SHORT TERM: gap down opening, DOW -117
Overnight the Asian markets lost 1.0%. Europe opened lower and lost 1.6%. US index futures were lower overnight. At 9am the FHFA was reported higher: +0.1% v +0.4%, then at 9:25 FED governor Powell’s speech was released: http://www.federalreserve.gov/newsevents/speech/powell20140923a.htm. The market gapped down at the open to SPX 1987, then started to rally. The market had closed at SPX 1994 yesterday. By 10:30 the SPX had closed the gap, hitting 1995, then pulled back to 1988 by 11:30. Another rally failed to generate much interest as the SPX hit 1993 by noon, then pulled back to 1984 by 2:30. Then after rallying to SPX 1989 by 3:30 the market dropped to the low of the day, 1983, and closed there.
For the day the SPX/DOW were -0.65%, and the NDX/NAZ were -0.35%. Bonds gained 9 ticks, Crude rose 60 cents, Gold added $7, and the USD was flat. Medium term support remains at the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots. Tomorrow: New home sales at 10am.
The market gapped down today for the first time during this pullback. After a rally to SPX 1995 the market worked its way lower for the rest of the day. At the low the SPX hit 1983. This represents a 36 point pullback from Friday’s 2019 high. While we noted yesterday this could be a C wave of an irregular Minor 2, we find the type and depth of the decline somewhat disconcerting.
When this uptrend began the SPX rallied from 1905 to 2011, then it pulled back in very choppy, eleven wave action, 33 points to 1978. After the SPX 1978/1979 low the market rallied 40 points to 2019. Now it has pulled back nearly the entire 40 point advance without one notable reversal. This decline has been straight down. Should the SPX lose the 1973 pivot range next, then something larger than just a pullback may be underway. Short term support is the 1973 and 1956 pivots, with resistance at SPX 1995 and the 2019 pivot. Best to your trading!
MEDIUM TERM: uptrend
LONG TERM: bull market