SHORT TERM: gap up opening rally, DOW +222
Overnight the Asian markets gained 1.0%. European markets opened higher and gained 0.6%. US index futures were higher overnight, and the market gapped up to SPX 2068 at the open. The SPX had closed at 2059 yesterday. At 10am Wholesale inventories were reported higher: +0.1% v -0.5%. The market continued to rally throughout the day, with only two three point pullbacks, and hit SPX 2085 just before 2084 close.
For the day the SPX/DOW gained 1.25%, and the NDX/NAZ gained 1.30%. Bonds gained 1 tick, Crude rallied $1.25, Gold rose $4, and the USD was higher. Medium term support rises to the 2070 and 2043 pivots, with resistance at the 2085 and 2131 pivots. Tomorrow: the Treasury deficit at 2pm.
The market gapped up at the open today and rallied to SPX 2085 with not much of a pullback along the way. While we were expecting one more decline, to the 2019 pivot area before a substantial rally, the market obviously had other intentions. With today’s rally the rise from Friday’s SPX 2039 low has now stretched to 40+ points. This suggests the first decline, of the anticipated downtrend from SPX 2111, ended at that low. Short term support rises to the 2070 and 2043 pivots, with resistance at the 2085 pivot and SPX 2104. Short term momentum rose through the negative divergence and ended the day quite overbought. Trade what is in front of you!
MEDIUM TERM: downtrend probable
LONG TERM: bear market rally