SHORT TERM: market pullback extends, DOW -110
Overnight the Asian markets were flat. European markets opened higher but closed -0.8%. US index futures were higher overnight, but drifted lower entering the open. At the open the SPX traded at 1454, two points below yesterday’s 1456 close. After a bounce to SPX 1456 in the opening minutes the market headed lower. Just before noon the SPX hit 1442, became extremely oversold and tried to rally. At 1:30 the FED issued the following: http://www.federalreserve.gov/newsevents/press/bcreg/20121009a.htm. At 3:00 the SPX had only rallied 5 points to 1447 and then headed lower again. Just before the close the SPX hit 1441 where it ended the day.
For the day the SPX/DOW were -0.90%, and the NDX/NAZ were -1.55%. Bonds lost 6 ticks, Crude rallied $2.85, Gold slid $11, and the USD was higher. Medium term support remains at the 1440 and 1386 pivots, with resistance at the 1499 and 1523 pivots. Tomorrow: Wholesale inventories at 10:00, then the Budget deficit and the FED’s Beige book at 2:00. After the close a speech from FED governor Tarullo.
The market opened lower today, led by the Techs, and continued lower to test the OEW 1440 pivot range – medium term support. This two day decline, from friday’s SPX 1471 high to today’s 1441 low, is much larger than the two previous pullbacks of 14 and 18 points. While the SPX/DOW are both holding support, the NDX/NAZ did not and confirmed downtrends today. We are now in either a fragmented market, or the uptrend ended last friday. The OEW 1440 pivot range now takes on more significance, as does the SPX 1422/27 support area. Should the market drop below SPX 1422 the uptrend is probably over.
Short term support is at the 1440 pivot and SPX 1422/27, with resistance at 1463/64 and the 1499 pivot. Short term momentum hit extremely oversold this morning, bounced, and is now displaying a very slight positive divergence. The short term OEW charts swung into negative mode shortly after the open, with the swing level now around SPX 1452. Best to your trading!
MEDIUM TERM: uptrend
LONG TERM: bull market