SHORT TERM: strong Q4 results but market declines, DOW -53
Overnight the Asian markets were mostly lower. Europe opened higher and closed +1.05%. US index futures were at first lower overnight and then turned higher. At around 8:20 the speech from FED vice chairman Kohn was released: http://www.federalreserve.gov/newsevents/speech/kohn20100129a.htm. Then at 8:30 Q4 GDP was reported higher than expected: +5.7% v +2.2%, and the Employment cost index rose: +0.5% v +0.4%. At the open the market bounced between SPX 1087 and 1090. It had closed at SPX 1085 yesterday. At 9:45 the Chicago PMI was reported improving: 61.5% v 58.7%, and at 10:00 Consumer sentiment hit a two year high: 74.4% v 72.5%. By 10:30 the SPX had rallied to 1096 but could not clear this week’s fulcrum, the OEW 1090 pivot. As the USD continued to rally on the GDP news the market headed lower. By 12:00 the SPX had traded down to SPX 1081. A small rally followed to SPX 1086 by 1:00 and then the market turned lower again. Just before 3:00 the SPX broke through thursday’s 1078 low and continued to 1072 by 3:30. A small bounce ended the week with a SPX 1074 close. For the day the SPX/DOW were -0.75%, and the NDX/NAZ were -1.60%. Bonds gained 16 ticks, Crude dropped 90 cents, Gold lost $2.00, and the USD was higher. Support for the SPX remains at 1061 and then 1041, with resistance at 1090 and then 1107. Short term momentum rose above neutral early before heading to oversold.
The market opened on a positive note after all of the recent news. We then reviewed the short term wave count on the hourly charts. After a failure to confirm an Intermediate wave two, and all the choppiness over the past few days, we adjusted the Minor wave 3 low from last friday’s SPX 1090 low to wednesday’s 1083 low. This count suggests the following: Minor 1 SPX 1129, Minor 2 SPX 1142, Minor 3 SPX 1083, Minor 4 SPX 1100, and Minor 5 underway. This count also suggested, at the time, that the thursday SPX 1078 low was either the end, or only the first wave of Minor wave 5. When the market failed to break through the OEW 1090 pivot range this morning, and started to head lower, it was not a positive sign. Then this afternoon’s break below thursday’s SPX 1078 low confirmed the first wave of Minor wave 5 scenario. It certainly looks like the SPX will need to hit the OEW 1061 pivot range to find support. This should be an interesting chart review this weekend. Best to you and yours, enjoy the weekend!
MEDIUM TERM: downtrend new low at SPX 1072
LONG TERM: bear market