SHORT TERM: another gap opening, DOW -209
Overnight the Asian markets lost 0.4%. Europe opened lower and lost 1.0%. US index futures were lower overnight as well. At 8:30 Personal income was reported flat: 0.0% vs. +0.2%, Personal spending was reported lower: -0.2% vs. +0.2%, and PCE prices remained flat: 0.0% vs. 0.0%. The market gapped down at the open to SPX 1649. The SPX had closed at 1654 yesterday. After a quick dip to SPX 1648, the Chicago PMI was reported higher: 58.7 vs. 49.0. The market then rallied to SPX 1655 just before 10:00. After Consumer sentiment was reported higher: 84.5 vs. 83.7, the market pulled back to SPX 1648 just past 10:00. A larger rally followed to SPX 1659 by 11:30. Then the decline began. At 3:00 the SPX hit 1642, bounced to 1647 by 3:30, then dropped to 1631 and closed there. Our important medium term support at the 1636 level has been broken.
For the day the SPX/DOW were -1.40%, and the NDX/NAZ were -1.00%. Bonds lost 4 ticks, Crude slid $1.85, Gold dropped $27, and the USD was higher. Medium term support remains at the 1628 and 1614 pivots, with resistance at the 1680 and 1699 pivots. Last night the FED reported an expected increase in the Monetary base: $3.173 tln vs. $3.106 tln.
The market gapped down at the open for the fourth time in six trading days. After bouncing around the lows it did rally to SPX 1659 by 11:30. After that it was all downhill. We posted a tentative Intermediate iii label at the SPX 1674 high. We will review the charts and see exactly where we stand over the weekend.
Short term support is at the 1628 and 1614 pivots, with resistance at SPX 1658-1667 and the 1680 pivot. Short term momentum ended the week extremely oversold. The short term OEW charts vacillated again today, negative-positive-negative, with the reversal level now SPX 1653. Best to your weekend!
MEDIUM TERM: downtrend now probable
LONG TERM: bull market