SHORT TERM: selling in Asia pressures market, DOW -48
Overnight al the Asian markets were lower including a 6.7% drop in China. Europe opened lower and closed -1.0%. Overnight US index futures were lower, and at the open the market gapped down to SPX 1022. It had closed at SPX 1029 on friday. At 9:45 the Chicago PMI was reported at 50.0 v 43.4. The market continued lower until 10:00 when the SPX hit 1015. This was only a tick below last week’s SPX low. From a slight oversold condition the market rallied to 1020 by 11:00. Another pullback followed, but 1016 held this time and then the SPX vacillated around the 1018 pivot for the rest of the day. For the day the SPX/DOW were -0.65%, and the NDX/NAZ were -1.05%. Bonds gained 16 ticks, Crude dropped $3.05, Gold lost $6.00, and the Euro was higher. Support for the SPX remains at 1018 and then 990, with resistance at 1041 and then 1061. Short term momentum over slightly oversold at the low and was rising to neutral heading into the close. Tomorrow, ISM and Construction spending at 10:00, then monthly Auto later in the day.
Coming off the SPX 1039 uptrend high the market pulled back 23 points into today’s low. This pullback is the second largest of the uptrend, only exceeded by the 39 point decline between Intermediate waves A and B. The OEW 1018 pivot is important, and a print at 1010 and lower would confirm a break of that support. The next OEW pivot at 990 is the more important one. A break of that pivot would indicate that this uptrend and the bear market rally are likely over. Today’s gap down was similar to the monday gap down following the SPX 956 uptrend high in June. Should the similarity continue the market should rally a few points above today’s close before making a lower daily low tomorrow. Best to your trading!
MEDIUM TERM: uptrend high at SPX 1039
LONG TERM: bear market