SHORT TERM: market gaps down and continues lower, DOW -226
Overnight the Asian markets were mostly higher. Europe opened lower and closed -2.20%. After the close yesterday the House passed President Obama’s stimulus plan without one Republican vote. Looks like there will be problems when it goes to the Senate. US index futures were lower overnight, and at 8:30 the weekly Unemployment claims rose: 588K v 585K. There is now a record (1967) 4.78 mln on unemployment. Durable goods continued to slide as well: -2.6% v -3.7%. The market gapped down at the open to SPX 864. It closed at 874 yesterday. Selling continued until 10:00 when the SPX hit 854, and New homes sales were reported at 331K v 388K. Over the next hour the SPX managed to rally only six points to 862 before heading lower. By 2:00 the SPX slightly breached the 848 pivot, hitting 846, and then rallied to 854 by 2:30. After that the market made a new low for the day at SPX 844 heading into the close. For the day the SPX/DOW were -3.00%, and the NDX/NAZ were -2.90%. Bonds were down over one point, Crude slipped 65 cents, Gold rallied $19.00, and the Euro was lower. Support for the SPX dropped back to 848 and then 789, after spending only one day above the 848 pivot. Resistance now at 848 and then 912. Short term momentum slid to nearly oversold heading into the close. Tomorrow, Q4 GDP at 8:30, then the Chicago PMI and another Consumer sentiment around 10:00.
After gapping up over the SPX 857/858 level yesterday, the market gapped right back down to it today. Then in the afternoon when the SPX traded down to the 848 pivot, that level became resistance once again. During the downtrend rally the market did get overbought, and then sold off. Despite today’s close right around the 848 pivot we’ve updated the DOW chart with a wave 2 at the recent highs. All eyes will be on the Q4 GDP number tomorrow. Best to your trading!
MEDIUM TERM: downtrending
LONG TERM: bear market