SHORT TERM: gap up opening then pullback, DOW -18
Overnight the Asian markets gained 1.2%. Europe opened higher and gained 0.3%. US index futures were higher overnight, and the market gapped up to SPX 1975 at the open. The SPX had closed at 1968 on Friday. In the opening minutes the SPX rallied to 1978 then began to pullback. The pullback hit SPX 1960 just before noon, bounced to 1965 just afternoon, then dropped to 1958 by 12:30. After that the market started to rally. By 2:30 the SPX had hit 1969 then pulled back to close at 1965.
For the day the SPX/DOW were -0.15%, and the NDX/NAZ were -0.35%. Bonds gained 9 ticks, Crude rose 70 cents, Gold rallied $14, and the USD was lower. Medium term support remains at the 1956 and 1929 pivots, with resistance at the 1973 and 2019 pivots. Tomorrow: Consumer credit at 3pm.
The market gapped up at the open today as buying enthusiasm continued into Monday morning. The SPX hit 1978, for a near Fibonacci 55 point rally off Thursday’s 1926 low. Then when the DAX started to tail off the SPX followed. Germany’s DAX had missed the entire Thursday/Friday rally, after closing down 2% on Thursday, due to a national holiday on Friday. It opened 1% higher, but headed lower for the rest of the day ending with a gain of only 0.2%. We continue to watch this weak index closely.
As for the SPX. Today’s pullback to 1958 was 20 points from the morning high. If we look at this downtrend in Fibonacci numbers we have the following. An a-b-c down 55 pts. – 21pts. – 55 pts. Now a rally of 55 pts., and a pullback of 21 pts. It is possible the 55 pts. rally was all of Int. wave B, or just Minor A of B with the 21 pts. decline Minor B. Typically B wave rallies are done when the hourly RSI gets overbought, like today. However, sometimes there is a retest of the high to set up as negative divergence. Until the market loses the OEW 1956 pivot range (1949-1963) a retest is possible. Short term support is at the 1956 and 1929 pivots, with resistance at the 1973 pivot and SPX 1985/1986. Short term momentum hit quite overbought early, then dropped to neutral. Best to your trading!
MEDIUM TERM: downtrend
LONG TERM: bull market