tuesday update

SHORT TERM: DOW confirms downtrend, DOW -214

Last night FED chairman Bernanke gave a speech at the Atlanta FED: http://www.federalreserve.gov/newsevents/speech/bernanke20120409a.htm. Overnight the Asian markets were mostly lower -0.4%. European markets opened lower, after an extended holiday, and were -2.6%. US index futures were relatively flat overnight. The US market opened 2 points below yesterday’s SPX 1382 close. In the first few minutes the SPX dipped to 1379, bounced to 1383, and then headed lower. At 10:00 Wholesale inventories were reported higher: +0.9% vs +0.4%, and FED governor Tarullo’s speech was released: http://www.federalreserve.gov/newsevents/speech/tarullo20120410a.htm. Around 10:30 the SPX entered the OEW 1372 pivot range. Then around noon the SPX entered the OEW 1363 pivot range. At 1:30 the SPX hit 1359, rallied to 1364 by 2:00, and then made a lower low at 1357 around 2:30. A rally attempt followed to SPX 1362 by 3:30, but the market ended the day at 1359.

For the day the SPX/DOW were -1.70%, and the NDX/NAZ were -1.75%. Bonds gained 15 ticks, Crude slid $1.25, Gold rallied $18.00, and the USD was higher. Support for the SPX drops to the 1313 and 1303 pivots, with resistance now at the 1363 and 1372 pivots. Short term momentum hit extremely oversold and closed there. Tomorrow,  Export/Import prices at 8:30, then the Budget deficit and the FED’s beige book at 2:00. Also tomorrow a speech from vice chair Yellen after hours at NYU.

The market opened raltively flat today. But with Europe open during US market hours the two declined in tandem. The continued weakness in foreign markets eventually took its toll on the US market, as the DOW has confirmed a downtrend and the US has entered a correction. The other three major US indices are likely to confirm downtrends shortly.

The recent market high at SPX 1422 did terminate with a diagonal triangle fifth Intermediate wave. The correction should bottom between SPX 1300 and 1340, with 1313-1327 the likely target range, during the next few weeks. We’re not expecting anything complex. Just a simple correction for Major wave 4 to alternate with the somewhat complex correction of Major wave 2.

The decline thus far appears to be a zigzag. Starting from the SPX 1422 high: 1405-1413-1393-1402-1378-1387-1357. Notice the rallies have been limited to 8-9 points, and the declines have been increasing: 17-20-24-30, without any overlaps. Short term support is now at SPX 1354, 1340, then 1333. Overhead resistance is at the 1363, 1372 and 1386 pivots. Short term momentum is extremely oversold and this market is due for a bounce soon. Best to your trading!

MEDIUM TERM: uptrend ended at SPX 1422

LONG TERM: bull market

CHARTS: http://stockcharts.com/public/1269446/tenpp