SHORT TERM: gap down opening, DOW -255
Overnight the Asian markets lost 2.4%. Europe opened lower and lost 3.1%. US index futures were sharply lower overnight, and at 8:30 weekly Jobless claims were reported lower: 269K v 285K. Another gap down opening took the market down to SPX 1822 in the opening minutes. Then after a rally the market dropped to SPX 1813 by 11:30. After another rally the market dropped to SPX 1810 by 2:30, exceeding the mid-January low at 1812. After putting in that low the market immediately took off to the upside. By 3pm the SPX hit 1836, pulled back to 1822 just past 3pm, then hit 1839 before ending the day at 1829.
For the day the SPX/DOW lost 1.40%, and the NDX/NAZ lost 0.25%. Bonds gained 18 ticks, Crude dropped 20 cents, Gold soared $45, and the USD was lower again. Medium term support drops to the 1828 and 1818 pivots, with resistance at the 1841 and 1869 pivots. Tomorrow: Export/Import prices and Retail sales at 8:30, then Business inventories and Consumer sentiment at 10am.
During the day we updated the SPX hourly chart to match the SPX daily chart, which displayed five Intermediate waves down from the SPX 2116/2104 uptrend high. Since the three declining waves do not look at all impulsive this downtrend may continue to extend lower. But for now there are some reasonable positive divergences on the daily charts to suggest it may have just ended. Since this is still the first downtrend of the bear market it is difficult to know what characteristics to expect until the bear market has created some trends. We naturally started off with an easy a-b-c down, and now see five waves down. Project, monitor and adjust. If a downtrend low is in place a 50% retracement of the entire downtrend would be quite normal. Medium term support is at the 1828 and 1818 pivots, with resistance at the 1841 and 1869 pivots. Short term momentum was quite oversold at the lows and rose toward neutral in late trading. Best to your trading!
MEDIUM TERM: downtrend
LONG TERM: bear market