SHORT TERM: it’s Brexit after all, DOW -611
Overnight the EU referendum votes were counted and the UK decided to leave the European Union. Asian markets dropped 4.3%. European markets dropped 6.0%. US index futures were sharply lower as well. At 8:30 Durable goods were reported lower: -2.2% v +3.4%. The market gapped down at the open to SPX 2064, traded down to 2055 and then started to rally. The SPX had closed at 2113 yesterday. At 10am Consumer sentiment was reported lower: 93.5 v 94.3. Just past 10am the market hit SPX 2073, and then headed lower. Throughout the day the market worked its way lower, with 8 point rallies in between lows, until it hit SPX 2033 at 3:30. Then a quick 16 point rally to SPX 2049 was sold into a SPX 2037 close.
For the day the SPX/DOW lost 3.5%, and the NDX/NAZ lost 4.1%. Bonds rallied 52 ticks, Crude dropped $2.50, Gold surged $59, and the USD was higher. Medium term support drops to the 2019 and 1973 pivots, with resistance at the 2043 and 2070 pivots. Today the Q2 GDP est. was lowered to +2.6% v +2.8%.
The market gapped down at the open today following the global sell off in equities. The turnaround from yesterday’s optimistic rally was quite dramatic. Yesterday’s rally took the market within 8 points of the uptrend high at SPX 2121. Then today the SPX confirmed a downtrend. This certainly looks like bear market activity. Inflection point cleared, but bifurcation still in play. Tough market! Enjoy your weekend!
MEDIUM TERM: downtrend underway
LONG TERM: neutral