SHORT TERM: quiet open then selloff, DOW -608
The first three days of the week display Asian stocks down 0.8%, and European stocks down 2.3%. US stocks started the week at SPX 2768. The SPX hit 2779 in the first few minutes after a gap up opening on Monday. Dropped to SPX 2691 on Tuesday, after a gap down opening. Then rallied nearly back to unchanged after being down 65 points. Today a quiet open then the selling resumed, and the SPX made new lows for the downtrend at 2652. Quite a volatile market.
Yesterday we thought the market had a chance to end this downtrend at SPX 2691, after several technical indicators looked positive. The market rallied big off the lows, and we were waiting for some upside follow through today before placing a Minor wave A label at that low. That upside follow through never materialized, and the market dropped right to our SPX 2675 initial target, and then the OEW 2656 pivot in the last hour of trading. Quite a volatile two days.
With today’s selloff the charts now display positive divergences on all timeframes. Naturally we would like to see some upside activity before thinking a significant low has been established. But this is what the RSI usually looks like at downtrend bottoms. Short term support is at 2656 and 2632 pivots, with resistance at the 2731 and 2780 pivots. Day traders markets!
MEDIUM TERM: downtrend
LONG TERM: downtrend probable