SHORT TERM: pullback extends, DOW -107
Overnight the Asian markets were mostly lower. Europe opened lower and closed -1.45%. US index futures were higher overnight, but the market opened slightly lower at SPX 1314. It had closed at SPX 1315 yesterday. Within the first few minutes the market rallied to SPX 1318. That was the high for the day. Another pullback followed, taking out yesterday’s 1312 low, to 1310 just past 10:00. At 10:00 yearly Existing homes sales were reported higher: 5.36 mln vs 5.28 mln. Another rally attempt followed, but the SPX topped out at 1315 and then headed lower again. Around 12:00 the SPX broke below the OEW 1313 pivot range and entered the 1303 pivot range. Near 1:30 the SPX hit 1300, and from extremely oversold levels attempted another rally. At 2:00 the FED issued the following: http://www.federalreserve.gov/newsevents/press/bcreg/20110223a.htm. The market then rallied back to the 1313 pivot just before 3:30 and started to pullback. At 3:30 the FED issued the following: http://www.federalreserve.gov/newsevents/press/bcreg/20110223b.htm. The pullback ended at SPX 1307 where the market closed.
For the day the SPX/DOW were -0.75%, and the NDX/NAZ were -1.05%. Bonds lost 8 ticks, Crude rallied $3.10, Gold rose $13.00, and the USD was lower. Support for the SPX now drops to 1303 and then 1291, with resistance now at 1313 and then 1363. Short term momentum was extremely oversold at today’s low. Tomorrow, weekly Jobless claims and Durable goods at 8:30, then FHFA home prices and New homes sales at 10:00.
Yesterday’s significant pullback resumed today after a small opening bounce to SPX 1318. The decline, thus far, is 44 SPX points or 3.3%, making it the largest pullback since the 54 point and 4.4% drop in November. At the low today there was a slight overlap between the SPX 1303 Minor 1 high and this potential Minor 4 pullback. This brings the entire short term count from the SPX 1173 Intermediate wave four low into question. This also increases the probabilites that a Major wave 1 high, and an uptrend high, occurred at SPX 1344. Nothing confirmed yet by OEW, will keep advised. Should OEW confirm a downtrend the likely support for Major wave 2 would be between SPX 1173 and 1227, Intermediate waves three and four.
Short term OEW charts remain negative. The SPX would have to rally back to 1320 and above to turn them positive again. Overhead resistance is now at the OEW 1313 pivot range, and then 1363 above that. Support is at the OEW 1303 pivot, it held today, and then 1291 below that. Short term momentum has risen out of the extremely oversold condition, but just barely. We remain with the counts as posted pending further market activity. It would appear this seven month uptrend has likely ended if Crude clears $100/bbl in the next few days. Best to your trading!
MEDIUM TERM: uptrend in jeopardy
LONG TERM: bull market