TRADING 04 FUTURES

[TREND1]

tuesday update by tony caldaro


SHORT TERM: market rebounds, DOW +32

Overnight the Asian markets lost 0.1%. Europe open higher but closed down 0.1% as well. US index futures were higher overnight, and at 9:00 Case-Shiller was reported higher: 135.80 vs 134.08. The market opened higher at SPX 1317 and hit 1320 by 10:00. The market had closed at SPX 1315 yesterday. Also at 10:00 Consumer confidence was reported lower: 62.0 vs 64.9. A pullback followed to SPX 1310, a point above yesterday's low, by 11:00 and another rally attempt followed. By 2:30 the SPX had risen to 1324, then it pulled back to end the day at SPX 1320.

For the day the SPX/DOW were +0.35%, and the NDX/NAZ were +0.60%. Bonds lost 6 ticks, Crude added 15 cents, Gold slid $11, and the USD was lower. Support for the SPX remains at the 1313 and 1303 pivots, with resistance at the 1363 and 1372 pivots. Short term momentum rose from yesterday's positive divergence to nearly overbought today. Last night the FED reported New home prices declined: $273.9K vs $283.9K. Tomorrow, Durable goods orders at 8:30, then Pending home sales at 10:00.

The market opened higher today, then nearly retested yesterday's low before rallying into the mid-1320's. During the advance the market neared slightly overbought. This fits quite well with the 1-2-3 count to SPX 1309 we noted yesterday. Today's rally would be wave 4. The largest rally after the recent SPX 1363 high was on FOMC day, (16 points). We counted that as wave 2. This recent rally has been 15 points thus far, (1309-1324), the second largest. We're counting this as wave 4. When it concludes the market could experience a sharp decline into the downtrend low. Should this pattern continue the entire correction, from May, could end in a large 3-3-5 flat.

Short term support is at the 1313 and 1303 pivots, with resistance at SPX 1324/27 and 1334/38. The short term OEW charts remain with a negative bias, and the swing point is now around SPX 1329. Best to your trading!

MEDIUM TERM: downtrend likely resuming

LONG TERM: bull market

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