SHORT TERM: market gaps down then rebounds, DOW -7
Overnight the Asian markets were lower losing 1.3%. Europe opened lower and lost 1.2%. US index futures were lower overnight as well. At 8:30 Personal income was reported higher (+0.5% vs +0.1%), Personal spending lower (0.0% vs +0.1%), and the FED’s favorite inflation gauge PCE prices were higher (+0.2% vs +0.1%). The market gapped down at the open to SPX 1304, dipped to 1302, bounced to 1305, and then headed lower in the opening minutes. The SPX had closed at 1316 on friday. Just past 10:00 the SPX hit 1300, a 33 point pullback from thursday’s 1333 uptrend high. With short term indicators quite oversold it then started to rally. Just before 3:00 the SPX hit 1314, then pulled back to 1310 before closing at 1313.
For the day the SPX/DOW were -0.15%, and the NDX/NAZ were mixed. Bonds gained 8 ticks, Crude lost 60 cents, Gold dropped $9, and the USD was higher. Support for the SPX remains to 1313 and then 1303, with resistance now at 1363 and then 1372. Short term momentum hit quite oversold early and rebounded to above neutral. Tomorrow, Case-Shiller at 9:00, then the Chicago PMI and Consumer confidence around 10:00.
The market met our second criteria this morning, for a Minor wave 3 high at SPX 1333 and a Minor wave 4 underway, when it traded in the low 1300’s. The first criteria was met on friday when the SPX hit 1312. Oddly enough, the market had its best rally since the decline began, (8 points), after hitting 1312 on friday. Then today, the market had its best rally of the entire decline, (14 points), after hitting SPX 1300 this morning. Thus far we have had a 21 point decline, and a 20 point decline, separated by an 8 point rally. Nearly perfect fibonacci numbers.
The 14 point rally that followed the SPX 1300 low could be signalling the 33 point decline (SPX 1333-1300) was all of Minor wave 4. For now, it appears too short in time/price and more likely just: wave A down to SPX 1300, wave B up to 1314 or higher, with a wave C down into the lower range of the OEW 1291 pivot to follow. Our short term OEW charts, which turned negative today, suggest this scenario. Short term support remains at the 1313, 1303 and 1291 pivots. Overhead resistance is at SPX 1327/33, 1345/47 and the 1363 pivot. Short term momentum is rising. Best to your trading!
MEDIUM TERM: uptrend high SPX 1333
LONG TERM: bull market