thursday update

SHORT TERM: DOW breaks through 11,673 at 9:45 taking the market lower, DOW -358

Overnight the Asian markets were mixed, but Europe opened lower and closed -2.50%. US index futures traded lower overnight, then at 6:30 vice chairman Kohn gave a speech in Germany: http://www.federalreserve.gov/newsevents/speech/kohn20080626a.htm. At 8:30 the weekly unemployment claims remained at 384,000 and the Q1 GDP remained the same at +1.0%. Stocks gapped down at the open as the SPX hit 1312 in the opening minutes. It closed at 1322 yesterday. At 9:45 the DOW broke through that 11,673 level we have been watching, that would indicate an extension to this downtrend. An hour later the SPX started making lower lows. In between, at 10:00 existing home sales were reported up about 0.2%, while prices continued to decline. For the rest of the day the market declined steadily, with only one six point rally between 1:30 and 2:00. At the close the SPX/DOW were -3.0%, and the NDX/NAZ -3.70%. Bonds were up 3/4 point, Crude gained $5.25 making new highs, Gold surged $36.00, and the Euro was higher. Support for the SPX slides down to 1261 and then 1240, with resistance at 1287 and then 1316. Short term momentum is overosld, and the near term indicators turned lower. Tomorrow core PCE and consumer spending at 8:30, then consumer sentiment at 10:00. While SPX 1304 looked like a good support area, as the technical indicators and short term wave counts appeared to align. The DOW wave formation suggested that an extension to the downtrend would occur if 11,673 was exceeded. Fifteen minutes into todays opening the DOW traded below that and the market followed. Today while Crude was making new highs over $140, the DOW made new bear market lows under 11,635. This confirms that Major wave C is certainly underway. For now, the next important level for the SPX is the next OEW pivot 1261. Best to your trading!

MEDIUM TERM: downtrend resumes

LONG TERM: bear market

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