SHORT TERM: gap down opening hits new lows, DOW -31
Overnight the Asian markets were lower losing 1.6%. Europe opened lower and declined 0.7%. US index futures were lower overnight, and at 8:30 weekly Jobless claims improved: 350K vs 374K. Also at 8:30 Export prices were reported lower -1.4% vs -0.5%, as were Import prices: -0.3% vs -0.1%. The market gapped down at the open to SPX 1335 and continued to decline. The SPX had closed at 1341 yesterday. Around 11:00 the SPX found support in the 1324/27 zone, hitting 1325, and began to rally. The rally carried the SPX to 1339 by 1:30. Then after a 5 point pullback to SPX 1334 by 2:00, the market made a slightly higher high at 1340 before pulling back to end the day at 1335.
For the day the SPX/DOW were -0.40%, and the NDX/NAZ were -0.90%. Bonds gained 2 ticks, Crude was flat, Gold slipped $5, and the USD was higher. Support for the SPX remains at the 1313 and 1303 pivots, with resistance at the 1363 and 1372 pivots. Short term momentum displayed another positive divergence at today’s low. Tomorrow, PPI at 8:30 then Consumer sentiment at 10:00.
The market gapped down at the open today. Broke through support at SPX 1334/38 during the open, and continued down to support at 1324/27. After that the market had a fairly good rally to just above the SPX 1334/38 zone. A volatile day! From the current SPX 1375 uptrend high we can count five waves down into this morning’s low: 1363-1374-1333-1344-1325. Five wave declines, of this degree, are often followed by another five wave decline shortly thereafter. This is the typical ABC, zigzag, correction.
This suggests the uptrend may have ended in a large ABC, (see DOW charts), at the recent high. Should this be the situation, a 50 point decline (1375-1325) could be followed by a 20 point rally, then possibly an 80 point decline. This would complete a zigzag, ending a complex ABC correction from May, around the previous SPX 1267 low. A break below DOW 12,450 would suggest this scenario is underway.
Short term support is at the SPX 1334/38 and 1324/27 zones, with resistance at the 1342/47 zone and the 1363 pivot. Short term momentum rose above neutral today after the positive divergence low. The short term OEW charts remain negative from around SPX 1350, with the swing point now at 1345. Best to your trading!
MEDIUM TERM: uptrend in jeopardy
LONG TERM: bull market