Since all rallies during this uptrend have been five wave structures we would expect a pullback at some point and then a higher high. Overall, the uptrend now has seven significant waves: 1947-1891-2057-2022-2075-2034-2083 so far. This suggests a corrective pattern at this point in time. However, the strength of the uptrend has certainly forced some capitulation. Short term support is at the 2070 and 2043 pivots, with resistance at the 2085 pivot and SPX 2104. Short term momentum is displaying a slight negative divergence. Trade what’s in front of you!
MEDIUM TERM: uptrend
LONG TERM: bear market