SHORT TERM: government tries to talk the market higher, DOW -251
Overnight the Asian markets were mixed. Europe opened higher but closed -1.95%. US index futures were higher overnight, and it was reported that the government was in talks with Citigroup to add additional capital, and President Obama stated bank nationalizations are not in the plans. At 8:30 the FED issued the following statement: http://www.federalreserve.gov/newsevents/press/bcreg/20090223a.htm. Then more rhetoric followed as the market opened. At the open the SPX gapped up to 778 in the opening minutes and was done rallying for the day. After that the market turned lower. At 10:30 the FED announced it was adding transparency to its balance sheet on its website: http://www.federalreserve.gov/newsevents/press/other/20090223a.htm. The market continued lower. By 1:00 the SPX hit a new low for the downtrend at 750, stabilized, and tried to rally. Over the next hour and a half it could only manage to rally 8 points. As the SPX headed to new bear market lows (741) it pulled up short at 742 just before the close and closed at 743. For the day the SPX/DOW were -3.45%, and the NDX/NAZ were -3.70%. Bonds were down 3 ticks, Crude dropped $2.00, Gold lost $6.00 and the Euro was lower. Support for the SPX now slips to 734 and then 717, with resistance at 768 and then 789. Short term momentum was near neutral at the open and ended oversold. Tomorrow, Case-Shiller home prices at 9:00, and then Consumer confidence at 10:00. Also at 10:00 FED chairman Bernanke starts a two-day monetary policy report to Congress, and FED governor Duke gives a speech in DC at noon. Should be an interesting day.
Today the DOW reached a level not seen since Oct 1997, and the SPX (except for one point) Apr 1997. An entire decade wiped out in 16 months. This market has now accomplished the minimum expected for this fifth Intermediate wave of Major wave C. Short term it appears the SPX/DOW are still in Minor wave 3 of Intermediate wave 5. A Minor wave 4 rally could start at any time as there is a slight positive divergence on the hourly charts. Then the market should complete this downtrend with a fifth wave, and this should complete the first important leg down of the bear market, Primary wave A. Fibonacci support remains between SPX 680-725. Best to your trading!
MEDIUM TERM: downtrend
LONG TERM: bear market