SHORT TERM: gap down opening, DOW -219
The SPX rallied 1.2% the first two days of the week. Then overnight Tuesday, it was reported the US was preparing an additional $200B in tariffs against China. Naturally China stated they would retaliate. ES futures dropped immediately and remained substantially lower heading into Wednesday’s open. Asian markets dropped 0.8% overnight, and European markets lost 1.4%. The SPX gapped down to 2776 at the open, closed at 2794 yesterday, rallied to 2786, then headed lower. The low for the day was SPX 2771 just past 2pm. Then the market bounced to close at SPX 2774.
While perusing the charts yesterday we noticed a very clean rising diagonal in the NYSE from the April downtrend low. Then a large pullback during June. Followed by a rally into early July: https://bit.ly/2ubPmvR. This pattern could explain the choppiness in the SPX/DOW over the past few months. Diagonals are created by three wave advances, in an overall contracting five wave pattern. We carried the same leading diagonal pattern onto the DOW charts, even though the ‘e’ wave has some overshoot: https://bit.ly/2KXDjfB. When you add in the two counts posted on the SPX charts, bulls and bears have plenty to choose from. Overall, two of three counts suggest higher prices are ahead for this month. When one adds in the impulsive NDX/NAZ/R2K patterns, and new highs in market breadth, probabilities suggest this April uptrend will continue. A rally above SPX 2802 would eliminate the Int. wave iv triangle posted on the SPX daily chart too. Good luck, and best to your trading!
MEDIUM TERM: uptrend still underway
LONG TERM: uptrend