TRADING 04 FUTURES

[TREND1]

monday update by tony caldaro


SHORT TERM: decline resumes, DOW -138

Overnight the Asian markets lost 0.6%. European markets opened lower and lost 1.8%. US index futures were lower overnight as well. The market gapped down at the open to SPX 1325 and headed lower. The SPX had closed at 1335 on friday. At 10:00 New home sales were reported higher: 369K vs 343K. The decline continued, will small 3-4 point rallies along the way, throughout the morning. Then around noon the SPX hit 1309 and tried to rally. With a short term positive divergence in place the market managed to make it back to SPX 1317 by 3:30 before fading into a 1314 close.

For the day the SPX/DOW were -1.35%, and the NDX/NAZ were -2.00%. Bonds gained 17 ticks, Crude lost 80 cents, Gold rallied $10, and the USD was higher. Support for the SPX remains at the 1313 and 1303 pivots, with resistance at the 1363 and 1372 pivots. Short term momentum is displaying a positive divergence. Tomorrow, Case-Shiller at 9:00 then Consumer confidence at 10:00.

The market gapped down at the open for the first time since last monday. Then the market dropped through initial support at SPX 1324/27, and continued lower until hitting about midway between the 1313 and 1303 pivots. This set up a positive divergence on the hourly charts and the market tried to rally. Short term, we can count a 1-2-3, or abc, into today's extremely oversold lows. A bounce back into the mid-1320's would not be too much of a surprise.

Initial short term resistance remains at the SPX 1324/27 area and then 1334/38. Support remains at the 1313 and 1303 pivots. Short term momentum displays a positive divergence. And the short term OEW remain with a negative bias and the swing point is now around SPX 1332. Best to your trading!

MEDIUM TERM: downtrend likely resuming

LONG TERM: bull market

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