SHORT TERM: market pulls back early but recovers, DOW -12
Overnight the Asian markets were mixed. Europe opened higher but closed -1.40%. US index futures were lower overnight and at 9:00 Case-Shiller reported the first uptick in housing prices since 2006: YoY -17.1% v -18.1%. The market opened lower at SPX 976 but rallied back to yesterday’s 982 high by 10:00. At this time Consumer confidence was reported lower for the second month: 46.6% v 49.3%. The market immediately sold off, dropping 13 points to 969 by 11:30. The SPX held that low and then began to rally. Today looked similar to yesterdays activity: opened lower, higher by 10:00, selloff before noon, and then recover the rest of the day. By 2:30 the SPX rallied back to 981 and then went sideways into the close. For the day the SPX/DOW were -0.20%, and the NDX/NAZ were +0.40%. Bonds ended flat, Crude lost $1.15, Gold dropped $15.00, and the Euro was lower. Support for the SPX remains at 961 and then 935, with resistance at 990 and then 1018. Short term momentum hit an oversold level before rising past neutral heading into the close. Tomorrow, Durable goods orders at 8:30 and then the Beige book around 2:00.
After todays 13 point pullback we reviewed the entire uptrend. Since the SPX 869 low on Jly 8th this market has had three similar pullbacks: 15 points, 14 points, 13 points, and nothing larger. Quite unusual for a 113 SPX point, three week rally. Since we do not yet see any failures in this rally. The first pullback (15 pts) could be counted as wave 2, and today’s pullback (13 pts) as wave 4. Which means the SPX could still make another run at the 990 OEW pivot to end the 5th wave. A decline to the 961 pivot would eliminate this scenario, and the 935 pivot would then likely follow. Best to your trading!
MEDIUM TERM: uptrend
LONG TERM: bear market