SHORT TERM: another gap up opening, DOW -21
Overnight the Asian markets lost 0.6%. Europe opened higher and gained 0.4%. US index futures were higher overnight. At 8:15 the ADP index was reported higher: 200K vs 188K, and at 8:30 Q2 GDP was reported higher: +1.7% vs +1.8%. The market gapped up at the open to SPX 1691 and continued to rally. The SPX had closed at 1686 yesterday. At 9:45 the Chicago PMI was reported higher: 52.3 vs 51.6. The market continued to rally until 11:00 when the SPX hit 1697. After that it started to pullback awaiting the FED’s FOMC statement. At 1:00 the SPX hit 1689 and then drifted higher. At 2:00 the FOMC statement: http://www.federalreserve.gov/newsevents/press/monetary/20130731a.htm. The market then popped to SPX 1694, dropped to 1686 by 2:15, then started to rally. Around 3:00 the SPX hit 1698, a new uptrend high, but pulled back into the close to end the day at 1686.
For the day the SPX/DOW were -0.05%, and the NDX/NAZ were +0.20%. Bonds gained 3 ticks, Crude gained $2.00, Gold slipped $3, and the USD was lower. Medium term support remains at the 1680 and 1628 pivots, with resistance at the 1699 and 1762 pivots. Tomorrow: weekly Jobless claims at 8:30, ISM manufacturing and Construction spending at 10:00, also monthly Auto sales during the day.
The market gapped up for the second day in a row today. And, just like yesterday the rally was sold into the afternoon. After the FED issued a “no change” FOMC statement the market resumed the pullback hitting 1686, and then rallied close to SPX 1698. With no tapering on the short term horizon one would think the market is preparing to move higher. However, the short term wave count from the Minor wave 4 SPX 1676 low, does not look particularly positive at the moment.
From the Minor 4 low, which was confirmed when the DOW made new highs this morning, the market has rallied in a choppy pattern: 1692-1683-1697-1686-1698. This, as most of you know, is a diagonal triangle formation. Which suggests Minor wave 5 may have ended today right near the all time highs. This pattern can also be counted as a Minute i-a-b-ii. The deciding factor is what the market does over the next few days. Should the market break below 1682, the uptrend is probably over. And, the Major wave 4 correction should follow. Should the market hold the SPX 1682 support level, then clear the 1699 pivot range, the more Minute wave bullish count comes into play. Then, this uptrend could extend into August. This has been an interesting week.
Short term support is at the 1680 pivot and SPX 1658-1667, with resistance at the 1699 pivot and SPX 1717. Short term momentum set up a negative divergence at today’s high. The short term OEW charts vacillated again today, are now negative, with the swing level SPX 1687. Best to your trading!
MEDIUM TERM: uptrend may have topped
LONG TERM: bull market