SHORT TERM: gap down opening, DOW -243
Overnight the Asian markets lost 0.4%. European markets opened higher, but lost 1.9%. US index futures were sharply lower overnight. As the FED started its two day FOMC meeting the market gapped down at the open to SPX 1422 and continued to slide. Around 10:30 the SPX hit 1408, setting up a slight positive divergence, and then tried to rally. At 2:00 the SPX hit 1418 and then began to pullback again. After hitting SPX 1412 around 2:30, the market bounced to 1419 by 3:00, and then pulled back to end the day at 1413.
For the day the SPX/DOW were -1.65%, and the NDX/NAZ were -0.95%. Bonds gained 11 ticks, Crude slid $2.10, Gold dropped $22, and the USD was higher. Medium term support remains at the 1386 and 1372 pivots, with resistance at the 1440 and 1499 pivots. Tomorrow: New homes sales and the FHFA housing price index at 10:00, followed by the FED’s FOMC statement in the afternoon.
The market gapped down at the open today for the first time since monday October 8th. In the first few minutes the SPX broke below support at 1422/27. Then it broke support at SPX 1413/16, one half hour later, on its way to 1408. At that low it set up a slight positive divergence and tried to rally. Also at the low our Minor wave C (1464-1408) is now longer than Minor wave A (1471-1426). Suggesting wave C may target the 1.618 relationship at SPX 1391 next. Over the weekend we noted the Fibonacci/retracement levels at: SPX 1391/93, SPX 1369, and SPX 1345/46.
Also last weekend we updated the DOW charts with the most probable long term count. This suggests the recent uptrend high was the end of Intermediate wave i of Major wave 3, and not Major wave 3 in its entirety. We also posted a potential bearish count at the very end of the public stock charts list. Recently there has been some interest in a potential bull market top, at the recent uptrend high, in our OEW group. It’s October! After reviewing the entire bull market. The possibility of an upcoming end to a potential bearish pattern did arise. This pattern suggests there is at least one more uptrend high, after this correction concludes, before a potential diagonal triangle top could form. Right now, this is only a 20% probability.
Short term support is at SPX 1402/3 then SPX 1396/98, with resistance at SPX 1413/16 and SPX 1422/27. Short term momentum is displaying a slight positive divergence at today’s low. The short term OEW charts remain negatively biased, with the swing level around SPX 1437. Best to your trading!
MEDIUM TERM: uptrend in jeopardy
LONG TERM: bull market