SHORT TERM: gap down opening then rally, DOW +240
Overnight the Asian markets lost 2.3%. Europe opened lower and lost 1.2%. US index futures were substantially lower overnight, but rebounded before the open. Nevertheless the SPX gapped down at the open to 2119, and immediately started to rally. The SPX had closed at 2128 on Friday. By 10:30 the SPX had reached 2137. Then after a small pullback to SPX 2131 the market rallied to 2151 just past 1pm. At that time FED governor Brainard’s speech: http://www.federalreserve.gov/newsevents/speech/brainard20160912a.htm. A larger pullback followed to SPX 2139 by 1:30. Then the market moved even higher. Heading into the close the SPX hit 2163, then dipped to close at 2159.
For the day the SPX/DOW gained 1.40%, and the NDX/NAZ gained 1.70%. Bonds gained 5 ticks, Crude rose 20 cents, Gold slipped $1, and the USD was lower. Medium term support rises to the 2131 and 2116 pivots, with resistance at the 2177 and 2212 pivots. Tomorrow: export/import prices at 8:30.
The market gapped down at the open today for the second day in a row. The market had not had two gap down openings in a row since the SPX 2074 low in early July. Previous to that is, you probably guess it, the Br-exit downtrend low at SPX 1992 in late June. Interesting pattern considering today’s rally. After opening the SPX 2119, (2116 pivot range), the market rallied impressively for the rest of the day with only one notable pullback after FED governor Brainard’s speech. Today’s rally not only closed the opening gap within a half hour, but nearly reached Friday’s SPX 2165 opening level as well. The oversold conditions, noted over the weekend, suggested a potential downtrend low Monday/Tuesday. If SPX 2119 was it, this downtrend would be the smallest correction, in percentage terms, since early 2006. Too early to tell at this point. But if the DOW clears 18,552 print basis the downtrend is probably over. Short term support is at the 2131 and 2116 pivots, with resistance at the 2177 pivot and SPX 2194. Short term momentum rose from extremely oversold to overbought. Best to your trading!
MEDIUM TERM: downtrend bottomed already?
LONG TERM: uptrend