SHORT TERM: gap down opening starts the month, DOW -51
Overnight the Asian markets lost 0.8%. Europe opened lower and lost 0.5%. US index futures were lower overnight and the market gapped down at the open to SPX 2061. The market had closed at SPX 2068 on Friday. In the first 15 minutes of trading the market declined to SPX 2051. Then it started to rally. At 10am ISM manufacturing was reported lower: 58.7 v 59.0. The rally continued until the SPX hit 2060 around 10:30. Then after another decline to a lower low at SPX 2050 was reached by 11am, the market rallied to SPX 2059 by 1:30. After another pullback to SPX 2052 by 2:30, the market bounced to 2058 by 3:30, then dipped to 2053 to end the day.
For the day the SPX/DOW were -0.50%, and the NDX/NAZ were -1.25%. Bonds lost 5 ticks, Crude rallied $3.20, Gold soared $45, and the USD was lower. Medium term support remains at the 2019 and 1973 pivots, with resistance at the 2070 and 2085 pivots. Tomorrow: Construction spending and Auto sales by 10am.
The market gapped down at the open, then dropped to SPX 2051. On the drop we eliminated the Minute wave iii at SPX 2076, as this decline has overlapped the high of Minute i at SPX 2056. This leaves the short term count, from the Minor 4 low at SPX 2030, suspect. Minor 5 could be subdividing, or it could have ended at SPX 2076. The key level to watch going forward remains SPX 2040. A break below that and the uptrend could be over. The daily RSI dropped below overbought today for the first time in over a month, and the MACD did a negative cross. It certainly looks like it is time to be somewhat defensive about this uptrend. Short term support is at SPX 2040 and the 2019 pivot, with resistance at the 2070 and 2085 pivots. Short term momentum hit extremely oversold this morning, then rebounded to end the day just above oversold. Best to your trading!
MEDIUM TERM: uptrend
LONG TERM: bull market