SHORT TERM: flat opening then another selloff, DOW -420
The Asian markets were mixed overnight and lost 0.4%. Europe opened lower and lost 1.3%. US index futures were relatively flat overnight. At 8:30 personal income/spending, the CPI and weekly jobless claims were reported improving. The market opened one point below yesterday’s SPX 2714 close, then slid down to 2699 by 10am. At 10am ISM was reported higher and FED chair Powell testified before the Senate. The market then rallied to SPX 2731 by 10:30. After that the market started to pullback. The pullback accelerated once the SPX broke 2700, hitting a low of 2660 by 2:30. A rally to SPX 2689 followed by 3:30, then the market closed at 2678.
For the day the SPX/DOW lost 1.50%, and the NDX/NAZ lost 1.40%. Bonds gained 17 ticks, Crude slid 25 cents, Gold slipped $3, and the USD was lower. Medium term support remains at the 2656 and 2632 pivots, with resistance at the 2731 and 2780 pivots. Tomorrow: consumer sentiment at 10am.
The market entered the day coming off another afternoon selloff. They seem to be quite common in recent weeks. After opening flat, taking out yesterday’s low, and then rallying 1% in 1/2 hour to the 2731 pivot, the market headed lower. February started with a selloff. March has started with a selloff too. We had been counting the advance from February’s SPX 2533 low as the early stages of an uptrend: 2754-2698-2789-xxxx. Today the pullback from Tuesday’s SPX 2789 high, yes another 100+ SPX drop in two days, broke through 2700 and hit 2660. Much lower than what was expected. This suggests two possible scenarios. 1. an irregular wave 2 is underway: 2698-2789-2660. 2. the entire advance from SPX 2533 is a big B wave: 2754-2698-2789. Since the market generated a WROC signal we’ll stay with scenario #1. Trade what you see. We have not been of too much help of late.
MEDIUM TERM: potential uptrend under pressure
LONG TERM: uptrend