the ELLIOTT WAVE lives on

SHORT TERM: market gaps down, ends lower in strange pattern day, DOW -121

Overnight the Asian markets were mostly lower with only Australia's ASX showing a gain. Europe came in lower and closed -1.0%. US index futures traded lower overnight and gapped down to the OEW support pivot at 1384 at the open. By 11:00 the SPX spiked to 1395, but failed to hold that level and slipped right back down to 1384 by 1:30. After some sideways activity in a tight range, the market again spiked to 1392 by 3:30. And, again this did not hold either. At the close the SPX/DOW were -0.80%, and the NDX/NAZ were -0.30%. Bonds gained 1/4 point, Crude added $2.40 to another new high, Gold gained $4.00, and the Euro was higher. Support for the SPX remains at 1383 and then 1364, with resistance at 1410 and then 1438. Short term momentum closed around neutral, while the near term indicators continued to slide lower. The market held the important 1383 pivot today in a lackluster performance. The daily and weekly indicators continue to erode, and Housing is showing definite signs of another downtrend. Looks like this uptrend has seen its top. Best to your weekend!

MEDIUM TERM: uptrend may have topped at 1423

LONG TERM: bear market

CHARTS:  http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1606987    

SHORT TERM: stocks move higher in quiet trading, DOW +52

Overnight the Asian markets were mixed, and Europe closed mixed as well. US index futures rallied overnight, and at 8:30 the weekly unemployment figures came in slightly less than expected, but the monthly average continued to rise. Stocks opened slightly higher trading to SPX 1399 by 10:00. When wholesale inventories were reported -0.1%, the market headed lower to SPX 1389 by 11:00. That was the low for the day. A rally then followed to 1402 by 2:00, but the market eased back going into the close. For the day the SPX/DOW were +0.40%, and the NDX/NAZ were +0.75%. Bonds gained about 3/4 points, Crude was up 95 cents to another new high, Gold added $13.00, and the Euro was flat. Support for the SPX remains at 1383 and then 1364, with resistance at 1410 and then 1438. Short term momentum closed at neutral, while the near term indicators continue to decline. Considering yesterday's selloff, this market did not respond with its usual bounce back. In fact, the rally today halted right at the 55 hma, (which is rising), and was quickly turned away. The OEW 1383 pivot now becomes an important support. A break below this pivot could be followed with a pullback to the 1344 pivot, which would represent about an 80 point decline. Best to your trading!

MEDIUM TERM: uptrend may have topped at 1423

LONG TERM: bear market

CHARTS: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1606987 

Long term trends are driven by mass investor psychology. When this psychology is positive there are bull markets, when not, bear markets. Determining what the long term psychology is, at any point in time, can not be measured by anything but the market itself. Certainly there are technical indicators and surveys that measure market sentiment, but these points of view are only for the medium term. And when the market suddenly changes direction, these opinions change as well.

For an investor to be successful in the markets they need to invest with the long term trend. The most successful traders on Wall Street, first determine the long term trend, and then trade within that trend. Most say that the trend is your friend. Then actually one could say that the long term trend is your banker.

Let's examine the typical investor. They invest in a stock, a market index, or commodity because of this or that reason. At the time of the investment, unknowingly, they are taking two basic risks. The first is timing, and the second is the long term trend of their investment. If they entered the investment, when the major trend is moving in their favor, the timing of the purchase is not that risky. Even if that investment declines at first, it will eventually recover and move higher. However, if the investment is made going against the long term trend, and the investment declines, it is not likely to recover. This is exactly how major losses occur in the markets.

Knowing just two simple facts: invest with the long term trend, and buy during corrections, can keep many investors out of trouble. Just as it helps consistent money managers make money for their clients on a year to year basis. You are probably wondering now, how does one determine this trend. As mentioned earlier, only the market can determine the long term trend. It does not occur at the exact top of a bull market, or at the exact bottom of a bear market. Yet, the market does confirm a long term trend, that will last for several years, shortly after those two events.

Basic Elliott Wave tracks bull and bear markets as they unfold. The better EW analysts work with probabilities, technical indicators and wave structures, to determine the long term trends, and the trends that create them. Yet, even though this sounds quite comprehensive, there is nothing about basic EW that is objective. The better EW analysts, however, move closer and closer to objectivity with experience. OEW also uses this comprehensive array of analysis, but with one major difference. OEW analysts know exactly which markets are in long term trends, and which might be entering transition. In addition to this, they know exactly where every wave began and ended during a bull or bear market. All this knowledge still does not bring on perfection, but it removes a lot of the quesswork. If you are interested in determining for yourself, now and in the future, the exact long term trend of every market. Contact caldaro@msn.com for details about joining our OEW group.        

SHORT TERM: market cascades lower as sellers reappear, DOW -206

Overnight the Asian markets were mostly lower, with only Japan's NIKK displaying a gain. Europe closed their session +0.80%. US index futures traded lower overnight and the market opened slightly to the downside, hitting SPX 1415 by 10:00. This is the time pending home sales were reported better than expected, but still down 1%. By 11:00 the market rallied to 1420 but failed to reach new highs (1423). The market then started to pullback, and when buyers didn't appear, the market continued lower. At 3:00 the government reported March consumer credit increased $15 bn, $6.5 bn was generally expected. By 3:30 the selling eased up as the SPX took out yesterdays lows and hit 1391. At the close the SPX/DOW were 1.70%, and the NDX/NAZ were -1.90%. Bonds gained 13 ticks, Crude made another new high up $1.95, Gold lost $7.00, and the Euro was lower. Support for the SPX again notches down to 1383 and then 1364, with resistance now at 1410 and then 1438. Short term momentum was getting oversold into the close. The near term indicators are heading lower. Tomorrow the weekly jobless claims at 8:30, and wholesale inventories at 10:00. For the first time in several weeks the SPX dropped below the 55 hma and closed there. Each time this has occurred in the recent past, it has led to more downside action short term. Considering that the market was recently the most overbought it has been since the bear market began. It wouldn't be surprising if SPX 1423 was the top of the uptrend. Certainly it's too early to tell, this uptrend has had a tendency to be quite volatile at times. Nevertheless, if the current decline of 32 SPX points, turns into 80+ points in the short term. We can then expect a rally back to the breakdown point, before the serious part of the downtrend begins. Many are impressed with bear market rallies. The chart below is just a reminder of what could follow, after what appears to be a solid uptrend. Best to your trading!

MEDIUM TERM: SPX 1423 may have been the high for the uptrend

LONG TERM: bear market

CHARTS: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1606987 

   

SHORT TERM: market opens lower but closes near uptrend highs, DOW +51

Overnight the Asian markets were mixed, and Europe ended their session -0.25%. US index futures traded lower, and the market opened to the downside as the SPX hit 1397 by 10:00. Holding support at the 55 hma, as it has since mid-April, the market turned around and rallied for the rest of the day. At the close the SPX/DOW were +0.60%, and the NDX/NAZ were +0.80%. Bonds declined, Crude made new highs, Gold was up a few dollars, and the Euro was higher. Support for the SPX again notches up to 1410 and then 1383, with resistance at 1438 and then 1462. Short term momentum is again getting overbought, while the near term indicators continue to display negative divergences. Tomorrow, a speech by FED governor Kroszner at 8:45, and pending home sales at 10:00. For the past several weeks the SPX has held the rising 55 hma as support, now at 1401, as it has worked its ways past two important OEW pivots: 1383 and 1410. The next pivot at 1438 should be a level of significant resistance. Not only did it provide interim support in September, November and December of last year. But this pivot is a long term pivot which goes back to the year 2000. Just as the long term pivot at 1383 offered significant resistance  in February. Expecting SPX 1438 to offer significant resistance in May. Best to your trading!

MEDIUM TERM: uptrend closes near it highs

LONG TERM: bear market

CHARTS: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1606987     

SHORT TERM: stocks slip lower in quiet trading, DOW -87

Overnight the Asian markets were mixed, and Europe's DAX closed +0.12%. US stocks opened slightly lower and then rallied to 1416 by 10:00, the high for the day. Also at 10:00 ISM services were reported to be expanding, with the current reading at 52. The market pulled back on the news to SPX 1405 by 11:00. After that the SPX stayed in a very narrow five point range for the rest of the day, while touching 1404 at 2:00. At the close the SPX/DOW were -0.55%, and the NDX/NAZ were -0.40%. Bonds were flat, Crude hit $120 gaining $3.70, Gold rallied $17.00, and the Euro was higher. Support for the SPX now notches down to 1383 and then 1364, with resistance at 1410 and then 1438. Short term momentum moved lower all day, closing at neutral. The near term indicators are still displaying negative divergences from fridays highs, and have slipped a bit lower. Marc requested that I post both the potential bullish count, and the preferred bearish count on the SPX, as mentioned over the weekend. The chart is below. Fed chairman Bernanke speaks tonight in NYC at 8:30. After reading friday that the FED is now accepting questionable student loan paper in exchange for treasuries: http://www.bloomberg.com/apps/news?pid=20601109&sid=a1ctn1Xfq5Do&refer=exclusive. Wonder whose next on the Bernanke Bridge loan agenda. These actions will create future problems for the FED in the name of political pressure, as mentioned in that piece. Best to your week!

MEDIUM TERM: uptrend may have topped at 1423, near the 89 wma

LONG TERM: bear market, unless the FED has determined to prevent one in this election year

CHARTS: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1606987

        

REVIEW

After a deluge of economic information during the week: FED lowered fed funds to 2%, Q1 GDP +0.6%, payrolls down only 20,000, PCE +3.2% annualized and ISM manufacturing still contracting at 48.6. The entire SPX range for the week occurred within the last two days: SPX 1383 - 1423. Not that much volatility. For the week the SPX/DOW were +1.25%, and the NDX/NAZ were +2.75%. Bonds were flat, Crude lost 1.9%, Gold dropped 3.6% and the Euro lost 1.2%.

LONG TERM: bear market

From the October 2007 top at SPX 1576 we continue to count the bear market as three Intermediate waves down into the January low completing Major wave A. Then an Intermediate wave A rally into the February high, followed by an irregular wave B into the March low, and Intermediate wave C still underway. Upon completion of this uptrend, from the SPX 1257 low, Major wave B should complete and the bear market should resume. The reason we maintain this view, is that in the entire history of the stock market from the year 1932, no bull market of more than three years has been followed by a bear market of anything less than eight months. That short bear market occurred in the 1950's. Since a 5 month bear market has never followed a 5 year bull market, there is no reason to expect it has occurred this time. However, OEW and EW for that matter, are about probabilities. Even though OEW defines the waves quantitatively, it does not label them. It removes the guess work of where a significant wave began and ended. These actual waves then create the structure of the overall bull/bear market. OEW applies to all market indices, commodities, stocks, etc. When an OEW technician knows exactly what the waves are, it removes a lot of the guess work. Then, the technician has to define what these actual waves are projecting for the future of the market by labeling them. The OEW technician applies a simple labeling scheme, based upon my many years of experience of watching the stock market unfold. It is not perfect, because the projected long term trend can change. Markets, as we know, are influenced by external events. Waves do not unfold because they have been etched in stone. They unfold because of changes in market sentiment as it relates to these external market events. Keeping all of this in mind, let's offer an alternative view, which also has historical validity. The Dow Theory has been around longer than the period we referenced (1932-2008). The theory suggests that when economic cycles change the TRANsports lead the change because they transport the goods that manufacuters make and consumers buy, before they show up in the profits of the Industrials. Therefore when the Transports start to breakdown, and the Industrials follow, it's a signal of an economic slowdown and a looming bear market. Conversely, when the Transports breakout, and the Industrials confirm, it's a signal of a pending economic expansion. Recent examples of this indicator start in November 2007. When the DOW made new highs in October 2007, the TRAN failed to confirm. Then in November 2007 the DOW Theory gave a sell signal, and the market sold off. Recently in March of 2008 the DOW made a lower low, but the TRAN failed to confirm. Then on April 18th the DOW Theory gave a buy signal, and the market has rallied. Naturally, this Theory is not perfect. It gave a sell signal near the lows of the 1998 correction, just before the market stormed to new highs in the dotcom explosion. Since I started posting this blog in August 2005, the DOW Theory (DT) and my labeling of OEW both remained bullish until late 2007. Then the DT gave a sell signal in November at SPX 1420, but my work didn't give a sell signal until early January at SPX 1375. Recently the DT gave a buy signal at SPX 1390, and my analysis is still bearish. I point this out because at the October 2007 highs there was a perfect five waves up from the October 2002 low, but I personally chose to ignore it. My error, not OEW. Recently, at the March 2008 lows there is the potential for an an OEW ABC flat formation. Expecting the bear market to last longer than just five months, as mentioned above, I have chose to ignore it. Maybe I'll be wrong again, and my labeling and interpretation of the wave structure will be wrong again. I'm only human, and markets are not etched in stone. The waves are clearly defined by OEW. The potential error in the interpretation of those waves are the error of the OEW technician, not the waves. We will know with the test of time.

MEDIUM TERM: uptrend makes new highs at SPX 1423

When the market started uptrending in March we projected several possible retracement levels. The first was a 38.2% retracement at SPX 1379. The next was a 50% retracement at SPX 1417. And finally the third, a 61.8% retracement at 1454. As the uptrend unfolded it appeared to be corrective, and still does. Every rally has overlapped the previous high, which is not an impulsive pattern. In early April the market ran into significant resistance at SPX 1387 and sold off. That was a potential top at the 38.2% retracement level. However, the selloff didn't breakdown below 1316, which would have signalled more downside. But held at 1324. Both of these levels coincided with the OEW pivots of 1383 and 1327. Holding support the market has now rallied to new uptrend highs with very little downside action. On thursday the SPX closed right at an OEW resistance pivot 1410, which should have offered significant resistance. On friday the market gapped right over it on the positive jobs report, the Microsoft buyout of Yahoo, and the FED expanding loan facilities yet again. With fridays action, the market hit the 50% retracement level at 1417, and traded around it for most of the day. The range for the day was 1406 to 1423, and the market closed at 1414. Our technical indicators are overbought on the hourly charts, and on the daily and weekly charts as well. This is clearly the strongest uptrend since the bear market began: 166 points verses 118, 126 points. On the near term indicators the market is displaying negative divergences. Yet, since the market has managed to continue to climb over the OEW pivots: 1383 and 1410. It may continue a bit higher to the next pivot at 1438, before turning over. For the reasons mentioned above, I'm certainly not convinced that this uptrend is the start of a new bull market. The short term wave structure looks corrective, and the uptrend has not exceeded any levels that would suggest it is more than just a bear market rally. Every uptrend, no matter how high it goes, is followed by a downtrend. During the next downtrend, which could start at any time, we'll have more information to determine exactly what this uptrend means longer term. Personally I prefer to stay with the long term trend. Until this market proves that the long term trend has changed, I remain bearish. There are other markets in long term bull trends: Gold, Crude, Commodities, and possibly even the USD. Corrections in known bull markets are safer to buy into than chasing rallies in potential long term bear markets.

SHORT TERM:

Support for the SPX is now at 1410 and then 1383, with resistance at 1438 and then 1462. Short term momentum is overbought with a negative RSI divergence, and the MACD is displaying a negative divergence as well. The near term indicators are also displaying the same. The beginning of this uptrend was quite choppy, rallies overlapping other rallies. However, from the recent 1324 low in mid-April, the rally has started to trend with minimal pullbacks. If one were bullish, they could say that the market since the mid-April low is starting to impulse higher. They could even count the entire uptrend as a 1-2, 1-2, 1-2-3 ... However, I prefer to count this uptrend as an ABC, or an (abc-x-abc) with the B (x) at the end of March. If the uptrend continues higher and completes the bullish pattern: 1-2, 1-2, 1-2-3-4-5, 4-5, 4-5. Then we will know to buy this market on the next downtrend correction, and the bear market bottom was in at the March low. If the bearish pattern: ABC (abc-x-abc) completes soon, and the market starts to downtrend. Then we know that this uptrend was nothing more than a bear market rally. Until a bullish pattern unfolds I remain bearish long term on the stock market.

COMMODITIES

Bonds ended flat this week after testing the low of the downtrend. Still see Bonds starting a major bear market.

Crude lost 1.9% this week, as monies moved out of commodities into stocks. Still see Crude uptrending in a major bull market.

Gold lost 3.6% as the downtrend continues, but it is trying to find support at the $850 level and is oversold. Still see Gold in a major bull market.

The Euro lost 1.2% this week as it continues its downtrend from the 160+ all time highs. The Euro may have just started a long term bear market.

FOREIGN MARKETS

The Asian markets are, and have been for the most part, in uptrends. Still bearish on most, but China appears to be resuming its bull market.

The European markets are following the US, as both the FTSE and DAX are currently in uptrends.

The Commodity markets Canada and Brazil are both in uptrends, as Brazil blasted to new highs on an investment grade upgrade.

NEXT WEEK

ISM services on monday, pending home sales on wednesday, weekly unemployment claims on thursday and trade deficit on friday. Also on monday FED chairman Bernanke speaks at the Columbia Business school in NYC at 8:30 in the evening. And FED governor Kroszner gives a speech, also about housing, in Ohio at 8:45 wednesday morning. Best to your week!

CHARTS: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1606987                           

SHORT TERM: market rallies to yet again to new uptrend highs, DOW +190

Overnight the Asian markets that were open were slightly lower. Europe, or the UK for that matter, was up 0.90%. This morning core PCE was reported tamer than expected +2.1% annualized. The monthly ISM manufacturing index was still contracting, but at the same level +48.6. And, the weekly unemployment claims were higher at 380K. Essentially most of the reports were better than expected. The market opened a bit mixed, precisely testing the OEW pivot at 1383 before 10:00. After that it appeared yesterday's sellers disappeared and the market rallied. By 1:00 the SPX made a new high for the uptrend at 1409. Then at 3:00 it made a slightly higher high at precisely the OEW 1410 pivot. Ending the day right near that level. For the day the SPX/DOW +1.60%, and the NDX/NAZ were +3.05%. Bonds lost about 6 ticks, Crude was $1.35 lower, Gold dropped $11.00, and the Euro was lower. The theme of the day was sell commodities, buy stocks. Support for the SPX remains at 1383 and then 1364, with resistance at 1410 and then 1438. Short term momentum is overbought again, and the near term indicators continue to display negative divergences. Tomorrow, before the open, the monthly jobs report.

Reviewed all the charts before posting tonight. At the beginning of this FED generated uptrend, the BSC bond bailout and the 75 bps rate cut. We projected that the market could rally back to the 1383 OEW pivot, a 38.2% retracement. Or, the OEW 1410 pivot, near the 50% retracement level. Well the market hit that latter level exactly today. This is a normal retracement in bear market rallies. During the 2000 - 2002 bear market, nearly all the counter trend rallies ended between these two parameters. Naturally, these two limits are not the only possible retracement levels. But they are the typical ones. Today's 1410 also coincides with the November low, which also ended at the 1410 pivot. Should this uptrend continue higher, a 61.8% retracement is at the next OEW pivot 1438. Bear market rallies can often give the appearance of new bull markets. Short sellers are forced to become buyers, and bullishness grows as the indices move higher. This is not a function of the economics surrounding the market, as many authorities have warned. But simply a function of the fear of missing the beginning of a new bull market, and chasing higher prices. When major companies write down billions of dollars every quarter, while continuing to raise capital at every opportunity to avoid a potential bankruptcy, and the stock rallies 10% on the news. One has to wonder if this market has lost its senses. Naturally, these types of events can and do occur at significant bottoms during bear markets. But when a 5 year bull market, is followed by only a mere 5 month-20% correction, I seriously doubt we have seen the end of this bear market. Twenty percent corrections often occur in bull markets, bear markets are more severe. And this is a bear market. Nevertheless, as posted yesterday, the market did not break through the support pivot at 1383 to confirm lower prices immediately ahead. But held that level and again moved higher. Weekly RSI/MACD levels are now also entering overbought territory for the first time since the bear market began. The market ended the day at an important resistance pivot. If the job report is positive tomorrow, we may have to wait until a 61.8% retracement occurs, at the next OEW pivot. Best to your trading!

MEDIUM TERM: uptrend holds support and hits 1410

LONG TERM: bear market

CHARTS: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1606987                 

SHORT TERM: another pre-FOMC trading day, DOW -40

Overnight the Asian markets were all higher, but Europe closed -0.30%. At 9:00 Case-Shiller reported that housing prices continued to decline in all 20 cities monitored for the past six months. And, within the last 12 months have dropped a record 12.7% nationwide. RealtyTrac had reported last night that foreclosures continue to rise, and have doubled in the last year. Nevertheless, the market opened flat, and rose to 1397 in the opening minutes. The high for the day. At 10:00 the Conference board announced their consumer confidence index has dropped to its lowest level in 5 years. By 11:00 the market hit 1387, near the 1383 OEW pivot and at the 55-hma making the low for the day. Another day with a narrow trading range ahead of the FOMC meeting. At the close the SPX/DOW were -0.35%, and the NDX/NAZ were +0.30%, similar to yesterday. Bonds gained 6 ticks, Crude dropped $3.50, Gold lost $23.50, and the Euro was lower. Support for the SPX remains at 1383 and then 1364, with resistance at 1410 and then 1438. Short term momentum is still displaying negative RSI divergences, as are the near term indicators. Tomorrow before the market opens the first guesstimate at Q1 GDP will be announced, and the monthly ADP employment report. Then at 2:15 the FED will announce its determination. It certainly will not be a quiet day tomorrow. The market slipped through that 15min diagonal posted on friday, then rallied back to test the trendline. When the SPX breaks below today's low at 1387 it should start heading lower. Best to your trading!

MEDIUM TERM: uptrend high thus far 1402 with negative divergences

LONG TERM: bear market

CHARTS: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1606987   

REVIEW:

A week ago the market surged to 1396 on positive earnings reports amidst negative economic news. This week the market traded between 1370 and 1398, as earnings turned mixed amidst positive economic news. This narrowing range with slightly higher highs appears aiming toward the FOMC meeting tuesday/wednesday, and the Q1 GDP report wednesday morning. For the week the SPX/DOW were +0.45%, and the NDX/NAZ were +0.90%. Bonds lost 0.9%, Crude hit new highs +2.0%, Gold dropped 2.8%, and the Euro lost 1.2%.

LONG TERM: bear market

Bear market rallies (uptrends), can at times, look like new bull markets. Especially when the rallies look like a 'kickoff' to something new, rather than just a short covering rally within an overall long term downtrend. This particular uptrend is a bit different than the two previous bear market uptrends: November and February. In that, after the first surge off the lows, the second rally has made higher highs, while the other two failed to do so. Yet, if one examines the last bear market, this kind of uptrend is still quite normal for a bear market. During the 2000-2002 bear market, nearly every SPX uptrend failed at the 50% retracement level and appeared corrective in nature. This uptrend also appears corrective in nature, and the 50% retracement level is at SPX 1417. Therefore, nothing has changed in our long term count, nor our expectations. Reference the SPX projection chart in the photo section, and the chart link below.

MEDIUM TERM: uptrending into 1410 OEW pivot

After the market bottomed in March at SPX 1257, on the BSC bond bailout and the FED's 75 bps rate cut. The market has zigzag'd its way higher in what appears to be an abc-x-abc pattern. This week the SPX slightly exceeded the February high at 1396. The next level of resistance on the charts is at the November low of 1406. This level also happens to coincide with the OEW pivot at 1410. To review, the potential bear market retracement levels are as follows: 1379 (38.2%), 1417 (50%), and 1454 (61.8%). The first one appeared possible when the market pulled back on the GE earnings news from 1387 in early April. However, the market held at the 1327 OEW pivot, and then rallied past that level as it now approaches what should be significant resistance at the 50% retracement level (1417). Supporting this topping scenario are the negative RSI hourly and daily divergences. And, daily/weekly MACD readings reaching their highest levels since the bear market began.

SHORT TERM:

Support for the SPX  remains at 1383 and then 1364, with resistance at 1410 and then 1438. Short term momentum is displaying negative RSI divergences, while the MACD is at its highest level since the bull market top in October 2007. The near term indicators are displaying sharp negative divergences at these highs as well. With lots of economic reports this week: ADP monthly employment and Q1 GDP on wednesday, core PCE and ISM on thursday, non farm payrolls and factory orders on friday. Plus the FED's FOMC report on wednesday, the stage is set for quite a volatile week as earnings reports wind down. We're not expecting the market to breach the OEW pivot at 1410.

FOREIGN MARKETS:

The Asian markets had a good week, led by the 15% gain in China's SSEC. Nearly every one of these markets are in uptrends.

The European markets were similar to the US with only marginal gains in the FTSE and DAX.

COMMODITIES:

Bonds continue their downtrend, as rates rise. The 1YR rate is now at its highest level (1.97%) since February, likely indicating FED rates to remain unchanged.

Crude made all time new highs again this week. It flirted with $120/bbl as the uptrend continues.

Gold was off for the week during its downtrend, but the $860 level is now offering the opportunity for the completion of a wave 4 flat.

The Euro broke hard from that diagonal triangle topping formation, with negative divergences. The Yen confirmed a downtrend.

CHARTS: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1606987             

SHORT TERM: market shrugs off more negative news and closes mixed, DOW +43

Overnight the Asian markets were mixed, and Europe closed out the week with a 0.90% gain. At the open the SPX rallied to 1396, closed yesterday at 1389. Then pulled back to 1387 by 10:00, when UoM reported consumer sentiment had dropped again in April to its lowest level in 26 years, (1982). Market steadied on the news, but rumors circulated that an American ship had fired on an Iranian ship in the Gulf. The market pulled back futher on that news, as Crude rallied. By 11:30 the details were disclosed that an Amercian merchant ship had fired warnings shots at two Iranian boats. The market bottomed at 1380, and then rallied into the close, ekeing out a slightly higher uptrend high at 1399. At the close the SPX/DOW were +0.50%, and the NDX/NAZ were -0.35%. Bonds lost 10 ticks, Crude gained $2.35 to a new high, Gold lost $2.50, and the Euro was lower. Support for the SPX remains at 1384 and then 1363, with resistance at 1410 and then 1438. Short term momentum is still displaying a negative RSI divergence on the hourly/daily charts, and the weekly charts are getting overbought. The near term indicators remain with divergences as well. Below is an interesting SPX 15min line chart from the late March low. Best to your weekend!

MEDIUM TERM: uptrend ekes out a new high at SPX 1399

LONG TERM: bear market

CHARTS:  http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1606987

  

SHORT TERM: market rallies on positive economic news, DOW +86

Overnight the Asian markets were everywhere, from Australia's 1% loss to China's 9% gain. Europe ended mixed as well. At 8:30 the DOL announced that the weekly unemployment claims dropped by about 10% to 342K. The market reacted favorably to the news opening slightly higher at SPX 1383. By 10:30 the market pulled back to 1371, close to tuesday's lows. Then holding that level the market rallied over the next several hours to new highs for the uptrend at SPX 1398 by 3:00. A small pullback followed in the last hour and the SPX settled at 1388. For the day the SPX/DOW were +0.65%, and the NDX/NAZ were +0.95%. Bonds lost about 3/4 points, Crude was off $2.35, Gold lost $21.50, and the Euro was lower. Support for the SPX now notches back up to 1383 and then 1364, with resistance at 1410 and then 1438. Short term momentum got a bit overbought at the highs, and is displaying a negative RSI divergence. The near term indicators edged up a bit, and are displaying negative divergences as well. The rally today was fairly broadbased, but seemed inspired by the pullback in commodities. At today's highs the DOW reached a 50% retracement of the entire bear market, and the SPX moved closer to the 1410 OEW pivot, which is effectively its 50% retracement level. Despite the major indices moving higher, the larger indices and some important sectors such as, the WLSH/NYA/XLF/KBE/HGX failed to make new uptrend highs. Since this rally from the 1257 low still looks corrective we expect a medium term top fairly soon. Possibly as early as tomorrow. Best to your trading!

MEDIUM TERM: uptrend still in place reaching SPX 1398 today

LONG TERM: bear market

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SHORT TERM: market gains but financial woes continue, DOW +43

Overnight the Asian markets were mostly higher, with only India's BSE posting a loss. Europe came in lower, but closed out the day +0.95%. US index futures traded higher overnight and the market opened higher at SPX 1381. A small pullback followed until 10:00 to 1375. Then the market rallied strongly to the high for the day at 1388. When the monoline bond insurers MBI/ABK started to tumble, the market sold off to its low for the day at 1372 by 12:30. After that the market edged its way higher into the close, while it awaited AAPL's earnings, which will be reported after the close. For the day the SPX/DOW were +0.30%, and the NDX/NAZ were +1.25%. Bonds were down 1/4 point, Crude gained 20 cents, Gold lost $18.00, and the Euro was lower. Support for the SPX remains at 1364 and then 1344, with resistance at 1383 and then 1410. Short term momentum stayed around neutral all day, while the near term indicators continue to decline. Tomorrow at 8:30 March durable goods and the weekly unemployment stats, to be followed at 10:00 by March existing home sales. Also at 10:00 a speech by FED member Alvarez on SWF's.

Today's selloff in the monoline bond insurers, could be a forerunner of things to come in the financial sector. As mentioned in a comment yesterday, the financial sectors XLF/KBE have certainly been lagging the general market during this uptrend. They have been the leaders in this bear market, having topped in early 2007. And, have usually preceded every new downtrend. For the SPX, we still have that 1396 double top in place. For the first three days of this week the market has failed to make any more upside progress. The intraday low from the friday 1396 high was yesterday's low at 1370. This is right near the 1364 OEW pivot. Should this pivot fail to hold support in the coming days, the next level to watch is the OEW pivot at 1327. After that, a new downtrend will likely be underway. Best to your trading! 

MEDIUM TERM: uptrend may have double topped at 1396, still an outside chance at 1410

LONG TERM: bear market

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SHORT TERM: market gaps down and heads lower, DOW -105

Overnight the Asian markets were mixed, Europe came in lower and ended -0.60%. US index futures traded lower overnight, and the market gapped down to SPX 1384 at the opening. At 10:00 the NARB reported that sales of existing homes continued to fall, as did the median price. But the drop was in line with expectations. After toggling the 1383 OEW pivot until noon, the market dropped to 1370 by 1:00, close to the 1364 pivot. A slight rally followed, but the 1370 level was retested again at 3:00 before the market moved higher into the close. For the day, the SPX/DOW -0.85%, and the NDX/NAZ were -1.45%. Bonds were flat, Crude neared $120 +1.65, Gold lost 50 cents, and the Euro was higher. Support for the SPX now slips back to 1364 and then 1344, with resistance at 1383 and then 1410. Short term momentum was slightly oversold at the lows, and finished at neutral. The near term indicators have now pulled back to neutral, as they continue to decline after friday's extreme overbought reading. Friday's high of SPX 1396 could have completed a double top with extreme overbought readings. If the market can hold the OEW pivot at 1364 then there is the possibility of another push higher to the 1410 pivot before this uptrends ends. We doubt the market can make it much higher than that. Best to your trading!

MEDIUM TERM: uptrend might have double topped at 1396

LONG TERM: bear market

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SHORT TERM: quiet inside day, market closes mixed, DOW -24

Overnight the Asian markets were all higher following friday's rally in the US, yet Europe closed -0.40%. US stock index futures were generally higher overnight, but eased back as the market opened lower at SPX 1384. After a small push to 1388 by 10:00, the market pulled back to 1379 by 11:00, the low for the day. After that the market edged up to 1390 in the last hour, the high for the day. Essentially, the market spent the whole day lower, toggling the 1383 OEW pivot. At the close the SPX/DOW were -0.15%, and the NDX/NAZ were +0.45%. Bonds were up 6 ticks, Crude gained $1.00 cents, Gold was $3.00 higher, and the Euro rose as well. Support for the SPX remains at 1383 and then 1364, with resistance at 1410 and then 1438. Short term momentum dropped below neutral during the pullback, but was rising into the close. The near term indicators pulled back a bit below the extreme overbought readings registered on friday. Currently we still have a double top on the SPX at 1396, and the larger indices are right near their resistance levels: WLSH (14,100-14,200) and the NYA (9340-9380). For now, not seeing much more upside medium term. Yet it may take a couple of days to finish off this rally. Best to your trading!

MEDIUM TERM: uptrend still ongoing, but running into resistance

LONG TERM: bear market

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REVIEW:

Despite negative economic news, confirmation by the FED of a weakening economy and a troubled financial sector, stocks soared. The catalyst, earnings in the tech sector, and better than expected earnings, after serious downgrades, in the financial sector. For the week, an options expiration week, the SPX/DOW were +4.3%, and the NDX/NAZ were +5.3%. Bonds looked to have topped, and were -1.7%. Crude made new highs +5.5%, Gold -1.3%, and the Euro looks to have topped -0.1%. Wild week!

LONG TERM: bear market

Historically, bull markets lasting more than three years have always been followed by bear markets lasting either eight months or longer. From the October top in 2007 to the recent lows in March 2008 is only five months. We have heard the expression many times in recent years; "this time will be different". Yet, in the end, it is never different. Speculative excesses need to be erased during contractions of wealth. And often, an overshoot to the downside of the contraction occurs. Therefore, our projected bear market scenario remains in place as posted. Major wave A into the January low, or five waves down into the March low if you prefer. In either case, a bear market counter trend Major wave B rally is still underway. The projected bear market scenario is still posted in the photo section, (photo one). Currently the DOW has retraced nearly 50% of the entire bear market decline, and the SPX a bit over 38.2%. The Techs have also retraced about 38.2%. These are normal retracements during bear market rallies. Any further upside, during this uptrend, could push the SPX to the 50% retracement level at 1417. There is heavy resistance between 1396, friday's close, and the 50% retracement. So we wouldn't expect much more upside than that. Upon completion of this uptrend, Major wave B, the start Major wave C should follow.

MEDIUM TERM: uptrend extends to 1396 on friday

When the SPX hit 1387 on April 7th it looked like the top to this uptrend. The market had equaled the February 27th secondary high at 1388. The short, near term and daily indicators were overbought. And the market started to break to the downside after GE's earnings. The market did pull back to 1324 on tuesday of this week, at which point it was oversold short term, and started to rally. The rally then extended beyond the expected resistance at SPX 1364 on thursday and kept going. Friday's peak hit the exact high of February 1st at 1396. A potential double top. At friday's highs, the short term, near term and daily indicators were as overbought as they have been at any time during this bear market. Yet, considering that friday's rally occurred on a gap up, the market may edge higher for a few more days. With the next OEW pivot at 1410, and the November 26th low at 1406, the market should run into significant resistance in the days ahead.

SHORT TERM:

Support for the SPX is now at 1383 and then 1364, with resistance at 1410 and then 1438. Short term momentum is extremely overbought, as are the near term indicators. This would suggest at least a short term pullback soon. Either from current levels, or the SPX 1410 pivot. When the pullback occurs, the 1327 OEW pivot will now be the key level to watch. During the recent pullback, we noted that the market needed to break through the 1316 OEW pivot to help confirm the SPX 1387 top. But the market held at 1324 and resumed the uptrend. Now the 1327 OEW pivot becomes the important one to monitor during the next pullback.

FOREIGN MARKETS:

The Asian market are all in uptrends with the exception of China's SSEC.

The European markets are both in uptrends as well, and are basically following the US market.

Canada and Brazil's markets have held quite well during this commodity boom, and are both in uptrends.

COMMODITIES:

Bonds appear to have topped long term. The patterns in both prices and rates appear complete, and the 1YR rates are now uptrending for the first time since July.

Crude continues to uptrend and made new highs this week. Expecting to see the low $120's soon.

Gold still appears in a downtrend, and expecting the correction to continue.

The Euro could have put in a diagonal triangle top at the recent highs. A sharp break downward is needed to confirm. The Yen is barely holding onto to its uptre