Friday update

SHORT TERM: another gap down opening, DOW -272

Overnight the Asian markets lost 1.6%. Europe opened lower and lost 2.5%. US index futures were sharply lower overnight. At 8:30 monthly Payrolls were reported lower: 173k v 215k, and the Unemployment rate was reported lower: 5.1% v 5.3%. The market gapped down at the open to SPX 1929 and hit 1920 just before 10am. The SPX had closed at 1951 yesterday. The market rallied to SPX 1933 by 10:30, and then started heading even lower. By 2:30 the SPX had hit 1911. Then it rallied to SPX 1931 by 3:30, before closing at 1921.

For the day the SPX/DOW were -1.60%, and the NDX/NAZ were -1.10%. Bonds gained 11 ticks, Crude dropped 75 cents, Gold slid $4, and the USD was lower. Medium term support drops to the 1901 and 1869 pivots, with resistance at the 1929 and 1956 pivots. Today the WLEI was reported lower: 48.3% v 49.1%, and the GDPN was reported higher: +1.5% v +1.2% … mixed signals.

The market had its thirteenth consecutive gap opening this morning. Typically an abundance of gap openings only occur during corrections. The market opened at SPX 1929, dropping below the 1940 level. This confirmed the entire rally from last week’s SPX 1867 low was indeed corrective, as was the rally from Tuesday’s 1903 low. Corrective action continues, suggesting the downtrend is still underway. We now see support for this downtrend in the low to mid SPX 1800’s. More on this in the weekend update. Best to your three day weekend!

MEDIUM TERM: downtrend

LONG TERM: bull market

CHARTS: http://stockcharts.com/public/1269446/tenpp

Filed under: Updates