SHORT TERM: another gap down day, DOW -59
Overnight the Asian markets were mixed. Europe opened lower and closed -1.75%. US index futures were lower overnight as well. At 8:30 the weekly Jobless claims came in higher: 429K vs 414K. The market gapped down substantially at the open to SPX 1276 and continued to 1264 by 10:00. The SPX had closed at 1287 yesterday. At 10:00 New home sales were reported relatively flat: 319K vs 323K. The market rallied quickly to SPX 1271, and then rolled over again hitting 1263 by 11:00. That was the low for the day. At 11:00 the FED issued the following: http://www.federalreserve.gov/newsevents/press/bcreg/20110623a.htm. The market then rallied back to the opening level of SPX 1276 before rolling over again. Around 3:00 the SPX hit 1268 and then spiked higher. Within a few minutes the SPX hit 1283. It then pulled back to SPX 1277 by 3:30 and rallied to close at 1284. Wild day!
For the day the SPX/DOW were -0.40%, and the NDX/NAZ were +0.75%. Bonds gained 20 ticks, Crude dropped $3.65, Gold fell $26.00, and the USD was sharply higher. Support for the SPX rmeains at 1261 and then 1240, with resistance at 1291 and then 1303. Short term momentum hit extremely oversold early in the morning, then ended up above neutral. Tomorrow, Q1 GDP at 8:30 along with Durable goods orders.
The opening gap down broke through the SPX 1280 level we noted yesterday. The rally from SPX 1258 to 1299 looked like a three wave affair at that point. But it could also be counted as a five, (10min chart), should today’s SPX 1263 low hold. The pullbacks were quite small during the move from SPX 1268 – 1299. Traders appear to be perplexed, as this market has had six gap openings in the past eight trading days: three up and three down. The past couple of weeks have certainly been quite volatile. For now, we’ll maintain our tentative downtrend low at SPX 1258 labeling. This sharp pullback from SPX 1299 to 1263 could have been a steep second wave. SPX 1258 looks like a good stop going forward. Short term OEW charts ended the day barely positive after turning negative earlier today. Tech leaders did quite well even during the selloff. Best to your trading!
MEDIUM TERM: downtrend at inflection point, low SPX 1258
LONG TERM: bull market