SHORT TERM: market gaps down again, DOW -97
Overnight the Asian markets were all lower. Europe opened lower and closed -0.70%. US index futures were lower overnight and at 8:30 Q2 GDP was reported positive but lower than expected: +1.3% vs +1.9%. The market gapped down, for the third time this week, at the open. The SPX opened at 1290 and hit 1283 within the first few minutes. The market had closed at SPX 1301 yesterday. The market then started to rally. At 9:45 the Chicago PMI was reported lower: 58.8 vs 61.1 and then Consumer sentiment was reported slightly lower: 63.7 vs 63.8. The market continued to rally until about 11:30 when the SPX hit 1304. Then another pullback followed to SPX 1295 by 1:00. Then a rally attempt ended at SPX 1300 by 2:00 and the market headed lower into a 1292 close.
For the day the SPX/DOW were -0.70%, and the NDX/NAZ were -0.35%. Bonds soared 41 ticks, Crude dropped $1.50, Gold rallied $9.00, and the USD was lower. Support on the SPX remains at 1291 and then 1261, with resistance at 1303 and then 1313. Short term momentum set up a positive divergence at today’s lows and then turned higher. Last night the FED reported the Monetary base had declined. Today, the WLEI was reported higher: 52.0% vs 51.6%.
Yesterday we ended the day getting close to the important SPX 1296 level. Today, as has been customary for this market in recent years, the market gapped right through it to a SPX 1290 open. The SPX did find some support in the mid-1280’s (1283), with a positive divergence, and then staged its best rally since this decline began from SPX 1347. Some observed the decline from SPX 1347 to 1283 looked like a completed five waves, and a rally into the 1313 pivot range is now possible. That should be enough to turn the short term OEW charts positive again. They have been negative since about 1335. Overall, debt ceiling or no debt ceiling, we’re likely to get an OEW downtrend confirmation soon. Will cover it all in the weekend update. Enjoy the weekend!
MEDIUM TERM: uptrend in jeopardy
LONG TERM: bull market at inflection point