thursday update

SHORT TERM: gap up opening, DOW +423

Overnight the Asian markets were mostly lower. Europe opened higher and closed +3.20%. US index futures were higher, then lower, then higher again in a volatile overnight session. At 8:30 weekly Jobless claims were reported lower: 395K vs 400K, and the Trade deficit was reported higher: -$53.1 bln vs -$50.2 bln. The market gapped up at the open to SPX 1133. The market had closed at SPX 1121 yesterday. After a quick pop to SPX 1140 the market pulled back to 1128 by 10:00. Another rally carried the SPX to 1156 by 11:00. This was followed by a pullback to SPX 1147 by 11:30. After that the market stair-stepped its way higher, hitting SPX 1186 around 3:30 and then declined to close at 1173. The same price as tuesday’s close.

For the day the SPX/DOW were +4.3%, and the NDX/NAZ were +4.6%. Bonds lost 28 ticks, Crude rose $2.70, Gold tumbled $42.00, and the USD was higher. Support for the SPX jumps to 1168 and then 1146, with resistance back to 1176 and then 1187. Short term momentum hit overbought today. Tomorrow, Retail sales at 8:30, then Consumer sentiment and Business inventories at 10:00.

It has been roller coaster city these past few trading days. Last night the ES rallied to 1148, then dropped to 1103, before turning right around and rallying into the open. Today’s cash market trading, however, was virtually straight up from yesterday’s SPX 1121 close. Around noon the SPX hit the levels we have been looking for to confirm the Int. wave iii low at 1102. The rally, however, climbed all the way up to our original Int. wave iv target at the OEW 1187 pivot. This market is now sufficiently overbought to complete Int. iv and start an Int. wave v decline into the downtrend low. It has been quite volatile, as we all know, and attempting to pinpoint a reversal point is quite difficult. Short term support is at the 1168 and then 1146 pivot ranges. Overhead resistance is at the 1176 and 1187 pivot ranges. Short term momentum is now overbought for the first time in three weeks. Next, a decline below SPX 1160 suggests that Int. wave v is underway. Hope the short special report today put this market in the proper historical perspective. Best to your trading!

MEDIUM TERM: downtrend low SPX 1102

LONG TERM: bear market highly probable

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