SHORT TERM: pullback continues, DOW -9
Overnight the Asian markets gained 0.6%. European market, however, opened lower and lost 0.7%. The US index futures were higher overnight, but lost ground heading into the open. At the open the SPX was four points below yesterday’s 1937 close. Then after a run up to SPX 1940 by 10am the market started to pullback. At 11am the SPX hit 1929, bounced to 1936 by 12:30, then hit 1928 by 2:30. At 2pm the Budget deficit was reported at -$94.6bn v -$97.6bn. A rally into the close stopped at SPX 1935, then the market closed at 1934.
For the day the SPX/DOW were -0.10%, and the NDX/NAZ were -0.20%. Bonds lost 5 ticks, Crude dropped 75 cents, Gold was flat, and the USD was higher. Medium term support remains at the 1929 and 1901 pivots, with resistance at the 1956 and 1973 pivots. Tomorrow: Retail sales at 8:30, then Business inventories at 10am.
Index futures looked like we would have a positive open this morning. But as Europe continued to move lower, futures weakened, and the market opened lower. After an early bounce the market then headed lower again. Stretching this pullback from Minute degree to Minor degree. As this unfolded we posted a Minor wave 1 label at Monday’s SPX 1945 high. Minor wave 2 appears to have been underway. The market then found support right at the OEW 1929 pivot and rallied some. If the SPX can get over 1940 we are probably in the early stages of Minor wave 3. If not, a 50% retracement is at 1925 and 61.8% at 1920.
Short term support is at the 1929 and 1901 pivots, with resistance at SPX 1945 and the 1956 pivot. Short term momentum hit oversold. The short term OEW charts swung negative at SPX 1934, but ended positive with a reversal level at 1933. Best to your trading!
MEDIUM TERM: uptrend probably underway
LONG TERM: bull market