SHORT TERM: gap up opening sold, DOW -196
Overnight the Asian markets gained 0.1%. Europe opened higher but ended mixed. US index futures were higher overnight, and the market gapped up to SPX 2042 – the high of the day. The market had closed at SPX 2030 yesterday. Right after the open the market started to decline and hit SPX 2023 by 11:30. It then rallied to SPX 2036 by 12:30, before pulling back to 2030 by 2pm just before the FOMC statement: http://www.federalreserve.gov/newsevents/press/monetary/20150128a.htm. Right after the statement the market rallied to SPX 2037, then reversed and made a new low for the day at 2018 by 2:30. After a bounce to SPX 2027 by 3pm, the market headed lower again. Heading into the close the SPX hit 2001, then closed at 2002.
For the day the SPX/DOW were -1.25%, and the NDX/NAZ were -0.75%. Bonds gained 26 ticks, Crude lost $1.90, Gold dropped $10 and the USD was higher. Medium term support drops to the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots. Tomorrow: weekly Jobless claims at 8:30, Pending home sales at 10am, and at 1pm FED governor Powell gives a speech.
Today the market had a gap opening for the seventh day in a row, and the fourteenth time out of eighteen trading days this month. This kind of volatility usually occurs during corrections. Despite several attempts to move to new highs this month, it looks like we have been in a correction since the SPX 2094 high in late-December. Completely missed it.
As a result of this probability we have moved our preferred count from the daily charts to the hourly charts. But have yet to update the weekly charts until the downtrend is confirmed. Since this pattern does look like an irregular Major wave 4 correction: A SPX 1973, B SPX 2094, and C underway. A flat could form with a retest of the OEW 1973 pivot to end Major 4. Should the market break that pivot, then we are probably looking at something more substantial. Short term support is now at the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots. Short term momentum ended the day quite oversold. Best to your trading!
MEDIUM TERM: downtrend highly probable
LONG TERM: bull market