SHORT TERM: drop in Existing home sales leads market lower, DOW -41
Overnight the Asian markets were mixed. Europe opened lower and closed -1.45% in broadbased selling. US index futures were lower overnight and at 8:30 the weekly Jobless claims were reported at 530K v 551K. At the open the market traded higher, between 1064 and 1066, after closing at 1061 yesterday. At 10:00 Existing home sales were reported at 5.10 mln v 5.24 mln. The forecast was for 5.40 mln unit sales. The market immediately headed lower. Approaching 10:30 the SPX broke through the 1061 pivot, and moved within the range of the 1041 pivot when it hit 1048. A small bounce followed to SPX 1053 by 11:30, and then the market drifted lower. At 12:00 the FED made the following press release concerning consumer credit: http://www.federalreserve.gov/newsevents/press/bcreg/20090924a.htm. At 2:00 the FED made another press release: http://www.federalreserve.gov/newsevents/press/bcreg/20090924b.htm. At 2:30 the SPX made a slightly lower low at 1046. During today’s entire decline, including the decline from yesterday’s SPX 1080 high, the USD has rallied. Also around 2:30 the FED’s general counsel Alvarez testified against HR 1207: http://www.federalreserve.gov/newsevents/testimony/alvarez20090925a.htm. Right on cue, the USD started to decline and the market started to rally. But the rally failed to gather any real momentum as SPX 1053 again provided some resistance. For the day the SPX/DOW were -0.70%, and the NDX/NAZ were -1.00%. Bonds gained 10 ticks, Crude lost $2.85, Gold dropped $20.00 on Comex options expiration day, and the Euro was lower. Support for the SPX slips down to 1041 and then 1018, with resistance now at 1061 and then 1090. Short term momentum reached an extremely oversold level at the low. Tomorrow, Durable goods orders at 8:30, and then New homes sales and Consumer sentiment at 10:00. At 1:15 FED governor Warsh gives a speech at the Chicago FED.
In a little bit more than 24 hours the SPX has dropped from 1080 to 1046 (34 points) for its largest decline since the Minor wave 2 (47 point) decline in early September. This downdraft certainly looks like Minor wave 4, or Minor wave D if it overlaps SPX 1039. Short term the market is quite oversold, but the daily RSI looks like it can decline some more. Possibly some consolidation between pivots for the next day or so. Best to your trading!
MEDIUM TERM: uptrend
LONG TERM: bear market