SHORT TERM: gap down and decline, DOW -176
Overnight the Asian markets lost 0.8%. Europe opened lower and lost 0.9%. US index futures fell overnight after China announced a contracting PMI. At 8:30 weekly Jobless claims were reported flat: 326k v 326k, then at 9am the FHFA was reported higher: +0.1% v +0.5%. The market gapped down at the open to SPX 1833 and continued to fall. At 10am Leading indicators were reported higher: +0.1% v +0.8%, but Existing home sales were lower: 4.87m v 4.90m. By 11am the SPX reached 1824 and tried to rally. The bounce ended at SPX 1829 around noon, and the market declined even further. At 2pm the SPX hit 1820, then tried to rally again. Heading into the close the SPX hit 1829 and then closed at 1828.
For the day the SPX/DOW were -1.00%, and the NDX/NAZ were -0.50%. Bonds gained 25 ticks, Crude added 55 cents, Gold rallied $25, and the USD was lower. Medium term support drops to the 1779 and 1699 pivots, with resistance now at the 1828 and 1841 pivots. Tomorrow: no economic reports scheduled.
We certainly did not see this coming. The recent rally in the SPX to 1851 was confirmed by the NDX/NAZ, but not the DOW. As it has lagged right after the open on Tuesday. The NDX/NAZ, btw, actually made a higher high yesterday when both the SPX/DOW lagged. However, since the DOW did not participate, for whatever reason, the entire market activity for this month appears to be corrective. It certainly looks that way in the DOW.
If we now step back a bit to the time all indices confirmed a new high we are looking at the end of December at SPX 1849. We can then count an extended complex pullback, somewhat similar in complexity to Minor waves 1 and 2 of Intermediate wave one (Sept.-Oct.). We can then count an a-b-c decline to SPX 1816 (1824-1843-1816), then a rally to SPX 1851, followed by another a-b-c decline to SPX 1820 thus far (1832-1847-1820). This is noted on the SPX hourly chart. So it looks like the market is where is was before the first drop to SPX 1816.
Short term support is now back to SPX 1814 and SPX 1800, with resistance at the 1828 and 1841 pivots. Short term momentum hit extreme oversold levels again, just like it did at the SPX 1816 low. The short term OEW charts turned negative at the open and ended there, with the reversal level now SPX 1837. Best to your trading this volatile market!
MEDIUM TERM: uptrend
LONG TERM: bull market