SHORT TERM: FOMC day volatility, DOW -62
Overnight the Asian markets gained 1.2%. Europe opened higher but lost 0.1%. US index futures were higher overnight. At 8:15 the ADP index was reported lower: 130k v 166k, but the CPI was reported higher: +0.2% v +0.1%. The market opened three points above yesterday’s SPX 1772 close, and immediately began to pullback. After hitting SPX 1767 by noon, the market bounced to 1770 by 1PM, then pulled back to 1766 just before the FOMC at 2PM: http://www.federalreserve.gov/newsevents/press/monetary/20131030a.htm. Then the market gyrated between SPX 1764 and 1770 for a few minutes before breaking to 1757 by 2:30. After a rally to SPX 1766 by 3:30 the market pulled back to close at 1763.
For the day the SPX/DOW were -0.45%, and the NDX/NAZ were -0.40%. Bonds lost 8 ticks, Crude dropped $1.50, Gold slipped $2, and the USD was higher. Medium term support remains at the 1699 and 1680 pivots, with resistance at the 1779 pivot. Tomorrow: weekly Jobless claims, Personal income/spending and the PCE at 8:30. Then Chicago PMI at 9:45.
The market opened at an all time high today in both the SPX and DOW. But then immediately began to pullback ahead of the FOMC statement. After the statement was released at 2PM the market gyrated, then broke to SPX 1757. Today’s decline from SPX 1775 to 1757 is the largest decline, by one point, since this recent rally began in early October at SPX 1646. Usually when the market makes its largest pullback, after a five wave advance, there is more to come on the downside.
With the market closing at SPX 1763 it is not too far away from making a new high, nor making lower lows. A rally above 1775 suggests the rally continues. A drop below SPX 1757 would suggest the pullback could reach the low 1740’s, break through 1730, or go even lower. The SPX has completed the minimum required to end this rally. And the DOW has done enough to end its uptrend. The next day or so should be the tell.
Short term support is at SPX 1757 and SPX 1730, with resistance at the 1779 pivot and SPX 1804. Short term momentum was quite overbought this AM then dropped to slightly oversold. The short term OEW charts turned negative for the first time since SPX 1670. But then flipped positive again in the last hour of trading. The reversal level is now SPX 1761. Best to your trading!
MEDIUM TERM: uptrend
LONG TERM: bull market