SHORT TERM: stocks open lower on a disappointing housing report
Overnight the Asian markets were mixed, and Europe came in -0.60%. Stock index futures were lower overnight and stayed lower, when at 9:00 Case Shiller reported national housing prices had declined 3.2% in Q2. The largest quarterly decline in 20 years. Prices were rising at a 7.5% rate just a year ago. At the open stocks gapped down as the SPX traded down through 1462 support to 1453 by 10:00. At 10:00 the Conference Board reported that consumer confidence declined to 105 verses 111.9 just a month ago. This index is still above 100, which is considered positive. Bonds are trading flat, Crude is off 25 cents, Gold is off 80 cents, and the Euro is flat. With a pullback below the 1462 support level, support is now at 1438 and then 1410, with resistance at 1462 and then 1484. Short term momentum is oversold. This is the most significant amount of selling since this rally began on August 16th. Also, the rally formed a rising wedge B wave, which was broken to the downside during yesterday’s last hour. Typically wedge formations like this one are fully retraced. Which should take the market down to our targeted support level of SPX 1364 over the next couple of weeks. Labeling yesterday’s high as the end of Intermediate wave B. Best to your trading!
MEDIUM TERM: correction
LONG TERM: bullish.