SHORT TERM: choppy session, DOW +37
Overnight the Asian markets were all lower. Europe opened lower and closed -1.85%. US index futures were higher overnight. At 8:30 weekly Jobless claims were reported relatively flat: 403K vs 404K. The market opened relatively flat as well at SPX 1211. The SPX had closed at 1210 yesterday. When trading started the market was quite choppy but in a very narrow range for the first 15 minutes or so. At 10:00 Existing home sales were reported lower: 4.91 mln vs 5.03 mln, the Philly FED was reported higher and positive: 8.7 vs -17.5, and Leading indicators were reported positive but lower: +0.2% vs +0.3%. The market hit SPX 1216 at around 10:30 and then started to pullback. By 12:30 the SPX hit 1197, was extremely oversold short term, and then began to rally. The rally continued until 3:00 when the SPX hit 1220. Then another pullback heading into the close ended the day at SPX 1215.
For the day the SPX/DOW were +0.40%, and the NDX/NAZ were -0.35%. Bonds lost 7 ticks, Crude slipped 15 cents, Gold dropped $23.00, and the USD was lower. Support for the SPX remains at 1187 and then 1176, with resistance at 1222 and then 1240. Short term momentum hit extremely oversold and then bounced higher. Tomorrow, a speech from FED governor Yellen at 3:00 in Colorado.
The market opened flat today, popped a few points, and then resumed its decline from tuesday’s high at SPX 1233. At today’s low, SPX 1197, it had pulled back 36 points. The largest pullback since this rally began on Oct 4th. With Options expiration tomorrow, and the VIX back to 35, anything is possible on friday. The short term OEW charts have been vacillating from a positive bias to a negative one nearly every day since the SPX hit 1225 last friday. We continue too wait for a move above 1231 or below 1191 to clear this situation. Short term support remains in the low 1200′s, and the 1187/1176 pivots. Short term resistance is at the 1222 pivot, the low 1230′s and the 1240 pivot. Short term momentum bounced off extremely oversold this AM and is heading towards overbought again. Best to your trading!
MEDIUM TERM: uptrend high SPX 1233
LONG TERM: bear market highly probable
CHARTS: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1606987
OK, here is what I sent to my subs after market closed, FWIW:
1. Looks like the market Rallied up in 5 fibonacci days to about 1194 from 1074 lows.
2. The B wave turned out to be an 8 fibonacci trading day consolidation where the high was 1233, followed by a correction of 23.6% fibonacci to the 1195 lows. Interesting that the 1195 lows yesterday were the basically the highs of the initial 5 day rally.
3. The C wave up or wave 3 up began today, which should be another 5 trading days to the upside towards additional fibonacci levels such as 1257 (My first target given out early last week) and 1284 even.
Bottom line is we seem to have a 5, 8, 5 pattern in trading days developing and the market closed over the 1233 bear line in the sand today at 1238.
Also of interest was the Russell 2000 which did correct this week, but at a 31% fibonacci clip also light compared to normal 38, 50, or 61% retracements.
In essence the character of the market has changed so far to ignoring bad news and buying good news. Also, the pullbacks are lighter and more in the consolidation mode than harsh pullback mode.
I was fooled because the normal sharp 50, 61% fib type corrections we come to experience most of the summer stopped appearing so far since the 1074 lows.
What does it all mean?
Unfortunately there are still two scenarios present
1. This is an ABC correction working off the 1370 to 1074 5 month drop
2. This is a new bullish emerging pattern from the 1074 drop which would require a 5 wave move to the upside from 1074.
Back in 2008 we had a huge 180-200 point SP 500 rally, but was followed by a 5 wave decline to new lows and then some into March of 2009. We can’t yet rule that type of pattern out as was shown in a screencast early last week to TMTF subs as possible.
However, we could be pushing higher in a bullish primary wave up as well due to the apparent 3-3-5 pattern that ended at about a 38% retrace of the move from 666 to 1370.
I wish I could stick my neck out and call one or the other, but I really cant just yet. I can tell you that obviously it appears this market wants to continue higher and 1257/84 are good pivots to watch.
I insist …this looks like wave c to me …
if wave 1/A ended at 1121 and major “a” ended at 1220…then, wave a =99 points
1239-1075=164…
164/99= 1.65…
so if these numbers are correct we may have seen the top.
same charts
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID4067322
Well we’ll pullback or even correct likely around DOW 12000. Maybe this will become the next big leg down to lower lows however (C wave). Time will tell..
M1, we’re go’in WAY higher. FXE about to bust a little inverted HS and the US markets will rally on this next week. Europe will be behind us soon and a possible QE3 coming. Rally monkey coming out – maybe!
You are probably right… I am not ruling out anything…have several alt counts
…back in the first days of aug I saw that 1102 was going to hold for at least 1-2 months….but the crowd was bearish and expecting lower lows and the count was bearish too
now it looks to me this was only major c and 2/B is completed, of course I could be completely wrong,
GL
thx M1
5 days up, 8 days sideways, and today looks like starting another 5 days up…. fibonacci trading days in this up cycle from 1074 lows. Pretty slick… and continues to look like Primary 3. Especially given the rumors of Bernanke now planning to buy mortgage backed securities…
Have a great weekend guys! Thank you all for your thoughts and insights. Thank you Tony for your tremendous work. Looking forward to your weekend market analysis, cheers.
cheers Igor!
I second that notion. Thanks Tony. Everyone have a great weekend.
Follow-up of my trade posted on Tuesday:
http://caldaro.wordpress.com/2011/10/17/monday-update-284/
I closed today the calendar spread on XLE with a tiny profit. Today’s spike ate all accumulated profit on the time decay of sold Oct calls. I didn’t expect a rise into OED. Anyway, I am still bullish on Energy.
Hey C B
Hope that rally in CL made u $$ since u saw it coming
ESZ should get back to sillyness GL
2 nd bailout coming for housing exclusively
good times
http://www.federalreserve.gov/newsevents/speech/tarullo20111020a.htm
Love oneself, or love oneself and all others. It’s a choice. Your future depends on it. Time is short. Make the choice!
Lee what makes you think ur reasoning didn’t convince me
bottom line: your call earlier was perfect but I missed that entry and at the end of the day I thought you were making a lot of sense and I was kinda late plus opex…so I reversed myself…
Anyways, great CL calls this week Lee..thanks a bunch!…enjoy the festivities!
No Thank You C B
Hey I’m giving the toast these folks have NO idea what their in for !
my pleasure
Lol, they’re lucky 2 have u Lee… you can either tell them exactly what they want to hear…or you could give them some “volatility.” (like in that poster..lol). Hey, if ur not able to erase all the tapes afterward & you end up on Youtube, we’d love to see that toast
Thanks Tony, everyone…have a great weekend all!
Nice symmetry 1191-1233 1197-1239
Path to 1258?
ZC back at 655- me likey
.236 retrace?
Gold- I had 3rd wave topping from 1862-1907 which I forecast in advance. My 4th primary wave objectives were 1530′s or 1440-1450. I still think 1440-1450 is possible, but a re-test of 1530′s would be close enough for me to buy… 5th wave to come, I have 2350 as likely.
Thank you David!
Tony,
First time poster, and dieing a slow death. I have only been following you for a little over a month, as I just bought my EWP book. I am really confused right now about where b of B ended? Is it at 1191 or 1197? Also, how will we know if this is v of a of B instead of i of c of B?
Thanks
Welcome Donald, A small dip, 34 points, but it looks like B ended at 1191.Our OEW charts suggested an A wave top at 1225, but the actual market pullbacks suggested it carried to 1233.Usually they move in sync. Had to wait for the market to show its hand.
Tony a question about Gold… David please chime in too… Didn’t gold finish it’s 12 plus years
rising 5 th wave top and now down we go??
What number would gold have to pierce below before this secular bull is over? The 2013 timing
is very close or close enough?
Loonie we count four waves with the fifth to go.$1478 stop
Ok thanks Tony
I’ll still go with 1247 SPX final B wave top
which may happen today.. I’m sticking with 5 waves down very soon… Orginal Tony count
until proven otherwise. Low in spring then
another 18 month or so cyclical bull
More hindsight work here, lol: IWM small cap ETF had a 31% fib retrace at yesterdays lows. That is common in a strong bull wave. During the 09-11 rally, most retracements were 31% on the strong move up off the 666 lows. So, this is giving further evidence of primary 3 here… which would be fine with me, easier to make money giong long than shorting
All B waves are hereby outlawed by the Securities commission, they are no longer allowed and we must go straight up to 1284. Thank you for your cooperation.
No problem, we are just trying to help
haaa
kjb0 says:
October 5, 2011 at 2:02 pm
Just sharing my count and areas. Looks like wave 5 of wave 1 of “C” down finished yesterday. Wave 2 up could go from 1220 to 1280 area. I will play it this way until it changes.
Bingo…although I was expecting an ABC…not straight up…Mrs.Market got me a few times
Tony,Market moving just as per my expected line.we are now in final (v)th wave of A wave which should top next week around 1250-60 level.After that the B wave will resume and can come down to 1100 level in November.
Steep drop Joy … cheers!
still think this is wave c….. so wave 1 down may be next….not b…
see neg div on the spx daily chart and ndx is not confirming this rally
…but I agree we may see some kind of rebound at 1100 on the way down
Vishal,
How can you be so sure that this train stops at 1250….I just Shorted today at 1211.75 (NSE) just as Nifty was crashing down. I guess I will be gang raped by the time this beast opens up on Monday. Every time I have been shorting S&P, it just keeps chugging on and on.
This time around I am no longer keep any SL until 1310 (78% retracement). So let’s see if I can make money or lose a lot.
Kling kong, that’s quite a deep sl u got out there, as far as nifty goes we are in a range of 5030-5140, if Dow maintains today’s upmove nifty will move past 5140 and destroy the bears,
Above 1250 weekly charts would reach readings that Tony mentioned in weekend update that would appear overbought in this bear phase so I said 1250
Nifty is a Bad market to trade gap ups and gap downs have screwed my option premiums many a times, with tonys insights u have better success ratio in UD markets as it’s a more liquid market widespread rampant speculation doesn’t happen like it does in nifty, Ofcourse at the end of the day everything is managed
Dow la hour can be a lottery but the way it stands looks like joydeep nailed it this time with his 1250 projection, good one
Looking like a run higher into 25 -27th Oct next week or the 2 – 4th Nov (which would be very extended).
Nearing a new uptrend high Tony
Vishal … the count posted looks okay.
tony, i agree. daneric had this posted on his blog. could be something similar going on. http://3.bp.blogspot.com/-5cLIyoP1_qA/Tp9C_Do1WEI/AAAAAAAAKDU/U9aAlOCCfP4/s1600/spx605.png
The Jan10 top … took a while to understand that chart.
Morning folks, happy Friday
Looks like an ascending wedge in ES this morning. Appears that a breakout through the 1230 point could be imminent.
In credit land buyers abound and are struggling to find enough paper; spreads ratcheting in. Path of least resistance seems to be up.
Cheers,
-rc
RC, Are the CDS spreads contracting?
Single name CDS (specific credits) is definitely performing well today. The CDX index is tighter but I would say is modestly lagging stocks and cash bonds right now. The IG index is only about -1.5bp tighter as I write this; given equity futures and cash spreads it should be a couple better than that. The HY cds index is about 14bp tighter, or about +1/2 point on dollar price.
That said, CDX has frequently performed oddly lately, relateive to other assets, as so many macro funds are using it (often ineffectively) as a market hedge. We’ve had a number of days when it has diverged directionally from equities, which historically is pretty unusual.
RC, Thanks. Had noticed some contraction in spreads between corporates and gov’ts.Was wondering if it was tracking the larger credit markets.
rc – agreed. posted the same thing a bit ago – but accidentally on wednesdays update. esz looks ready to break, target of 1265ish – around the 200-day.
Hi Tony,
Hi Everyone,
I know most of the traders that post here are very short-term oriented, but here’s my view on the larger degree for $SPX.
The market remains very strong as the recent pullback has found support above the 1190 chart level and abv the 100-hour moving average. Thus, the hourly chart remains quite positive right now. At the same time, it seems to me the market is a bit tired and I doubt it is ready to continue its advance directly from here. Most likely we will either see more sideways consolidation in the next few days abv 1190 or a deeper pullback twd 1165/60 before the uptrend from the early Oct low can resume. Here’s a view of the hourly chart:
http://trendrecognition.com/images/stories/2011/indexes2011/sp500_vst_20111021.gif
Going forward, I expect a move twd 1300 level before the current move higher from Oct low is over. Here’s my wave interpretation of the daily chart (and the daily chart of Nasdaq 100 is looking even more bullish):
http://trendrecognition.com/images/stories/2011/indexes2011/sp500_st_20111016.gif
Regards,
Alexander
P.S. I read Tony’s work almost every day and I take a look at the discussions here quite often. I post less often in this blog because my time horizon is a bit larger: I am not interested in day trading as some of the traders here are. But thanks to everyone that brings value to the discussions!
welcome Alexander,Medium term generally agree with slightly less upside targets.Long term that looks like Neowave.
Yes Tony, I follow the Neowave approach.
NAS Fibo…
http://astrofibo.blogspot.com/2011/10/nas-fibo_21.html
Pingback: thursday update
It looks these charts are still valid. I still think we need a “bang” to be more confident abt a new leg down.
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID4067322
BPI of the Consumer Non-Cyclical sector and the Financial sector increased by 2% today in my theoretical sector portfolio model.
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3474785&cmd=show&disp=p
XLF accumulates since August and now we are getting the confirmation of that in the increasing breadth in Financials. One more sign that this rally is not over yet.
Chart #7 here:
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3474785
Hi Tony
I was re-reading yesterdays great post and can I ask if I understood this correctly. You suggest that the low of March 2009 was THE low and we have now embarked on a multiyear bull market and the lows will not be revisited?
Is that right? or Did I get thew rong end of the message completely.
Welcome Darren … history suggests, you got that right!
Tony,
Been away………looking for high next mon or tueday @1225 again.
Then down to 1190 or 1165 by Nov 1st to complete the b zig zag.
Cheers
Scotty
The most fun to trade market in awhile, I love it. Must move in and then take profits fast on either bull or bear positions. Had some fun today with ERY/TZA etc. With that said, Copper fell another 5.5% today and in my opinion is either going to have to spike up hard next week or the market is going to have to follow it down. My story is down, and we shall see. Cheers all!
There’s a BIG vote this weekend in the Euro-zone about their bailout fund (a QE3, ala Europe?) and their (Greek+) debt crisis. Will the results of this meeting help determine the short-term direction of our markets? Hmmm. Just asking?
Likely
No, they just pushed the decision out to next week. Wed. at the latest according to reports.
DJI Fibo…
http://astrofibo.blogspot.com/2011/10/dji-fibo.html
SP500 Fibo…+
http://astrofibo.blogspot.com/2011/10/sp500-fibo_20.html