SHORT TERM: gap down opening, DOW -130
Overnight the Asian markets lost 0.3%. European markets opened lower and tumbled 2.3%. US index futures were lower overnight, and the market gapped down to SPX 1506 at the open. The SPX had closed at 1513 on friday. In the opening minutes the SPX hit 1503, then bounced back to 1506 by 10:00. At 10:00 Factory orders were reported higher: +1.8% vs 0.0%. The pullback then resumed hitting a familar number, thursday’s low, SPX 1497 by 12:00. Then after a bounce to SPX 1500 by 1:00, 1497 was retested by 2:00. Another bounce to SPX 1501 also failed by 3:00, then the market made a lower low to 1495 just before closing at 1496.
For the day the SPX/DOW were -1.05%, and the NDX/NAZ were -1.65%. Bonds gained 15 ticks, Crude lost $1.65, Gold bounced $6, and the USD was higher. Medium term support drops to the 1440 and 1386 pivots, with resistance at the 1499 and 1523 pivots. Tomorrow: a speech by FED governor Duke at 8:30, then ISM services at 10:00.
The market gapped down at the open today for the first time since January 24th. But unlike 24Jan, which opened at the low and then rallied, this decline continued. When the market dropped below SPX 1500, turning the short term OEW charts negative, we changed the tentative “careful Minor 3” labeling on the hourly chart to its appropriate color dark blue. When the market continued down to SPX 1495 it generated the largest pullback since Minor wave 3 began at SPX 1398. That was a nice run.
Should the market indeed be in Minor wave 4 the pullback should be around 30 to 40 points. Our analysis, based on previous Minor 4 waves suggests support between SPX 1476 and 1484. With short term support at the bull market breakout range: SPX 1471/75, the low to mid-1470’s looks like a good area for a Minor wave 4 low. When it does conclude the market should make new uptrend highs during Minor wave 5 to complete the uptrend.
Short term support is now at SPX 1471/75 and 1462/64, with resistance at the 1499 and 1523 pivots. Short term momentum hit oversold today, had an afternoon bounce, then ended oversold. The short term OEW charts turned negative today for the first time since SPX 1420, the reversal level is now around 1500. Best to your trading!
MEDIUM TERM: uptrend
LONG TERM: bull market