SHORT TERM: gap up opening faded again, DOW +26
Overnight the Asian markets gained 0.5%. European markets opened higher, but lost 0.1%. US index futures were higher overnight, and at 8:30 weekly Jobless claims were reported lower: 369K vs 388K, plus Durable goods orders were reported higher: +9.9% vs -13.2%. The market gapped up at the open to SPX 1418, and in the opening minutes hit 1421. Soon after, the market started to pullback. At 10:00 Pending home sales were reported higher: +0.3% vs -2.6%. The pullback continued. Just past 10:00 the FED released this: http://www.federalreserve.gov/newsevents/press/bcreg/20121025a.htm. Around noon the SPX hit 1405, a new low for this pullback/correction. Then the market tried to rally. Heading into the close the SPX rebounded to 1413 and closed there.
For the day the SPX/DOW were +0.25%, and the NDX/NAZ were +0.10%. Bonds lost 16 ticks, Crude added 45 cents, Gold gained $11, and the USD was higher. Medium term support remains at the 1386 and 1372 pivots, with resistance at the 1440 and 1499 pivots. Last night the FED reported New home prices slipped: $292.4K vs $293.9K. Tomorrow: Q3 GDP at 8:30, then Consumer sentiment around 10:00.
The market gapped up at the open today for the second day in a row. This has not occurred since late July. Unlike late July, however, when the market gained about 4% over those two days. The recent gap up openings were completely sold off, and the gaps were closed. Not unusual for downtrend behavior. Yesterday’s selling led to a new downtrend low at SPX 1407, and today’s did the same when the SPX hit 1405. We continue to target the SPX 1391/93 fibonacci/retracement area for the first test of a potential low.
Short term support remains at SPX 1402/03 and SPX 1396/98, with resistance at SPX 1413/16 and SPX 1422/27. Short term momentum spent most of the day below neutral. The short term OEW charts remain negatively biased, with the swing level now around SPX 1427. Best to your trading!
MEDIUM TERM: downtrend likely underway
LONG TERM: bull market