SHORT TERM: gap down opening then volatility, DOW -173
Overnight the Asian markets actually gained 0.4%. Europe opened lower and lost 3.1%. US index futures were sharply lower overnight. At 8:30 Retail sales were reported lower: -0.3% v +0.6%, the NY FED reported lower: 6.2 v 27.5, and the PPI was lower: -0.1% v 0.0%. The market gapped down at the opening to SPX 1856, and continued down to 1837 in the opening minutes. After that it rallied to SPX 1867 by 10am. At 10am Business inventories were reported higher: +0.2% v +0.4%. The market then pulled back to SPX 1851 by 10:30, rallied to 1862 by 11am, and then headed lower again. At 11am the Treasury reported another surplus: +$105.8bn v +$75.1bn. Then the market dropped to the low of the day at SPX 1821 by 1:30. The market then rallied to SPX 1835 just before 2pm, dipped to 1826 at 2pm, and then rallied higher after the FED’s Beige book was released: http://www.federalreserve.gov/monetarypolicy/beigebook/beigebook201410.htm. Just before 3pm the SPX hit 1855, pulled by to 1843 by 3:30, then rallied to 1869 during the last half hour. This was followed by a pullback to SPX 1860 then a bounce to close at 1862.
For the day the SPX/DOW were -0.95%, and the NDX/NAZ were -0.45%. Bonds rallied 25 ticks after being up nearly 90 ticks, Crude lost 25 cents, Gold added $5, and the USD was lower. Medium term support drops to the 1841 and 1828 pivots, with resistance at the 1869 and 1901 pivots. Tomorrow: weekly Jobless claims at 8:30, Industrial production at 9:15 (est. +0.5%), then the Philly FED and the NAHB at 10am.
The market gapped down at the open today, breaking through the OEW 1869 pivot, forcing us to remove that tentative green Major A label. After a drop to SPX 1837, the OEW 1841 pivot, the market rallied to 1867, the OEW 1869 pivot. The next series of declines took the SPX to 1821, the OEW 1828 pivot, which was followed by a strong counter rally back to SPX 1869, the 1869 pivot. This certainly was a wild day, which became even wilder after the Beige book was released. Kind of reminds me of the market’s reaction to the FOMC minutes last Wednesday.
Technically this was the most volatile day we have seen since 2011. Also at the lows the SPX was down 9.01% for the largest correction since mid-2012. While this afternoon’s rally was encouraging, five waves up to SPX 1869, we are not convinced of a Major wave A low at SPX 1821 just yet. There was a lot of damage done today to the technicals we are tracking. However, if the market can make it to the 1901 pivot again the downtrend low may be in. Short term support is at the 1841 and 1828 pivots, with resistance at the 1869 and 1901 pivots. Short term momentum rose to just above neutral from extremely oversold. Best to your trading this volatile market!
MEDIUM TERM: Major A downtrend
LONG TERM: bull market but Primary IV underway