SHORT TERM: gap up opening immediately reversed, DOW -293
Overnight the Asian markets gained 0.2%. European markets opened lower and lost 0.9%. US index futures were higher overnight, and at 8:30 Durable goods orders were reported lower: -1.4% v +2.8%. The market gapped up at the open to SPX 2097, it had closed at 2092 yesterday. Right after the open, however, the market started to pullback. In the opening minutes the SPX hit 2087, bounced to 2094 by 10:30, then hit 2087 again just before 11am. After a bounce to SPX 2092 by 11am the market dropped to 2069 by 1:30. Another rally attempt could only manage a bounce to SPX 2075 by 2:30, then market headed lower to close at 2061.
For the day the SPX/DOW were -1.5%, and the NDX/NAZ were -2.35%. Bonds lost 10 ticks, Crude rallied $1.45, Gold rose $2, and the USD was lower. Medium term support drops to the 2019 and 1973 pivots, with resistance at the 2070 and 2085 pivots. Tomorrow: weekly Jobless claims at 8:30.
The market gapped up at the open today, but then immediately turned lower. Yesterday the cyclicals were putting downside pressure on the market while the growth sector was trying to rally. Today, the growth sector led lower. Around 11:30 the SPX broke key support, for the impulsive pattern, from the recent SPX 2040 low. This created an overlap between this pullback, which we were labeling Micro 4, and the SPX 2081 high, Micro 1. This overlap now makes the entire rally from SPX 2040 to 2115 look corrective. The five week failure to make back to back higher closes, and the constant gap openings, appear to have taken their toll on the uptrend. We now have to consider the recent SPX 2040 low as an A wave, and the SPX 2115 high as a B wave, with the C wave down currently underway. Under this scenario initial support would be naturally at SPX 2040, with the next support at the 2019 pivot. Short term support is at the SPX 2040 and the 2019 pivot, with resistance at the 2070 and 2085 pivots. Short term momentum ended the day extremely oversold. Best to your trading!
MEDIUM TERM: downtrend probabilities increasing
LONG TERM: bull market