thursday update

SHORT TERM: decline continues in bungee session, DOW -18

Overnight Asian markets gained 0.2%. Europe opened lower but gained 0.1%. US index futures were higher overnight, and at 8:30 weekly Jobless claims were reported lower: 350K vs 361K. The market opened unchanged at SPX 1420, bounced to 1423 in the first few minutes, and then started to pullback. At 10:00 Consumer confidence was reported lower: 65.1 vs 73.7, while New home sales were reported higher: 377K vs 368K. The market then broke through SPX 1413/16 short term support and continued lower. Around 12:30 the SPX found support at the next short term level 1402/03, and then tried to rally. At 1:30 the SPX hit 1409, pulled back to 1403 by 2:30, then moved higher still. Heading into the last hour of trading the SPX hit 1421, then pulled back into a 1418 close.

For the day the SPX/DOW were -0.10%, and the NDX/NAZ were -0.15%. Bonds gained 9 ticks, Crude rose 20 cents, Gold added $4, and the USD was flat. Medium term support remains at the 1386 and 1372 pivots, with resistance at the 1440 and 1499 pivots. Tomorrow: Chicago PMI at 9:45, then Pending home sales at 10:00.

The market opened flat today, bounced a bit, then headed lower, taking out support at SPX 1413/16, 1412, and then finding support at 1402/03. The first important level, SPX 1412, has now been breached to the downside. The next important level, SPX 1398, is still holding firm. The bounce from yesterday’s SPX 1416 low was not sufficient to suggest a completed wave from 1433. So, in effect, we are looking at five waves down from SPX 1448 to today’s 1402 low. The rally that followed today’s low suggests those five waves completed. This decline, however, is by far the largest since the downtrend low at SPX 1343. The bearish DOW count is beginning to edge a bit higher in probability.

Short term support is at SPX 1413/16 and the 1402/03, with resistance at 1422/27 and the 1440 pivot. Short term momentum hit extremely oversold at the noon lows, then rebounded to above neutral. The short term OEW charts remain negative, with the swing level now at SPX 1424. Best to your trading!

MEDIUM TERM: uptrend in jeopardy

LONG TERM: bull/bear inflection point

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