SHORT TERM: early pullback then mixed finish, DOW -55
Overnight the Asian markets slipped 0.1%. European markets opened lower and lost 1.5%. US index futures fluctuated above and below unchanged, and the market opened relatively flat around friday’s SPX 1407 close. Right after the open the market started to pullback. At 10:00 ISM manufacturing came in lower: 49.6 vs 49.8, and Construction spending was negative: -0.9% vs +0.4%. The pullback continued until 11:00 when the SPX hit 1397. Having retested thursday’s low, with a positive divergence,the market tried to rally. The rally carried the SPX to 1409 by 2:30. Then the market pulled back to close at SPX 1405.
For the day the SPX/DOW were -0.25%, and the NDX/NAZ were mixed. Bonds lost 9 ticks, Crude slid 95 cents, Gold added $2, and the USD was higher. Medium term support remains at the 1386 and 1372 pivots, with resistance at the 1440 and 1499 pivots. Tomorrow, Q2 Productivity and unit Labor costs at 8:30.
The market opened flat today, dipped back down to SPX 1397, and then tried to rally. With this second pullback to SPX 1397 we eliminated the subdividing Minor wave 3 count that was carried on the SPX daily chart. Then replaced it with a potential triangular Minor wave 4. The five abcde waves: 1398, 1416, 1397, 1414 and 1397. The downsloping upper trendline is now just under SPX 1410. A rally above that level, with the double positive divergence, could thrust the market to new highs.
Short term support is at SPX 1402/03, SPX 1396/98 and the 1386 pivot. Overhead resistance is at SPX 1413/16, SPX 1422/27 and the 1440 pivot. Short term momentum displays that double positive divergence. The short term OEW charts will turn positive again with a rally above SPX 1407. Best to your trading!
MEDIUM TERM: uptrend
LONG TERM: bull market