SHORT TERM: gap up opening, DOW -6
Overnight the Asian markets lost 1.0%. Europe opened lower but gained 0.2%. US index futures were higher overnight, and the market gapped up to SPX 1883 at the open. The SPX had closed at 1875 yesterday. In the opening minutes the SPX hit 1890, then dropped to 1876 by 10am. After that it went into rally mode. The SPX then made a choppy move to 1899 by noon: 1885-1878-1890-1885-1899. Then the SPX reversed and started to pullback. At 12:30 it hit SPX 1889, bounced to 1895 just past 1pm, then made a slightly lower low for the downtrend at SPX 1872 just before 3:30. Then the market rallied to SPX 1883 before pulling back to 1878 to end the day.
For the day the SPX/DOW were mixed, and the NDX/NAZ were +0.20%. Bonds gained 11 ticks, Crude dropped $3.85, Gold gained $1, and the USD was higher. Medium term support remains at the 1869 and 1841 pivots, with resistance at the 1901 and 1929 pivots. Tomorrow: Retail sales, the PPI and the NY FED at 8:30, Business inventories at 10am, then the FED’s beige book at 2pm.
The market gapped up at the open today, rallied to SPX 1890, pulled back to 1876, then rallied to 1899. then it did its recently normal afternoon selloff, making a new downtrend low at SPX 1872 by two points. During this mornings rally we posted a tentative Major A green label at the lows. We observed, and posted in the comments last night, that the market was about oversold as it had been during every downtrend of Primary III, and two of the three downtrends of Primary II. Despite the volatile action again today, which should continue throughout Primary IV, the technicals did not display any signs of a further breakdown. Should the SPX lose the 1869 pivot (1862-1876), however, then Major wave A is likely extending. For now we think the OEW 1869 pivot should hold. Short term support is at the 1869 and 1841 pivots, with resistance a the 1901 and 1929 pivots. Short term momentum displays a positive divergence at this afternoon’s low. Best to your trading the Beige book!
MEDIUM TERM: Major A downtrend may be bottoming
LONG TERM: bull market