U.S. Trade: U.S. stocks were trading in the green,
aided by much better than expected earnings reports coming from three
important companies, JP Morgan, Yahoo and Sandisk. However, the major
U.S. indexes plunged as rumors surfaced that the U.S. Treasury would
force a 90% pay cut to the top executives of the companies that
received government bailouts.
S&P futures showed a negative
sentiment during the European session, and for a few moments, the
futures index actually broke below the low set on Tuesday. However, the
market rose sharply from there, gaining approximately 17 points, helped
by the day's company earnings reports. Throughout the U.S. session,
S&P futures tried to break above the 1100.00 area, but failed to
find any follow-thru, which triggered a strong sell-off, with the
S&P futures falling 1% in just a few minutes. This sell-off was
extended as rumors emerged that the Treasury is trying to impose a 90%
pay cut to the financial companies that were bailed out by the
government.
Most of the gains in the equity market were led by
the commodity market, which thrived as crude oil broke above the $81.00
area. To add further gains to the uptrend seen in commodities and
equities, the Eur/Usd exchange rate reached 1.50, the most in a little
more than a year.
S&P Technical View: TheLFB Member Charts
Daily chart trend: Long. Main price points: 1080-1100. Looking for: Wave 5 or C top
The price structure on the daily chart is 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, (shown below), 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 blue 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 zing-sag correction, which is valid
for a wave 4 scenario.
