SHORT TERM: gap up opening then selloff, DOW -206
So far this week Asian markets have lost 0.6%, and European markets have lost 0.9%. US stocks started the week at SPX 2781. After a selloff on Monday the SPX gapped up on Tuesday, but reversed and hit 2719 in the first hour of trading. Then after a rally to SPX 2755 by midday the market made a lower low at SPX 2715. A gap up opening on Wednesday pushed the SPX to 2747. But it was sold off to an even lower low at SPX 2686 in the afternoon. The market has rallied but has consistently failed to maintain the advance.
The pullback we have been expecting has been underway. We have been expecting support around the SPX 2700 level, before the market reverses right back to the recent 2815 highs. Today the market hit that level, paused, then dropped to SPX 2686, a 0.618 retracement. We had a positive divergence yesterday, then about a 30-point rally, and now have another positive divergence at today’s low. Would like to see the market take out today’s highs before thinking Minor B concluded at SPX 2686. Short term support is at the 2656 and 2632 pivots, with resistance at the 2731 and 2780 pivots. Short term momentum ended the day with a positive divergence. Best to your trading Options expiration!
MEDIUM TERM: uptrend possible
LONG TERM: downtrend probable