SHORT TERM: market holds SPX 1261 pivot then rallies, DOW +32
Overnight the Asian markets were all lower, and Europe opened lower closing -2.10%. US index futures were lower overnight as well, and the market gapped down at the open hitting 1267 within the first few minutes. The SPX closed at 1280 yesterday. The market then rallied when at 10:00 ISM manufacturing was reported slightly positive at 50.2%, and construction spending eased only -0.4%. By 11:00 the rally closed the opening downside gap, but then the market turned over again. By 12:30 the SPX hit the OEW 1261 pivot, the low for the downtrend thus far. It then held support and rallied, exceeding the 11:00 (1283) high to 1285 by 3:00 and stayed positive into the close. For the day the SPX/DOW were +0.35%, and the NDX/NAZ were +0.95%. Bonds were flat, Crude gained $1.40, Gold added $12.00 and the Euro was slightly higher. Support for the SPX remains at 1261 and then 1240, with resistance at 1287 and then 1316. Short term momentum turned higher after putting in a positive divergence, and the near term indicators edged higher as well. Tomorrow the ADP employment index at 8:30, and factory orders at 10:00.
Last week we mentioned, after the DOW broke to new bear market lows, that the SPX could test the Jan low at 1270, rally, and then near the Mar low at 1257, without exceeding it. This would put in a positive SPX/DOW divergence at the OEW 1261 pivot. This is exactly what has happened over the past few trading days. And today’s positive close, after posting a new low at 1267 this morning, then another low at 1261 this afternoon, is a positive sign. Should the SPX break through 1287 pivot tomorrow and hold that level as support. Then the downtrend could have very well ended today. Best to your trading!
MEDIUM TERM: downtrend hits 1261 support and rallies
LONG TERM: bear market
This friday the US celebrates the 232nd anniversary of the signing of the Declaration of Independance. This declaration was a direct result of our breaking away from the imperialism of England in the 18th century. For the next 200 years Americans fought wars to remain a sovereign nation, and for our allies, while still detesting imperialism. In recent decades, and especially this one, what we as a people have detested, our government has become. If this is what globalization represents, and what a new world order is all about. It’s time for a change in direction.