SHORT TERM: limit down early – market rebounds, DOW -312
Overnight the Asian markets were substantially lower, Europe opened lower and closed down 5.00%. US index futures were limit down (60 SPX points) overnight. At 6:00 AM OPEC announced they were cutting Crude oil production by 1.5 mln barrels per day. At 9:00 PNC announced they were acquiring troubled National City for $5.5 bln. At the open the market gapped down to 899, and in a few minutes was trading at 853. That was a few points under yesterday’s lows, and the low for the day. At 10:00, while the market was rebounding, existing home sales were reported up 5.5%, to the best level in 13 months. Making note of these news events because on a day like this they can be overlooked. By 11:30 the SPX hit 888, then pulled back near the lows of the day at 860 before moving higher into the close. For the day the SPX/DOW were down 3.50%, and the NDX/NAZ were down 3.10%. Bonds were down about 21 ticks, Crude lost $3.00, Gold rallied $18.50, 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, despite the volatility, remained in neutral most of the day. With today’s close at SPX 877, the market has made a lower weekly close than the 899 weekly close of two weeks ago. This market has now accomplished what we were expecting, based upon historical crash like scenarios, (see last weekend’s report). We can now expect the market to go through a bottoming process. It may take days, or weeks, with possibly a new intraday low as well. Best to your weekend!
MEDIUM TERM: downtrend SPX 840 low holds
LONG TERM: bear market