SHORT TERM: pullback continues, DOW -115
Overnight the Asian markets gained 0.6%. Europe opened higher but closed down 0.6%. US index futures were higher overnight, and at 8:30 weekly Jobless claims were reported higher: 372K vs 366K. The market opened lower at SPX 1411, two points under yesterday’s close, and continued to pullback. At 10:00 New home sales were reported higher: 272K vs 250K, and the FHFA housing index rose: +0.7% vs +0.8%. A bit past 10:00 the SPX hit 1404, below the 1407/10 level, and tried to rally. At 11:30 the SPX could only manage to hit 1409 and started to pullback again. At 1:30 with the SPX now at 1401 it tried to rally. But by 3:00 the SPX had only managed to reach 1405, then it pulled back to close at 1402.
For the day the SPX/DOW were -0.85%, and the NDX/NAZ were -0.70%. Bonds gained 11 ticks, Crude dropped $1.10, Gold rallied $13, and the USD was lower. Medium term support for the SPX remains at the 1386 and 1372 pivots, with resistance at the 1440 and 1499 pivots. Short term momentum is beginning to display a positive divergence. Tomorrow Durable goods orders at 8:30.
The market opened slightly lower today, then broke though the SPX 1407/10 area we have been monitoring. This decline now looks like Minor wave 3 of Intermediate wave iii completed at the new bull market high of SPX 1427, about 6 points below our OEW 1440 pivot range target. The pullback, Minor wave 4, has hit SPX 1401 for a 26 point decline thus far.
The pullbacks during this uptrend have been fairly steep: 54, 50, 51 and 37 points. Since the initial pullbacks appear to be of a base building nature, the last pullback would fit better for Minor wave 4. This suggests support in the SPX 1390′s. Since Minute wave i topped at SPX 1392 and Minute iv bottomed at 1396 this may indicate the support range. Minor 3 was nearly 100 SPX points, a 38.2% retracement would put it right into that SPX 1392/1396 range as well. Should this area fail to hold support, and the SPX drops below 1375, then the alternate DOW count becomes most probable.
Short term support is now at SPX 1402/03 and the 1386 pivot range, with resistance now at 1413/15 and 1422/27. Short term momentum is creating a positive divergence. The short term OEW charts turned negative again right after the open, and the swing point is now at SPX 1409. Best to your trading!
MEDIUM TERM: uptrend
LONG TERM: bull market