SHORT TERM: wild day, DOW -7
Overnight the Asian markets lost 1.3%. European markets gave back yesterday’s 1.8% gain, and then some, losing 2.5%. US index futures were lower overnight and the market gapped down at the open to SPX 1310. The market had closed at SPX 1317 yesterday. In the first 15 minutes, or so, the market pulled back to SPX 1306. Then it rallied to SPX 1312 by 10:00, only to pullback again. Also at 10:00 New home sales were reported higher: 343K vs 328K, and the FHFA housing index was reported higher: +1.8% vs +0.3%. At 11:00 the FED released this: http://www.federalreserve.gov/newsevents/press/other/20120523a.htm. By 10:30 the SPX had hit 1298, bounced to 1303 by 11:30, then pulled back to 1297 by 12:30. After that it tried to rally. At 2:00 the SPX hit 1306, pulled back to 1300 by 2:30, and then rallied again. Heading into the close the SPX hit 1321, then dipped to end the day at 1319.
For the day the SPX/DOW were again mixed, and the NDX/NAZ were +0.35%. Bonds gained 11 ticks, Crude lost $1.45, Gold slid $5.00, and the USD was higher. Support for the SPX remains at the 1313 and 1303 pivots, with resistance at the 1363 and 1372 pivots. Short term momentum hit quite oversold during today’s decline and then rebounded. Tomorrow, weekly Jobless claims at 8:30 along with Durable goods orders.
Quite a volatile day as the market gapped down at the open, traded down to SPX 1297, and then rallied for the rest of the day. The DOW made a new downtrend low during the decline, but the other three major indices did not. This is a positive divergence. Remember the DOW made a new high on May 1st, while the other three major indices did not. That set up a negative divergence. The SPX was at 1415 then, and declined to 1292 afterwards. Today may have signalled the end of the downtrend. But we’d feel more comfortable about that when the SPX clears 1322, see below.
Short term support remains at the 1313 and 1303 pivots, with resistance at SPX 1328 and 1342/47. Short term momentum swung from quite oversold to slightly overbought during the day. The short term OEW charts remain with a negative bias from SPX 1395, with the positive swing point now above 1322. Best to your trading!
MEDIUM TERM: downtrend may have bottomed
LONG TERM: bull market