SHORT TERM: lower early then rebound, DOW +10
Overnight the Asian markets lost 0.1%. European markets opened lower and lost 0.3%. US index futures were relatively flat overnight. The market opened three points below yesterday’s SPX 1845 close, then bounced to 1849 in the first few minutes. At 10am FED counsel Alvarez’s testimony was released: http://www.federalreserve.gov/newsevents/testimony/alvarez20140408a.htm. A pullback followed to a lower low at SPX 1837 by 10:30, and then the market started to rally. Just before 11:30 the SPX hit 1853, pulled back to 1848 just before noon, then headed higher. At 1:30 the SPX hit 1855, pulled back to 1848 by 2:30, bounced to 1854 by 3:30, then ended the day at 1852.
For the day the SPX/DOW were +0.20%, and the NDX/NAZ were +0.85%. Bonds gained 5 ticks, Crude rallied $1.85, Gold rose $12, and the USD was lower. Medium term support remains at the 1841 and 1828 pivots, with resistance at the 1869 and 1901 pivots. Tomorrow: Wholesale inventories at 10am, then the FOMC minutes at 2pm.
The market opened lower today, bounced, and then made a lower pullback low at SPX 1837. From the SPX 1897 high we counted five waves down to that low: 1854-1864-1841-1853-1837. This fifth wave could have ended the decline in possibly the form of a Minor 2 irregular flat, or this is just the first part of a more complex C wave. There was a slight short term positive divergence at the lower low. And, the NDX/NAZ, leaders of the decline, are also displaying positive divergences from yesterday’s low. After the SPX 1837 low the market had its best rally of the entire decline – a positive. However, we would like to see the SPX clear the 1869 pivot to feel more confident that this decline is over. We suspect, as long as the NDX/NAZ hold their lows the SPX/DOW will resume their uptrend. Should the NDX/NAZ drop lower, the SPX/DOW will likely confirm downtrends of their own.
Short term support is at the 1841 and 1828 pivots, with resistance at the 1869 and 1901 pivots. Short term momentum rose from extremely oversold to just above neutral today. The short term OEW charts remain negative with the reversal level now at SPX 1863. Best to your trading!
MEDIUM TERM: uptrend weakened
LONG TERM: bull market