SHORT TERM: market sells off post FOMC, DOW -251
Overnight the Asian markets gained 0.1%. European markets opened lower and lost 0.7%. US index futures were slightly lower overnight, and at 8:30 weekly Jobless claims were reported slightly higher: 387K vs 386K. The market opened one point higher than yesterday’s SPX 1356 close, and nudged up to 1358 in the first few minutes. Then it started to pullback. At 10:00 Existing home sales were reported lower: 4.55 mln vs 4.62 mln, Leading indicators were reported higher: +0.3% vs -0.1%, FHFA housing prices were reported lower: +0.8% vs +1.8%, and the Philly FED dropped lower: -16.6 vs -5.8. The market continued to pullback, with only 3 – 4 point bounces along the way. At 11:30 the SPX broke through the 1342/47 support zone. At 1:30 the market broke through the SPX 1335/36 support zone. Then it traded down to SPX 1324 just before the close, and ended the day at 1326. Quite a nonstop decline.
For the day the SPX/DOW were -2.3%, and the NDX/NAZ were -2.2%. Bonds gained 5 ticks, Crude lost $3.00, Gold dropped $40.00, 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 ended the day extremely oversold.
The market opened slightly higher today then started to pullback. When the negative economic reports were released at 10:00 the pullback continued unabated throughout the day. We noted two days ago we had counted three waves up from SPX 1267 to 1363 heading into the FED FOMC statement. We had been expecting five waves. After the statement was released the market became quite volatile, as expected, pulled back to SPX 1346 and ended the day at 1356. We expected the pullback to continue into today, and suggested the key levels to watch were SPX 1336 and 1329. After the market broke through those levels this afternoon, the recent rally looked more like a completed three wave advance, suggesting the downtrend may still be underway.
Short term support is now at the 1313 and 1303 pivots, with resistance at SPX 1327/29, 1335/36 and 1342/47. Short term momentum is extremely oversold, and the market is due for at least a small rally. The OEW short term charts swung negative today when the market declined below SPX 1338. The swung point is now at SPX 1339. Rough day in most of the markets except for the USD. Best to your trading!
MEDIUM TERM: downtrend may be resuming
LONG TERM: bull market