SHORT TERM: gap down opening starts week/month. DOW -17
Overnight the Asian markets gained 0.5%. Europe opened lower and lost 0.5%. US index futures were lower overnight. At 8:30 PCE prices were reported unchanged, Personal income (+0.3% v +0.3)/spending (0.0% v +0.3%) were reported mixed. The market gapped down at the open to SPX 1927, then declined to 1920 by 10am. The SPX closed at 1940 on Friday. At 10am Construction spending was reported higher +0.1% v -0.4%, and ISM manufacturing was reported unchanged: 48.2 v 48.2. After what ended up being the low for the day the market started to rally. Just before noon the SPX hit 1936, then pulled back to 1926 by 1pm. At 1pm vice chair Fischer’s speech was released: http://www.federalreserve.gov/newsevents/speech/fischer20160201a.htm. The market then resumed its rally hitting SPX 1947 at 3:30. Then a pullback into the close ended the day at SPX 1939.
For the day the SPX/DOW lost 0.05%, and the NDX/NAZ gained 0.15%. Bonds lost 9 ticks, Crude dropped $2.25, Gold rallied $11, and the USD was lower. Medium term support remains at the 1929 and 1901 pivots, with resistance at the 1956 and 1973 pivots. Tomorrow: monthly Auto sales.
The market gapped down at the open, hit SPX 1920, and then rallied to a higher high at SPX 1947. From last Wednesday’s SPX 1873 low, and retest at 1874 on Thursday, we can now count seven waves up into today’s high: 1894-1879-1899-1886-1940-1920-1947. This pattern suggests, when this rally ends, it could be the end of the entire advance from the downtrend low at SPX 1812. Short term support remains at the 1929 and 1901 pivots, with resistance at the 1956 and 1973 pivots. Short term momentum ended the day with a negative divergence, and medium term momentum is neared overbought. Best to your trading!
MEDIUM TERM: potential uptrend still underway
LONG TERM: bear market