SHORT TERM: pullback from monday’s high continues, DOW -146
Overnight most of the Asian markets were lower. Europe opened higher but closed -1.50%. US index futures were lower overnight, and at 8:30 weekly Jobless claims were reported lower: 457K v 476K, but Durables goods orders turned negative: -1.1% v +3.0%. The stock market gapped down at the open to SPX 1088. It had closed at 1092 yesterday. The selling continued until around 10:00 as the SPX broke through the OEW 1090 support pivot and hit 1079. A pretty good rally followed from an oversold condition and the SPX hit 1085 by 10:30. Yet another pullback followed taking the SPX to 1075 by 11:00. Then with a positive short term divergence the market started to work its way higher. After a rally to 1082 and a pullback to 1077 the SPX hit 1086 by 2:00. The seond time on the day that the SPX could not get above the 1090 pivot. The market was not done going lower yet. Heading into the last hour the SPX hit 1072, bounced a bit, and retested 1072 before closing at 1074.
For the day the SPX/DOW were -1.55%, and the NDX/NAZ were -1.60%. Bonds lost 2 ticks, Crude slipped 10 cents, Gold rallied $7.00, and the USD was flat. Support for the SPX drops to 1058 and then 1041, with resistance now at 1090 and then 1107. Short term momentum remains oversold with a positive divergence. Tomorrow, the second Q1 GDP revision at 8:30, then Consumer sentiment at 10:00.
On tuesday, when the market confirmed the rally form SPX 1042 to 1131 was over, we posted three potential support levels: SPX 1097 (38.2%) retracement – we were already there; SPX 1086/1087 (50%) – the market hit it on wednesday; SPX 1076 (61.8%) and the market hit it today. These fibonacci retracement levels actually acted as temporary support levels as the market worked its way lower. Any more downside pressure should push the SPX to the OEW 1058 pivot. Best to your trading!
MEDIUM TERM: downtrend low at SPX 1041
LONG TERM: bull market in correction