SHORT TERM: 2016 off to rough start, DOW -276
On Sunday FED vice chair Fischer gave a speech: http://www.federalreserve.gov/newsevents/speech/fischer20160103a.htm. Overnight Asian markets were sharply lower, led by China’s 7% drop, and lost 2.7%. Europe opened lower and lost 3.1%. US index futures were sharply lower as well, and the market gapped down to SPX 2012 at the open. The market had closed at SPX 2044 on Thursday. In the opening minutes the SPX hit 2000, bounced to 2008, and then headed lower. At 10am Construction spending was reported lower: -0.4% v +1.0%, and ISM manufacturing was lower: 48.2 v 48.6. By 11am the SPX had hit 1990 and then started to rally. Just before 1pm the SPX hit 2006, pulled back to 1994 by 3:30, then rallied to close at 2013.
For the day the SPX/DOW lost 1.55%, and the NDX/NAZ lost 2.05%. Bonds gained 10 ticks, Crude slid 15 cents, Gold rallied $14, and the USD was higher. Medium term support drops to the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots. Tomorrow: monthly Auto sales.
The market gapped down at the open today, jumping completely below support at SPX 2034/2044, and opened at 2012. It then traded down to SPX 1990 before it had its first notable rally of the day. A somewhat disturbing way to start the new year. During the second half of December the market gyrated between a continuing downtrend and a potential new uptrend. The up/down trend inflection point was at SPX 2044, and the uptrend needed to clear the 2085 pivot. Today’s action finally cleared the pattern: a continuing downtrend. It is now clear that SPX 1993 was a complex Int. A, SPX 2082 completed Int. B, and Int. C has been underway, for the past three days, for the Major wave 2 downtrend. This correction has certainly taken longer than expected. At today’s low the market could have completed a flat: 1993-2082-1990. Or it could extend into a zigzag with equal A and C waves: 1993-2082-1971? The short term MACD is already oversold, like it was during Int. ii and Int. iv of Major 1, and Int. A of Major 2. Short term support is at SPX 1990/1993 and 1973 pivot, with resistance at the 2019 pivot and SPX 2044/46. Short term momentum hit extremely oversold at today’s low. Best to your trading this volatile market!
MEDIUM TERM: downtrend
LONG TERM: bull market