Wednesday update

SHORT TERM: another gap up opening, DOW +619

Overnight the Asian markets gained 0.2%. Europe opened lower and lost 1.5%. US index futures were higher overnight, and at 8:30 Durable goods were reported higher: +2.0% v +3.4%. The market gapped up at the open to SPX 1905. The market had closed at SPX 1868 yesterday. In the opening minutes the market rallied to SPX 1915. It then pullback to SPX 1889 just past 10am, bounced to 1908 at 10:30, then dropped to 1880 by 12:30. After that the market started to rally again. By 2pm the SPX was back to 1908, dropped to 1897 by 2:30, then rallied to 1943 just before a 1941 close.

For the day the SPX/DOW were +3.90%, and the NDX/NAZ were +4.65%. Bonds lost 9 ticks, Crude slipped 35 cents, Gold dropped $15, and the USD was higher. Medium term support jumps to the 1929 and 1901 pivots, with resistance at the 1956 and 1973 pivots. Tomorrow: Q2 GDP (est. +3.1%) and weekly Jobless claims at 8:30, then Pending home sales at 10am.

The market gapped up at the open today for the second day in a row. This time, however, the market did not selloff into the close, losing 3% in the last hour of trading. It rallied into the close gaining 1+%. Market is still quite volatile as today’s range was 3%. We noticed several things this morning before the open and posted a tentative green Primary IV at yesterday’s SPX 1867 low. First a short term positive divergence and a double bottom (many of them lately) at SPX 1867. An extremely oversold daily RSI, and the most oversold weekly/monthly RSI since Primary II. The SPX had corrected 12.6%, the DOW 16.2%, and the NAZ 18.0% – the largest corrections since P2 as well. Plus the low occurred within the 1828, 1841, 1869 pivot range, and it occurred this week. Both expected. The potential for a downtrend low is there. Let’s see what the market can do with it. Short term support is at 1901 and 1929 pivots, with resistance at the 1956 and 1973 pivots. Short term momentum touched overbought after yesterday’s positive divergence. Best to your GDP trading!

MEDIUM TERM: downtrend may have bottomed

LONG TERM: bull market

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

Filed under: Updates