SHORT TERM: gap up and pullback starts week/month, DOW +24
During the US holiday Asian markets gained 1.6%, then gained another 0.2% last night. European markets gained 1.6%, but ended -0.6% today. US index futures were sharply higher over the holiday, and remained higher into the open. The market gapped up to SPX 1647 at the open and hit 1651 in the first few minutes. The market had closed at SPX 1633 on friday. Then the market started to pullback. At 10:00 ISM manufacturing was reported higher: 55.7 vs 55.4, and Construction spending was higher: +0.6% vs -0.6%. The pullback continued into the afternoon, with 3-4 point bounces until the SPX hit 1633 just before 3:00. After that the market rallied to SPX 1641 before closing at 1640.
For the day the SPX/DOW were +0.30%, and the NDX/NAZ were +0.60%. Bonds lost 25 ticks, Crude gained 90 cents, Gold rallied $18, and the USD was higher. Medium term support remains at the 1628 and 1614 pivots, with resistance at the 1680 and 1699 pivots. Tomorrow: the Trade deficit at 8:30, monthly Auto sales during the day, and the FED’s Beige book at 2:00.
Futures rallied strongly over the holiday and held until the open. A fourteen point gap up opening rallied another four points, to SPX 1651, before the market started to pullback. Just before 3:00 the market completely closed that upside gap when hitting SPX 1633. Then it rallied into the close. What was really interesting about today’s gap up opening is that the DOW, at the highs, had only rallied 170 points from friday’s low. Which fit exactly within its rally range for the entire downtrend: 160 to 170 points. We marked today’s high as the end of Minor b. But some choppy action can continue. When Minor b does conclude, Minor c of Intermediate wave C should be a sharp decline.
Short term support remains at the 1628 and 1614 pivots, with resistance at SPX 1636-1640 and 1648-1649. Short term momentum hit overbought this morning then ended the day around neutral. The short term OEW charts remain negative with the reversal level now SPX 1645. Best to your trading!
MEDIUM TERM: downtrend
LONG TERM: bull market