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thursday update
SHORT TERM: SPX breaks through 2002 lows, DOW -445
Overnight the Asian markets were all substantially lower. Europe opened lower and closed -3.15%. US index futures were flat to higher overnight, and at 8:30 the weekly Jobless claims were reported at their highest level since 1992 at 542K v. 515K. The market opened lower at SPX 801 and then continued trading lower. At 10:00 the Philly FED was released and is continuing to contract -39.5 v. -37.5, and Leading indicators turned negative -0.8% v. +0.1%. Also at 10:00 FED governor Kroszner's testimony in Congress was released: http://www.federalreserve.gov/newsevents/testimony/kroszner20081120a.htm, and Deputy Director Parkinson released his testimony before Congress as well: http://www.federalreserve.gov/newsevents/testimony/parkinson20081120a.htm. The market made a low at SPX 777 by 10:30, breaking through the 789 pivot. When news was released that the Senate had come to a 'bailout' deal regarding the Automakers the market rallied. By 11:00 the SPX hit 809 just above yesterday's close. Then pulled back to 787, near the 789 pivot, by 12:00. A another rally followed to the highs of the day at SPX 821. Then news came out that there was no Automakers deal. The market headed south. At 2:00 the FED announced that it was going to extend the FOMC meeting in December to two days: http://www.federalreserve.gov/newsevents/press/monetary/20081120a.htm. As the selling accelerated in the last hour of trading the SPX broke through the 789 pivot again. Then broke through the 2002 low 768 pivot, and continued lower hitting SPX 748 just before the close. The five-year bull market, from 2002-2007, has been wiped out in just 13 months. At the close the SPX/DOW were -6.10%, and the NDX/NAZ were -4.90%. Bonds soared 2 points, Crude lost $4.75, Gold gained $9.50, and the Euro was lower. Support for the SPX drops to 734 and then 717, with resistance now at 768 and then 789. Short term momentum was oversold at the lows, as the positive divergences continue to build. Tomorrow options expiration friday. This morning one of the commenters Joe, sent me a question regarding the short term wave count for this fifth wave of the downtrend. After reviewing the charts my response was that if those two important pivots (789 and 768) failed to hold, a series of 1-2's could be counted from the SPX 1008 high at the beginning of November. I posted the count on the SPX hourly chart at that time. Now it appears it is the working count. If we take SPX 1008 as the end of wave 4 for this downtrend, then we can count the following for wave 5: wave i SPX 900, wave ii SPX 952, then wave iii subdivides: wave 1 SPX 819, wave 2 SPX 917 and wave 3 of iii underway. Hope this helps your trading. This count is posted in the link below.
MEDIUM TERM: downtrend makes new lows at SPX 748
LONG TERM: bear market
 
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wednesday update
SHORT TERM: downtrend makes slightly lower lows, DOW -427
Overnight the Asian markets ignored the rally in the US yesterday and were mostly lower. Europe opened lower and closed -4.85%. US index futures were lower overnight, and at 8:30 the CPI was reported to have dropped 1%, the largest monthly drop on record. The Core CPI turned negative for the first time since 1982 at -0.1%. Also at 8:30 Housing starts reportedly dropped to 791K v. 828K, this is the lowest level since 1959. At 9:00 the FED vice chairman Kohn's speech was released: http://www.federalreserve.gov/newsevents/speech/kohn20081119a.htm. The market bounced around at the open and moved higher to SPX 864. It then pulled back to 850 by 10:00, and rallied to its high for the day at SPX 867 nearing 10:30. After that there was a sharp selloff to SPX 827, yesterday's lows, by 12:30. The market bounced to 840 by 1:00, and then made at low at 822 right after the FOMC minutes were released: http://www.federalreserve.gov/monetarypolicy/fomcminutes20081029.htm. A rally attempt followed, but by 3:00 the SPX hit 836 and then headed lower hitting SPX 806 nearing the close. The downtrend continues, and the DOW closed under 8,000 for the first time since March 2003. At the close the SPX/DOW were -5.60%, and the NDX/NAZ were -6.20%. Bonds were up 1 point again today, Crude slipped $1.25, Gold dropped $5.75 and the Euro was lower. Tomorrow, weekly Jobless claims at 8:30, then the Philly FED along with Leading indicators at 10:00. Friday is options expiration. Support for the SPX drops to 789 and then 768, with resistance at 848 and then 912. Short term momentum was oversold at the close. We now have double positive divergences on the hourly charts, and divergences on every time frame in the major indices. The pivot at SPX 789 should provide the low for this downtrend, unless of course, these divergences fail. Best to your trading!
MEDIUM TERM: downtrend makes new low at SPX 806
LONG TERM: bear market
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tuesday update
SHORT TERM: another volatile day, DOW +151
Overnight the Asian markets were all lower. Europe opened lower but closed +1.15%. US index futures were relatively quiet overnight, and at 8:30 the monthly PPI was reported at -2.8% v. -0.4%, but the Core PPI remained at +0.4%. At 9:30 FED chairman Bernanke's testimony before Congress regarding the TARP and liquidity was released: http://www.federalreserve.gov/newsevents/testimony/bernanke20081118a.htm. The market opened slightly to the downside at 847, rallied to 858 and then pulled back to 846 by 10:00. Holding the SPX 848 pivot the market rallied for the next two hours to 866 by noon. After a short term negative divergence appeared the market began to sell off. At 1:00 NAHB reported the Home builders index had dropped to 9, its lowest level ever. The market continued to selloff until 3:00, when it hit the low for the day at SPX 827. Now sporting a short term positive divergence the market rallied into the close. For the day the SPX/DOW were +1.40%, and the NDX/NAZ were +0.20%. Bonds were up nearly one point, Crude dropped 50 cents, Gold lost $5.00, and the Euro was lower. Support for the SPX remains at 848 and then 789, with resistance at 912 and then 935. Short term momentum was slightly oversold at the lows and moved higher into the close. Tomorrow the CPI is released at 8:30 along with Housing starts. Then the FED's vice chair Kohn releases a speech at 9:00, and the FOMC minutes are released at 2:00. Looks like another volatile day. This market continues to mark time as the day traders flip positions on every short term divergence. Short term we're now following two counts. One is posted on the SPX hourly chart, and the other on the DOW hourly chart. The SPX suggests this downtrend has more downside to go. But the DOW appears to be forming a fifth wave ending diagonal wedge. Most of the damage by this downtrend appears done, with possibly a bit more to the SPX 789 pivot. The market is long overdue for an uptrend of some degree. Best to your trading!
MEDIUM TERM: downtrend low at SPX 819
LONG TERM: bear market
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monday update
SHORT TERM: market closes near the lows for the day, DOW -224
Overnight the Asian markets were mixed. Europe opened lower and closed -2.8%. US index futures moved around quite a bit overnight, and at 8:30 the Empire State index was reported weaker: -25.4 v. -24.6. At 9:15 Industrial production was reported to have improved: +1.3% v. -3.7%. The market opened lower, trading in the 860's before heading to SPX 849 by 10:30. That was the low for the day, right at the 848 pivot. A good rally followed until 1:00 when the SPX hit 882, the high for the day. After that the market pulled back into the 860's, and marked time for a while, before heading back to the 848 pivot going into the close. For the day the SPX/DOW were -2.60%, and the NDX/NAZ were -2.30%. Bonds gained 20 ticks, Crude lost $2.00, Gold eased $7.00, and the Euro was higher. Support for the SPX remains at 848 and then 789, with resistance at 912 and then 935. Short term momentum stayed below neutral for most of the day. Tomorrow the PPI at 8:30, testimony be FED chair Bernanke at 9:30, and then the Home builders index at 1:00. Not much new to report. Still appears that the market is in a trading range with a downward bias, as this downtrend continues. Today we added to stockcharts the Commodity sectors we noted on friday. You can find them on page 8. This market continues to be mostly for daytraders. Best to your trading!
MEDIUM TERM: downtrend low at SPX 819
LONG TERM: bear market
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