thursday update

SHORT TERM: market gaps down at open, DOW -13

Overnight the Asian market tumbled 3.9% – mostly Japan. Europe opened lower and lost 2.1%. US index futures were sharply lower overnight. At 8:30 weekly Jobless claims were reported lower: 340K vs. 360K, and at 9:00 the FHFA housing index was reported higher: +1.3% vs. +0.7%. The market gapped down at the open, for the first time since April 17th, dropping to SPX 1644. The market had closed at SPX 1655 yesterday. In the opening minutes the decline continued until the SPX hit 1636, became extremely oversold, then started to rally. At 10:00 the SPX hit 1647, pulled back to 1641 by 11:00, then rallied to 1654 by noon. Also at 10:00 New home sales were reported higher: 454K vs. 417K. After another pullback, this time to SPX 1645, the market rallied to 1656 by 3:00, closing the opening gap. A pullback into the close ended the day at SPX 1651.

For the day the SPX/DOW were -0.20%, and the NDX/NAZ were -0.20%. Bonds gained 3 ticks, Crude added 10 cents, Gold gained $27, and the USD was lower. Medium term support remains at the 1628 and 1614 pivots, with resistance at the 1680 and 1699 pivots. Tomorrow: Durable goods orders at 8:30.

Panic selling in Japan last night, (-7.3%), after opening over 1% higher, spilled over into markets worldwide. However, the decline in key foreign markets was held to about 2%. The SPX gapped down, nearly touched the upper range of the OEW 1628 pivot, and then began to rally. The decline from yesterday’s uptrend high SPX 1687, to today’s low, 1636, was 3% in less that 24 hours. The market’s message is that it can go down quickly as well as rise, and volatility has likely returned for the rest of the bull market.

Thus far we are still considering the SPX 1687 high as Minute iii of Minor 5 of the uptrend. Today’s drop to SPX 1636 could have ended Minute iv. A rally into the SPX 1658-1667 range would suggest Minute v is underway. A breakdown below the OEW 1628 pivot would suggest the downtrend Intermediate iv may be underway.

Short term support is at the 1628 and 1614 pivots, with resistance at the SPX 1658-1667 zone and the 1680 pivot. Short term momentum hit extremely oversold this AM, then bounced to neutral. The short term OEW charts were slightly negative at yesterday’s close, remained negative, with the reversal level is now at 1655. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: bull market

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

Filed under: Updates