SHORT TERM: higher open then selloff, DOW -252
Overnight the Asian markets lost 0.4%. Europe open higher, but when the ECB disappointed, it closed down 2.8%. US index futures followed Europe higher, then lower before the open. At 8:30 weekly Jobless claims were higher: 269K v 260K. The market opened five points above yesterday’s SPX 2080 close, and then immediately headed lower. At 10am Factory orders were reported higher: +1.5% v -1.0%, ISM services were reported lower: 55.9 v 59.1, and FED chair Yellen testified before the Senate: http://www.federalreserve.gov/newsevents/testimony/yellen20151203a.htm. At 10:30 the SPX hit 2067, then rallied to 2078 just after 11am. After that it headed even lower. At 1pm FED vice chair Fischer gave a speech, fifth FED speech in two days: http://www.federalreserve.gov/newsevents/speech/fischer20151203a.htm. The market continued its decline and hit SPX 2042 right around 2:30. Then it rallied to SPX 2052 in the last hour before closing at 2050.
For the day the SPX/DOW lost 1.40%, and the NDX/NAZ lost 1.70%. Bonds lost 36 ticks, Crude gained $1.20, Gold advance $10, and the USD was lower. Medium term support drops to the 2019 and 1973 pivots, with resistance again at the 2070 and 2085 pivots. Tomorrow: monthly Payrolls and the Trade deficit at 8:30, and no FED speeches.
US index futures were much higher overnight, along with Europe, in anticipation of the ECB increasing its monthly EQE buying. When that failed to materialize the DAX, in example, went from +1% to -3%. US index futures also turned red. The market did manage to open higher, but the volatility in the currency and bond markets immediately began to take its toll on the equity market. We had noted yesterday that SPX 2070 could be an important level. The market broke through that in the first hour of trading, bounced above it, and then headed even lower. Our i-ii-iii-iv-1-2 count posted on the hourly chart yesterday did not hold. After the SPX 2070 break we posted a tentative Intermediate wave v label at yesterday’s SPX 2104 high. This would suggest a fifth wave failure in the current uptrend, failing to at least reach SPX 2116, and a downtrend now underway.
The reason we are going with this count is that the NDX/NAZ both made new uptrend highs this week, possibly completing their fifth waves up from the late-August low. If the uptrend did end this week, and the market is now in a downtrend, this bull market is going to extend into 2016. The parameter: there’s a high probability of the first uptrend off the Primary IV low could end the bull market — if it makes new bull market highs. The SPX, DOW, nor NAZ have made new bull market highs. If the market confirms a downtrend soon that parameter no longer applies, suggesting Primary wave V will divide into five Major wave trends. As a result yesterday’s/today’s decline is both bad news and good news. Bad news in that a correction is probably underway, but good news in that the bull market has at least two more uptrends to go. We updated the SPX daily chart with the appropriate labeling should a downtrend be confirmed soon. Short term support is at the 2019 pivot and SPX 1991, with resistance at the 2070 and 2085 pivots. Short term momentum is extremely oversold. Best to your Payrolls trading!
MEDIUM TERM: uptrend under pressure
LONG TERM: bull market