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tuesday update
Nov 18, 2008

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Tony

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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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