SHORT TERM: another volatile FED day, DOW -223
Overnight the Asian markets gained 1.2%. Europe opened lower but gained 0.8%. US index futures were lower overnight and the market gapped down at the open to SPX 1896. The market had closed at SPX 1904 yesterday. After an opening bounce to SPX 1903 the market dropped off to 1887 just past 10am, and then started to rally. At 10am New home sales were reported higher: 544K v 490K. The rally continued until 12:30, along with a rally in Crude, to SPX 1917. The market drifted lower to SPX 1906 just ahead of the FOMC statement and forecast at 2pm, and then started rising just before their release: http://www.federalreserve.gov/newsevents/press/monetary/20160127a.htm, http://www.federalreserve.gov/newsevents/press/monetary/20160127b.htm. Right after the statements the market hit SPX 1916, an then headed lower. The initial reaction was down to SPX 1894, up to 1904, and then selling to 1873 just past 3pm. After that the market rallied to SPX 1885, then dipped to close at 1883.
For the day the SPX/DOW lost 1.25%, and the NDX/NAZ lost 2.35%. Bonds gained 2 ticks, Crude rose 50 cents, Gold rose $4, and the USD was lower. Medium term support drops back to the 1869 and 1841 pivots, with resistance at the 1901 and 1929 pivots. Tomorrow: weekly Jobless claims and Durable goods at 8:30, then Pending home sales at 10am.
Volatile day! After the market opened with a gap down, hit SPX 1887, and then rallied past 1909 we marked Monday’s 1876 low as Int. B. Then the market hit SPX 1917, dipped, and hit 1916 just after the FOMC statements. After that it was all basically downhill for the rest of the day. In the last hour of trading the market dropped below SPX 1876, suggesting the entire pattern from 1812-1917 had completed with a complex double zigzag: 1909-1876-1917. At first glance this rally looks too small to be a Major B uptrend – no confirmation either. Some in our group have mentioned it could be just Int. A of Major B – possible. With the market in bear mode, and risks mostly to the downside, will accept the completed pattern, await more market data and see where it leads. Project, monitor and adjust. Crude, btw, hit its highest level of the week just before the market sold off. Overall, being long in a bear market for anything more than a short period of time, is as risky as being short in a bull market. Short term support drops to the 1869 and 1841 pivots, with resistance again at the 1901 and 1929 pivots. Short term momentum hit overbought right at today’s high and went right down to oversold. Best to your trading this volatile market!
MEDIUM TERM: potential uptrend hits inflection point
LONG TERM: bear market