U.S. Trade: Led by the NASDAQ index, the U.S. markets took a deep dive in Thursday trade, as the Unemployment Claims and the PMI data disappointed the market. In a relative short period, the S&P futures plunged 20 points, or 2%, to test the 1030-1035 area, which is acting as an important swing point for about two weeks. For now, the S&P futures are trying to get the necessary momentum to move much lower, but the breakout failed to happen. 

Most of the declines came after the ISM Manufacturing PMI came in worse than expected, but still above the 50-benchmark level, which separates contraction from growth. The report hit the wires at 52.6, even though the market expected a much better read, of 53.9. Moreover, the PMI report failed to reach the market's expectations for the first time since February 09.  

The worse than expected PMI read, coupled with the poor Unemployment Claims might show that the economy is heading towards a very slow recovery, something that does not justify the 60% jump in the global markets over the last six months of trading. In addition, the earrings season is approaching fast, which made some investors reduce their exposure to equities 

S&P Technical View:
Daily chart trend: Short possibilities. Main price points: 1075. Looking for: Wave 5 or C top

The wave count on the weekly chart, above, offers a question; is it wave 4 or not? The price structure on a daily chart is also showing two valid scenarios. On the left side of the chart below, it shows an impulse structure with five waves up from the 665 lows to the current highs. If this is the case, the wave 4 discussed on the weekly chart, above, will be rejected, since the fourth wave is a corrective wave, which means it cannot be sub-divided by a five wave move. However, in this scenario, a three wave push lower into a corrective wave 2), with a targets somewhere around 38.2%-50% Fibonacci support levels, is expected.

On the right side of the chart, we have a different picture, with a wave count that has a clear zig-zag correction, which is valid for a wave 4 scenario. In this case lower wave 5 will follow.

Overall, the current price structure signals for a turning point, since the market is trading on the top of wave 5 or wave C leg, around the Fibonacci resistance levels with the current top at 1075.