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thursday update
Oct 03, 2008

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Tony

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SHORT TERM: market pressuring House into submission, DOW -348

Last night the Senate passed the new earmark laden "bailout plan" 74-25. The Asian markets were mixed on the news, while Europe opened higher but closed -2.15%. US index futures pulled back in the early hours, and at 8:30 the weekly unemployment report came in just under 500K, the highest level in seven years. The market gapped down at the open hitting 1156 and continued lower and lower until hitting SPX 1122 by 11:30. At 10:00 August factory orders were reported to have dropped 4%, the largest monthly decline in two years. The market rallied to SPX 1134 by noon, and then bounced around between this level and the lower one for about two hours. Around 2:30 the market slipped below 1120 and hit 1111 nearing the close. Everything but Bonds and the USD remained under pressure all day. At the close the SPX/DOW were -3.60%, and the NDX/NAZ were -4.55%. Bonds gained about 20 ticks, Crude lost $4.75, Gold dropped $48.00, and the Euro was lower. Support for the SPX drops down to 1107, 1090 and then 1061, with resistance at 1136 and then 1146. There is a long term pivot at precisely SPX 1107 that we completely forgot about. It's posted on the daily chart now. Short term momentum is oversold, and the near term indicators are getting there as well. Tomorrow, Sept. non-farm payrolls at 8:30, then ISM services at 10:00, and hopefully the House with vote on the "bailout plan". Last night, Eric in our OEW group, mentioned that the Senate would probably pass the bill and then the market would sell off, pressuring the House, right into the vote. Nice going!
We continue to feel the market is very close to the Primary wave A low. The price projections set forth a couple of days ago suggest a bottom in between the two lower support pivots 1061 and 1090. Preferably in the SPX 1070's. Tomorrow should be a most interesting day. We added Kraft to our stock list. Best to your trading!
MEDIUM TERM: downtrend low thus far at SPX 1106
LONG TERM: neutral to bullish, expecting Primary wave B to begin soon

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