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wednesday update
Dec 04, 2008

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SHORT TERM: market rallies for 7th of the last 8 days, DOW +173

Overnight the Asian markets were all higher. Europe opened lower but closed +0.95%. US index futures traded lower overnight, and near 8:30 ADP reported a monthly job loss of 250K v. 157K in October. The market gapped down at the open to SPX 835 and traded as low as 828 by 10:00. At that time ISM services reported its lowest reading ever at 37.3% v. 44.4% in October. Nevertheless, the market set up a very short term positive divergence and started to rally. FED governor Kroszner's speech was released a few minutes later: http://www.federalreserve.gov/newsevents/speech/kroszner20081203a.htm. By 12:00 the market hit SPX 864, taking out yesterday's high of 851, and started to pullback. At 2:00 the FED's Beige book was released: http://www.federalreserve.gov/FOMC/BeigeBook/2008/20081203/default.htm. Around that time the SPX hit 835 and started to rally. This market continues to respond positively to negative news. A sign that it's likely oversold. Heading into the close the market was making new highs for the day as the SPX hit 873. At the close the SPX/DOW were +2.30%, and the NDX/NAZ were +3.05%. Bonds continued their rally up 20 ticks, Crude was flat, Gold dropped $8.50, and the Euro was lower. Support for the SPX remains at 848 and then 789, with resistance at 912 and then 935. Short term momentum stayed around neutral all day and was moving higher into the close. Tomorrow, at 10:00 Factory orders. Then a speech by FED chairman Bernanke at 11:15, followed by a speech by FED governor Kroszner at 4:30.
This rally continues to move along in a choppy fashion during the day. But it continues to make upside progress. Intraday support remains at monday's lows of 816, which represents a 50% retracement of the 5-day rally from SPX 741 to 896. Overhead resistance remains at the previous high, and then the pivot at 912. The market still needs to break through those levels to regain its upside momentum. Best to your trading!
MEDIUM TERM: downtrend low at SPX 741
LONG TERM: bear market rally trying to re-establish itself
CHARTS: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1606987         

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