SHORT TERM: too much good news, DOW -153
Overnight the Asian markets lost 0.6%. Europe opened higher, rallied on the ECB rate cut, then ended -0.1%. US index futures were lower overnight, rallied on the ECB news, then weakened when Q3 GDP was reported higher than expected: +2.8% v +2.5%. Also at 8:30 weekly Jobless claims were reported lower: 336K v 340K. The market opened three points above yesterday’s SPX 1770 close, rallied to 1775 in the opening minutes, then started to pullback. Around 11:30 the SPX hit 1756, a recent support zone, then rallied to 1765 by 12:30. Then the market started to pullback further. At 2:30 the SPX hit 1749, bounced to 1754 by 3:00 when Consumer credit was reported higher: $13.7bn v $13.6bn, then headed south again. Heading into the close the SPX hit 1746, then closed at 1747.
For the day the SPX/DOW were -1.15%, and the NDX/NAZ were -1.90%. Bonds gained 8 ticks, Crude slipped 50 cents, Gold slid $11, and the USD was higher. Medium term support remains at the 1699 and 1680 pivots, with resistance at the 1779 pivot. Tomorrow: monthly Payrolls and PCE prices at 8:30, Consumer sentiment at 10AM, then a speech from FED chairman Bernanke at 3:30PM.
The market opened higher today, retested the all time highs at SPX 1775, and then sold off. At the end of the day the market had declined from a high of SPX 1775 to 1746, and closed at 1747. The last time the market experienced this type of decline, without a gap down opening, was May 22nd. Then the SPX put in an uptrend high at 1687, sold off to 1649, and closed at 1655 all in one day. Near the close we updated the SPX/DOW charts. The DOW charts suggest a potential Primary III high occurred this AM. The SPX charts are a bit more complicated, but “at least” Minor c of Int. iv/d certainly appears to be underway. Keep in mind we use the DOW as a bellwether, and this market has been in an index trifurcation for a few months.
Short term support is now at SPX 1730, with resistance at SPX 1753-1757 and SPX 1765-1769. Short term momentum sold off after today’s negative divergence, ending the day at extremely oversold. The short term OEW charts turned negative early and ended the day negative, with the reversal level at SPX 1762. Monthly payrolls tomorrow best to your trading!
MEDIUM TERM: uptrend
LONG TERM: bull market