SHORT TERM: consolidations turns into a pullback, DOW -72
Overnight Asian markets were all lower, losing 0.8%. European markets opened lower and closed -1.1%. US index futures were relatively flat overnight, and at 8:30 Durable goods orders were reported higher: +2.2% vs -3.7%. The stock market opened one point under yesterday’s SPX 1413 close. It then bounced to SPX 1414 before heading lower. Just before noon the SPX hit 1398, rallied to 1403, and then rolled over again. Around 2:00 the SPX hit 1397. This closed the upside gap entirely from friday’s SPX 1397 close to monday’s 1405 open. Then from an extremely oversold condition the market tried to rally. Heading into the close the SPX hit 1406 and closed there.
For the day the SPX/DOW were -0.50%, and the NDX/NAZ were -0.45%. Bonds lost 4 ticks, Crude dropped $1.80, Gold fell $17.00, and the USD was lower. 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 today, then rallied to neutral in late afternoon. Tomorrow, Q3 GDP at 8:30, (market expecting +3.0%), along with the weekly Jobless claims. At 10:00 FED director Braun testifies before the senate, and at 12:45 FED chairman Bernanke concludes his four part lecture on the financial crisis.
The market opened flat today, after yesterday’s new uptrend high at SPX 1419 and dip to 1412 near the close. After a few minutes the market turned yesterday’s consolidation into a minor pullback, dropping down to SPX 1397 by mid-afternoon. This 22 point pullback created an extremely oversold condition, which was a bit unexpected. Some markets, including Gold and Crude, were also caught in what might have been end of quarter profit taking. The quarter ends friday.
From an EW perspective the uptrend still looks fine. The recent rally from SPX 1387 to 1419 can be counted as a Minute wave i, and this pullback Minute ii. Should the market continue to pullback, to SPX 1387, the entire movement from 1387-1419 and back could be counted as an irregular Minor wave 2. The OEW pivot at 1363 still appears to be the “line in the sand” for the uptrend. If the market breaks below that pivot a new downtrend may be underway. Another possibly is Intermediate wave v, from the SPX 1340 low, may be setting up as a diagonal triangle. Should this be the case the next rally to new highs, or back to SPX 1419, may end the uptrend. Lot’s of possibilities here, including the count we have been carrying on the SPX charts. Which remains the most probable. These possibilites should clear in the next few days. Best to your trading!
MEDIUM TERM: uptrend high SPX 1419
LONG TERM: bull market