tuesday update -- MrSwing

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tuesday update
Jul 08, 2008

Tony

the ELLIOTT WAVE lives on
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SHORT TERM: market rallies on positive FED comments, DOW +152

Overnight the Asian markets were mostly lower, and China's SSEC showed the only gain. Europe opened lower, and closed -1.35%. US index futures were solidly lower overnight, but recouped losses heading into the open after Bernanke's speech: http://www.federalreserve.gov/newsevents/speech/bernanke20080708a.htm. Besides suggesting that the FED be granted expanded powers over the financial system, he suggested expanding the iBank T-swaps into 2009. The market liked the news and the index futures turned positive heading into the open. The SPX opened unchanged at 1252, rallied to 1256 a few minutes later, and then tested yesterday's important lows by 11:00, hitting 1243. At 10:00 May pending home sales were reported -4.7%, and wholesale inventories rose 0.8%. After holding the 1240 pivot again the market rallied to the next pivot at 1261 by 1:00. A pullback followed to 1250 by 2:00, but the market rallied again breaking through 1261 heading into the close, to close at 1274. For the day the SPX/DOW were +1.55%, and the NDX/NAZ were +2.35%. Bonds gained 1/4 point, Crude lost $5.30, Gold dropped $6.50, and the Euro was lower. Support for the SPX jumps up to 1261 and then 1240, with resistance at 1287 and then 1316. Short term momentum is reaching overbought, while both the short and near term indicators continue to display positive divergences at yesterdays lows. Tomorrow there's nothing substantial on the economic agenda, market should trade the technicals.

Yesterday we reported that the SPX 1240 pivot was an important support area. Most of the technicals were displaying oversold lows and some positive divergences. Today the market successfully retested that pivot at around 11:00 and rallied right to yesterdays high heading into the close. Since all of the minor rallies within this downtrend have been 30+ points. A rally above 40+ points should indicate a change in market character, and possibly the medium term trend. Best to your trading!

MEDIUM TERM: downtrend may have bottomed at SPX 1241

LONG TERM: bear market

CHARTS: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1606987