SHORT TERM: new uptrend high then market declines, DOW -166
Overnight the Asian markets were mostly lower. Europe opened lower and closed -1.05%. US index futures were lower, then higher overnight. At 8:30 Q4 GDP was reported lower than expected: +3.2% vs +2.6%. Estimates were over +3.5%. The market opened unchanged at SPX 1300 and rallied to the OEW 1303 pivot in the opening minutes. That was the high for the day, and possibly the uptrend. Approaching 10:00 the market started to pullback when Consumer confidence was reported higher: 74.2 vs 72.7. The pullback began to gather momentum after yesterday’s SPX 1294 low was taken out. After a pause around 11:00 at SPX 1287 the market headed lower yet again. Right around noon the SPX hit 1277, bounced to 1283 by 1:00, then made a lower low at 1276 just past 1:30. Another rally attempt followed, but the market only hit SPX 1282 by 3:00, and then made a new low on the day at 1275 before closing at 1276.
For the day the SPX/DOW were -1.60%, and the NDX/NAZ were -2.50%. Bonds gained 14 ticks, Crude soared $3.80, Gold rallied $24.00, and the USD was higher. Support for the SPX drops to 1261 and then 1240, with resistance now at 1291 and then 1303. Short term momentum ended the day at extremely oversold levels. Last night the FED reported the M1-multiplier declined, but the Monetary base rose. Today the WLEI came in lower: 53.5% vs 54.1%, the first week to week decline since August.
After reaching a new uptrend high this morning right at the 1303 pivot the market had the largest, and quickest, pullback since the late november Intermediate wave four low at SPX 1173. The short term OEW charts quickly turned negative when the market broke below SPX 1292. While the market continued to drift higher during the past couple of weeks we had been waiting for an early downtrend confirmation signal before posting a tentative “green” Major wave 1 level at the highs. That signal occurred today! This is not an OEW downtrend confirmation, only a leading indicator that one may occur shortly. In fact, this is the first signal of a potential trend reversal in more than six months. We’ll cover the implications of this event in the weekend update. Enjoy the weekend!
MEDIUM TERM: uptrend in jeopardy after new high @ SPX 1303
LONG TERM: bull market