SHORT TERM: market dips and then rallies, DOW +180
Overnight the Asian markets were all lower. Europe opened lower, but closed mixed. US index futures were lower overnight as well. At 8:30 the PPI was reported higher: +0.8% vs 0.0%. The market opened flat at SPX 1201, moved to 1203, and then headed lower. At 10:00 the NAHB reported a rise in their housing index: 18 vs 14. The market then hit SPX 1191, thursday’s low, and began to rally. At 1:30 FED chairman Bernanke’s speech was released: http://www.federalreserve.gov/newsevents/speech/bernanke20111018a.htm. The market continued to rally with only 4-5 point pullbacks along the way. Around 2:30 with the SPX at 1214 the market spiked higher to 1233 by 3:00, after a news agency reported a $2 tln european bailout fund was agreed upon between the leaders of Germany and France. After that the market pulled back to clse at SPX 1225.
For the day the SPX/DOW were +1.65%, and the NDX/NAZ were +1.35%. Bonds lost 2 ticks, Crude rallied $1.45, Gold slid $9.00, and the USD was lower. Support for the SPX moves back to 1222 and then 1187, with resistance at 1240 and then 1261. Short term momentum hit quite oversold this morning, then hit overbought again this afternoon. Tomorrow, the CPI at 8:30 along with Building permits and Housing starts. Then at 2:00 the FED’s Beige book.
The market sold off early this morning, hitting thursday’s low at SPX 1191, and then worked its way higher until mid-afternoon. After that $2 tln Europe bailout news bite, the market surged to a new uptrend high. The high SPX 1233 came within the range of the OEW 1240 pivot, and exceeded the high of the last uptrend at 1231. Right now we are displaying another negative divergence on the hourly chart, and one on the daily chart as well. We also can count five waves up from the SPX 1075 low two weeks ago today.
This market appears to be hitting an interesting juncture. Should a bailout fund of that magnitude actually come to pass. The liquidity injected into the world’s money supply will naturally have to go somewhere. The most likely assets to benefit would be stocks and commodities. While all the reports have not been confimed thus far. Something has to be done with Europe’s credit problems. If this is it, it would be another Quantitative Easing event. With this in mind we will have to consider the alternative SPX count posted on the NAZ charts having a greater possibility.
Short term support is again at the 1222 pivot, the low 1200′s and the 1187 pivot. Overhead resistance moves to the low 1230′s, then the 1240 and 1261 pivots. Short term momentum ended the day overbought. Best to your trading!
MEDIUM TERM: uptrend makes new high at SPX 1233
LONG TERM: bear market highly probable
CHARTS: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1606987
CL closed at the 23.60 % months low/high . I was due
C B
My brothers giving it another try. Illinois is a no fault state but he’s still doing it
This is support in ESZ next is 1185
1204 * is the support I mentioned ESZ
haha…ur brother must be an optimist. Lee. It seems that it’s much easier to change one’s spouse than to change oneself, so people keep trying…whatever works..
Great, so you have a happy weekend to look forward to…October is a great month for weddings & everything looks so beautiful now. I missed all of that foliage in IL this year, dang it.
Hi Tony, I am a bit confused..do we have wave “a” or wave 1 unfolding ? … Do we have 5 or 3 waves to 1075 ?…
M1 and RC, So far it’s an impulsing uptrend.Kind of odd for a bear market.Today’s daily update should clear things a bit.
uh oh
Great day for baseball 1
40′s rainy and windy … not exactly summer Texas weather.
ascending triangle here?
i thought about that too. we either go up or we go down
I’m looking since yesterday afternoon… but now looks more and more like descending triangle. Within next 30 minutes it probably will burst one way or another… looks more down at this point to me.
well, now it’s shaping into symmetrical
oh, well…
head fake or true breakout here?
abcde topping pattern? http://www.screencast.com/t/MpsbE3yDP
1231 ESZ still not taken out…why not ?
Think CL just put in a ST high
side note, vix up 5% on flat day…
thanks for that CL thought, Lee! Let’s see how cruel it’ll get.
Hey C B !!
I’m usually early …nice hedge huh ?
I’ll be in town for a wedding on Saturday so if its raining that day it’s my fault.
Hey Lee, that was excellent…gave us plenty of time to over-analyze and still do it
are your kids getting married already?
“if it’s raining, it’s my fault.” haha…it always is…deal with it!
It has been 24 years since “Black Monday” and I certainly agree with Tony’s secular analysis…
http://nandanshah.wordpress.com/
Thank you Tony for your great work.
Welcome Nandan … you have a nice site.
Thank you Tony. I have learned and continue to learn so much from you and the fellow posters/comments that appear on your site.
Ascending Triangle Scenario And “C” Wave Support – NASDAQ
http://www.wavegenius.com/2011/10/19/1154am-nasdaq-10-day-visual-chart-the-ascending-triangle-scenario/
It doesn’t matter to me if it’s wave B or wave 3. Trying to get the exact count sometimes leads to confusing results and missed opportunities. I look at the market internals and post it here regularly. Starting from the last week the market breadth improved significantly, all sectors are in a buy mode. “Buy mode” means “buy” to me. Selling short is too risky in such conditions. Not worth a risk. I prefer to wait until some sectors start to switch into a sell mode before entering short trades. I quit with trying to catch a top or a bottom, I guess I am getting older
Fair point and your right. That’s why it’s small.
Amen brother… internals have become more bullish than bearish recently. Doesn’t of course rule out pullbacks.
I think we may see a sell-off on Thursday-Friday. Doubting that all bought calls will expire in the money. Happens more often than not. Of course, it’s just my speculation.
i am starting to think that if, and when, europe finally gets it together – it will be a sell the news event – as the market will have already baked in all the upside on news & anticipation.
Here’s a scenario for that then!
1) We consolidate here as overbought and perhaps a small move lower here into the Semi-Major GANN turn date of 25 – 27th Oct. Don’t expect much downside – possibly the resistance in the low 1200s.
2) From there we push through resistance into 2 – 4th Nov where there is another Semi-Major GANN turn date. By then we could be at the 200dma on the S&P. This is also when Europe bring out the Grand Plan I believe though I need to check! This should mark a more significant top and co-inside with the 45 day cycle high.
3) After the announcement we have a ‘sell the news’ type event into the 8-10 where there is another Semi-Major GANN turn date. This is the crucial one. If this proves likely to be turn higher then we’re going a lot higher into March 2012.
To fit with the 45 and 90 day cycles there would be a reasonable drop from end of Nov/early Dec into roughly 28 Dec where there is a MAJOR TURN (Bradley Model). This should move UP into March 2012.
Am I stretching? Yes! Is it possible? Yes! If we consolidate here into Tues 25th into the low 1200s I am buying this market!
This is now my preferred outlook btw and I will be putting on positions based roughly on this scenario. I am short small here with a stop at 1233 and looking for downside into the low 1200s by this Friday/Tues next week.
Morning all…
So, I’m confused. If the current count suggests that Primary B could get to 1260, 1290 or maybe even higher, then why would the present action at 1230′ish already be suggesting a different count? Is it not possible that Primary B could just move to it’s target area quicker than expected and in a somewhat atypical internal wave structure?
Also, regarding the EFSF potential to act as a QE-Europe, wasn’t the first QE1 in the US announced months before the market bottomed?
Thoughts?
This is perhaps now not a Primary B! It’s a Wave 3 of Primary 3.
Yes, I understand that argument. What I don’t understand is how the opinion of the larger count could/would change when the price action is still contained within a feasible (if not probable) structure consistent with the base case?
Otherwise, it sounds to me like your base case always was that of a Wave 3 of Primary 3 and not a Primary B, and are just now enthusiastically voicing that count as the data gradually becomes more supportive of it. Is that correct?
And if this is a wave 3, when/where was wave 1 and 2? Was wave 1 from the 8/911 low to the 8/31/11 high? And if that’s the case, how common is it that a wave 2 of a new uptrend bottoms lower than the previous wave C decline? (assuming 10/4 low was wave 2 and 8/9 was wave C)
I’m not trying to be argumentative – I am truly curious about all of this. At this point it appears to me that all of the count switching and revisionism suggests there really isn’t much predictive power to the process.
Opinions and insights much appreciated!
thanks
-rc
I didn’t believe it was a Primary 3 but I am starting to give that count more serious thought based on the recent price action. Wave 1 started early Oct and we just had a very shallow Wave 2 pullback to 1188 area. This can happen based on the type of Wave 1 we have/ may have just seen.
If I had believed it I would have bought the near the lows. I definitely did not. I am waiting to see what transpires at this very important juncture. 1233 area! If we break higher I will look for an opportunity to enter longs (probably on a pullback). I do find it difficult to buy here after such a strong move. I would like to see what kind of consolidation we have here if any going into 25th Oct.
Understood. Thanks for the reply Alex, much appreciated.
My mind keeps going back to Tony’s comments that “a wave B usually feels like a new uptrend,” and I can’t help but wonder if we’re not all sitting here falling into the same trap despite writing our own warnings to ourselves.
Oh well. I’m neither long nor short – only confused.
Thanks again,
-rc
Yep I completely understand. When trading at the moment I am trading small or not at all. As said I am looking for either a pullback here into Tues 25th Oct or if we were to break out today over 1233 in the last 30mins before the close my short would close and I would perhaps look at shorting next week instead of going long. I like the GANN turn dates as a general rule. The last Semi-Major one marked the recent 1074 low.
BSE has butchered my shorts after the Dow turnaround last night
What do they say…. “when in doubt get out”. Right now, Im not very sure of this pattern other than it is feeling and smelling and looking like wave 1 of primary 3 to me… it’s either that, or a major fakeout a la 2008 before another 5 big waves…
well well, finally the primary wave 2 gets some street cred from Tony. Love it. 3-3-5 correction to me also looked like a primary 2… and I have to say, this rally smacks of a Primary 3 kickoff. Sucks because I shorted it and was wrong for the last about 40 odd points… but… still evaluating… tough call, but have to admit its looking bullish. The only retracement so far is a bare 23.6% and that is SUPER crazy. Stay tuned… I prefer high cash until I can figure this thing out.
Is it crazy though if it’s a Wave 1 of Primary 3? In rare extended Wave 1 advances like this the Wave 2 need only retrace 23.6% which we saw when we hit 1187 area. This being the case and if we are in a Wave 3 already then we could expect Wave 3 to be 61.8% of the 1st Wave which would take us to the 1270 area right around the 200dma on the S&P. This could occur by either of the next 2 Semi-Major GANN turn dates. They are the 25-27 Oct and 2 – 4 Nov. This would also bring an end to the current 45 day cycle.
I AM NOT LONG! By the end of tonight I may be pleased I am not or within the next two weeks or so I may be wishing I had been! If it goes to 1270 in the next 2 – 3 weeks at least I should be able to convince myself to go short!
I love Tony’s analysis and it’s been right on target. I will say that I also enjoy DB’s analysis and his stated trades, since when he has not been correct he admits it (as he states above) and, well, in his own words “I prefer high cash until I can figure this thing out.”
The other viewpoints and analysis expressed on this site also make it a great source of info after reading Tony’s great analysis! Thanks all!!
Tony,minimum target for the wave A has been achieved today which is 1231,the starting point of last 5th wave ED.It can stretch upto 1261 pivot.
…..maybe 1280 around the 200……
nice call Joy
Ascending triangle W2 support for DOW S&P NASDAQ
http://www.wavegenius.com/2011/10/18/elliott-wave-forecast-video-for-10-19-11-ascending-triangle-support/
My theoretical sector portfolio shows the breadth improvement in 5 sectors today. BPI of the Technology sector, Services sector, Energy sector and Consumer Non-Cyclical sector added 2% each, and BPI of the Utilities sector raised from 62% to 66%. Interesting enough that two latter sectors are defensive ones. With other sectors not showing any sign of weakness I attribute this to a tide raising all boats. All sectors are in a buy mode.
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3474785&cmd=show&disp=p
Looks like you were right about Gold at the weekend. It seems to be starting to break lower.
I was expecting a move down this week to re-test the 1535 low, since that would be in-line with the price action in Primary III at this stage, when we got a W-formation in weekly RSI.
I agree with you that we’ve seen an intermediate top at 1923, with quite a long consolidation phase ahead.
I suppose your reply was addressed to another poster
Sorry I thought it was you who published the in-depth analysis of Gold over the weekend?
I posted a link to TA analysis on Gold, I thought worth an attention. All credits to the author.
Yes; although he seems perhaps a bit too bearish.
I’m not expecting Gold to fall below the 1462-1478 range.
If it is going there it should happen quite soon, within the next week or so.
Pingback: tuesday update
Interesting article on the “High Low Logic Index”, which was devised in the 1970s by Norman Fosback. I’ve heard of it before and it is apparently very bullish now…
http://www.marketwatch.com/story/indicator-with-great-record-turns-bullish-2011-10-18
“…there have been only four other occasions over the last 25 years in which the Ned Davis Research version of the High Low Logic Index has moved from bearish territory above 4.05% to as low as it is today, and all four came close to a major market bottom: Late 1987, late 1990, early 2003, and late 2008.” I just found this interesting, along with Tony’s current analysis.
AAPL Fibo… November 97 – October 18 2011…
http://astrofibo.blogspot.com/2011/10/aapl-fibo_18.html
SP500 Time Ratio…
http://astrofibo.blogspot.com/2011/10/sp500-fibo_18.html
lol Mike….why do some folks hurt the ones they love the most?
Btw, the dude forgot the lid ….apparently he wants to die of toxic exposure…
Lol,
I think it’s wildly overrated, over valued, and has a china slave camp making em. like it off 200 day in past. To expensive to play with there options up here. If there is a tiss with china(something a central banker could cause) there game gets interesting.
Harris is bmo. Fresh on the list. At least it’s worth 10 times my bank. Love is for romantics not trading.
Sent from my Ithingy.
Mike, if I agreed with you, we’d both be…
right, of course!
Hey, enjoy ur I-thing b4 you decide to microwave it or sth like that..
Prefer them soaked overnight in buttermilk. Chicken fried with sausage white gravy.
There cost comes down as the steak goes up..
http://stockcharts.com/h-sc/ui?s=$spx&p=d&yr=0&mn=5&dy=0&id=p34235188626&a=193878014
nice chart, thx. watch ur “chicken fried” intake…Jupiter is in Taurus till June 2012…and Jupiter expands what it touches….yes, yes, you guessed..weight gain alert! lol
Not my chart.
Thanks 4 posting it, Mike. It’s helpful. Also thanks Igor, for your work & Mike7 for that interesting link…and Sam…for all the projections and the “most insane” $SPX target earlier 2day
… this is, btw, the most insane number I’ve seen today. http://screencast.com/t/OUvGrdSiNzi ST, this ichimoku cloud (red shaded area is still the resistance range) could be pretty helpful if they just want to keep the status quo during this opex week http://screencast.com/t/qaN22CL77b9h And thanks Tony, Lee, HD as always. GL everyone.
Tony
I looked at the Naz but can you walk us though the alternate count?
Thanks
bob
Hi Bob, The alternate simply suggests that the recent drop from May/July was a Primary wave II flat.And the market has just started Primary wave III.
check out appl thanks tony
Shud be an interesting day ahead in asia caught between europe bailout and apple….