SHORT TERM: gap down opening, DOW -394
Overnight the Asian markets lost 0.1%. Europe opened lower and lost 1.1%. US index futures were lower overnight, and the market gapped down to SPX 2165 at the open. The market had closed at SPX 2181 yesterday. As the decline continued to unfold, at 10am wholesale inventories were reported unchanged. The market then dropped to support at SPX 2157, bounced 5 points, and headed lower again. The decline continued lower until just past 2pm when the SPX entered the 2131 pivot range (2136). It then bounced to SPX 2143 by 2:30, but headed lower again. It the last hour of trading the SPX hit 2128 and closed there.
For the day the SPX/DOW lost 2.30%, and the NDX/NAZ lost 2.55%. Bonds lost 12 ticks, Crude dropped $1.75, Gold slid $8, and the USD was higher. Medium term support drops to the 2085 and 2070 pivots, with resistance at the 2131 and 2177 pivots. Today the Q3 GDP estimate was lowered to 3.3% v 3.5%.
The market gapped down at the open for the first time in two months, July 6th. Gapping below the 2177 pivot range the market then dropped to the SPX 2157 support. After that failed the market continued lower until it hit the 2131 pivot range. Quite a decline after spending the past two months in a 1.5% range. The 5th wave diagonal triangle pattern, noted in yesterday’s update, was confirmed today with the large selloff. This is how markets usually respond when a 5th wave diagonal ends. More on this and a review in the weekend update. Best to your weekend!
MEDIUM TERM: downtrend
LONG TERM: uptrend