SHORT TERM: tumble Thursday, DOW -267
Last night FED governor Tarullo gave a speech: http://www.federalreserve.gov/newsevents/speech/tarullo20140409a.htm. Overnight the Asian markets gained 0.5%. European markets opened higher but lost 0.4%. US index futures swung above/below unchanged overnight. At 8:30 weekly Jobless claims were reported at their lowest level since 2007: 300k v 326k, and Export (+0.5% v +0.6%)/Import prices (+0.3 v -0.2%) were reported higher. The market opened two points below yesterday’s SPX 1872 close, dipped to 1868, then hit 1873 before 10am. After that it was all downhill for the rest of the day. With only two 4 point bounces the SPX dropped to 1840 by 1:30. At 2pm the Budget deficit was reported lower: -$36.9bn v -$106.5bn. After a bounce to SPX 1848 by 2:30, the market dropped to 1831 just after 3pm. Then another bounce to SPX 1839 before the close, before declining again to end the day at 1833.
For the day the SPX/DOW were -1.85%, and the NDX/NAZ were -3.10%. Bonds gained 12 ticks, Crude slipped 30 cents, Gold rose $7, and the USD was lower. Medium term support drops to the 1828 and 1779 pivots, with resistance at the 1841 and 1869 pivots. Tomorrow: the PPI at 8:30, then Consumer sentiment at 10am.
The market opened a bit lower today, made a slightly higher high, and then began to pullback. The growth indices NDX/NAZ had a slight down open and continued to fall right from the beginning of trading. While those indices were declining 1% the SPX was only down a handful of points. But when they broke lower they took the whole market with them. After yesterday’s extreme short term overbought reading we expected a pullback. But not a selloff. Currently the DOW count appears to be the most probable count for the Cyclicals, while the NDX/NAZ remain in Intermediate wave iv. The opportunity to realign the four major indices appears squandered. Kudos to those that caught these swings!
Short term support drops to the 1828 pivot and SPX 1814, with resistance at the 1841 and 1869 pivots. Short term momentum ended the day extremely oversold – rally next? The short term OEW charts swung negative at 1860, and the reversal level is now SPX 1858. Best to your trading this volatile week.
MEDIUM TERM: downtrend
LONG BTERM: bull market