U.S. stocks suffered their worst decline in more than a month on Wednesday after a worse-than-expected jobs report coupled with a revenue warning from Intel Corp. Energy shares were among the top decliners after oil fell 12%, the largest daily percentage drop in 7 years. BHP was hammered overnight and is expected to shed $1.45 today. On SYCOM, the SPI drifted lower for the majority of the session closing at 3704.

The SPI opened at 3712 and hit the technical high of 3715 during the opening stock rotation. From here the SPI crashed through 3700, found small support at 3680 and then fell away again to hit 3667 which provided strong support leading up to the Nikkei open. The SPI rallied to trade above 3700 but failed as the Nikkei started to crash and dismal economic figures were released. The deterioration in building approvals accelerated in November, with total dwelling approvals falling a jaw-dropping 12.8%MoM, much larger than the expected -1.5%. The SPI fell to the morning low of 3664 following the result. The physical was hammered led down by resources. BHP lost 6%, RIO down 6.5% and Woodside 6%. Macquarie fell just 3.5% despite saying that fourth quarter market conditions were exceptionally challenging for almost all Macquarie businesses, adversely impacting business activity and profitability. CSL and Woolworths, economic bellwethers, remained in positive territory for the day.

In afternoon trading the SPI continued to retest the lows. It traded on technical support level 3659 for an hour or so and broke through around 3pm to hit the intra day low of 3639. But the buyers arrived again around 3:30pm and the SPI surged into the close. The physical closed at 3694.3, down 85.4 points (-2.26%). Worst stocks: BHP, Woodside and Westpac. Best: Woolworths, CSL and WDC. The buyers hung around after cash close and the SPI traded up to 3696 before settling at 3692, down 83 points. It is worth noting the SPI settled at a 2 point discount to cash after trading at 22 points for the majority of the day.

As discussed in yesterday update, I favour that this week’s rejection from highs in the US equity markets and the local market represents the start of downtrend resumption and a move to new lows. Basis the local market, a move to new lows will likely read as wave V within the sequence from the 6004 May high, with longer term wave relationships projecting 3121 and 3025 as major support and a region likely to be tested. Renewed weakness through and a daily close below support at 3648-59 would provide an initial degree of bearish confirmation. A break of Fibonacci support at 3605 would provide a stronger degree of confirmation. The short term pattern will now remain negative providing we do not see a recovery through resistance at 3745-60.