SHORT TERM: turbulent Tuesday, DOW -112
Overnight the Asian markets dropped 1.9%. Europe opened higher and gained 2.4%. US index futures were higher then substantially lower overnight. At 8:30 Housing starts were reported higher: 1028k v 1009k, but Building permits were lower: 1035k v 1080k. The market gapped down at the open to SPX 1976, and then started to rally. The SPX had closed at 1990 yesterday. By 11:30 the market had rallied to SPX 2017, with only two 6 – 7 point pullbacks along the way. Then it started to pullback. After a drop to SPX 1987 by 1:30, the market rallied to 1999 by 2pm, then declined again to close at the low for the day 1973.
For the day the SPX/DOW were -0.75%, and the NDX/NAZ were -1.45%. Bonds gained 17 ticks, Crude rose 5 cents, Gold added $3, and the USD was lower. Medium term support remains at the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots. Tomorrow: the CPI at 8:30, then the FOMC statement at 2pm and a press conference afterwards.
The market gapped down at the open for the seventh gap opening in a row. Right at the open the SPX entered the 1973 pivot range (1976), and then began to rally. At the low it appeared the market had completed a very complex zigzag, and we then labeled it an Int. wave A low. The rally that followed was the best rally of the entire downtrend, adding to the probability that Int. wave A did bottom at SPX 1976. After the rally to SPX 2017 the market had a substantial pullback retracing the entire advance. We had labeled the high with a tentative green Minor wave a, but that no longer fits. At the close we updated the chart to count the SPX 1976 as Minute a, and 2017 as Minute b. Minute c is underway from the 2017 high. One other note. The market has now corrected 5.1%. Should Int. wave v be subdividing, all the technical parameters have now been met for a possible downtrend low at the next significant low in price. This market is a day traders market, so use stops when trading. Short term support remains at the 1973 and 1956 pivots, with resistance at the 2019 pivot and SPX 2056. Short term momentum rose off the positive divergence, but despite the big rally it never even got overbought. The conclusion of FOMC meetings are often quite volatile market events. Best to your trading!
MEDIUM TERM: downtrend
LONG TERM: bull market