SHORT TERM: interesting FOMC day, DOW -44
Overnight the Asian markets gained 1.0% – mostly Japan. Europe opened lower and lost 0.4%. US index futures were lower overnight. At 8:15 ADP was reported lower: 192K vs 215K, then at 8:30 Q4 GDP was reported negative: -0.1% vs +3.1%. The market opened one point below yesterday’s SPX 1508 close, bounced around in the opening minutes and made a new uptrend high at 1510. Then it started to pullback. Around 10:30 the SPX hit 1503. Then it rallied to SPX 1508 by 1:30 heading into the FOMC statement at 2:15: http://www.federalreserve.gov/newsevents/press/monetary/20130130a.htm. After that the market pulled back to SPX 1500 in the last few minutes of trading, before bouncing to close at 1502.
For the day the SPX/DOW were -0.35%, and the NDX/NAZ were -0.25%. Bonds gained 2 ticks, Crude added 45 cents, Gold rallied $13, and the USD was lower. Medium term support remains at the 1499 and 1440 pivots, with resistance at the 1523 and 1552 pivots. Tomorrow: weekly Jobless claims at 8:30, along with Personal income/spending, and PCE prices. Then at 9:45 the Chicago PMI.
The market opened slightly lower today, made a new uptrend high (SPX 1510), and then pulled back to SPX 1503. At that point we thought Nano wave 3 ended at SPX 1510, and Nano 4 at 1503, which is the top of Nano 1. Then we expected the market to rally, which it did, but it only reached SPX 1508 before weakening again after the FOMC statement.
Upon examining the short term charts, knowing SPX 1503 was now a key level for this Nano wave count. We noticed another potential count: a Minute iv ascending triangle starting at SPX 1495 and ending at 1498. With this potential count Minute v could have ended at SPX 1510, and Minor wave 3 as well. We then posted a “tentative” green Minor wave 3 label on the SPX hourly chart, with the obvious negative RSI divergence.
The real test for this second count is at SPX 1498, which would be the low of Minute iv. Should the SPX drop to/below this level, then Minor 3 probably ended at SPX 1510. If the SPX holds support above this level, then the market could still reach the OEW 1523 pivot as the rally from SPX 1498-1510 could be counted as a Micro wave 1, and this decline a Micro wave 2. Confusing right? Simply put, should the SPX reach 1498 again it could decline another 30 points, or so, for Minor 4. Should SPX 1500, or so hold support, the market can then reach 1523 pivot before the 40 point, or so, Minor 4 pullback gets underway. Markets get tricky when the become choppy.
Short term support is at the 1499 pivot and SPX 1471/75, with resistance at the 1523 and 1552 pivots. Short term mementum setup a negative divergence and declined to slightly oversold. The short term OEW charts remain positive with the swing level now around SPX 1496. Best to your trading!
MEDIUM TERM: new uptrend high at SPX 1510
LONG TERM: bull market