September 23
wednesday update
SHORT TERM: FED to continue to monetize debt, DOW -81
Overnight the Asian markets were mostly lower. Europe opened higher but closed -0.10%. US index futures were flat overnight, and at the open stocks opened at yesterday's close SPX 1072, traded up to 1074, and then pulled back to 1067 by 11:00. The market stayed in this opening range, while drifting higher, until the FED released its FOMC statement at 2:15:
http://www.federalreserve.gov/newsev.../20090923a.htm. The initial market response, to the generally expected news, was a drop in the USD and a rise in stocks, gold and bonds. At 2:30 the SPX hit a new uptrend high at 1080. That was the high for the day as the post FOMC volatility got into full swing heading into the close. For the next hour and a half the SPX traded straight down to 1060, and closed right at the OEW 1061 pivot. For the day the SPX/DOW were -0.90%, and the NDX/NAZ were -0.65%. Bonds were up 14 ticks, Crude dropped $3.35, Gold slipped $6.00, and the Euro was lower. Support for the SPX remains at 1061 and then 1041, with resistance at 1090 and then 1107. Short term momentum rallied from neutral to slightly overbought at the highs, and then finished the day oversold. Tomorrow, the weekly Jobless claims at 8:30, and then Existing home sales at 10:00.
Today's post FOMC push to SPX 1080, from monday's 1057 low, completes a five wave rally from the early Sept low at SPX 992. It was a few points short of the OEW 1090 pivot, but it only needed to exceed the previous uptrend high at SPX 1075. This gives us three waves up from the Intermediate wave B low at SPX 979 in mid-August. We continue to count these three Minor waves as either a 1-2-3, or an a-b-c. Since we are now pulling back the market will disclose which count is actually underway. If this pullback holds above the Minor wave 1 high of SPX 1039, then the 1-2-3 scenario is underway. If this pullback drops below that level, then the a-b-c ending diagonal triangle scenario is underway. Expecting the SPX to get oversold, on the daily RSI, during this pullback. Just like it did at the two previous important lows: Minor wave 2 and Intermediate wave B. Best to your trading!
MEDIUM TERM: uptrend makes new high at SPX 1080
LONG TERM: bear market
CHARTS:
http://stockcharts.com/def/servlet/F...?obj=ID1606987
