U.S. Trade: A drop in unemployment claims and higher productivity helped the major U.S. indexes climb higher in Thursday trade. Since the recovery phase began, investors saw the labor market as one of the biggest threats to the economic recovery. Increasing unemployment meant lower forward consumption, in an economy historically driven by the consumer actually consuming, and at a fast pace.

In this way, a drop in the weekly unemployment claims was interpreted as a bullish sign, for those who view the glass as half-full. The pessimist view will be that the 4 and 10 week averages are literally off the charts at +500K claimants, and the bears will no doubt have their day with that headline. However, today was not to be that day, and the bulls held court through the entire cash session. The acid test however will be the No-farm numbers from the U.S. on Friday.

The market showed a positive momentum, even from the overnight futures session, with all three indexes posting gains around the opening bell. However, the NASDAQ index outperformed the Dow Jones and the S&P 500, being pulled higher by the technology stocks on the back of Cisco's quarterly results.

S&P futures are trading near to the 1060.00 area, the same place where the market topped during the last few days of the prior week of trading. A break above this level would allow the market to test the 1075 area, the last important intra-day resistance until the 1100.00 benchmark level.

S&P Technical View:
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, 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 950 area is expected.

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

Overall, the current price structure signals for a coming turning point with at least three wave push lower over the coming weeks, since the market is trading around the top of wave 5 or wave C leg. 

Sector Moves: Each of the nine sectors represented in the U.S.