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thursday update
Dec 11, 2008

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SHORT TERM: the SPX again fails to break through the 912 pivot, DOW -196

Overnight the Asian markets were mixed, and Europe opened lower but closed mixed. US index futures were quiet overnight, and at 8:30 the weekly Jobless claims were reported at 573K v 515K. Also the Trade deficit was reported at 57.2 v 56.6 and the import Price index continued to decline -6.7% v -5.4%. As a result the market gapped down at the open and the SPX touched the recent intraday lows at 886. A rally followed until about noon when the FED released the US flow of funds report: http://www.federalreserve.gov/releases/z1/Current/z1.pdf. In summary, in Q3 US households paid down debt for the first time since 1952. Total U.S. domestic nonfinancial debt, however, increased at a 7.2% annual rate, boosted by a postwar record 39.2% increase in debt taken on by the federal government. The SPX then hit 905, its high for the day. And, for the fourth time in four days the SPX failed to break through the 912 pivot. Traders then took advantage of some very short term negative divergences and sold the market for the rest of the day. At the close the SPX/DOW were -2.50%, and the NDX/NAZ were down 3.55%. Bonds gained 1 1/4 points, Crude added $3.75, Gold rallied $17.00 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 declined most of the day and was oversold at the close. Tomorrow, the PPI and retail Sales at 8:30, then consumer Sentiment and Inventories at 10:00.
Today the SPX again failed to break through the 912 pivot, and then broke through the week's lows in the 880's. Looks like the rally will need to consolidate before it re-establishes itself. Support remains at the 848 pivot.
MEDIUM TERM: downtrend low at 741
LONG TERM: bear market rally underway
CHARTS: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1606987   

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