SHORT TERM: market ends lower in last hour selling, DOW -120
Overnight all the Asian markets were higher. Europe opened higher but closed mixed. US index futures were relatively flat overnight, and at 8:30 the weekly Jobless claims were reported: 432K v 454K. The market opened slightly higher to SPX 1128. After trading in a two point range for about one half hour the market headed lower. Just before 11:30 the Chicago PMI was revised lower from yesterday’s report: 58.7 v 60.0. The PMI readings for the previous three months were also reported lower. Around 11:30 the SPX hit yesterday’s low at 1122. Heading into 3:00 the market stayed within a one point range. Then in the last hour, from SPX 1123, the market pulled back into the close to end the week, month and year at SPX 1115. For the day the SPX/DOW were -1.10%, and the NDX/NAZ were -1.00%. Bonds lost 16 ticks, Crude added 25 cents, Gold rose $3.00, and the USD was higher. Support for the SPX remains at 1107 and then 1090, with resistance at 1133 and then 1168. Short term momentum was getting extremely oversold at the close. Tomorrow the new year holiday.
We have been counting this rally from SPX 1086 as an anticipated five wave structure: Wave 1 SPX 1116, Wave 2 SPX 1094, Wave 3 SPX 1130 and Wave 4 underway. Today’s last hour pullback pushed the SPX to 1115, slightly overlapping the Wave 1 high on an hourly basis. This five wave rally is starting to get a bit sloppy. Todays 13 SPX point trading range ended the six day streak of tight (6 points or less) trading ranges. The market seemed to come alive in the last hour after a two week rest. Monday should be an interesting opening. In the mean time we wish all of you and yours a healthy and happy new year.
MEDIUM TERM: uptrend
LONG TERM: bear market rally