SHORT TERM: FED cuts fed funds 25 bps market ends lower, DOW -12
Overnight the Asian markets were mostly lower, with only China’s SSEC displaying a gain. Europe ended the day mixed as well. Stocks gathered some momentum when the Q1 GDP was announced +0.6% at 8:30 this morning. The details of the rise were a lot less impressive: http://tinyurl.com/59xume. The market opened slightly higher to SPX 1393, and edged up to 1399 by 11:30. As everyone awaited the FED’s decision at 2:15 the market stayed within that range until about 2:00 when it started to move higher. At 2:15 the FED announced the expected 25 bps rate cut: http://www.federalreserve.gov/newsevents/press/monetary/20080430a.htm. The market surged to 1405 by 2:30, right near the OEW 1410 pivot, and then headed lower. Just past 3:00 the SPX broke through the 55hma at 1387, mentioned yesterday, and the upward trend line to that diagonal triangle posted friday. The SPX then closed at the lows for the day, right near the 1383 OEW pivot. At the close the SPX/DOW were -0.25%, and the NDX/NAZ were -0.70%. Bonds gained nearly 1/2 point, Crude lost 75 cents, Gold edged up $2.00, and the Euro was higher. Support for the SPX remains at 1383 and then 1364, with resistance at 1410 and then 1438. Short term momentum still has those negative divergences in place, as does the near term indicators. Tomorrow core PCE, weekly jobless claims and ISM, all at 8:30. Friday is the monthly non-farm payroll, and factory orders.
The rally from the March 31st low at 1313, still looks like a ‘c’ wave diagonal triangle, as posted last friday. The selloff late today, right from the highs, supports this scenario. However, the OEW pivot at 1383 has yet to be broken to the downside. Once this occurs the market should head lower in earnest. Best to your trading!
MEDIUM TERM: uptrend should have topped today at SPX 1405
LONG TERM: bear market