SHORT TERM: gap down opening market recovers, DOW -47
Overnight the ECB and BOC both lowered rates, and the BOE increased their Bond purchase program by 50 billion pounds. Asian markets were mixed gaining 0.2%. European markets opened higher but lost 0.5%. US index futures were relatively flat overnight. At 8:15 the ADP was reported higher: 179K vs 136K. Then at 8:30 weekly Jobless claims were reported lower: 374K vs 388K. The market gapped down at the open, nevertheless, to SPX 1368. It then bounced to SPX 1371 before heading straight to the 1363 pivot by 10:00. At 10:00 ISM services were reported lower: 52.1 vs 53.7. Right around that time the market started to recover. By 2:00 the SPX had closed the opening gap when it hit 1374. However, it then started to pullback heading into the close, ending the day at SPX 1368.
For the day the SPX/DOW were -0.40%, and the NDX/NAZ were +0.05%. Bonds gained 10 ticks, Crude slid 75 cents, Gold fell $18, and the USD was higher. Support for the SPX slips back to the 1363 and 1313 pivots, with resistance now at 1372 and 1386. Short term momentum declined to neutral from tuesday’s negative divergence. Tomorrow, the monthly Payrolls report at 8:30.
The market gapped down at the open, apparently disappointed the ECB did not start LTRO 3 and only cut rates. The pullback, from tuesday’s SPX 1375 high, was only 12 points to 1363. Then, possibly encouraged by today’s rally in Apple, the market worked its way higher from ten o’clock to two o’clock and essentially closed the gap before pulling back in the last two hours of trading.
Normally, when a negative divergence takes hold the market usually gets oversold before attempting to make higher highs again. Thus far the pullback has only been to neutral. The pullback that started at SPX 1375 may not be over. Should it resume tomorrow/monday the SPX could pullback to the lower range of the 1363 pivot (1356), or even the next support area at 1342/47. Then the uptrend should resume. Short term support is at the 1363 pivot and SPX 1342/47, with resistance at the 1372 and 1386 pivots. The short term OEW charts remain positive, with the swing point around SPX 1350. Best to your trading!
MEDIUM TERM: uptrend
LONG TERM: bull market