thursday update

SHORT TERM: new uptrend high then pullback, DOW -22

Overnight the Asian markets were mixed, gaining 0.2%. European markets opened higher and closed +1.5%. US index futures were higher overnight, and at 8:30 weekly Jobless claims were reported higher: 377K vs 352K, and Durable goods orders were positive but lower: +3.0% vs +3.7%. The market opened at a new uptrend high, SPX 1330, and rallied to 1333 by 10:00. That was the high for the day. Then the market started to pullback. Also at 10:00 New home sales were reported lower: 307K vs 315K, and Leading indicators were positive but lower: +0.4% vs +0.5%. The market remained in pullback mode, with only 3 point bounces, into the last hour of trading. At 3:30 the SPX hit 1314, and then bounced 5 points to 1319 before closing at 1318.

For the day the SPX/DOW were -0.40%, and the NDX/NAZ were -0.45%. Bonds gained 20 ticks, Crude added 45 cents, Gold rose $8, and the USD was lower. Support for the SPX remains at 1313 and then 1303, with resistance at 1363 and then 1372. Short term momentum declined from the negative divergence towards oversold. Tomorrow, Q4 GDP at 8:30, expectations are +3.2%, then Consumer sentiment at 10:00.

The market opened at a new uptrend high this morning, then hit SPX 1333. After that it started to pullback, suggesting the 17 wave rally for Minor wave 3 (SPX 1202-1333) was complete. As the day unfolded the market gradually drifted lower with only three point bounces along the way. After this new uptrend high, we have a double negative RSI hourly divergence, and a extremely overbought daily RSI. All these factors certainly suggest a Minor wave 3 was completed after the FOMC news. What we would need to see next is first the SPX trading down to 1312, then second a drop into the low 1300′s. These two events would increase the probability that Minor wave 4 is underway. Since Minor 3 would have travelled 131 points, (SPX 1202-1333), a pullback of about 50 points would fit the uptrend structure quite well. Today’s low was SPX 1314.

Short term support is at the 1313, 1303 and 1291 pivots. Overhead resistance is at SPX 1327, 1345/47 and the 1363 pivot. Short term momentum declined to below neutral after the negative divergence. Short Term OEW charts are still positive with support just under the 1313 pivot. Should the market hold above SPX 1312, and rally to higher highs, Minor wave 3 would be extending. Best to your trading!

MEDIUM TERM: uptrend new high at SPX 1333

LONG TERM: bull market

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