SHORT TERM: significant pullback starts the week, DOW -178
Overnight Asian markets were all lower. Europe opened lower and closed -0.15%. US index futures lost ground during monday’s holiday session and stayed lower into today’s open. At 9:00 Case-Shiller reported housing prices were: -2.4% vs -1.6% y/y. At the open the market gapped down to SPX 1333 and continued lower to 1325 in the opening minutes. The SPX had closed at 1343 on friday. After hitting 1325 the market rallied to SPX 1336 just past 10:00. That was the high for the day. Also at 10:00 Consumer confidence was reported higher: 70.4 vs 65.6. For the next half hour the market traded within a few points of the high. Then around 11:00 it started to break lower. Around 12:00 the SPX took out the low for the day and traded down to 1315 by around 1:30. After a bounce to SPX 1318 by 3:00 the market made its lowf or the day at 1312 by 3:30. Another bounce into the close ended the session at SPX 1315.
For the day the SPX/DOW were -1.75%, and the NDX/NAZ were -2.80%. Bonds gained 34 ticks, Crude soared $7.60, Gold rallied $10.00, and the USD was higher. Support for the SPX remains at 1313 and then 1303, with resistance at 1363 and then 1372. Short term momentum is extremely oversold. Tomorrow, Existing home sales at 10:00.
As reported yesterday, fears of a disruption in world oil supplies have generated a lot of profit taking in many of the world’s markets. With Crude soaring as much as $9.00 in overseas trading last night – it has backed off some since – a flight to perceived less risky assets, i.e. Bonds, Gold and the USD has been underway to some degree.
Technically, the market has just experienced its largest pullback, (32 points), since the Intermediate wave four low at SPX 1173 in November. The short term OEW charts suggest that the SPX 1344 high ended Minor wave 3 of Intermediate wave five. Should the high of Minor wave one at SPX 1303 be penetrated by this pullback, then this count would be questionable and Major wave 1 may have completed. Should the SPX 1303 level hold during this pullback a Minor wave 5 rally should follow to new uptrend highs. With support at the 1313 and 1303 pivots it appears to be “make or break” time for this Major wave 1 seven month uptrend. Best to your trading!
MEDIUM TERM: uptrend high @ SPX 1344
LONG TERM: bull market