SHORT TERM: market gaps down, DOW -131
Overnight the Asian markets were mostly lower -1.3%. European markets were still closed. US index futures had traded lower in abbreviated trading on friday, and remained lower into today’s open. At the open the SPX gapped down to 1385 and continued lower. The SPX had closed at 1398 on thursday. Around 10:00 the SPX hit 1378, the top of Intermediate wave iii, and started to stabilize. For the rest of the day the market moved higher, hitting SPX 1387 around 3:00. Then a pullback into the close ended the day at SPX 1382.
For the day the SPX/DOW were down 1.05%, and the NDX/NAZ were down 0.95%. Bonds gained 33 ticks, Crude slid 90 cents, Gold rallied $11.00, and the USD was lower. Support for the SPX drops to 1372 and 1363 pivots, with resistance now at 1386 and 1440 pivots. Short term momentum hit extremely oversold at today’s lows. Tonight, FED chairman Bernanke gives a speech at 7:15. Tomorrow, Wholesale inventories at 10:00.
Today the market gapped down for the third trading day in a row. The decline from monday’s SPX 1422 high has been as follows: 1405-1413-1393-1402-1378. Notice the two rallies have been 8 and 9 points respectively. And, the declines have been: 17-20-24, gradually increasing. Thus far there has not been an overlap of any of the waves. Therefore this could represent five waves down, or part of a double zigzag formation. Until the market rallies above SPX 1393 we’ll count it as a double zigzag.
After today’s SPX 1378 low, the market staged a good rally after declining 44 points. This rally started from an extremely oversold short term condition, and also note, Europe was closed and had no impact on US trading. The rally, however, was no more than the typical 8-9 point variety. Short term support drops to the 1376 and 1363 pivots, with resistance at the 1386 pivot and SPX 1414. The short term OEW charts remain negative with the swing point around 1399. Best to your trading!
MEDIUM TERM: uptrend likely topped at SPX 1422
LONG TERM: bull market