Wednesday update

SHORT TERM: another gap up rally, DOW +285

Last night FED governor Powell gave a speech: http://www.federalreserve.gov/newsevents/speech/powell20160628a.htm. Overnight the Asian markets gained 1.3%. Europe opened higher and gained 2.7%. US index futures were higher overnight. At 8:30 Personal income (+0.2% v +0.4%)/spending (+0.4% v +1.0%)were reported higher, and the PCE was reported higher: +0.2% v +0.2%. The market gapped up at the open to SPX 2055 and continued to rally. The SPX had closed at 2036 yesterday. At 10am Pending home sales were reported lower: -3.7% v +5.1%. By 12:30 the SPX had hit 2068. After a pullback to SPX 2063 just past 1pm the market moved even higher. Heading into the last hour of trading the SPX hit 2073, dipped to 2068, then closed at 2071.

For the day the SPX/DOW gained 1.65%, and the NDX/NAZ gained 1.80%. Bonds lost 15 ticks, Crude rose $1.45, Gold gained $5, and the USD was lower. Medium term support rises to the 2070 and 2043 pivots, with resistance at the 2085 and 2131 pivots. Tomorrow: weekly Jobless claims at 8:30, then the Chicago PMI at 9:45. Today the Q2 GDP est. was raised: +2.7% v +2.6%.

The market gapped up at the open today for the second day in a row, after two successive gap down openings. With the SPX opening at 2055 it jumped right over the 2043 pivot, suggesting the rally would continue to the 2070 pivot. Which it did! What we have now is a two day 121 point decline (2113-1992), followed by a two day 61.8%+ retracement (1992-2073). With short term momentum hitting extremely overbought further upside should be limited to the 2070 pivot range, if not the 2085 pivot range. Then the market should pullback at least to the 2019 pivot, if not lower. Volatility continues. Best to your trading!

MEDIUM TERM: downtrend

LONG TERM: neutral

CHARTS: https://stockcharts.com/public/1269446/tenpp

Filed under: Updates