SHORT TERM: gap up opening on tax reform enthusiasm, DOW +166
Overnight the Asian markets gained 0.4%. Europe opened higher but ended flat. US index futures spiked overnight when the Senate passed the 2018 Budget, increasing the opportunity for Tax reform this year. The market gapped up at the open to SPX 2570, bounced around a bit, then crept higher. The market had closed at SPX 2562 yesterday. At 10am existing home sales were reported higher. The market hit SPX 2575 around 2:30, dipped, then end the week at 2575.
For the day the SPX/DOW gained 0.60%, and the NDX/NAZ gained 0.30%. Bonds lost 15 ticks, Crude gained 45 cents, Gold dropped $8, and the USD was higher. Medium term support remains at the 2525 and 2479 pivots, with resistance at the 2575 and 2594 pivots. This week the Q3 GDP estimate was reported unchanged at +2.7%.
The market gapped up at the open today for the first time since September 11th. That gap up was in the midst of the rally to cross SPX 2500 for the first time, and reach 2509. The market opened within the OEW 2575 pivot range, which was our target for Micro 3, and then closed right at the pivot. We can now count 5 waves up from the Micro wave 2 SPX 2417 low in August: 2455-2428-2564-2548-2575. Micro 3 can now top out at any time. When it does we expect a 20-30 point pullback for Micro 4, before resuming the uptrend with Micro 5. Short term support is now at SPX 2548 and the 2525 pivot, with resistance at the 2575 and 2594 pivots. Short term momentum hit quite overbought during today’s rally. Wild October Opex! Best to your weekend.
MEDIUM TERM: uptrend
LONG TERM: uptrend