SHORT TERM: gap up open then pullback, DOW -231
Overnight the Asian markets lost 0.4%. Europe opened higher but lost 1.4%. US index futures were higher overnight. At 8:30 weekly Jobless claims were reported lower: 315k v 323k, Retail sales were reported higher: +0.3% v -0.4%, Export prices were higher: +0.6% v +0.2%, and Import prices were lower: -0.2% v +0.3%. The market gapped up at the open to SPX 1873, ticked up to 1874, then began to pullback. At 10am Business inventories were reported higher: +0.4% v +0.5%. The pullback closed the upside gap just past 10am and continued lower until just past 1pm, when the SPX hit 1846. Then after a bounce to SPX 1853 by 1:30, the market dropped to 1842 around 3:30. After a bounce to SPX 1849 the market closed at 1846.
For the day the SPX/DOW were -1.30%, and the NDX/NAZ were -1.50%. Bonds gained 20 ticks, Crude added 25 cents, Gold rose $5, and the USD was flat. Medium term support remains at the 1841 and 1828 pivots, with resistance at the 1869 and 1901 pivots. Tomorrow: the PPI at 8:30, and Consumer sentiment at 10am.
The market gapped up at the open, clearing SPX 1870, but was immediately sold off. Today’s action was similar to Tuesday’s, when the SPX cleared 1880 and then was immediately sold off. This is certainly not third wave activity. When we look at all four major indices since the February downtrend low we observe: new bull market highs in the NDX/NAZ, no new high in the DOW, and four weeks of choppy activity after the initial two week surge in the SPX.
We noted yesterday above SPX 1870 the market would start to look positive short term, but below 1850 it would start to look negative. We got both today. In fact, when the market declined to SPX 1865 we knew the third wave was on hold. After reviewing the charts we updated the DOW charts putting the Primary wave III top, and Primary wave IV underway back on the table as an alternate count. This does not suggest this market is about to collapse. The NDX/NAZ are nowhere near a Primary III high. Until the DOW starts impulsing again, we see it in a wide trading range for an extended period of time.
In regard to the SPX, this pullback to the 1841 pivot range is still acceptable. Although this uptrend, as noted above, is quite choppy. However, a break below the 1828 pivot range would suggest the uptrend may be over. Short term support is at the 1841 and 1828 pivots, with resistance at the 1869 pivot and SPX 1884. Short term momentum is quite oversold. The short term OEW charts remain negative with the reversal level now SPX 1865. Best to your trading!
MEDIUM TERM: uptrend
LONG TERM: bull market