SHORT TERM: holiday volatility continues, DOW -154
Overnight all the Asian markets were lower, Hong Kong was down over 4% and Japan was over 3% lower. Europe opened lower, but rallied throughout the day to close +1.15%. US index futures were at one point down another 15 ES (SPX) points, but started to turnaround about 2:30 EST, chart below. At the open the SPX gapped down from wednesday’s close at 1110 to 1090, well above the overnight low of around 1070. The market quickly sold off for a few minutes to 1084, but then resumed the recovery from the overnight lows. By 11:00 the SPX had rallied back to 1099, quite a volatile holiday for US traders and the past two days worldwide. After a pullback to 1093 by 12:30, the market tried to rally into the close. The SPX hit 1098 in the closing minutes but turned over to close at 1091. For the day the SPX/DOW were -1.60%, and the NDX/NAZ were -1.65%. Bonds were up 20 ticks, Crude dropped $1.90, Gold lost $13.00, and the USD was higher. Support for the SPX drops to 1090 and then 1061, with resistance at 1107 and then 1133. Short term momentum was extremely oversold at the open and then rebounded during the day. This will be interesting week to review.
Wednesday night, while all US government agencies and broker/dealers were closed, ES (SPX) dropped 24 points on the Dubai debt news as markets sold off around the world. Bonds rallied 21 ticks, Crude lost $1.75 and Gold lost $4.00. Last night, after US government agencies and broker/dealers were reopened, around 2:30 AM EST the ES (SPX) was down an additional 15 points. Yet this time, Bonds were up, Crude was down an additional $4.50 and Gold was down $55.00. The USD, btw, was up about the same amount on both nights. Consider the variables between both nights and make your own decisions. Today’s trading found support within the range of the 1090 pivot. So no major damage done despite the holiday/overnight volatility. Will review everything over the weekend. Best to yours!
MEDIUM TERM: uptrend
LONG TERM: bear market rally