SHORT TERM: rally continues, DOW +235
Overnight the Asian markets gained 1.0%. Europe opened lower but gained 1.2%. US index futures were lower, then higher overnight. At 8:30 weekly Jobless claims were reported higher: 269K v 257K, then at 9:45 the Chicago PMI was reported higher: 56.8 v 49.3. The market opened six points above yesterday’s SPX 2071 close. Then it retested SPX 2071 by 10am. After that it started to rally. The rally continued right into a SPX 2099 close, with only 5 point pullbacks along the way.
For the day the SPX/DOW gained 1.35%, and the NDX/NAZ gained 1.25%. Bonds lost 3 ticks, Crude dropped $1.50, Gold added $6, and the USD was higher. Medium term support rises to the 2085 and 2070 pivots, with resistance at the 2131 pivot. Tomorrow: ISM manufacturing, Construction spending and Auto sales at 10am.
The market opened higher again today for the third day in a row. From Monday’s double bottom SPX 1992 low, the SPX has now rallied over 100 points in three days. Quite an impressive rally, when considering the largest pullback since that low has been only 11 points. While we were expecting this advance to stop at the 2070 pivot, or possibly the 2085 pivot, the fact that it has exceeded both suggests something else may be underway. With the market currently less than 1% away from fully retracing the entire Brexit meltdown, and 2% from all time highs, we’ll wait until new highs are made before we drop the most bearish scenario. This market has had four uptrends since the May 2015 SPX 2135 high, and all have ended between SPX 2111 and 2133. This just may be another one. Short term support is at the 2085 and 2070 pivot, with resistance at SPX 2113 and SPX 2121. Short term momentum is about as overbought as it ever gets. Best to your trading!
MEDIUM TERM: uptrend may be underway
LONG TERM: neutral