SHORT TERM: SPX/NDX trigger leading downtrend indicators, DOW -119
Overnight the Asian marketx were mostly lower. Europe opened lower and closed -2.40%. US index futures were lower overnight, and at 8:30 Durable goods orders were reported: +1.0% v -2.6%. At the open the market traded between 1059 and 1063 before heading lower. At 10:00 New home sales were reported lower: 402K v 417K. Just before 11:00 the SPX broke through the OEW 1061 pivot and headed down to 1050. The market then tried to rally, but could only manage to reach SPX 1056 before heading lower again. At 1:00 the SPX was within the range of the OEW 1041 pivot when it hit 1047. Another rally attempt followed, reaching SPX 1054 by 1:30. That too did not generate many buyers and the market headed down again. By 3:30 the SPX had hit 1042 right at the 1041 pivot, and then bounced into the close. For the day the SPX/DOW were -1.60%, and the NDX/NAZ were -2.50%. Bonds were up 11 ticks, Crude lost $2.30, Gold dropped $8.00, and the EUR was lower. Support for the SPX drops to 1041 and then 1018, with resistance now at 1061 and then 1090. Short term momentum was reaching extremely oversold at today’s lows. Tomorrow, the weekly Jobless claims and preliminary Q3 GDP at 8:30. Should be interesting.
Today’s selling triggered the leading downtrend indicators in both the SPX/DOW and the NDX/NAZ. This indicator has worked quite well when both the derivative driven SPX and NDX trigger together. This suggests that the SPX 1101 high ended the current uptrend, Major wave C, and Primary wave B. When we get an OEW downtrend confirmation we will change the colors on the charts from tentative green to the appropriate color. Short term we are counting this decline as having completed waves 1 and 2 with wave 3 underway. Keep in mind that this 1-2-3 count should only be part of the first downwave of this downtrend. Monitor the OEW pivots, the RSI indicators and the USD index to track this potential downtrend as it unfolds. Once confirmed it would not be surprising if this downtrend corrects all the way back to SPX 869, the low of Major wave B. Best to your trading!
MEDIUM TERM: uptrend in jeopardy
LONG TERM: bear market