friday update

SHORT TERM: volatility in the forefront today again
Stocks gapped up at the open on a good core PCE report, and by 10:00 the SPX made the high for the day at 1518. After putting in a slight negative RSI divergence at the highs, the market started to pullback. By 12:30 the SPX had pulled back to support at 1505, and vacillated around that short term pivot for a couple of hours. When the buyers didn’t come in, the market broke lower to the next short pterm pivot at 1493. We’ve heard this tune many times over the past few weeks, as the market has remained in this trading range: 1480′s – 1540. By 3:30 the SPX hit 1494 and started to rally again. The volatility today was a full 200 point swing in the DOW: +100 to -100. We labeled the high at 1518 as wave A of another potential rising ABC pattern. If SPX 1493 does hold, this would be wave B, with another rally to follow going into next week. Short term momentum is now a bit oversold. At the close the market nearly completed the full round trip back to unchanged: the SPX/DOW were down 0.10%, and the NDX/NAZ finished mixed. Bonds had a big day up nearly one point, Crude gained 80 cents, Gold gained 90 cents, and the Euro was higher. Examining the action in the NDX, displays that it stayed within the range described this morning: 1900 – 1965. This morning it did get fairly close to making a new high: the previous high is 1948.58, today’s high 1497.00. That might have been it! But for now the same short term pattern applies here: an A wave up, B wave down, and possibly a C wave rally into early next week. If the NDX breaks through 1900, we’re most likely heading into a correction. Enjoy your weekend!
MEDIUM TERM: neutral
LONG TERM: bullish.  

About tony caldaro

Investor
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4 Responses to friday update

  1. tony says:

    Hi Peter,
     
    The subprime loan problem came to the forefront during the last correction.
    When the correction gets underway, the bears will talk it up again.
    Not certain its a problem yet, but it\’s not getting any better.
    cheers! 

  2. tony says:

    Hi Frank,
     
    That\’s hard to tell at this point.
    It\’s recent display of strength might have evened the playing ground.
    cheers!

  3. peter says:

    Jim Cramer, in quick statements before his vacation, said Bear Stearns is not a big deal because liquidity is not a problem, saying there are at least 2 big buyers for troubled CDO’s.
    But local liquidity IS drying up for someone trying to buy or refinance because of stricter underwriting. This also undermines Lehman’s argument that refi’s are lessening the crisis.
    The FDIC just tightened loan underwriting standards at their insured banks. State regulators are taking notice for non-bank lenders. The FDIC is encouraging the FED to use truth in lending powers to extend similar standards for all mortgage lenders nationwide. Video at this link:
    http://www.bloomberg.com/avp/avp.asxx?clip=mms://media2.bloomberg.com/cache/vnHnmb0OziNQ.asf
    Rating agencies say they will not downgrade CDOs for 3 to 6 months because they want to see more foreclosures as evidence that collateral is worth less, So a CDO firesale  is at least postponed. But  new CDO offerings are being canceled. And top analysts say future downgrades of CDO’s will cause losses to existing CDO investors as bad or worse than the Savings and Loan Crisis…. which cost taxpayers 140 bil.
    Article at http://www.bloomberg.com/apps/news?pid=20601009&sid=aIzzx2vC10KI&refer=bond

  4. Frank says:

    Hi Tony,
     
    If and when 4th wave start, $compx being the most strong and supporting current rise, do you still feel it will have the largest, percentage wise, correction of all three indicies ($DJI,$SPX,$COMPX)?
     
    Frank

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