SHORT TERM: a gap down then choppy day, DOW -133
Overnight the Asian markets gained 0.2%. European markets opened higher and gained 0.8%. US index futures were lower overnight, and at 8:30 the NY FED was reported lower: 1.5 v 6.3. The market gapped down at the open to SPX 1705, then slipped further to 1701 in the opening minutes. After that the usual morning rally began. By 10:30 the SPX hit 1710, dipped to 1703 by 11AM, then rallied to 1712 by 11:30. Then the market started to pullback. Around 2:30 the SPX hit 1696, rallied to 1704 by 3:30, then dropped to 1698 at the close.
For the day the SPX/DOW were -0.80%, and the NDX/NAZ were -0.45%. Bonds lost 4 ticks, Crude dropped $1.45, Gold gained $9, and the USD was higher. Medium term support slips to the 1680 and 1628 pivots, with resistance at the 1699 and 1779 pivots. Tomorrow: the CPI at 8:30, NAHB housing at 10AM, then the FED’s Beige book at 2PM.
The market gapped down for the second day in a row this AM, and again the gap down was ignored as the market rallied for the first few hours. These gap down openings, there have five of them and one gap up, started the day before the Government shut down at SPX 1692. And two weeks later we are oddly enough above the initial gap down level. Strange market behavior. After the gap down and market rally to SPX 1712. The current rally pattern, from last week’s SPX 1646 low, looked like a rising diagonal triangle and we labeled a tentative Intermediate wave b at the high. We noted early on the blog two levels to watch SPX: 1701 and 1692. The first one, SPX 1701, gave way in the afternoon when the market dropped to 1696. If the second gives way as well, Int. wave b may have ended today with an Int. wave c to follow.
Short term support is at the OEW 1680 pivot and SPX 1646, with resistance at the 1699 pivot and SPX 1730. Short term momentum reached slightly oversold after the negative divergence. The short term OEW charts remain positive with the reversal level SPX 1694. Best to your trading as we approach default Thursday!
MEDIUM TERM: DOW downtrend, SPX/NDX/NAZ uptrend
LONG TERM: bull market