SHORT TERM: quiet open precedes big decline, DOW -326
Overnight the Asian markets lost 1.3%. Europe opened higher but lost 1.3% too. US index futures were higher overnight, and the market opened one point below Friday’s SPX 1783 close. Within the first few minutes the SPX hit 1785 and then began to pullback. At 10am ISM manufacturing was reported lower but still positive: 51.3 v 57.0, and Construction spending was reports slightly higher: +0.1% v +1.0%. Auto sales, however, were lower for the month of January. Just past 10am the SPX dropped below last week’s 1770 low and declined to 1763 by 10:30. After a bounce back to SPX 1770 just before 11am, the market dropped to 1751 by 12:30. Another rally attempt failed as the market hit SPX 1757 by 1pm, then it dropped to 1744 by 1:30. As the market tried to rally again the FED released: http://www.federalreserve.gov/boarddocs/SnLoanSurvey/default.htm, and this article hit the OEW camp: http://www.reuters.com/article/2014/02/03/us-usa-bernanke-brookings-idUSBREA1210P20140203. After another rally attempt failed at SPX 1750 by 2:30, the market hit 1741 by 3pm, 1746 by 3:30, then 1740 just before a 1742 close.
For the day the SPX/DOW were -2.15%, and the NDX/NAZ were -2.45%. Bonds gained 22 ticks, Crude slid 80 cents, Gold rallied $12, and the USD was lower. Medium term support drops to the 1699 and 1680 pivots, with resistance back at the 1779 and 1828 pivots. Tomorrow: Factory orders at 10am.
The market opened quietly this morning, but the sellers took over in short order. Just after 10am the SPX dropped below last week’s 1770 low and the 1768 support level. After that there was a steady decline, with a few 5 to 7 point bounces, down to SPX 1740. Clearly wave 3 of this C wave has been underway since SPX 1794. Thus far we can count three waves down from the B wave high at SPX 1799: 1772-1794-1740 so far. On Jan 24th the SPX dropped 39 points in one day, (1829-1790), during the third wave down of A. The market made a lower low the next day, and then got quite choppy for a few days.
Short term support is now at the 1699 and 1680 pivots, with resistance at SPX 1746 and 1768. Short term momentum hit extremely oversold and is due for a bounce. The short term OEW charts remain negative with the reversal now at SPX 1779. Best to your trading!
MEDIUM TERM: downtrend
LONG TERM: bull market