SHORT TERM: pullback extends to 28 points, DOW -125
Overnight the Asian markets were mostly lower: -1.0%. Europe opened lower and had its worse day in four months: -2.6%. US index futures were lower overnight, and at 8:15 the ADP index was reported lower: 209K vs 216K. The market gapped down at the open to SPX 1404 and continued to fall. The SPX had closed at 1413 yesterday. At 10:00 ISM services was reported lower: 56.0 vs 57.3. Just past 10:00 the SPX broke through 1400. Around 11:00 the SPX found support at 1394, rallied to 1399 by 12:30, then retested 1394 by 1:30. After that it tried to rally. By 3:00 the SPX rebounded to 1401, then dipped to a 1399 close.
For the day the SPX/DOW were -1.0%, and the NDX/NAZ were -1.4%. Bonds gained 18 ticks, Crude dropped $1.95, Gold fell $26.00, and the USD was higher. Support for the SPX remains at the 1386 and 1372 pivots, with resistance at the 1440 and 1499 pivots. Short term momentum dropped to quite oversold during today’s decline. Tomorrow, weekly Jobless claims at 8:30. Monthly Payrolls and Consumer credit will be reported on friday even though the markets will be closed for a holiday.
The market gapped down at the open today, broke through SPX 1400, then found some support at 1394. This represents a 28 point pullback from monday’s SPX 1422 uptrend high. This is pretty much in line with the two 27 point pullbacks of the last two weeks, which also contained gap down openings. The rising wedge shaped pattern, that was created during all this activity, appears complete at SPX 1422. This pattern could have terminated Intermediate wave v, Major wave 3, and the Nov-Apr uptrend. At 10:00 we posted a tentative ‘green’ Major wave 3 label at the uptrend high on the SPX charts.
What was previously support has now become resistance. Short term support remains at the OEW 1386 and 1372 pivots, with overhead resistance at SPX 1414, 1419 and then 1422. Short term momentum bounced a bit from quite oversold. The short term OEW charts turned to a negative bias on the gap down opening. Should a downtrend be underway, we would expect the SPX to find support between 1300 and 1340 and end the correction in May. There should be very good support within the 1291-1313 OEW pivot zone. Best to your trading!
MEDIUM TERM: uptrend may have ended at SPX 1422
LONG TERM: bull market