SHORT TERM: market pulls back again, DOW -115
Overnight the Asian markets were all higher. Europe opened higher but closed mixed. US index futures were higher overnight as well. At 8:30 Q1 GDP was revised higher: +1.9% vs +1.8%, and Durable goods orders reversed their decline: +1.9% vs -3.6%. The market opened slightly lower at SPX 1283. It had closed at SPX 1284 yesterday. Right after the open the market hit SPX 1284 but then started to decline. The pullback continued until about 1:00 when the SPX hit 1269. Then after a bounce to SPX 1274 the market rolled over again. Just before the close the SPX hit 1267 and nudged higher to a 1268 close.
For the day the SPX/DOW were -1.05%, and the NDX/NAZ were -1.45%. Bonds gained 14 ticks, Crude added 15 cents, Gold dropped $20.00, and the USD was higher. Support for the SPX remains at 1261 and then 1240, with resistance at 1291 and then 1303. Short term momentum hit oversold again after rising above neutral yesterday. Last night the FED reported the M1-multiplier continued to decline. Also, the Monetary base continued to rise. Today the WLEI was reported lower: 52.9% vs 53.6%.
We expected the market to rally today, if the downtrend bottom was in, after yesterday’s sharp midday reversal. It didn’t. It headed down from the open and remained lower for most of the day. When we reviewed the entire downtrend from SPX 1371 we noticed it could be unfolding in a five wave pattern to complete an irregular ABC flat. The A would be the three wave Mar SPX 1249 low, the B the three wave May SPX 1371 high, and the C a potential five wave decline to complete a 3-3-5. Should this be the pattern unfolding, during this downtrend, then we should see significant support within the OEW 1240 pivot range. The upper end of this pivot also coincides with several fibonacci wave relationships. Best to your weekend!
MEDIUM TERM: downtrend low SPX 1258
LONG TERM: bull market