SHORT TERM: quiet open then big rally, DOW +175
Overnight the Asian markets gained 0.6%. Europe opened lower but finished mixed. US index futures were lower, then higher overnight. At 8:30 the NY FED was reported lower: -9.0 v +9.6. The market opened two points above Friday’s SPX 2047 close and continued to rally. At 10am the NAHB was reported unchanged at 58. The rally continued throughout the day, with only one 3 point pullback, until the SPX hit 2072 just past 3pm. Then the market dipped to close at SPX 2067.
For the day the SPX/DOW gained 1.00%, and the NDX/NAZ gained 1.25%. Bonds lost 14 ticks, Crude rose $1.65, Gold added $1, and the USD was lower. Medium term support remains at the 2043 and 2019 pivots, with resistance at the 2070 and 2085 pivots. Tomorrow: the CPI, Housing starts and Building permits at 8:30, then, Industrial production (est. +0.25%) at 9:15.
With no gap down opening this morning, to clear the positive divergence, the market rallied. While we estimated 15+ points off Friday’s SPX 2043 low, the market did a lot more than that. With Friday’s low of SPX 2043 falling short of the previous low at 2039, and the rally above 2071 today, it is possible that wave ii/b is not over yet. And the market could rally back into the 2085 pivot range yet again. Short term support is at the 2043 and 2019 pivots, with resistance at the 2070 and 2085 pivots. Short term momentum hit quite overbought today after Friday’s positive divergence, then dipped lower. Trade what’s in front of you!
MEDIUM TERM: downtrend probable
LONG TERM: bear market