SHORT TERM: market pulls back after ECB meeting, DOW -46
Overnight the Asian markets gained 0.3%. Europe opened lower and lost 0.3%. US index futures were higher, then lower overnight, and at 8:30 weekly jobless claims were reported lower: 259K v 263K. The market opened 5 points below yesterday’s SPX 2186 close, and continued down to 2177 by 10:30. After that the market rallied to SPX 2185 just past 11am, nearly reaching unchanged, and then headed lower again. Just before 2pm the SPX hit 2178, then bounced to 2183 by 3pm when consumer credit was reported higher: $17.7B v $12.3B. After that the market settled at SPX 2181 at the close.
For the day the SPX/DOW lost 0.25%, and the NDX/NAZ lost 0.50%. Bonds lost 19 ticks, Crude rallied $1.90, Gold slid $7, and the USD was higher. Medium term support remains at the 2177 and 2131 pivots, with resistance at the 2212 and 2252 pivots. Tomorrow: wholesale inventories at 10am.
The market opened lower today, dropped to SPX 2177, rallied to 2185, then dropped again. After the ECB failed to make any changes to its EQE program European stocks fell and the SPX followed. During the decline we updated the hourly chart, which is still on a negative divergence, to display a possible 5th wave diagonal triangle pattern we recently uncovered. This pattern was observed in the DOW during 2014, and this pattern was confirmed in the SPX during the 2002-2007 bull market. While the conventional diagonal triangle is a contracting triangle that works its way towards an apex. This diagonal does just the opposite. It starts with the apex and expands outward. We’ll call it an inverted/expanding diagonal. The five waves of the diagonal would be: 2194-2169-2193-2157-2188 (thus far). If the E wave failed at SPX 2188, then a potential downtrend is underway now. If a rally back to resistance at SPX 2193/94 is required to complete the pattern, then a potential downtrend could unfold at that point. Short term support is at the 2177 pivot and SPX 2157, with resistance at SPX 2194 and the 2212 pivot. Short term momentum is still declining after yesterday’s negative divergence. Trade what’s in front of you!
MEDIUM TERM: uptrend topped/topping ?
LONG TERM: uptrend