SHORT TERM: gap down opening again, DOW -392
Overnight the Asian markets lost 2.5%, China stopped trading after 1/2 hour with a 7% loss. Europe opened lower and lost 2.0%. US index futures reacted to China’s decline and were substantially lower. At 8:30 weekly Jobless claims were reported lower: 277K v 287K. The market gapped down at the open to SPX 1962, hit 1954 in the opening minutes, then rallied to 1968 just before 10am. The market had closed at SPX 1991 yesterday. After a pullback to SPX 1959 at 10am, the market rallied to 2077 by 11am before heading even lower. At 2:30 the SPX hit 1941, rebounded to 1954, then headed lower again. At 3:30 the SPX hit 1939, rallied to 1952 just before the close, then end the day at 1943.
For the day the SPX/DOW lost 2.35%, and the NDX/NAZ lost 3.05%. Bonds gained 9 ticks, Crude lost 75 cents, Gold rallied $15, and the USD was lower. Medium term support drops to the 1929 and 1901 pivots, with resistance at the 1956 and 1973 pivots. Tomorrow: monthly Payrolls (est. +200K) at 8:30, Wholesale inventories at 10am, and Consumer credit at 3pm.
The market gapped down at the open today for the fourth time in the last five trading days. At the open the market dropped below the 1973 pivot and the potential support levels we noted yesterday. Then after hitting the 1956 pivot the market rallied to the 1973 pivot before heading even lower. This market has remained in sell mode since the last two days of 2015. The turmoil in China’s market has overflowed into world markets yet again. The market action in China tonight could be quite important heading into the US open tomorrow. Be careful! Short term support is at the 1929 and 1901 pivots, with resistance at the 1956 and 1973 pivots. Short term momentum continues to display a positive divergence, but thus far the market has not reacted positively. Best to your trading with China and monthly Payrolls on tap!
MEDIUM TERM: downtrend
LONG TERM: bull market