SHORT TERM: pullback continues into second day, DOW -77
Overnight the Asian markets, those that were open, were mixed. Europe opened higher but closed -0.25%. US index futures were lower overnight, and at 8:30 weekly Jobless claims were reported higher: 465K v 450K. The market gapped down at the open to SPX 1127, it had closed at 1134 yesterday. Within the first few minutes the SPX traded down to 1123, hit short term oversold, and then started to rally. At 10:00 annualized Existing homes sales were reported higher: 4.13 mln v 3.83 mln, and the BEA leading indicators were reported positive: +0.3% v +0.1%. The market continued to rally until it ran into resistance at SPX 1137, the OEW 1136 pivot, around 11:30. Then heading into the afternoon the market started to pullback again. Around 3:30 the SPX retested the low for the day at 1123 and then closed at 1125.
For the day the SPX/DOW were -0.80%, and the NDX/NAZ were -0.20%. Bonds gained 3 ticks, Crude added 20 cents, Gold rose $2.00, and the USD was higher. Support for the SPX remains at 1107 and then 1090, with resistance at 1136 and then 1146. Short term momentum hit a good oversold condition, for the first time this month, early this morning, then bounced to neutral and put in a slight positive divergence at the close. Tomorrow, Durables goods orders at 8:30, then New home sales at 10:00. Also tomorrow, a speech by FED governor Duke in Wash, DC at 9:00. At 10:00 Congressional testimony by FED general counsel Alvarez, and at 4:30 a speech by FED chairman Bernanke at Princeton Univ.
The market gapped down at the open this morning after closing below the OEW 1136 yesterday. The short term OEW charts confirmed the completion of the five Minute waves up from the SPX 1041 low to the SPX 1149 high. This completes Minor wave 1 of Intermediate wave three. The pullback Minor wave 2 is currently underway. Thus far, at today’s low, the pullback from 1149 is 26 points (at 1123). This is about a 23.6% retracement of the recent rally. A retest of the OEW 1107 pivot would represent about a 38.2% retracement. Typically we would expect the daily RSI momentum readings to at least reach neutral during this type of pullback. Sometimes this indicator may even get close to an oversold reading. It hit neutral heading into the close. Once this pullback completes the market should then start to rally in Minor wave 3. Best to your trading!
LONG TERM: bull market