SHORT TERM: gap down opening again, DOW -51
Overnight the Asian markets lost 1.4%. Europe opened lower and lost 2.1%. US index futures were lower and the market gapped down to SPX 2045 at the open. The market had closed at SPX 2060 yesterday. In the opening minutes the market dropped to SPX 2036, and then rallied to SPX 2046 by 10am. When Wholesale inventories were reported higher: +0.4% v +0.3%, the market dropped to SPX 2034 by 10:30. Then the market started a larger rally. At 1:30 the SPX hit 2058, dipped to 2052 by 2:30, then rallied to close at 2060 to close the gap.
For the day the SPX/DOW were -0.15%, and the NDX/NAZ were +0.45%. Bonds gained 13 ticks, Crude rose 70 cents, Gold rallied $25, and the USD was lower. Medium term support remains at the 2019 and 1973 pivots, with resistance at the 2070 and 2085 pivots. Tomorrow: the Budget deficit at 2pm.
The market gapped down at the open for the second day in a row. This has not happened since the recent downtrend bottomed in mid-October. By 10:30 the SPX had declined to 2034, for a 45 point drop from Friday’s 2079 uptrend high. This is the largest decline since the uptrend began in mid-October. This morning’s decline also took out the important SPX 2050 support. When one adds these three factors to the negative factors detailed in the Weekend and Monday’s reports, it certainly looks like a downtrend may be underway. From Friday’s SPX 2079 high we can count five waves down into this morning’s low: 2054-2063-2036-2046-2034. The rallied that followed into the afternoon, could be a B wave of some degree with upside potential limited to the 2070 pivot range. Short term support is now at SPX 2034 and the 2019 pivot, with resistance at the 2070 and 2085 pivots. Short term momentum rallied to above neutral from extremely oversold. Best to your trading!
MEDIUM TERM: uptrend may have topped
LONG TERM: bull market