Equity Futures: Dow -41.00. S&P -0.50. NASDAQ -5.75. Japan Nikkei +42.00. German Dax -3.00
U.S. Trade: The U.S. equity markets closed around the break-even point in Tuesday trade following the weaker than expected U.S. Pending Home Sales report.
Throughout the overnight session, European shares held just in the red-zone most of the time, and the U.S. futures markets managed to hold near the breakeven line. However, this has changed throughout the U.S. trading hours, when the Pending Home Sales report showed that sales fell a 16.00%, being the first decline in almost a year. This had a negative influence among homebuilders, and dampened enthusiasm for taking things higher.
The three major U.S. indexes, the S&P, the Dow and the NASDAQ traded split during the cash session. The S&P managed to move up and down among the opening price bands, but the Dow Jones and the tech-driven NASDAQ fell as much as 0.50% in intra-day trade on Tuesday. Shares found some support from the U.S. Factory Orders report, which increased 1.1% in November, twice as much as expected. The uptick in factory orders was led by demand for industrial goods, another sign that the economy is getting close to the expansionary cycle.
S&P Technical View:TheLFB Member Charts
Daily chart trend: Long. Main price points: 1115-1130. Looking for: Top of a Long wave 5 or C
The price structure on the daily chart is showing two valid scenarios. The left side of the chart shows an impulse structure with five waves up from the 665 lows to the current highs. If this is the case then 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 target somewhere around the 950 would be expected.
On the right side of the chart, we have a different picture with a clear zig-zag correction, which is valid for a wave 4 scenario. In this case, a lower Short blue wave 5 will follow.
Overall, the price structure is signaling for an upcoming turning point (between 1125-1130) on both wave counts with at least a three wave push lower, since the market is trading around the top of a black wave 5 or black wave C leg.
Sector Moves: Utilities and healthcare companies lost approximately 1% on Tuesday, being the worst performers in the U.S. market. The negative momentum seen in the healthcare sector started in the European session, plunging approximately 1% from the start of the session.
Within the healthcare sector, the heavyweight Johnson & Johnson lost 1.05%, Pfizer fell 1.75%, while Amgen lost 1.40%. However, the best gainer in the S&P 500 index also came from the healthcare sector. The hospital chain Tenet jumped 10.5% after Goldman added it to its buy list. Since February 09, Tenet had 12 rating revisions, from which 10 ended with an upgrade, which helped the company surge 470%.
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