SHORT TERM: market gaps down at open, DOW -249
Overnight the Asian markets were all lower. Europe opened lower and closed -3.0%. US index futures were also sharply lower overnight, and the market gapped down to SPX 1205 at the open and continued to decline. The SPX had closed at 1216 on friday. At 10:00 annualized Existing home sales were reported higher: 4.97 mln vs 4.91 mln. Around 11:00 the SPX hit 1183, within the OEW 1187 pivot range. After a small bounce and retest of 1183 near noon, the market tried to rally. Also around noon the FED issued the following: http://www.federalreserve.gov/newsevents/press/other/20111121a.htm. The SPX hit 1191 by 1:30, still within the pivot range, pulled back to 1185 by 2:00, and then rallied to 1195 by 2:30. Another pullback followed to 1189 by 3:00, then the market rallied to SPX 1198 by 3:30, and ended the day at 1193.
For the day the SPX/DOW were -2.0%, and the NDX/NAZ were -1.9%. Bonds gained 8 ticks, Crude slid 35 cents, Gold dropped $38.00, and the USD was higher. Support for the SPX remains at 1187 and then 1176, with resistance at 1222 and then 1240. Short term momentum hit extremely oversold at today’s low and then rose toward neutral. Tomorrow, Q3 GDP at 8:30, then the FOMC minutes at 2:00.
The market gapped down at the open today, and continued to decline until it hit the low for the day at SPX 1183. After a retest around noon the market then rallied into the close before dipping some in the last half hour. Today’s decline could have completed a small wave five to end Minute wave iii of C DOW count, or Minute wave iii of 3 SPX count. We had detailed these smaller waves in the weekend report: wave 1 SPX 1244, wave 2 SPX 1264, wave 3 SPX 1209, wave 4 SPX 1224. If this is the case the short term OEW charts should turn positive to confirm, but currently require a rally over 1220 to do so.
Today’s decline took the market into the upper range of the OEW 1168, 1176, 1187 pivot cluster. The decline also stopped at the 50% retracement level (SPX 1184) of the 1075-1293 uptrend. Should our short term bullish count be correct, the market should now rally somewhat to complete a Minute wave iv, and then decline into the OEW pivot cluster again to complete the correction. Short term support remains in the 1168, 1176, 1187 cluster, with resistance now in the upper 1190′s, 1209 and then the 1222 pivot. Best to your trading!
MEDIUM TERM: uptrend probably topped at SPX 1293
LONG TERM: neutral