SHORT TERM: pullback extends, DOW -78
Overnight the Asian markets were mixed and lost 0.6%. European markets opened lower and lost 1.2%. US index futures were lower overnight, and at 8:30 weekly Jobless claims were reported lower: 348K vs 351K. The market gapped down again, second time in three days, at the open to SPX 1395. It had closed at SPX 1403 yesterday. Within the first few minutes the market dipped to SPX 1393, then bounced to 1396 by 10:00. At ten Leading indicators were reported higher: +0.7% vs +0.4%, and the FHFA housing index was reported lower: 0.0% vs +0.7%. Also, FED governor Tarullo gave senate testimony: http://www.federalreserve.gov/newsevents/testimony/tarullo20120322a.htm. The market sold off further to SPX 1389 by 11:00, hit extremely oversold short term, and then tried to rally. At 1:00 the SPX hit the opening level at 1395 and rolled over again. In the last hour of trading the SPX retested 1389, rallied to 1394, then dipped to a 1393 close.
For the day the SPX/DOW were -0.65%, and the NDX/NAZ were -0.30%. Bonds gained 5 ticks, Crude lost $1.85, Gold slid $7.00, and the USD was higher. Support for the SPX remains at the 1386 and 1372 pivots, with resistance at the 1440 and 1499 pivots. Short term momentum hit extremely oversold. Tomorrow, New home sales at 10:00 then a speech from FED chairman Bernanke at the DC FED at 1:45.
The market opened lower today taking out tuesday’s SPX 1396 low at the open, and continued lower to 1389. Which was retested in the last hour of trading. This decline is a bit more than expected. We thought the SPX would pullback within a 20 point range from the 1414 high. The pullback is now 25 points. This decline now creates the possibility that SPX 1414 was the uptrend high. We have posted this count, as an alternate, on the DOW charts. The OEW pivot at 1386 is creating support for this pullback. Should it fail, and the SPX drops into the 1372 pivot range, there would be reason for concern. If that pivot fails, and the SPX drops to the 1363 pivot, and then below, the uptrend is probably over.
In the meantime. The decline from SPX 1414 could be a labeled zigzag: 1396-1408-1389, as both declines look like five waves. And, there is slight positive divergence at the second low on the hourly chart. Short term support remains at the 1386 and 1372 pivots, with resistance now at SPX 1408 and 1414. Best to your trading!
MEDIUM TERM: uptrend high SPX 1414
LONG TERM: bull market