SHORT TERM: market pulls back, DOW -207
Overnight the Asian markets were mixed. Europe opened lower and closed -0.30%. US index futures were higher, then lower, overnight. At 9:00 Case-Shiller reported a 0.2% increase in housing prices. The market opened lower at SPX 1249, and continued to decline after a rumor the ECU meeting for wednesday was cancelled. Within the first few minutes the SPX hit 1233, and then it started to rebound when the rumor was found to be false. At 10:00 Consumer confidence reported a decline: 39.8 vs 45.4, and the NAHB housing index also declined: -0.1% vs +0.8%. The market rallied until 10:30 when the SPX hit 1245. Then for the next two hours the market stayed in a wide trading range between SPX 1236 and 1244. Around 12:30 it started to pullback again. In the last hour of trading the SPX dropped below the 1233 opening low, hitting 1227, and finished the day at 1229.
For the day the SPX/DOW were -1.85%, and the NDX/NAZ were -2.15%. Bonds gained 28 ticks, Crude added $1.60, Gold rallied $49.00, and the USD was higher. Support for the SPX drops back to 1222 and then 1187, with resistance now at 1240 and then 1261. Short term momentum, which was quite overbought yesterday, hit quite oversold today. Tomorrow, Durable goods at 8:30 then New home sales at 10:00.
The market opened lower today on a rumor, stabilized, and then headed even lower heading into the close. The SPX 1257 area did offer quite a bit of resistance as noted yesterday. Today’s decline, however, cleared away our 1-2-3 wave count scenario from the SPX 1191 low. Now this uptrend is starting to look like the choppy B wave rally it was expected to be. With the break of the SPX 1233 level this afternoon anything is possible short term. With the EU meeting tomorrow anything and everything is on the table going forward. This uptrend did hit the 15 day point yesterday on that 1257 high. This market could turn quite volatile again. Short term support is at the 1222 and 1187 pivots, resistance is at the 1240 and 1261 pivots. Best to your trading!
MEDIUM TERM: uptrend high SPX 1257
LONG TERM: bear market highly probable