SHORT TERM: market closes mixed after early selling, DOW -16
Overnight most of the Asian markets surged in an attempt to catch up to the recent rise in the US. Europe even opened 3.0% higher and closed +3.4%. US index futures were fairly flat overnight. At 9:00 Case-Shiller reported home prices were down 10.7% in 2007, and declined to a -11.4% rate in the last twelve months. The market opened slightly to the upside hitting 1355, but quickly pulled back to 1342 by 10:00. Then the OFHEO reported a yearly decline of only 3% in home prices during 2007. For the differences between the two indices: http://blogs.wsj.com/economics/2008/02/26/ofheo-vs-case-shiller-a-primer/. Also at 10:00, the Conference Board reported consumer confidence hit a 35 year low (1973). Levels not seen since the market was in its last Cycle wave bear market. By 10:30, the market retested the 1344 EW pivot, and began to rally. It was a choppy rally, but the market made new highs on the day by 3:00 at 1357. Then eased back some into the close. At the close the SPX/DOW were mixed, and the NDX/NAZ were +0.60%. Bonds were up 5 ticks, Crude gained 90 cents, Gold rallied $22.00, and the Euro was also higher. Support for the SPX remains at 1344 and then 1327, with resistance at 1364 and then 1383. Short term momentum traded mostly higher today, and ended just above neutral. Tomorrow February durable goods orders at 8:30, and new home sales at 10:00. Near term momentum remains overbought.
Minor waves within this bear market have rallied between 50 and 63 points. This rally thus far has been 103 points, which certainly suggests it is not a Minor wave rally. The counter trend uptrends in November and February, rallied 118 points and 126 points respectively. This rally certainly appears to be one of those. If the rally contains itself within the structure of the entire decline from 1576 to 1257. Then the upper limit of this advance would be between 1375 and 1383. Not too far from where the market closed today, SPX 1353. If the entire decline from 1576 to 1257 is a complete (1-2-3-4-5) structure, as noted on the DOW chart alternate count. Then this rally could advance a bit further. At 38.2% retracement of the entire decline occurs at 1380, a 50.0% at 1417, and a 61.8% at 1454. Since the first decline from the 1576 high ended at 1406, and the February uptrend ended at 1388. I would suspect that the market would run into significant resistance in that range. Limiting this rally to the 1380 – 1417 area. There are EW pivots at both these levels, SPX 1383 and 1410. It’s still a bear market, and selling the rallies is still the strategy. Historically, there has only been one bull market of over three years that had a short bear market. Between 1949 – 1953, a bull market lasting four years was followed with an 8 month bear market. This was Major waves 1 and 2 of an 17 year Primary wave III. That was nothing like we are experiencing now, a Cycle wave bear market. Best to your trading!
MEDIUM TERM: uptrend appears underway
LONG TERM: bear market