SHORT TERM: market gaps up then retreats, DOW -21
Overnight the Asian markets gained 1.0%. European markets opened higher and gained 0.4%. US index futures were higher overnight as well. At 9:00 Case-Shiller reported a 1.3% decline in housing prices. The market gapped up at the open to SPX 1318 and continued to rally to 1320 in the opening minutes. The SPX had closed at 1313 yesterday. At 9:45, when the Chicago PMI was reported lower: 60.2 vs 62.5 the market started to pullback. Then at 10:00, when Consumer confidence was reported lower: 61.1 vs 64.5 the pullback continued. Just before noon the SPX hit 1307 and tried to rally. Just before 3:00 the SPX hit 1314 and trhen pulled back some to close at 1312.
For the day the SPX/DOW were -0.10%, and the NDX/NAZ were +0.10%. Bonds gained 8 ticks, Crude slipped 30 cents, Gold gained $11, and the USD was higher. Support for the SPX drops to 1303 and then 1291, with resistance now at 1313 and then 1363. Short term momentum hit overbought this morning, declined below neutral, and ended the day above it. Tomorrow at 8:15 the ADP index, at 10:00 ISM manufacturing and Construction spending, than Auto sales after that. At 2:00 FED director Bertsch gives testimony before the senate on banking supervision.
Today’s gap up opening was sold as quickly as yesterday’s gap down opening was bought. Traders appear to have more control of the market than either buyers or sellers since last thursday’s SPX 1333 uptrend high. Over the past few days we have had a 33 point decline to SPX 1300. Then a 21 point rally to today’s SPX 1321 high. What followed has been a 14 point pullback to SPX 1307, and then a 7 point bounce to 1314. We labeled yesterday’s SPX 1300 low Minute wave A, and today’s 1321 high Minute wave B. Minute wave C, of Minor wave 4, should be currently underway. Should Minute C find support at SPX 1300 it could end Minor wave 4 with a small flat. Should Minute C find support at SPX 1288 it could end Minor 4 with a simple zigzag. In both cases the low should be around the OEW 1291 pivot range, and Minor wave 4 would have taken about 1 week.
Short term support slips to the 1303 and 1291 pivots, then SPX 1278. Overhead resistance is at the 1313 pivot, then SPX 1327/33 and 1345/47. Short term momentum declined from overbought this morning to around neutral. Our short term OEW charts are currently at neutral. Best to your trading!
MEDIUM TERM: uptrend high SPX 1333
LONG TERM: bull market