Monday update

SHORT TERM: flash crash Monday, DOW -588

Overnight the ES futures opened 10 points below Friday’s close. After an hour or so they were 20 points lower. Overnight they dropped to 60 points lower. Then about 1/2 hour before the open they hit limit down 100 points lower: (-5.0%). Then just as the market opened they dropped to 140 points down. The cash market opened down 96 points at SPX 1875, dipped to 1867, and then started to rally without the futures. Instead of the tail (ES) wagging the dog, the dog (SPX) was wagging the tail. The market then rallied to SPX 1911, dipped to 1875 just before 10am, then rallied to 1932 before 10:30. A wild first hour of trading. By 10:30 the SPX was down to 1909, rallied to 1928 just before 11am, then dropped to 1909 by 11:30. Then by 1pm the SPX was at 1954. After that it headed back down again. Around 3:30 the SPX hit 1880, rallied to 1925, then closed at 1893.

For the day the SPX/DOW were -3.75%, and the NDX/NAZ were -3.80%. Bonds gained 10 ticks, Crude lost $2.30, Gold slipped $6, and the USD was lower. Medium term support drops to the 1869 and 1841 pivots, with resistance at the 1901 and 1929 pivots.

The gap down opening today made no doubt that the market is in Primary IV. Kudos to those that called it a month ago. The four major indices have already had their largest corrections since 2011. Today’s activity, which was quite volatile, looks similar in some ways to the flash crash of 2010. Only that occurred during trading hours. As a result of today’s activity we have updated all the SPX charts to display a Primary III high at SPX 2135, a Major A at SPX 2044, a Major B at SPX 2133, and Major C underway. Support for Primary IV should arrive between the 1828, 1841 and 1869 pivots. The market dropped to the 1869 pivot this morning, rallied to the 1956 pivot, and then started to decline again. Volatile day! Short term support at the 1869 and 1841 pivots, with resistance at the 1901 and 1929 pivots. Short term momentum only managed to get out of oversold territory during today’s midday rally, then closed at oversold again. Careful out there, this is a very volatile market.

Late last week Stock charts deleted the Java mode I was using to update the charts, and now it requires some new mode. It will take me some time to figure it out. This the reason the charts have not been completed updated.

MEDIUM TERM: downtrend

LONG TERM: bull market

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

Filed under: Updates