SHORT TERM: market rallies then new downtrend lows, DOW -29
This is our 3,000th entry on the blog. Overnight the Asian markets slipped 0.1%. Europe opened lower and lost 0.7%. US index futures were higher overnight, which recently seems to be the case nearly every night during this decline. At 8:30 weekly Jobless claims were reported much higher: 439K vs 355K, the CPI was reported slightly positive: +0.1% vs +0.6%, and the NY FED was reported still in contraction mode: -5.1 vs -6.2. The market opened flat at SPX 1355, tried to rally hitting 1361 in the opening minutes, then headed lower. At 10:00 the Philly FED was reported back in contraction mode: -10.7 vs +5.7. The SPX hit 1352 at 10:00, rallied to 1360 by 10:30, then made a new downtrend low at 1348 by 12:30. Just before 12:30 FED chairman Bernanke’s speech was released: http://www.federalreserve.gov/newsevents/speech/bernanke20121115a.htm. The market again tried to rally, hitting SPX 1359 by 2:00. But it rolled over again retesting SPX 1348 by 3:30, then bounced into a 1353 close.
For the day the SPX/DOW were -0.20%, and the NDX/NAZ were -0.30%. Bonds lost 1 tick, Crude slid 85 cents, Gold dropped $11, and the USD was flat. Medium term support remains at the 1313 and 1303 pivots, with resistance at the 1363 and 1372 pivots. Tomorrow: Industrial production at 9:15, then Options expiration.
The market opened flat today, bounced around a bit, then made a new downtrend low at SPX 1348. The SPX has now declined 8.6%, or 127 points, from its September high. Yesterday we noted the largest downtrend ended the day after Thanksgiving 2011, and was 134 points. This is correct for only downtrends of this degree, which does not include the Primary II 2011 correction.
Despite the recent slide we still have wave relationship and retracement support just under today’s low. At SPX 1345/46 the SPX will have retraced exactly 61.8% of the recent uptrend, and Minor C = 2.618 Minor A. Just below this level, at SPX 1335, Minute C = 1.618 Minute A. Yesterday we upgraded the alternate bearish count to a 30% probability. That chart was first posted in last weekend’s update.
Short term support remains at SPX 1342/47 and 1333/38. Short term momentum is approaching extremely oversold, and still displaying a potential positive divergence – which has not meant much recently. The short term OEW charts remain negative with the swing level now at SPX 1381. Best to your trading!
MEDIUM TERM: new downtrend low at SPX 1348
LONG TERM: bull market