SHORT TERM: another gap down opening, DOW -76
Overnight the Asian markets were mostly lower losing 0.6%. Europe opened lower and ended losing 2.2%. US index futures were lower overnight, and the market gapped down to SPX 1363 at the open. The SPX closed at 1370 yesterday. The selling continued until about 11:30 when the SPX hit 1348, its lowest level since early March. With a positive divergence in place the market tried to rally. By noon the SPX hit 1355, pulled back to 1350 by 1:00, and then moved up again. In the last hour of trading the SPX hit 1366 and closed at 1364.
For the day the SPX/DOW were -0.50%, and the NDX/NAZ were -0.35%. Bonds gained 7 ticks, Crude lost 50 cents, Gold dropped $31.00, and the USD was higher. Support for the SPX remains at the 1363 and 1313 pivots, with resistance at the 1372 and 1386 pivots. Short term momentum hit extremely oversold with a positive divergence. Tomorrow, a speech from FED chairman Bernanke at 9:30, then Wholesale inventories at 10:00.
The market gapped down again today. Taking just about everything with it except for Bonds and the USD. The decline from yesterday’s SPX 1374 high bottomed at 1348. At the low a positive divergence set up a rally to SPX 1366. We have been counting the decline from the Intermediate wave B high at SPX 1415 as a double zigzag. Int. wave A was a double zigzag, and Int. wave C is following a similar sequence. Thus far we have counted an abA (1394-1403-1364), then a B wave rally (1374). Today we should have completed ‘a’ and possibly ‘b’, of the next zigzag (1348-1366-….). When ‘b’ does conclude, resisitance at the OEW 1363 pivot, a declining wave ‘c’ should take the market down to the lows of the correction. This could occur as early as this week.
There is potential alternate count of five waves down from SPX 1415 to 1348, completing wave A of a simple ABC Intermediate wave C decline. The B wave would now be underway with resistance at the OEW 1372 and 1386 pivots. This would suggest Intermediate wave C could extend into next week. For now, we remain with the preferred count. Short term support is at the 1363 pivot and then 1340, with resistance at the 1372 and 1386 pivots. Short term momentum rebounded to above neutral off the positive divergence. Best to your trading!
MEDIUM TERM: downtrending
LONG TERM: bull market