SHORT TERM: market starts higher, but again turns lower.

Overnight the few Asian markets that were open closed mixed, and Europe came in about unchanged. Stock index futures edged up after the Dec. Durable goods orders were announced to be +3.1%, and up 7% for 2006. The market opened higher, but within a few minutes selling again hit the tech sector and the market headed lower. Just after 10:00, when Dec. New home sales were reported to be higher than expected, (+4.8%, but -17.3% for 2006), the market made a short term low. Bonds are trading down a few ticks, Crude 80 cents higher, Gold down 40 cents and the Euro is down. At the lows, the major indices penetrated the support levels mentioned in yesterday afternoons post, then quickly bounced back. The cyclicals are now the most short term oversold they have been in 2007, and the tech sector is displaying a positive RSI divergence at the lows. The market should rally from this oversold conditon, and the extent of the rally will determine when we keep going higher, or correct the entire 2007 advance. OEW continues to display a medium term uptrend in all the major indices. Therefore, I remain bullish medium term. If this short term rally fails to start impulsing higher, it would appear the entire 2007 advance might be retraced. There are several possible EW scenarios medium term. Yet, I am staying with the current labeling until we get OEW confirmation that the trend has changed. If you recall, we had this type of activity coming off the lows in July. Many of the economic numbers are pointing to a good 2007, 

Commodities are in a bear market, and there is a high liklihood that short term rates will be heading lower as a result. But technicals are technicals, and that's what we follow. Best to your trading!

MEDIUM TERM: bullish

LONG TERM: bullish.