SHORT TERM: day traders delight, a roller coaster ride today, DOW +51
Overnight the SPX futures traded about 14 points higher than where they closed yesterday. Then as the market prepared to open, they were sold off to unchanged. Within minutes, as the SPX hit 1433, a rally retraced that entire selloff and then some, as the SPX hit 1453 by 11:00. But the day was not done. A selling wave followed that morning high taking the SPX all the way to 1419 by 2:30. Retracing it all! Then another rally in the final hour pushed the SPX all the way to 1445 nearing the close. Of course it didn’t close there as sellers moved in again. At the close the SPX/DOW were +0.45%, and the NDX/NAZ were +0.30%. Bonds closed down about 1/4 point, Crude gained $3.70, Gold was up $25.00, and the Euro was sharply higher. Support for the SPX is at 1438 and then 1410, with resistance at 1462 and then 1484. Short term momentum bounced quite a bit today, but ended rising and at neutral.
With today’s break below SPX 1430, the diagonal triangle scenario is no longer compelling. A decent wedge can no longer be formed. Therefore, the labeling has been moved back to the labeling on the DOW weekly chart. Now both the SPX and DOW are displaying the same ongoing correction. The key levels to watch during this correction continue to be 1438, and now 1410, 1383, and 1364. With the weekly RSI currently oversold, it appears very unlikely that the market will drop much below one of those levels. The economy may be weakening, and the financial stocks discounted, but we’re definitely still bullish in the OEW camp.
MEDIUM TERM: correction continues
LONG TERM: bullish