SHORT TERM: gap up opening again, DOW +305
Overnight the Asian markets lost 0.5%. Europe opened higher and gained 1.0%. US index futures were higher overnight, and the market gapped up to SPX 2032 at the open. The market had closed at SPX 2021 yesterday. By 10am the SPX had rallied to 2040, and then started to pullback. Also at 10am Factory orders were reported lower: -3.4% v -0.7%, and Auto sales were reported higher. The pullback lasted until noon: SPX 2029 at 11am, 2037 at 11:30, and 2028 by 12pm. Then the market rallied to SPX 2046 by 2pm, pulled back to 2038 by 2:30, then rallied to close at the high 2050.
For the day the SPX/DOW were +1.60%, and the NDX/NAZ were +1.00%. Bonds lost 28 ticks, Crude rallied $2.85, Gold slid $13, and the USD was lower. Medium term support remains at the 2019 and 1973 pivots, with resistance at the 2070 and 2085 pivots. Tomorrow: ADP at 8:15, then ISM services and a speech from FED governor Powell at 10am.
The market gapped up at the open for the second day in a row today. During January’s 15 gaps openings in 20 days, the market only gapped up twice in a row once. That was the three wave SPX 1992 to 2064 rally in early January. Today’s gap opening completed a third wave from yesterday’s SPX 1981 low: 2010-1993-2040. Pulled back to SPX 2028 for a fourth wave, then rallied to 2050 for a fifth wave. This advance is the first impulsive five wave rally since mid-December. That rally started an uptrend.
While we were expecting a downtrend low this week. We are kind of surprised it could of happened on Monday, and especially within the first half hour of trading. Even after yesterday’s rally we thought SPX 1973 could be revisited, if this rally failed to produce five waves. Now with five waves up probabilities suggest a new uptrend is underway. The most likely correction count, in the SPX/NAZ, would be a failed irregular Major wave 4 flat. In the DOW/NDX, just an irregular Major wave 4 flat as they both made lower lows. There is one of possibility: that of an ongoing Major wave 4 triangle with this being the D wave. This possibility is posted on the NDX charts. Short term support is now at SPX 2028 and the 2019 pivot, with resistance at SPX 2057/58 and the 2070 pivot. Short term momentum is displaying a slight negative divergence at today’s close. Best to your trading this volatile market!
MEDIUM TERM: uptrend may be underway
LONG TERM: bull market