SHORT TERM: turnaround Tuesday, DOW +93
Overnight the Asian markets ended mixed. Europe opened higher but lost 2.0%. US index futures were higher overnight, and at 8:30 the Trade deficit was reported larger: -$41.9bn v -$40.9bn. The market opened two points above yesterday’s SPX 2069 close, then immediately started to pullback. Just past 10am the SPX hit 2055. Then after a quick bounce to SPX 2060 the market hit 2046 just before 11am. The quick moves continued with a bounce to SPX 2054 by 11am, a dip to 2048 just past 11am, a bounce to 2053, and then a low at 2044 by 11:30. After that the market staged a good rally. By 1am the SPX had rallied to 2068, dipped to 2063, then hit the opening level at 2071 nearing 1:30. After a pullback to SPX 2063 by 2:30, the market rallied to 2084 by 3:30, then closed at 2081.
For the day the SPX/DOW were +0.55%, and the NDX/NAZ were +0.20%. Bonds gained 5 ticks, Crude added 45 cents, Gold slid $13, and the USD was higher. Medium term support rises to the 2070 and 2019 pivots, with resistance at the 2085 and 2131 pivots. Tomorrow: the FOMC minutes at 2pm.
The market opened slightly higher today, then declined in what appears to be a three wave pattern down to SPX 2044: 2046-2054-2044. This would effectively give the market 5 waves down from SPX 2079, and completes the Minute C zigzag from 2085. Not a perfect ending to a multi-week correction. But the correction does appear to be complete. At the low there were positive divergences on the SPX hourly/daily charts. From the SPX 2044 low the market rallied to the 2070 pivot, pulled back, then rallied to the 2085 pivot and pulled back again. If the low is indeed in, the market should start impulsing higher in an Intermediate wave iii uptrend. Today’s reversal would be a good kickoff to that uptrend. Short term support is now at the 2070 pivot and SPX 2044, with resistance at the 2085 and 2131 pivots. Short term momentum ended the day slightly overbought. Best to your trading!
MEDIUM TERM: downtrend
LONG TERM: bull market