SHORT TERM: pullback continues, DOW -74
Overnight the Asian markets were mixed with a net 0.1% gain. Europe opened lower and closed -0.8%. US index futures were lower overnight, and at 8:30 Q4 GDP came in lower than expected: +2.8% vs +1.8%. The market opened lower at SPX 1314, then tried to rally. The SPX had closed at 1318 yesterday. Around 10:00 the SPX hit 1318 and began to pullback. Also at 10:00 Consumer sentiment was reported higher: 75.0 vs 74.0. The SPX took out yesterday’s 1314 low around 10:30 hitting 1313. But the SPX remained quite choppy, through the morning into the afternoon, with about 3 point bounces after each new marginal low. Around noon the SPX 1312 and then rallied to 1320 by 3:30. A pullback into the close end the week at SPX 1316.
For the day the SPX/DOW were -0.35%, and the NDX/NAZ were +0.35%. Bonds gained 9 ticks, Crude slipped 5 cents, Gold rose $16, and the USD was lower. Support for the SPX remains at 1313 and then 1303, with resistance at 1363 and then 1372. Short term momentum dipped into oversold territory, then ended the day at neutral. Last night the FED reported a decline in the M1 multiplier, and an increase in the Monetary base. Today, Consumer sentiment continued to improve: 40% vs 39%, as did the WLEI: 43.5% vs 42.4%. Both are still bearish, while below the neutral 50%.
The market opened lower today, bounced around a bit, then hit the SPX 1314 level twice before trading down to 1312 by around noon. After that the market rallied to SPX 1320 by 3:30 before easing back into the close. The entire range on the day was only 8 SPX points. Nevertheless this, two day, 21 point pullback is the largest one since Minor wave 2 was underway in mid december. While we have not received any confirmation from our short term charts, it does look like Minor wave 4 is potentially underway. The first of our two criteria noted yesterday, (1) SPX trading to 1312, was hit today. But the market rebounded before the second, (2) SPX trading in the low 1300’s, was hit.
Short term support remains at the 1313, 1303 and 1291 pivots. Overhead resistance is at SPX 1327, 1347 and the 1363 pivot. Short term momentum hit oversold at today’s low and rebounded to neutral. Short term OEW charts remain positive with support at the 1313 pivot. Best to your weekend!
MEDIUM TERM: uptrend high SPX 1333
LONG TERM: bull market