SHORT TERM: gap up opening ends in a volatile day, DOW +162
Overnight the Asian markets were mostly higher. Europe opened higher but closed mixed. US index futures were higher overnight, but at 8:30 Durable goods orders were reported more negative: -0.8% vs -0.1%. Nevertheless, the market gapped up at the open to SPX 1238, and continued to rally in the opening minutes. The SPX had closed at 1229 yesterday. After the initial surge, when the SPX hit 1243, the market started to pullback. At 10:00 New home sales were reported higher: 313K vs 295K. After that report the pullback started to accelerate. Around 11:00 the market took out yesterday’s SPX 1227 low and hit 1221. This represents another two day 36 point pullback, similar to last week’s tuesday/thursday 1233-1197 pullback. Then the market started to rally. After an initial push to SPX 1232 by 12:00, and a pullback to 1225 by 1:30, the market headed toward the highs of the day. At 2:00 the FED issued the following press release: http://www.federalreserve.gov/newsevents/press/bcreg/20111026a.htm. Around 3:30 the SPX hit 1246, then pulled back to close at 1242.
For the day the SPX/DOW were +1.20%, and the NDX/NAZ were mixed. Bonds lost 19 ticks, Crude slid $2.35, Gold added $14.00, and the USD was lower. Support for the SPX moves back to 1240 and then 1222, with resistance at 1261 and then 1291. Short term momentum hit oversold this AM and has risen past neutral. Tomorrow, weekly Jobless claims and Q3 GDP at 8:30, estimates are +2.1% to +2.3%. Then at 10:00 Pending home sales.
This has been a difficult uptrend to track, but we feel yesterday tipped off the pattern. The current pullback of 36 points (1257-1221) overlapped the previous high at SPX 1233. These 20+ point overlaps are getting quite common. After the initial surge off the diagonal triangle Intermediate wave v/Major wave A low, this uptrend appears to be running out of upside momentum. When we review the rallies and the pullbacks we notice there have been six pullbacks of 20+ points each. This suggests this has been a corrective uptrend forming a series of zigzags as it ascends. Exactly what should be expected in a B wave rally. The most obvious count is an Intermediate abA from SPX 1075-1225. An Intermediate B wave to SPX 1191, then the ‘a’ of an Intermediate abC to 1257. The ‘b’ of this abC pattern may have completed today at SPX 1221.
What would be next is another zigzag, with a 20+ point pullback in the middle, into the eventual pattern high. This may hit the 1284 area, or create a double/triple top at the 1261 pivot. SPX 1258 is a 61.8% retracement, and 1284 is a 70.7% retracement, of the entire May-Oct decline. Also at SPX 1266 Int. C = 0.50 Int. A, and at 1284 Int. C = 0.618 Int. A. So we have a cluster of price and pattern possibilities at both levels. Best to your trading!
MEDIUM TERM: uptrend high SPX 1257
LONG TERM: bear market highly probable
CHARTS: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1606987
For what this is worth. There are a number of
astrological similarities for tomorrow with
oct 19th ( Black Monday) . Should be interesting.
October 19th 1987
congrats on the fine technicians who saw 5 waves into the 1075 SPX here at this forum
I was a day early of course but it was never a doubt.
I have now purchased a couple of giraffes and an elephant aw who am I kidding I bought Never Land Ranch with the profits.
invitations for house party are coming soon
AAPL has 2 island reversals in a row on the 60 minute chart over the past 2 months in the same $415-$427 range (athough I guess the second one technically must negate the first one as an island reversal). Does any one know if this has any technical significance?
Hi mckennedy,
an island reversal on a daily chart in the middle of Oct combined with -D on RSI and MACD and signs of distribution on CMF and Accum/Dist foretells a significant top which would be hard to overcome. My take only.
Thanks Guys
Have to run..leaving the LEE3000 in auto mode
look Tony 1291 pivot… Its like Lassie
Hard to believe the market took out the 1261 and challenged the 1291 all in uno dia
I have been trading for 13 years or so and I have never seen anything like what we have seen in the past month. Biggest point gain for the Dow in a month, EVER. Best % gain for S&P 500 since January 1987.
Spooky isn’t it.
Tony, you must like it that way though, no – it speeds up your pattern recognition process..
Hey what started with a little “Twist” and is ending with the “Moster Mash.” Kind of spooky..
Thanks a lot Tony, everyone!
I started clerking in the S&P pit in Jan 1987. I remember that . I thought I was a GL charm for a while that year……
aha, there you are, Lee… that charming candle. http://screencast.com/t/WmrCcneQ36I Looks like you totally charmed the pants off that market for a while. Pretty amazing how you did that…lol…it would be great if you could tell us sometime how that day went, Lee
Thanks Guys
thanks Lee!
Well we literally came within a few pips of 61.8% on the EUR/USD. We hit the 1284-1291 Pivots. I guess this is make it or break it time, the next few days. Any thoughts?
Potential sell signal at today’s close, but not enough of a track record (compared to the many others I use) to bet heavily on this one. Personally, I see a bit more upside, so I will wait for the much bigger sell signal I’m tracking to play out (could be as soon as Tuesday), but will short a break back below Dow 12,000 in any case.
forced covers + money managers chasing is a hell of a thing
EOM BS too.
1288 just now satisfies even your 1291 point, Tony, doesn’t it? I couldn’t believe we could jump that high in a single day. This is an amazing market. So low 1300′s now is quite within reach, especially with a a bit of zz.
- div showing up on my screens
anyone else ?
R3 ESZ @ 1284.33
CL still in yes range
R3 held
see yas at S3 or at R4 R5 R6
The gang who called it a bear market at 1075 SPX on CNBC are whooping it up here.
I guess it’s natural
They did that at the march 2009 low too.
Not bashing but what has Prechter been saying lately ? Wave 2 up ?
They sure did
The late he knew he was great Mark Haines RIP Made the bottom call in their faces
Wonder what he’d say now ?
Mark Hanes (of the Haines (TM) ? Bottom
) would have prbly said nothing cuz he was a lawyer, but his thoughts about those clowns wouldn’t have been very kind .. He was one of a kind, for sure..
Lee, on 1 and 5 min yes, not on 15 min and 60 min, though ,…maybe we do 1295 first?..these guys are protecting the closing numbers these last few days of the month…they like to do it the safe way…at the open…somewhere there
thanks C B !
Tony-
New to the site and your blog. I was wondering if we break the 2438.44 high on the NDX100 will that mean all bets are off for the bearish case on that index and other indicies? Also would that mean we will not likely have a move down to take out the low for the year? Thanks!
Welcome AJ, That’s possible but we are staying with our Major B wave scenario.The NDX has been outperforming the general market since 2009.
It feels like qe3 stocks and commodities on fire
Are we there yet? overbought enough to scale 1291 pivot IMO
Up 70 since yesterday low? That always holds
Great call by David Banister yesterday morning. David, what’s your sense now that we’ve reached 1284?
David Banister (@activetrading) says:
October 26, 2011 at 7:56 am
I’m still seeing 1284 for sure if not 1306. Also I like Greek Stock market index as well. Best of luck to all. Today’s possible entries are again ERTS for big breakout coming and IO which Im long at 7.03.
+1 indeed 1284 hit and mkt pausing
Dare anyone say short some now ?
Probably wouldn’t get hurt going short here, but these big moves usually indicate that the turn is imminent but not quite there yet.
Will let the data play out as it does and let that determine my decisions, but my hunch is that the turn is still a few days away. Frankly, I’d love to see 3 more up days into Tuesday (or even down tomorrow then up Mon. & Tues.).
This is a good read. Written by Warren Mosler:
http://moslereconomics.com/2011/10/27/euro-zone-strikes-deal-on-2nd-greek-package-efsf/
ED overthrow ? at 1:55 to 1284
As posted in real-time on Monday, front-ran my system and was 200 points in the black but ended up 100 in the red. I’ll take those odds every time.
But now back to the system. Still hasn’t given a sell signal since the buy signals of October 3 and 7, but a major sell signal is forming as we speak. Will post confirmation when it completes.
Thanks to everyone for your comments and input, thanks to Tony for managing such a great forum.
thx Catch, for your input
Thanks a ton C T M
Tony has the phrase sell on good news changed to buy on good news?
Depends on the final outcome of the EFSF.
Borrowed this phrase from poster “doctor_jr” from another forum:
“Buy the rumor, go parabolic on the news.”
Tony, with the blue arrow on the SPX monthly, you indicate possible reversal here… right?
I think you mentioned once a few weeks ago that would be the point to expect, when it comes to this point on SPX monthly.
Blubrd, Quick observation.Yes was expecting wave B to hit neutral RSI monthly and overbought weekly.We’re right there, but still have time to complete the pattern.
What do you mean by “completing the pattern?” Go fully to 1284 or 1291?
Or you meant to have another zig zag before it’s over?
In a of that ZZ now
Well you can scratch my comment from this morning regarding treasuries not selling off enough. After this abysmal 7yr auction, everythin out the curve has just tanked. 30yr now down almost 4 points.
Thx RC, probably the reason for the second surge today.
I know your not to keen on sentiment Tony, but i thought it would be interesting. This weeks AAII Sentiment Survey, everyone is bullish again and excessively so.
http://www.aaii.com/sentimentsurvey
Thanks Gsel … would expect that after this uptrend.
Thanks G
Dow Jones 5 min chart appears to have a ending diagonal forming ?
I remember in May of 2008 guys coming up who traded on the floor but not pit with checks walking past us in our little den of sillyness doing the walk of shame and bumping their accounts to hold underwater shorts on a 200 handle dry kiss that happened in about 3 weeks.
but that was not P3 up obviously.
deja vu 2.0 ?
Well Chaz Bono has been voted off DWTS so I think it’s up to the Cardinals to clear things up. Heck why not ? A boy can dream
If they show up, as they have, when their backs were against the wall.We take two by friday.
think this move has bested late april 17 may 20 th 2008 pop now by 15 handles for 205 big ones
r1=1283.95 r2=1295.16 and only 4 more hours left
nice
200 DMA also ..
most def. can’t ignore that one..
thanks Lee!
So lets presume we are completing the big wave B up.
We are now in c of B. a peaked 10-14……(A straight line advance)
b bottomed 10-21. We need a complex zigzag up (alternation) and we are
completing c of B today, close to the “Super Moon” of yesterday and kissing
the 200 dma.
Could be a very interesting close today.
Scotty & Tony,
What about Tony’s weekend analysis that “80% of the time, the Primary wave bull market high was retested, (within -3.5% to +1%), at some point during the B wave portion of the declining Primary wave.” Are you saying SPX 1323-1385 is off the table? Also, if we’re looking for a minimum 12 months Primary Wave II, and it’s only been about 6 months since Primary II began in May, is it too soon for a completion of wave B? Thanks.
Welcome Ladad, Nothing is off the table here.Historically Major B’s can rise from 61.8% retracement to a 1.01% retracement.Until we see a potentially completed pattern is can go further.The 1284 pivot is now being visited.
Good morning,
I want to chime in with my “this is complete bogus” opinion. For their ‘solution’ to work, as planned, will cost France and Germany their ratings. Perhaps several notches.
Nothing is voted on, nothing is implemented and therefore nothing has really changed. As market participants come to realize this I think this rally gets faded. This feels like a blow off top to me, but of course only time will tell. The treasury market isn’t selling off nearly as much as it should be given the broad market euphoria. The vast majority of spread tightening in credit is street driven (not due to large inflows by real money accounts).
The European banks will be required to obtain private capital first. I see some issues with EUR 100bn of European bank issuance getting done in the near future.
This smacks of pump fake to me, and I’m not biting. We’ve had so many great headlines over the last few years from Europe, and every time their dysfunctionality has shown throw. When it comes time for the details and implementation of this grand plan, I am confident that they will once again prove their knack for disappointment.
Just my 2 cents.
Cheers,
-rc
Thanks RC, Either the credit markets are wrong, or equities are wrong.Since this looks more like a TARP than a large QE program, i.e. US late 2008, the credit markets are likely right again
I agree that we have not seen QE – YET – but QE has started in Japan: http://economictimes.indiatimes.com/news/international-business/bank-of-japan-eases-policy-amid-yen-rise-europe-debt-woes/articleshow/10505901.cms
And has been hinted at by incoming ECB President Draghi: http://www.reuters.com/article/2011/10/26/us-eurozone-idUSTRE79I0IC20111026
And most of all, by China’s Premier Wen Jiabao: http://www.businessweek.com/news/2011-10-26/china-s-bonds-climb-after-premier-wen-signals-policy-adjustment.html
Liquidity will NOT solve the solvency issues, but with inflation already running hot, commodities may continue to march higher (in line with your commodity cycle expectations)
Depending on which days you count, this is either the 2nd or 3rd day of RSI non-confirmation.
Scotty, The daily RSI peaked over a week ago.
Yea thats what I’m saying. Even with todays action it is still
below previous peaks.
the rally from 1074 is 1.618 the rally from 1101. Just sayin….
1263.25 I got 7 shorting that so I didn’t get totally punked.
Let’s see what grains do GL
Did I say hard down today ? Fricken BRILLIANT !
What 200 dma ? Bondholders value declines by 50 % ??????
and we add a trillion more debt ????
now thats encouraging for investors. Maybe 1074 WAS the bottom of C.
Starting to act like it.
scotty
Days still young !
Dr CL,Think you chose the right market.
Haaaa I’m here for you guys
Thx Tony
Again, some may want to continue to consider primary wave 2 ended at 1074 and primary 3 is underway…. its maybe not my preferred view, but I am watching price action. This price action is super strong and would signal some type of Primary 3 is possible. With that said, there are lots of walls of worry to climb yet for sure. 1284 mos def is on the way now.
Morn all
This just in… The sky is blue
“In the Spring there will be growth”
swany
you have achieved total consciousness
As long as the roots are not severed…..all is well. And all will continue to be well…..in the garden
Europe good news put global market euphoric again and it seems that we may have not done with the A wave yet.So we may go till 1280 kind of level to conclude this A wave and resumption of the much awaited correction in B wave which I think will be very deep.The Intermediate (v)th wave of this Major A wave of Primary B wave in spx probably playing an another ED where 1st wave top(1233) and 4th wave(1221) overlapped.
Hi Tony
Just wondering what you think to the European news, in a nut shell:
Measures include recapitalization of European banks, a potentially bigger role for the International Monetary Fund, a commitment from Italy to do more to reduce its debt and a signal from leaders that the European Central Bank will maintain bond purchases in the secondary market.
Is this monetization of debt that you were talking about which increases liquidity and makes markets go alot higher along with commodities? I don’t really get all the jargon so thought you could shed some light and share your thoughts.
Thanks
G
Hi G, Mario Draghi, incoming head of ECB, has stated the ECB will continue to purchase gov’t bonds to stabilize the credit situation in Europe.The ECB’s balance sheet is already at $2.4 tln, while the FED stands at $2.8 tln.Germany suggested the EFSF, which is being leveraged to $1 tln, should be used to partially guarantee gov’t bonds and halt the purchases by the ECB.In the mean time, banks have borrowed heavily, some $65 bln, from the ECB in recent days in new 12 month liquidity program. Scheduled to end Jun12.$100 bln or so has been set aside by the ECU to recapitalize the European banks.Also, the organized voluntary default of Greece, 50% haircut, is a major factor in the ECU package.Overall, this does not appear to be a monetization program, more like a TARP. But the ECB has been buying gov’t bonds since August with no specified limit.
Thanks Tony. The markets seem to be smashing through all resistances. Starting to feel like a primary 3?
G
G,Gapping overnight through important resistance levels.Has been doing that for several months now.Primary III is a possibility, but staying with Major B
Baltic Dry Index bottomed on August 8th and has continued higher. Also, watch the Greek Stock Indices bottom big here at 50 and move up BIG in the next 12 months, as in over 100%.
Joe Granville… Reverse Gravity gang, KISS. Reflation trade is on…. Long IO, ERTS, and LTD.
What is IO?
Pingback: wednesday update
thanks Tony
1284 IS looking good to me still…. and Gold should be 1775 then 1844, then 1900 in the coming weeks. Tomorrow Im on Thestreet.com with Alix Steel. Cheers all
Dave
Have fun David
That is awesome DB!!! I was on TV once too
H D, so that was you?An emmy performance
so funny, HD ..lol!!
Thank you Tony, it’s good to see that your analysis suggests higher prices ahead.
As I mentioned yesterday I think that we are going through a retracement / consolidation if I interpret right the signals of my market sector model. Today I got one more confirmation of that. The model shows an improvement of internals in 4 sectors. BPI of the Basic Materials, Healthcare and Consumer Cyclical sectors added 2% each today. I keep an eye on the Consumer Cyclical sector as the most economically sensitive sector to give me a sign what we should expect. So far this sector is a leader and not going to pause. This gives me a confidence that this rally is not over yet. Actually, only the Utilities show the better internal breadth. BPI of the Utilities sector jumped by 6% today and entered an overbought territory. I suppose that a part of investors prefers to move their money into a defensive sector in sight of uncertainty in EU. It is interesting to see how unfolding events will influence on the sector rotation.
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3474785&cmd=show&disp=p
Igor, and to get the yield Utilities offer.
Exactly Tony, thank you. I should keep in mind that it might skew somehow the sector rotation picture in the realm of low interest rates. C B reminded me about that also some days ago
Igor, the good news is: that was the only thing I know about utilities….lol…so the worst is over now.
Thanks Tony, as always.
I notice Gold has stalled just one point below the 50% Fib of the 1923 to 1535 downtrend.
Do you expect this Fib to provide significant overhead resistance?
What ever you do, don’t tell them that the weeklys are up 700 percent or the monthlys more than dbled this week. Or the Rangers (cow chipers)would end it tonight but the rain gods intervened. Put a smile here…..
Cheers
http://www.fox2now.com/news/ktvi-rally-squirrel-back-in-st-louis-get-a-makeover-20111025,0,7614735.story
Hi Tony. I am new and thank you for your efforts. I am a beginner and read 3 different Elliot wave blogs each week. The consensus is reassuring and informative.
Welcome Dmlamos
Hi . I am brand new to your blog. I am new to Elliot wave analysis and thank you for your efforts. I read everyday with great interest.
.SP500 Fibo…Time Ratio…
.http://astrofibo.blogspot.com/2011/10/sp500-fibotime-ratio.html
FTSE Fibo…
http://astrofibo.blogspot.com/2011/10/ftse-fibo.html
Thanks Tony. Looking at the daily MACD lines…the fast one already has +D vs the 1350 area …does the corrective structure you anticipate allow a move of that magnitude(1330-1350) per OEW rules? Also looking at the 60 min RSI, do we have a +D there 1234->1221(?)
sorry, intraday 1226—> move for the RSI. Thanks Tony.
Thanks Tony..that’s really helpful..I’ve just straightened myself out on a few things here…thanks so much.
hey Lee, that’s good! …you must be really good to her
…as far as eyesight is concerned though, did you know that guys are like plastic bags…they hold everything in and you can see right thru them… 
good one
Well, actually that was a commentary on the human nature in general cuz we all behave like that to a degree, sometimes…Hey Lee that funny thing you said about husbands & wives just reminded me of the wedding you mentioned last week…and yes, we are dying to hear how everyone loved that toast you made……if you can give us the highlights…Doc
Hey C B
They loved the speech
I did it in 38.2 seconds 1. thanks for coming
2. joke
3. Toast
The ladies in the 65-85 age group thought I was dreamy
haha, nice, Lee…you had them at 38.2
Can you tell us the joke, or is it classified?
Hi CB, Yes, we discussed that in the recent weekend update.Even a marginal new high.But for now, we’re only tracking the current sohrt term pattern. Surprised you noticed that.There was a very slight, almost unseeable positive divergence between yesterday’s low and today’s low.That gap up opening set it up.
Good eye C B
May I be a male chauvinist and say it’s because a women notices a lot more details in most things than most men.
Take my wife… I’m always taking her everywhere but she always finds hey way back
Tony,
You have stated,
“The most obvious count is an Intermediate abA from SPX 1075-1225. An Intermediate B wave to SPX 1191, then the ‘a’ of an Intermediate abC to 1257. The ‘b’ of this abC pattern may have completed today at SPX 1221″
Is this abc from 1075- say 1261/1284 the completion of the counter trend ABC rally or is this abc just the “A” wave completion and the “B” and “C” waves are yet to come ? The reason why I am asking about the “B” and “C” waves are yet to come is because you had previously stated that during the “B” wave the market will reach oversold levels. I certainly expected more than a 1 day 200+ point correction for the “B” wave. And since this hasn’t happened yet, And therefore I am still wondering what’s going on. It has already reached the top end of the range you had mentioned for this rally, so it might also mean the the next wave could be the real “C” and S&P could head for new lows.
Sorry if my question sounds so silly, but I am still at EW 101.
Welcome Nifty, No question, in these markets, are silly questions.We are going with the most obvious count until the market forces a change.The most obvious count suggests this uptrend will end on the next zigzag up from SPX 1221.This would end Major B, and then Major C to new bear market lows would follow.Naturally, as you noted, this entire rally may be only A of an ABC Major B wave.This we think depends on the news out of Europe, and possibly the FED, in the coming days and weeks.
thanks for sharing your analysis with us everday, tony. interestingly, vix has yet to make break below oct 14′s low while the spx grinds higher. follow the bouncing ball!
In keeping with Tony’s baseball theme… ” the best the Eurocrats can hope for is to extend the game by an inning or two but their arms are tired, their
bullpen is empty and at some point we are going to see an avalanche of runs scored against them as the whole thing finally topples under it’s own
weight”. – A quote by John Mauldin
Batter up!
Tone,
Thanks for your great work.
See 2moro as a hard down day.
Scotty
cheers Scotty!
Thanks big time again Tony