the ELLIOTT WAVE lives on

SHORT TERM: market holds SPX 1261 pivot then rallies, DOW +32

Overnight the Asian markets were all lower, and Europe opened lower closing -2.10%. US index futures were lower overnight as well, and the market gapped down at the open hitting 1267 within the first few minutes. The SPX closed at 1280 yesterday. The market then rallied when at 10:00 ISM manufacturing was reported slightly positive at 50.2%, and construction spending eased only -0.4%. By 11:00 the rally closed the opening downside gap, but then the market turned over again. By 12:30 the SPX hit the OEW 1261 pivot, the low for the downtrend thus far. It then held support and rallied, exceeding the 11:00 (1283) high to 1285 by 3:00 and stayed positive into the close. For the day the SPX/DOW were +0.35%, and the NDX/NAZ were +0.95%. Bonds were flat, Crude gained $1.40, Gold added $12.00 and the Euro was slightly higher. Support for the SPX remains at 1261 and then 1240, with resistance at 1287 and then 1316. Short term momentum turned higher after putting in a positive divergence, and the near term indicators edged higher as well. Tomorrow the ADP employment index at 8:30, and factory orders at 10:00.

Last week we mentioned, after the DOW broke to new bear market lows, that the SPX could test the Jan low at 1270, rally, and then near the Mar low at 1257, without exceeding it. This would put in a positive SPX/DOW divergence at the OEW 1261 pivot. This is exactly what has happened over the past few trading days. And today's positive close, after posting a new low at 1267 this morning, then another low at 1261 this afternoon, is a positive sign. Should the SPX break through 1287 pivot tomorrow and hold that level as support. Then the downtrend could have very well ended today. Best to your trading!

MEDIUM TERM: downtrend hits 1261 support and rallies

LONG TERM: bear market

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

COMMENT

This friday the US celebrates the 232nd anniversary of the signing of the Declaration of Independance. This declaration was a direct result of our breaking away from the imperialism of England in the 18th century. For the next 200 years Americans fought wars to remain a sovereign nation, and for our allies, while still detesting imperialism. In recent decades, and especially this one, what we as a people have detested, our government has become. If this is what globalization represents, and what a new world order is all about. It's time for a change in direction.  

SHORT TERM: market ekes out a gain, DOW +4

Overnight the Asian markets were mostly lower with only Hong kong's HSI displaying a gain. Europe opened mixed and closed mixed. US index futures were lower overnight but rallied heading into the open and the market opened unchanged. A small bounce up, and then a pullback into 10:00, put in the low for the day at SPX 1275. At 9:45 the Chicago PMI was announced improving at 49.6%, but still contracting. Failing to take out fridays low at 1272, the market rallied until 1:00 as Crude sold off, putting in the high for the day at 1290. After that the market created a zigzag into the close to end the day slightly positive. At the close the SPX/DOW were +0.10%, and the NDX/NAZ were -1.00%. Bonds gained about 1/4 point, Crude was 25 cents higher, Gold lost $2.50 and the Euro was lower. For the month the SPX/DOW were -9.4%. Support for the SPX remains at 1261 and then 1240, with resistance at 1287 and then 1316. Again today the market failed to break through the 1287 pivot. Short term momentum moved up to neutral during the rally and ended there. The near term indicators edged slightly higher as well. Tomorrow June ISM and construction spending at 10:00. Not much of a relief rally today off friday's 1272 low, only about 18 points. Would have expected a bit more to complete Minute wave iv. Best to your trading!

MEDIUM TERM: downtrend continues

LONG TERM: bear market

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

REVIEW

Stocks slumped for the second week in a row, SPX/DOW -3.6% vs. -3.5% last week. The DOW was the first major index to make new bear market lows, now -19% from the October 2007 high. Yet, under the radar, the KBE banking index has now fully retraced its entire 2002-2007 bull market. The NDX/NAZ dropped 3.8% as some started to realize that techs are cyclical too. Bonds gained 1.2%, Crude rallied 3.6%, Gold confirmed a new uptrend +3.1%, and the Euro gained 1.2%. Crude, the CRB (2.0%)  and CCI all made new all time highs. Economic reports continued flat to negative, and housing was reported down 15.3% year over year. The FED remained on hold.

LONG TERM: bear market

For a comprehensive review of the entire stock market from 1932 to present, please refer to last weeks weekend update. After the five year bull market topped in October 2007 at SPX 1576, the market declined in a series of waves into the March low at 1257. These waves all took one month each (Nov-Dec-Jan-Feb-Mar). A two month rally followed into a May high at 1440. After spending just two hours at that level the next wave (downtrend) began. We have labeled the Jan low as the orthodox OEW low Major wave A, and the May high as the end of Major wave B. An alternate count on the DOW charts, uses the actual March price low as a 5 wave Major wave A decline, then the May high again as Major wave B. Should the market follow the same pattern during Major wave C. We should expect another series of waves down (Jun-July-Aug-Sept-Oct). Upon completion this would terminate Primary wave A, of a potential five year Primary ABC, or Cycle wave [2], bear market. Our eventual target for the end of Primary wave A is just below SPX 1100. Upon conclusion of Primary wave A, an explosive counter-trend bullish like rally should occur, retracing as much as 61.8% of Primary wave A. Certainly a buying opportunity! For now, we will just continue to track Major wave C, which was confirmed by the DOW making new bear market lows this week. And when the waves and the technicals set up, a few months from now, we'll turn bullish for that rally.

MEDIUM TERM: downtrend continues

From the SPX 1440 Major wave B high the first downtrend has been underway for about six weeks now. Many negative technical signals were displayed at the high. This downtrend appears to be unfolding in five waves, similar to the first two downtrends in the bear market, which bottomed in Nov (170 pts) and Jan (250 pts). The current downtrend reached 168 points at friday's lows. So you can see that it is similar in length to the Nov wave, thus far. Counting from the high Minor wave 1 was 67 pts at 1373 in late May, and Minor wave 3 was 75 points at 1331 mid-June. Therefore Minor wave 5, to complete this downtrend, can be any length. Since Minor wave 4 ended at 1367, it has already reached 95 pts in length, longer than either waves 1 or 3. If we now take the total move of waves 1 thru 3, we find the length was 109 pts (1440 - 1331). Subtracting 109 points from 1367 provides the next fibonacci target of 1258. The SPX closed at 1278 on friday. When the SPX hit 1440 in May it topped right at our OEW 1438 long term pivot. Now if the downtrend bottoms near 1258, it will have also stopped at an OEW pivot 1261. The daily RSI/MACD indicators are close to downtrend low readings, as is the weekly RSI. If 1261 fails to hold next week, 1240 is the next support pivot.

SHORT TERM

Support for the SPX is at 1261 and then 1240, with resistance at 1287 and then 1316. Short term momentum is oversold, and the near term indicators are the most oversold they have been during this entire downtrend. From the Minor wave 4 high at 1367 we count two minute waves: Minute i at 1304 and Minute ii at 1334. Minute wave iii has already reached 1272 (64 pts), as compared to Minute wave i (63 pts). Minute wave iii came within 2 pts of the Jan 1270 low, a psychological support level. When Minute iii ends we should experience a quick 30+ point rally. The rallies during this downtrend have been 33, 38 and 32 respectively. Then minute wave v should complete Minor wave 5 and end the downtrend. Should the SPX set up holding above the Mar 1257 low, this would place a positve divergence between the SPX and the DOW. A similar positive divergence in March kicked off an uptrend. We would then expect an uptrend retracement back to SPX 1344 - 1364 before the next downtrend took out all the lows and closed in on 1100. Best to your trading!

FOREIGN MARKETS

The Asian markets are all in downtrends, as India's BSE and China's SSEC have made new lows.

The European markets are still in downtrends, following the western markets, and a nearing new bear market lows.

The Commodity markets are still mixed with Canada's TSX in an uptrend, and Brazil's BVSP in a downtrend. Expecting both to make new highs when the worldwide downtrends reverse.

COMMODITIES

Bonds, the 10YR rate has declined from 4.32% to 3.99% as stocks have dropped. When stocks bottom rates should resume their climb.

Crude made another new high this week trading over $140 as its bull market uptrend continues.

Gold certainly came alive after the FED failed to take any action at their FOMC meeting. It is now uptrending again in its bull market.

The Euro gained 1.2% this week and is close to starting another uptrend, not good for the USD medium term, nor long term.

NEXT WEEK

End of month and the end of Q2 occur on monday. The Chicago PMI is released on monday just after the open. On tuesday June ISM manufacturing and Construction spending, then ADP employment and Factory orders on wednesday, followed by June non-farm payrolls and ISM services on thursday. Friday is a national holiday in the US. The only FED speech on the calendar is FED governor Mishkin on wednesday in Israel. Best to your week! 

SHORT TERM: Crude continues higher, stocks continue lower, DOW -107

Overnight the Asian markets were all lower, with China's SSEC and India's BSE taking the biggest hits. Europe opened slightly higher, and closed mixed. US index futures traded lower overnight, and got a boost when the Commerce Dept reported some government biased consumer income numbers. At the open the SPX hit 1286, then quickly dropped at 1280, a new low for the downtrend. The market then rallied to 1289 by 10:00, when the core PCE was reported +0.1%, and the FED released the minutes of their two meetings in mid-March regarding the BSC meltdown: http://www.federalreserve.gov/newsevents/press/other/other20080627a1.pdf, and http://www.federalreserve.gov/newsevents/press/other/other20080627a2.pdf. The market responded by selliing off on the news as the SPX hit 1278 by 11:00. A bounce into the noon hour was quickly erased, when Crude started rallying. By 2:00 the SPX hit its low for the day at 1272, then the market rallied fairly well into the close as Crude turned around and went lower. At the close the SPX/DOW were -0.65%, and the NDX/NAZ were mixed. Bonds were up 1/4 point, Crude gained $1.00, Gold added $14.00, and the Euro turned higher. Support for the SPX remains at 1261 and then 1240, with resistance at 1287 and then 1316. The OEW pivot at 1287 was tested early today, and the market failed to break through. Short term momentum was oversold at the lows and edged up a bit into the close. The near term indicators made new lows this morning, and are more oversold now that they were at waves 1 and 3 for the SPX. This would indicate the market should get some sort of bounce soon.

SHORT TERM: DOW breaks through 11,673 at 9:45 taking the market lower, DOW -358

Overnight the Asian markets were mixed, but Europe opened lower and closed -2.50%. US index futures traded lower overnight, then at 6:30 vice chairman Kohn gave a speech in Germany: http://www.federalreserve.gov/newsevents/speech/kohn20080626a.htm. At 8:30 the weekly unemployment claims remained at 384,000 and the Q1 GDP remained the same at +1.0%. Stocks gapped down at the open as the SPX hit 1312 in the opening minutes. It closed at 1322 yesterday. At 9:45 the DOW broke through that 11,673 level we have been watching, that would indicate an extension to this downtrend. An hour later the SPX started making lower lows. In between, at 10:00 existing home sales were reported up about 0.2%, while prices continued to decline. For the rest of the day the market declined steadily, with only one six point rally between 1:30 and 2:00. At the close the SPX/DOW were -3.0%, and the NDX/NAZ -3.70%. Bonds were up 3/4 point, Crude gained $5.25 making new highs, Gold surged $36.00, and the Euro was higher. Support for the SPX slides down to 1261 and then 1240, with resistance at 1287 and then 1316. Short term momentum is overosld, and the near term indicators turned lower. Tomorrow core PCE and consumer spending at 8:30, then consumer sentiment at 10:00. While SPX 1304 looked like a good support area, as the technical indicators and short term wave counts appeared to align. The DOW wave formation suggested that an extension to the downtrend would occur if 11,673 was exceeded. Fifteen minutes into todays opening the DOW traded below that and the market followed. Today while Crude was making new highs over $140, the DOW made new bear market lows under 11,635. This confirms that Major wave C is certainly underway. For now, the next important level for the SPX is the next OEW pivot 1261. Best to your trading!

MEDIUM TERM: downtrend resumes

LONG TERM: bear market

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

SHORT TERM: general market rallies as crude declines, DOW +4

Overnight the Asian markets shifted from lower to higher as the night transited. Europe then opened higher, and closed +0.90%. US index futures traded higher overnight and the market opened higher as durable orders were reported -0.9%, but better than expected. At the open the SPX hit 1318 and continued to rally to 1329, a new high off yesterdays low, by 11:00. At 10:00 the Commerce department reported new home sales declined 2.3%, and have dropped 40.3% in the last year. After reaching 1329, the market went into its usual sideways action as it awaited the comments from the FOMC meeting at 2:00. When the FED released its statement, leaving rates unchanged as expected, http://www.federalreserve.gov/newsevents/press/monetary/20080625a.htm the market wildly swung from 1325 to 1336 in the next hour. At 3:00 the market pulled back, and the DOW went negative on the day but recovered. At the close the SPX/DOW were +0.30%, and the NDX/NAZ were +1.50%. Bonds lost a few ticks, Crude dropped $2.50, Gold slipped $3.50, and the Euro was higher. Support for the SPX remains at 1316 and then 1287, with resistance at 1327 and then 1344. The market rallied above the 1327 pivot today to 1336, but was unable to hold that pivot going into the close. Short term momentum rose and closed at neutral, while the near term indicators turned higher. Tomorrow the weekly jobless claims and the Q1 GDP revision at 8:30, then existing home sales at 10:00. The downtrend does appear to have bottomed yesterday at the SPX 1304 low. Oversold conditions and positive divergences set up at the lows. Todays rally to 1336 moved into the Minor wave 3 lows at 1331, but the DOW remained relatively weak. Best to your trading!

MEDIUM TERM: downtrend could have bottomed at SPX 1304 yesterday

LONG TERM: bear market

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

SHORT TERM: downtrend appears to bottom - market rebounds from lows, DOW -35

Overnight the Asian markets were mixed, and Europe opened higher but closed -0.70%. US index futures traded lower overnight, rallied a bit at 9:00 when Case-Shiller reported housing prices are still declining rapidly, -15.3% year over year in April. At the open stocks headed lower, and by 10:00 hit SPX 1304. The Conference board then reported the fifth lowest consumer sentiment reading ever. Satisfying the projected targets of a lower low, near SPX 1300, without exceeding DOW 11,673, the market bottomed. A fairly solid rally followed until about 12:30 when the SPX hit 1325. After that, the market went into a trading range while making a slightly higher high at 1326. At the close the SPX/DOW were -0.30%, and the NDX/NAZ -0.60%. Bonds gained 3/4 point, Crude gained 25 cents, Gold rose $4.00, and the Euro was higher. Support for the SPX remains at 1316 and then 1283, with resistance at 1327 and then 1344. Short term momentum was oversold at the lows while putting in a positive RSI divergence. The near term indicators were oversold with positive divergences as well. The daily and weekly indicators are also oversold with positive divergences. Barring one last washout, which has occurred during the other downtrends in this bear market, this downtrend could have bottomed at SPX 1304. The short term wave count looks good, as this 5th Minor wave was shorter than either the 1st or 3rd waves. As long as SPX 1300 holds, and DOW 11,673 holds, we should now expect a new uptrend unfold, lasting a few weeks back to SPX 1383. This would project a 61.8% retracement of this downtrend (1440-1304). Tomorrow durable goods at 8:30, new home sales at 10:00, then the FOMC report at 2:00, and finally RIMM's earnings after the close. Should be quite a volatile day. Best to your trading!

MEDIUM TERM: downtrend may have bottomed at SPX 1304

LONG TERM: bear market

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

SHORT TERM: market finishes mixed in directionless day, DOW flat

Overnight the Asian markets were all lower, but Europe opened higher and closed +0.50%. US index futures traded higher overnight and the market gapped up a few points at the open as the SPX hit 1324 within the opening minutes, the high for the day. A choppy pullback followed until around 12:30 when the SPX neared the lows of the downtrend (1314) hitting 1315. Then another small rally and pullback followed into the close. For the day the SPX/DOW were mixed, and the NDX/NAZ were -0.80%. Bonds lost about 1/4 point, Crude gained $1.70, Gold dropped $18.50, and the Euro was lower. Support for the SPX remains at 1316 and then 1287, with resistance at 1327 and then 1344. The market stayed within the 1316 - 1327 pivot range today. Short term momentum ended just below neutral, while the near term indicators edged up slightly. From fridays low at 1314 there has not been much of a rally, 1324 the high today. Counting todays action as all or part of minute wave iv/Minor wave 5 of this downtrend. The next decline could put in the low for the downtrend ending minute wave v/Minor wave 5, unless this downtrend extends. The key level to watch would be DOW 11,673. If exceeded an extension is likely underway. Tomorrow Case-Shiller reports its monthly price analysis of the housing market at 9:00. Then at 10:00 the OFHEO home price report and Consumer sentiment. Best to your trading!

MEDIUM TERM: downtrend from SPX 1440 may be close to a bottom

LONG TERM: bear market

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

REVIEW

Out of the ten economic reports last week every one of them was worse than the month before, except the Leading indicators which were flat. PPI inflation hit a new high at 7.2%, manufacturing continued lower, housing starts and builder sentiment continued to decline, the budget deficit expanded, and bank earnings were generally weak. The market responded by pushing the DOW under 12,000 for the first time in three months. The financial, bank and housing indices all made new bear markets lows. This week Investor Intelligence reported that there are now 1% more bears than bulls. It certainly looks like a bear market. However, unless this downtrend takes a turn for the worse and extends, it looks like it is getting close to a bottom.

COMMENT

During the five year bull market some were fighting the tape on the way up. After the market topped in October 2007, some are now fighting the tape on the way down. This is what makes markets, a difference of opinion. The optimists are usually looking for higher prices, and the pessimists a crash. This bear market is not likely to satisfy either group. There is just too much noise coming out of the media, and positively biased reports coming out of the government. This is the Information Age, but unfortunately most of the information reported is in error. It has come to the point that the only thing one can trust is the market itself. Yet, the market at times, gets carried away with the positive spin also, as witnessed by the recent two month uptrend. Certainly this is nothing new, it's all happened before. But in this period of globalization, the noise is on an unprecedented worldwide scale. Understandably some want to talk up their situation, some. Yet if the government, bankers and corporate heads can not be trusted with such a simple thing, as reporting what is actually occurring. How can they be trusted with greater oversight, power, and control of economies worldwide. If this continues, we all should reevaluate this one world economy concept. Our collective future may depend on it.

LONG TERM: bear market

Reviewing the big picture, we continue to claim that the 2002 low and 1932 low both ended Supercycles. These two lows were 70 years apart, shortened by two years from the normal 72 year saeculum/precession cycle, due to the strong influence of the 4 year presidential cycle. Now that they are in sync, the next Supercycle low is not due until the year 2074. Counting from the 2002 low the market is in a multi-generational Supercycle bull market. Supercycle bull markets unfold in five Cycle waves. During the 1932 - 2000 Supercycle, the Cycle waves in the DOW occurred at 1937 - 1942 - 1973 - 1982 - 2000. Cycle waves take several years to unfold. During the last Supercycle beginning in 1932, Cycle wave [1] took five years, and Cycle wave [2] took five years as well. Cycle wave [1] was a five year impulsive bull market to kick off the Supercycle, while Cycle wave [2] was a three wave ABC flat. Within this ABC flat, wave A bottomed in 1938, wave B topped in 1939, and wave C took three years bottoming in 1942. When our current 2002 Supercycle began we had projected a 5 year bull market (2002 - 2007), similar to the 1932 - 1937 bull market. Not only did that occur, but the internal wave structure was amazingly similar: waves 1 and 3 were simple, with an extended 5th wave. When OEW analysis quantified a bull market reversal after the October 2007 top. Naturally, following the previous Supercycle scenario again, we projected a five year Cycle wave [2] bear market with a wave A decline to end in 2008, a wave B rally into 2009, and then a wave C decline into 2012. Thus far the market seems to be replicating the same scenario. While all bull markets are five wave impulse structures, all bear markets are three wave corrective structures. Bear markets simply correct a portion of the previous bull market. The length and depth of the bear market is always relative to the length and strength of the bull market it is correcting. Typically, when a bull market creates an extended 5th wave, the bear market retraces back to the previous 4th wave where it finds support. This occurred during the 1937 - 1942 bear market, when both the A and C waves found support at the previous 4th wave. Since the 2002 - 2007 bull market was of a similar structure, an extended 5th wave, we could then project the most probable bear market scenario for Cycle wave [2] in time and price. Therefore, wave A should bottom in 2008 near the previous 4th wave (SPX 1061, DOW 9708). Then a one year rally that should retrace a significant portion of this decline into 2009. Followed by a three year decline to retest those lows again in 2012. This is the most probable bear market scenario based upon historical data. This is not the only scenario! However, this is our roadmap for the next several years. The Cycle wave [2] bear market could unfold in the typical 3-3-5 flat formation, or it could be a complex three formation.  

MEDIUM TERM: downtrending

Reviewing the current picture, the Primary wave A decline from 2007 - 2008 should take the form of a three wave structure. The three waves, Major ABC may take the form of a zigzag (5-3-5), or a complex three. When reviewing the decline, thus far, please note that there was a series of single month waves (Nov-Dec-Jan-Feb-Mar) and then the market rallied for two months into May. On the SPX charts we display the complex three scenario: a three wave Major wave A decline into the Jan low, then an irregular Major wave B into the May high. On the DOW charts we display the zigzag scenario: a five wave down Major wave A into the Mar low, then a three wave Major wave B rally into the May high. These are the two most probable scenarios. Since the Jan low and the Mar low were both near the same level either count is valid at this time. Typically, during bear markets and corrections, wave C will be in proportion to wave A. Since Major wave A was between 306 - 319 points, depending upon either the Jan or Mar low. A Major wave C decline to the 1134 - 1121 range, from the Major wave B 1440 high, would make Major waves A and C equal. This is also generally within several percent of the previous 4th wave SPX 1061 level. This now provides us with a range for the potential low for Major wave C (SPX 1061 - 1134) ending some time this year. If we then project the time sequence of the first decline (Nov-Dec-Jan-Feb-Mar), followed by a two month rally into May, we arrive at (Jun-July-Aug-Sept-Oct). So we can conclude if Major wave C equals Major wave A in time and price, the low should occur in October in the (1064 - 1134) range. This type of symmetry is often found in many markets.

SHORT TERM: close to a bottom, unless extending

Narrowing in on the current downtrend, we find that this first downtrend in Major wave C is thus far shorter than the first downtrend of Major wave A from the SPX 1576 bull market high. That first downtrend (Oct-Nov) unfolded in five waves and declined 170 points (1576-1406). Thus far this downtrend is unfolding in five waves and has declined 126 points (1440-1314). However, in reference to the DOW, its first decline was also five waves and 1297 points, and this decline is five waves and already 1318 points, about equal. As we have observed over the past few weeks, the DOW is leading this market. The short term wave structure in the SPX displays that wave 3 is longer than wave 1, therefore wave 5 may be any length. Yet, the short term structure in the DOW displays that wave 3 was shorter than wave 1, which means wave 5 can not exceed the length of wave 3. So the DOW appears to be the key in determining the length of this downtrend. Since wave 1 was 694 points, and wave 3 was 650 points, wave 5 can not exceed 650 points, or drop below 11,673 (12,323-650), unless an extension occurs. The low thus far on friday was 11,819. Upon examination of the technical indicators, we find that weekly and daily momentum is getting oversold. This is typical of downtrend bottoms. Also the short term is oversold and near term indicators are nearing an oversold level as well. So unless this downtrend extends it is getting close to a bottom. The wave count from the highs displays four waves down, and the market is currently in wave 5. Within this 5th wave we count three smaller waves into fridays lows. This suggests we should get a small wave 4 bounce and then make another low to end a small fifth wave of the 5th wave down. The OEW pivots are displaying support at 1316 and then 1287, with resistance at 1327 and then 1344. A bounce to the 1327 pivot would seem about right at this time, if the small third wave completed at 1314 on friday. Then the market should decline again into its low for the downtrend. If the DOW/SPX move in line, then the maximum downside for the SPX should be relative to the maximum downside in the DOW. Remember the DOW wave 5 can not exceed wave 3. From friday's close the DOW can still drop 1.43%, this would put the SPX at 1299. So unless this downtrend extends, let's put the potential low for the SPX at the centenial number of SPX 1300. Charts for most of this are posted in the photo section, and in the CHARTS link below.

FOREIGN MARKETS

The Asian markets have mostly followed the western markets. The only exception has been Japan's NIKK, which has remained in an uptrend. Hong Kong's HSI, and Australia's ASX are still above their lows. While India's BSE and China's SSEC have made new lows already. China, btw, is currently the most oversold it has ever been on a weekly basis, and is displaying a two month positive MACD divergence on the daily charts. 

The European markets continue to track the US indices closely.

The Commodity markets, Canada and Brazil are still mixed, with Brazil in a downtrend, and Canada remaining in an uptrend.

COMMODITIES

Bonds continue their frist downtrend in a new bear market, the 10YR has already dropped from 122 to 112.

Crude continues to uptrend in its bull market. Expecting this uptrend to push Crude over $150 before it tops.

Gold is trying to established a confirmed uptrend in its bull market. The May low at $846 continues to hold.

The Euro is again showing signs of life, as the USD wanes. The bear market for the USD may not be over just yet.

NEXT WEEK 

Tuesday starts off with the monthly Case-Shiller housing price report, and the politically adjusted OFHEO housing price report. Wednesday, we have durable goods and new home sales in the morning, the FOMC concludes in the afternoon, and RIMM reports after the close. Talk about a wild day! Thursday, the weekly jobless claims, the final revision to Q1 GDP (Q2 is expected to be -1%), and existing home sales. Finally on friday consumer spending, sentiment, and the PCE price index. Have fun, and be careful!

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

SHORT TERM: market gaps down making new downtrend lows, DOW -220

Overnight the Asian markets were mostly lower, with only China's SSEC gaining. Europe opened higher, but closed -1.80%. US index futures were lower overnight and continued lower into the open as the SPX gapped down to 1335, from yesterdays close at 1343. By 10:00 the market appeared to stabilize near the 1327 pivot, and by 11:00 it touched SPX 1322. A rally attempt followed, which topped out a half hour later at 1331. Then the market turned over, broke through the 1327 OEW pivot and bottomed at 1314, near the 1316 OEW pivot by 3:00. A small rally into the close followed. For the day the SPX/DOW were -1.85%, and the NDX/NAZ were -2.50%. Bonds rallied about 1/2 point, Crude gained $2.75, Gold was flat, and the Euro rallied. Support for the SPX now notches down to 1316 and then 1287, with resistance at 1327 and then 1344. Short term momentum is oversold, and the near term indicators are beginning to get there as well. Thus far the SPX appears to have completed Minor wave 4 at SPX 1367, and the market remains in Minor wave 5. Possibly Minute iii of Minor 5. In regards to the DOW, the 11,800 approximate projection for Minor wave 5 was made at the completion of Minor wave 3. After Minor 4 completed lower than it could have, a Minor wave 5 at DOW 11,670 is now possible. Will review everything this weekend. Best to yours!

MEDIUM TERM: downtrend continues from SPX 1440

LONG TERM: bear market

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

SHORT TERM: market rallies after retesting downtrend lows, DOW +34

Overnight the Asian markets were all lower, and Europe closed lower as well -0.50%. US index futures traded lower overnight but moved to mixed when at 8:30 the weekly jobless claims dipped slightly. At the open the SPX rallied a bit to 1440, then sold off to 1331 when the Philly Fed reported manufacturing is still dropping (-17.1 vs -15.6), but May leading indicators edged up another 0.1%. By 10:30 the market started to rally, this time to 1341 by 11:00, before again heading down to 1331 by 11:30. After a successful retest near the 1327 OEW pivot, the market rallied again. At 2:30 FED vice chairman Kohn released the following testimony before a Senate subcommittee: http://www.federalreserve.gov/newsevents/testimony/kohn20080619a.htm. The market continued to rally until 3:00 when it hit the high for the day at 1348, just above the 1344 OEW pivot, then backed off some into the close. For the day the SPX/DOW were +0.30%, and the NDX/NAZ were +1.50%. Bonds lost over 1/2 point, Crude dropped $4.80 on reports that China will lessen its internal subsidies, Gold rallied $5.00, and the Euro was lower. Support for the SPX remains at 1327 and then 1316, with resistance at 1344 and then 1364. Short term momentum was oversold this morning, but rallied above neutral into the close. The near term indicators turned up a bit, but at the lows did not appear to be sufficiently oversold to end this downtrend. Neither do the technical indicators on the daily or weekly charts. Tomorrow is options expiration friday, anything can happen. Thus far, it looks like the downtrend has completed four Minor waves down which ended on tuesday at SPX 1367. This recent decline to todays lows at SPX 1331 could have completed Minor 5. However, it seems too small a fifth wave and too short for the typical downtrend in this bear market. If SPX 1367 is exceeded then that was probably it. If not, expecting lower lows in the coming days. Best to your trading!

MEDIUM TERM: downtrend continues

LONG TERM: bear market

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SHORT TERM: market closes lower on weak economic data, DOW -109

Overnight the Asian markets were mostly higher, and Europe closed higher as well +1.05%. US index futures traded higher overnight and rallied further on the weak economic reports before the open. May housing starts dropped to a 17 year low, the budget deficit continues to expand, the PPI is now running at a 7.2% inflation rate, and May industrial output dropped. Stocks gapped up at the open on an apparent short squeeze, and a good earnings report from GS. In the opening minutes the SPX hit 1367, the high for the day. After that the rally eroded for most of the day as the market worked its way down to SPX 1351 at the close. For the day the SPX/DOW were -0.80%, and the NDX/NAZ -0.65%. Bonds gained over 1/2 point, Crude added 90 cents, Gold added 90 cents as well, and the Euro was higher. Support for the SPX remains at 1344 and then 1327, with resistance at 1364 and then 1383. Short term momentum is heading lower, and the near term indicators turned over as well. Tomorrow a few of the ibanks will report earnings, but other than that it should be a technical day. The SPX 1367 high this morning should have been the end of Minor wave 4. Wave 3 (75 points) was longer than wave 1 (67), and wave 4 (36) was just about equal to wave 2 (33). If wave 5 equals wave 1 (SPX 1300), and if wave 5 equals wave 3 (1292), which gets close to the 1283 OEW pivot. A rally, from here, above 1367 would put the current count in question. Since wave 3 was longer than wave 1, wave 5 can be any length. However, in the DOW wave 3 was shorter than 1, suggesting a maximum downside of 11,800. Best to your trading!

MEDIUM TERM: downtrend continues

LONG TERM: bear market

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SHORT TERM: stocks close mixed after hitting resistance, DOW -38

Overnight the Asian markets were mostly higher with only Australia's ASX displaying a loss. Europe opened higher by finished -0.35% on the day. US index futures were mixed overnight, but sold off with Europe before the open. At 8:30 the Empire state manufacturing index reported a drop to -8.7, a shaprer contraction than expected. At the open stocks gapped down as the SPX hit 1352 in the opening minutes. At 10:00 FED chairman Bernanke talked about health-care reform: http://www.federalreserve.gov/newsevents/speech/bernanke20080616a.htm. Inspired by the rally in Tech the market moved slightly in the green at 11:00 at 1361. A small pullback followed by 12:00, then the market made its high for the day at 1365, despite the Home builder index reporting an 18 reading, matching its 22-year low. After 1:30 the market pulled back into the close to finish mixed on the day. At the close the SPX/DOW were mixed, and the NDX/NAZ were +0.90%. Bonds were up a few ticks, Crude lost 90 cents, Gold gained $11.50 and the Euro was higher. Support for the SPX remains at 1344 and then 1327, with resistance at 1364 and then 1383. Short term momentum was overbought during the rally, and the near term indicators are now overbought for a typical 4th wave. Tomorrow before the open; the May PPI, the trade deficit, housing starts, and industrial production. Lots of data in a short period of time. With today's rally to 1365, the SPX hit the OEW resistance pivot at 1364. This area should continue to provide resistance for Minor wave 4. The market should not rally much above this level to maintain the same count. Best to your trading.

MEDIUM TERM: downtrend continues

LONG TERM: bear market

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REVIEW

It was a down week for most of the markets we follow; stocks, bonds, crude, gold and even the euro. Everything was for sale. Stocks did rally on friday to pare their loses for the week. The DOW eked out a 0.8% gain, the SPX ended with a marginal 0.1% loss, and the NDX/NAZ dropped 1.0%. Economic reports were mixed with retail and pending home sales rising, but trade/federal deficits continued to grow, as did unemployment claims and inflation. The FED talked up the USD and global banking, while the President talked up terrorism and pressuring Iran. Next week home building and PPI start the week, while the leading indicators and options expiration end it.

LONG TERM: bear market

The bear market that started in October 2007 continues to move along generally as expected, see projection in photo section. Five waves down, all one month apart, can be counted into the March SPX 1257 low, which was followed by a two month rally into the May 1440 high. This is being counted as Major wave A and Major wave B of a Major wave ABC decline. This count is posted on the DOW charts. Also acceptable, and preferred, since bear markets usually unfold in three wave structures and not five, is the count on the SPX charts. Which displays a three wave decline into the SPX 1270 low in January, then an irregular rally into the May 1440 high. In either case, Major waves A and B appear completed, and the first wave down of Major wave C is now underway. Some time this year, possibly in October, this Major wave C will have completed with a retest of the 2004 lows near SPX 1100. Then a very strong, bull market type rally should follow. We'll turn bullish long term at that time.

MEDIUM TERM: downtrend continues

There were many market warning signs at the May 1440 highs. Negative divergences were appearing on all timeframes, the market had retraced between 50% and 62% of the entire decline, and the SPX reached the OEW 1438 long term pivot. Since then, index after index started to confirm an OEW downtrend, as the market declined from the highs. Based upon some fibonacci and price/time relationships, reported in previous weekly reports. We expected this down wave to conclude with a retest of the Jan/Mar lows in late June. This type of market activity would be unsettling for both bulls and bears. Which is what this market has done best for the past several years. In OEW terms, the end of this downtrend would only end the first Intermediate wave in the larger Major wave decline. Then after a rally into July, the next downtrend should make new lows for the bear market, shaking out the remaining bulls. Thus far, the short term waves of this decline continue to point to this retest scenario.

SHORT TERM

Support for the SPX is currently at 1344 and then 1327, with resistance at 1364 and then 1383. Short term momentum turned higher on friday and is reaching overbought, while near term momentum is reaching the typical overbought level for this stage of the downtrend. While we had projected a possible scenario from the SPX 1440 high: 1373-1406-1316-1344-1261 last week. The recent short term decline seemed to find support at the next higher OEW pivot at 1327. So the short term wave count now appears as wave (1) 1373, (2) 1406, (3) 1331 and (4) underway now. With friday's close at SPX 1360 there is not much more room on the upside for the 4th wave. Therefore, the OEW pivot at 1364 should provide good resistance. And, this downtrend should complete with a 5th wave and lower lows this week.

FOREIGN MARKETS

The Asian markets all remain in downtrends with the exception of Japan's NIKK.

The European markets are downtrending as well and should bottom, more or less, with the US market.

The Commodity stock markets are mixed, with Brazil downtrending and Canada still uptrending.

COMMODITIES

Bonds took quite a hit this week losing 2.5%. Inflationary expectations are rising along with interest rates.

Crude pulled back as well after making a new high last week, -2.2%. Expecting the uptrend to resume to over $150 shortly.

Gold failed a few weeks ago to confirm an uptrend off the $846 May low and continues to pullback.

The Euro continued its downtrend this week, but G8 over the weekend mentioned nothing of USD intervention. USD could break down further in weeks to come.

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