SHORT TERM: market gaps down then recovers somewhat, DOW -88
Overnight the Asian markets were mostly lower. Europe opened lower but closed mixed. US index futures were lower overnight and the market gapped down to SPX 1335 at the open. The SPX had closed at 1345 on friday. In the opening minutes the market dipped to SPX 1331, got oversold for the first time since last monday, and then began to rally. At 11:00 the FED released the following: http://www.federalreserve.gov/publications/other-reports/default.htm#creditratings. The market continued to rally into the afternoon. Around 1:00 the SPX hit resistance at 1344 and began to pullback. This pullback continued into a SPX 1337 close.
For the day the SPX/DOW were -0.65%, and the NDX/NAZ were -0.40%. Bonds lost 7 ticks, Crude dropped 75 cents, Gold rallied $15.00 and the USD was lower. Support for the SPX remains at 1313 and then 1303, with resistance at 1363 and then 1372. Short term momentum hit oversold this morning then turned higher. Tomorrow, Case-Shiller at 9:00, then Consumer confidence and New homes sales at 10:00.
The market stalled around the SPX 1344 area on thursday/friday. Pulled back 10 SPX points on friday. Rallied just short of the SPX 1347 high friday, and then pulled back even further today to 1331 today. Thus far, we can count the rally from last monday’s SPX 1296 low to 1347 having only one pullback of 10 points or more. Today’s decline did get the market oversold. On the bullish side: we can count the rally and pullback as Minute waves one and two of Minor 5. On the bearish side: we can consider this the beginning of a much larger decline. All we can be sure of at the moment, is this market has been trapped between the OEW 1261 pivot and 1372 pivot for all of 2011. The short term OEW charts remain positive with support at SPX 1335, then the 1313 and 1291 pivot ranges. Overhead resistance remains in the SPX 1344 area, then the 1363 and 1372 pivot ranges starting with 1356. Best to your trading!
MEDIUM TERM: uptrend high SPX 1356
LONG TERM: bull market remains at inflection point