SHORT TERM: pullback makes new lows, DOW -37
Overnight the Asian markets were again mostly lower. Europe opened lower and closed -0.50%. US index futures were lower overnight, but improved after Crude pulled back from a spike high over $103/bbl. At 8:30 weekly Jobless claims were reported under 400K again: 391K vs 413K, and Durable goods orders were reported higher: +2.7% vs -2.3%. The market opened slightly lower at SPX 1305 and tried to rally. The SPX had closed at 1307 yesterday. At 10:00 the FHFA housing price index was reported lower: -0.3% vs +0.0%, and New home sales was lower: 284K vs 329K. The market continued to work its way higher until 10:30 when it hit the high for the day at SPX 1311, right near the 1313 pivot. Then the two day pullback stretched into three days. Around 12:00 the SPX retested yesterday’s 1300 low. This low held for about an hour and a half, and then the market headed lower. Around 2:00 the SPX broke through the OEW 1303 pivot and hit 1294, the low for the day. With a positive short term divergence now in place, and a pullback in Crude, the market began to rally into the close. Around 3:30 the SPX hit 1310 and then dipped some to close at 1306.
For the day the SPX/DOW were -0.20%, and the NDX/NAZ were +0.55%. Bonds gained 5 ticks, Crude dropped $1.70 cents, Gold slid $12.00, and the USD was lower. Support for the SPX remains at 1303 and then 1291, with resistance at 1313 and then 1361. Short term momentum put in a positive divergence at today’s low. Tomorrow, Q4 GDP at 8:30, then Consumer Sentiment at 10:00. At 1:30 FED vice chairman Yellen gives a speech in NYC.
The market opened a little lower today and tried to continue yesterday’s afternoon rally from SPX 1300. When the SPX could only reach 1311, below yesterday’s 1313 pivot test, the market headed south. In mid-afternoon the SPX traded down to 1294, breaking through the 1303 support pivot and entering the 1291 support pivot range. After a postive divergence appeared on the hourly charts, and a pullback by Crude, the market started to rally. From an OEW perspective, however, the damage had already been done to our short term OEW count. The alternate count posted this morning has now become the preferred count.
This count suggests Major wave 1 completed at the SPX 1344 high with the wave pattern posted. A new downtrend has not been confirmed by OEW. Should this pullback continue lower into next week we’re likely to get an OEW downtrend confirmation. We also have a SPX alternate count posted on the DOW charts. This count suggests, once this pullback concludes the July uptrend will resume.
Thus far all the SPX sectors have remained in uptrends, but the TRANsports confirmed a downtrend recently. So we are starting to see some weakness in the indices. Support is currently at the 1303/1291 pivots with 1261 below that, resistance at the 1313 pivot. Should the market clear the 1313 pivot then the OEW short term charts will turn positive again. Crude continues to be the driving force for the equity market. Best to your trading!
MEDIUM TERM: uptrend in jeopardy
LONG TERM: bull market