SHORT TERM: gap up opening reversed, DOW -86
Overnight the Asian markets open lost 1.5%. Europe opened higher and gained 0.2%. US index futures were higher overnight. At 8:30 the ADP index was reported lower: 169k v 189k, then FED chair Yellen’s speech was released: http://www.federalreserve.gov/newsevents/speech/yellen20150506a.htm. The market gapped up at the open to SPX 2097, ticked up to 2098, and then started to pullback. Just after 10am the SPX hit 2077. Then after a rally to SPX 2089 just before 11am, the market headed lower again. Around 2:30 the SPX hit 2068, and then started to rally. Heading into the close the SPX hit 2080 and closed there.
For the day the SPX/DOW were -0.45%, and the NDX/NAZ were -0.55%. Bonds lost 11 ticks, Crude gained 25 cents, Gold slipped $1, and the USD was lower. Medium term support drops to the 2070 and 2019 pivots, with resistance at the 2085 and 2131 pivots. Tomorrow: weekly Jobless claims, then Consumer credit at 3pm.
The market gapped up at the open today, hit SPX 2098, and then the market was immediately sold off. The pullback that followed took the SPX to its lowest level since the first few days of April. During the pullback the market broke below the rising lower trend line since late-March on the hourly chart, and mid-March on the daily chart. It continues to look like a correction is underway. Should the SPX confirm at downtrend we will upgrade the SPX 2120 high to Intermediate wave i, and this lengthy correction would be Intermediate wave ii. Initial support would be around SPX 2040, then the 2019 pivot. Should the market break below the OEW 1973 pivot, then we are probably looking at a much steeper Primary IV correction. For now we will just deal with the smaller correction and see what unfolds. Short term support is at the 2070 pivot and SPX 2040, with resistance at the 2085 pivot and the SPX 2120’s. Short term momentum put in a positive divergence at today’s lows ad ended the day rising toward neutral. Best to your trading!
MEDIUM TERM: downtrend likely underway
LONG TERM: bull market