SHORT TERM: pullback continues as OEW 1107 breaks, DOW -149
Overnight the Asian markets were mostly lower. Europe opened lower and closed -0.70%. US index futures were generally flat overnight and the market opened up one point from yesterday’s SPX 1113 close. Within the first few minutes the market rallied to SPX 1118. That was the high for the day. At 10:00 annualized Existing home sales were reported lower: 5.66 mln v 5.79 mln. The market continued its pullback from the SPX 1118 high until about 10:30. Then retesting the OEW 1107 pivot, at 1109, the market tried to rally. By 11:30 the SPX hit 1117 then began to rollover again. Around 3:00 the SPX broke through the OEW 1107 pivot and headed to the next support at the 1090 swing pivot. Around 3:30 the SPX hit 1094 and closed at 1095.
For the day the SPX/DOW were -1.50%, and the NDX/NAZ were -1.00%. Bonds gained 22 ticks, Crude dropped $1.00, Gold added $2.00, and the USD was higher. Support for the SPX drops to 1090 and then 1058, with resistance at 1107 and then 1136. Short term momentum was extremely oversold at today’s lows. Tomorrow, New home sales at 10:00, then the FOMC statement after 2:00.
Today’s market activity appears to have cleared up our short term count from the SPX 1042 low. What we were counting as a potential five wave rally from that low for Intermediate wave A into the OEW 1136 pivot. It ended up being a three wave rally into the 1136 pivot that topped near yesterday’s open at SPX 1131. The OEW short term charts suggest today’s pullback confirms the completion of that rally. We should start looking for an Intermediate wave B low next. Since the rally from SPX 1042 to 1131 was exactly a fibonacci 89 points, this pullback should fit into the fibonacci number scheme as well. A fibo 34 point pullback would suggest SPX 1097 (we’re already there), a fibo 55 point pullback would suggest SPX 1076, and a 50% 44/45 point pullback would suggest SPX 1086/1087. Three levels to watch. If this market does accomplish a 50% pullback to SPX 1086/1087. Then a fibo 55 point rally would put the SPX at 1141/1142, which is within the range of the targeted OEW 1146 pivot. FOMC and volatility again tomorrow. Best to your trading!
MEDIUM TERM: downtrend low at SPX 1041
LONG TERM: bull market in correction