SHORT TERM: gap down opening then volatility, DOW -25
Overnight the Asian markets lost 1.2%. Europe opened higher but lost 0.6%. US index futures were higher overnight, but then began to fade. At 8:15 the, often not useful, ADP index was reported higher: 215k v 130k. Then at 8:30 the Trade deficit was reported lower: -$40.6bn v -41.8bn. The market gapped down at the open to SPX 1787, dipped to 1786, then started to rally. The market had closed at SPX 1795 yesterday. At 10am New home sales were reported lower for Sept (354k v 421k) then higher for Oct (444k v 354k), and ISM services were reported lower: 53.9 v 55.4. The rally continued until about 10:30 when the SPX revisited yesterday’s 1800 high. Then another pullback began. By 1:30 the market had dropped below the opening low and hit the SPX 1779 pivot. Then it started to rise ahead of the: http://www.federalreserve.gov/monetarypolicy/beigebook/default.htm. The rally continued until 3:30 when the SPX hit 1796. Then a dip into the close ended the day at SPX 1793.
For the day the SPX/DOW were -0.15%, and the NDX/NAZ were +0.05%. Bonds lost 15 ticks, Crude gained $1.15, Gold rallied $21, and the USD was lower. Medium term support remains at the 1779 and 1699 pivots, with resistance at the 1828 and 1841 pivots. Today long term Investor sentiment was reported lower: 54.2% v 56.3%. Tomorrow: Q3 GDP (est. +3.1%) and weekly Jobless claims at 8:30. Then Factory orders at 10am.
Wild day! The market gapped down at the open, hit SPX 1786, rallied to 1800, dropped to 1779, then rallied to 1796. The last time we had this kind of volatile activity was November 19th. Possibly going unnoticed: the SPX/DOW have now declined for four days in a row. Also likely going unnoticed, since last Friday the futures market has displayed the same pattern every day: Buy the open before 10am, then Sell short when the rally begins to fade right into the S2 pivot. Are the BOTs raising holiday bonus money?
The decline from the SPX 1814 all time high currently looks like an ABC: 1786-1800-1779. The first decline took four days, but the rally and next decline took only hours. It is possible these last two waves are part of a larger wave. A rally to SPX 1800 would rule that out. With another lower low today the short term trend remains down.
Short term support is at the 1779 pivot and SPX 1746, with resistance at SPX 1810, SPX 1818 and the 1828 pivot. Short term momentum put in a positive divergence at today’s first low, then again at the second low, and ended the day at neutral. The short term OEW charts remain negative with the reversal level now SPX 1797. Best to your ECB/GDP trading tomorrow!
MEDIUM TERM: uptrend weakening
LONG TERM: bull market