SHORT TERM: gap up opening faded, DOW +73
Overnight the Asian markets gained 0.3%. Europe opened higher and rallied 2.0%. US index futures were relatively flat overnight until the monthly payrolls report. At 8:30 payrolls were reported lower: 151K v 255K, and the trade deficit narrowed: -$39.5B v -$44.5B. The market gapped up at the open to SPX 2182, then hit 2185 by 10am. The market had closed at SPX 2171 yesterday. At 10am factory orders were reported higher: 1.9% v -1.5%. Then the market started to pullback. The pullback lasted until 1:30 when the SPX hit 2174. Then a rally into the close end the week at SPX 2180.
For the day the SPX/DOW gained 0.40%, and the NDX/NAZ gained 0.35%. Bonds lost 7 ticks, Crude rose $1.05, Gold gained $12, and the USD was higher. Medium term support rises to the 2177 and 2131 pivots, with resistance at the 2212 and 2252 pivots. Today the Q3 GDP estimate was raised: 3.5% v 3.2%.
The market gapped up for the first time since last Friday. By 10am the market had rallied to SPX 2185, but then started to pullback. At 1:30 the SPX had nearly closed the opening gap when hitting 2174. Then it turned higher. While we have been expecting the market to enter a correction, all it has done for the past few weeks is to enter a choppy pattern with a downward bias. The 2% range has managed to work off the overbought condition created by a 200-point two month rally. In fact, the daily RSI on all the major indices put in a positive divergence yesterday. This often occurs at downtrend lows. More in the weekend update. Best to your three-day weekend!
MEDIUM TERM: pullbacks but no correction
LONG TERM: uptrend