SHORT TERM: consolidation day, DOW -15
Overnight the Asian markets were mostly lower: -0.7%. European market opened higher and were +0.2%. US index futures were lower overnight, and at 8:30 weekly Jobless claims were reported slightly lower: 357K vs 359K. The market gapped down at the open to SPX 1394, dipped to 1393, and then started to rally. Around 11:30 the SPX had closed the gap and rallied to 1402. With short term momentum now back to neutral the market started to pullback. Around 2:00 the pullback ended at SPX 1395, and then market then drifted up into a 1398 close. At the close the FED released the following: http://www.federalreserve.gov/newsevents/press/other/20120405a.htm, and this: http://www.federalreserve.gov/newsevents/press/bcreg/20120405a.htm.
For the day the SPX/DOW were -0.10%, and the NDX/NAZ were +0.50%. Bonds gained 19 ticks, Crude rose $1.65, Gold rallied $12.00, and the USD was higher too. Support for the SPX remains at the OEW 1386 and 1372 pivots, with resistance at the 1440 and 1499 pivots. Short term momentum moved between neutral and slightly oversold today. Tomorrow, with the US markets closed, the monthly Payroll report at 8:30, then Consumer credit at 3:00.
The market gapped down at the open today, took out yesterday’s low by 1 point, and then tried to rally. Thus far, the SPX has declined from 1422 to 1405, bounced to 1413, declined to 1393, and now has bounced to 1402. This 29 point decline from SPX 1422 can be considered the first wave down of a new downtrend, or the third consecutive major pullback in as many weeks. Since major pullbacks, during this uptrend, have only occurred about once a month. We are expecting this one to be the beginning of a new downtrend. Market characteristics have changed.
Short term support remains at the OEW 1386, (the range was tested today), and 1372 pivots. Overhead support resistance is at SPX 1414, 1419 and 1422. Short term momentum has not hit extremely oversold despite the decline. It bounced around between oversold and neutral today. The short term OEW charts remain on a negative bias with the swing point around 1404. Enjoy the holiday!
MEDIUM TERM: uptrend may have ended at SPX 1422
LONG TERM: bull market