SHORT TERM: solid gap up rally after ECU debt deal, DOW +340
Overnight, the Eurozone reached agreement on dealing with their credit crisis. Asian markets were all higher on the news. Europe opened higher and closed +4.2%. US index futures were higher overnight as well. At 8:30 Q3 GDP was reported higher than expected: +2.5% vs +1.3%, and weekly Jobless claims came in slightly lower: 402K vs 403K. The market gapped up at the open to SPX 1266 and continued to rally. The SPX had closed at 1242 yesterday. Within the opening minutes the SPX hit 1275 and then began to pullback. At 10:00 Pending home sales were reported lower: -4.6% vs -1.2%. The market pulled back to SPX 1265 by about 10:30, and then started to rally again. With several small pullbacks along the way the SPX rallied to 1293 by 3:30. Then a quick decline to SPX 1279 was followed by a bounce into a 1285 close.
For the day the SPX/DOW were +3.15%, and the NDX/NAZ were +3.05%. Bonds lost 36 ticks, Crude jumped $3.60, Gold rallied $18.00, and the USD was sharply lower. Support for the SPX jumps to 1261 and then 1240, with resistance at 1291 and then 1303. Short term momentum hit extremely overbought. Tomorrow, Personal income/spending at 8:30 along with PCE prices. Then at 10:00 Consumer sentiment.
Strong overnight buying in the SPX futures helped create a large gap up opening of about 2%, which jumped right over resistance between SPX 1257 and the OEW 1261 pivot. This type of activity has been a common occurrence over the past few months, both up and down. In the first few minutes the 1261 pivot was cleared, and then retested around 10:30. After that the market headed straight up to test the next resistance level at SPX 1284 and then the OEW 1291 pivot. Quite a rally! This market has now risen 20.3% since the Oct 4th SPX 1075 low. Hope many of you have caught some of this uptrend, even though we still consider it a bear market rally.
While we have been expecting another rally off of yesterday’s SPX 1221 low. One has to be impressed with today’s gap up and 3+% surge. We checked the pattern and found each of three previous zigzag rallies have been 96, 75 and 66 points respectively. This rally, which should be wave A of the last ABC zigzag, is currently 72 points. So it still fits within the range of the previous ones. With the SPX 1258 and 1284, 61.8% and 70.7% fibonacci retracement, levels being exceeded today, the next levels are at 1308 (78.6%) and 1337 (88.6%). Also, if the Int. wave C = 0.618 Int. wave A relationship at SPX 1284 does not hold. Then the next internal wave relationship is at Int. C = Int. A or SPX 1341. Quite a range of targets.
For now we expect a 20+ point pullback soon, and then another high. Short term support is at the 1261 and 1240 pivots, with overhead resistance at the 1291 and 1303 pivots. Short term momentum is extremely overbought. Best to your trading!
MEDIUM TERM: uptrend hits new high SPX 1293
LONG TERM: bear market highly probable
CHARTS: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1606987
For everyone interested in the Euro deal. The Euro deal was just leaders saying we are going to do these things. With no actual steps or action. Just more Euro talk with no action.
It’s hard to come to any conclusion from Media who paint it as actions actually happening. Everything said at the meeting has not happened. The 50% “voluntary” haircut has not happened no laws and packages have been created or signed.
Basically the Euro summit was something like this: “We need QE3″ Instead of “We need QE3, and we are going to start it next month with a balance sheet of XYZ.”
Knowing Europe, which promised a second Greek Bailout in July and now it’s almost November and still nothing finalized. Whatever was discussed at the Summit is either never going to happen, or by the time they get around to it, it will be to late and then they will need a bigger package then before.
Sorry for the rant lol. Here is a great article discussing the Summit from PIMCO’s CEO:
http://www.reuters.com/article/2011/10/27/eurozone-deal-pimco-idUSL5E7LR4UX20111027
thx Gsel
So we are slowly working the overbought conditions off, not giving up much on the gain. And all that is just under the pivot. Do you feel what I am feeling?
igor, i do – was just thinking the same thing. the indices look like they’re forming a triangle on the 5-min charts…
Bullish consolidation…
Pretty sure that the Dow will close lower today, but wouldn’t be surprised to see higher highs in the future.
Tony today’s upmove in BSE sensed as per plan or any change if view we are dot at the blue line drawn by you
Vishal,Happy holidays!Let’s see if we can get a little more overbought on the weekly
Happy Diwali to you Tony it’s equivalent to Christmas there
Corn-Prolly have to gap the 655 pivot. It just ain’t happening. I’ve been waiting 3 weeks and am getting tired of it – Let’s do it already! . DX could be showing bear flag. Could help?. GL
SPX is up against the monthly SMA at 1289. Dow’s monthly SMA is 12110. I doubt either of these are break these levels. Would think we would be more likely to see the trend turn down from here.
10mSMA, that is……
Tony, based on the newsevent of europe yesterday, will it be safe to say that the crisis has been postponed for a year or so or thats too premature/optimistic, in teh sense that the C wave down thatw e expect what will drice that?
Vishal, Not sure if it has been delayed that long.Could be a few weeks a few months.We still have to deal with a declining global economy.
As posted yesterday, my system generated a rare and thus untested Sell signal yesterday at the close (Dow 12,208.55). Not as long a track record as my system’s other signals, but I’m not impressed with today’s action from the bulls so will turn short-term bearish here at Dow 12,200 with a stop-loss at 12,300.
Thanks Catch
Gracias CTM
Hey Tony
What a game. Berkman MVP
Lee,So far … Freese could get it also … or Carp if he pitches a gem Remember the 1-0 complete game shutout against the Phillies in game 5
http://espn.go.com/ if anybody missed it
Can’t wait Tony
Hi all,
here’s my updated chart on $SPX with the count I presented here a couple of weeks ago.
http://www.trendrecognition.com/images/stories/2011/indexes2011/sp500_mt_20111027.gif
The strenght in Nasdaq 100 however is a signal that something more positive may be following. Here’s my Medium-Term chart of Nasdaq 100:
http://www.trendrecognition.com/images/stories/2011/indexes2011/nasdaq_mt_20111027.gif
For a shorter-term, I think it is important $SPX to hold abv 1257 to remain in strong uptrend. Some strong resistance is likely to occur near 1300/10 (a Fibo pivot level on my chart).
I am travelling for a couple of days. Have a good trading, everyone!
Alexander
thx Alexander
NAS Fibo…
http://astrofibo.blogspot.com/2011/10/nas-fibo_28.html
Astro your arrows have been pointing south all week. You’re likely to be right next week – or soon!
Looks like we have -div on Nasdaq and Ndx daily charts. CT.
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Nov 1998 or Dec 2008?
A key (and simplistic) technical difference I would note between Nov 1998 and Dec 2008 was the direction of the 200 day MA. In 1998 it remained pointed upward throughout. In Dec 2008 it was downward. Currently the 200 day MA is descending.
Cheers!
Good read RC. In 1998, the market was just about to embark on the final leg up of a secular bull market that had been in place for 16 years. At this point we have been in a secular bear for over 11 years. Even though I believe that 667 was the nominal low for this secular bear I have a feeling that the low in real terms (priced in gold) won’t come until 2015-2016. That lines up with the 1982 and the 34 year time cycle.
A bit off topic but can anyone explain to me what the Rangers were thinking when they pitched to Lance Berkman? Why not load the bases with two outs, a one run lead, and runners on first and second? Pitch to anyone but Pujols or Berkman. Oh well, maybe Lance will get the ring he deserves. I’m just wondering if I’m the only one who was thinking this way. Probably the best baseball game I have ever seen though.
Maybe they thought an ex-Texan would give them a break.Nothing like a native born to bail out the team and put the series on Freese
I thought Craig was next up to bat and if memory serves correct he flew out to right field to end the inning. Berkman is a stand up guy, great player, and wants to win. I watched him do some great things for us here in Houston and I think he is finally getting the respect he deserves. He also deserves a ring. He didn’t have the offensive firepower around him when we went in 2005 (because Bagwell had a bum shoulder and Drayton wouldn’t open up his wallet to put a real team together) and now he is one game away. Tonight will no doubt be interesting. Curious to see how the Rangers respond mentally. One strike away, TWICE. Talk about a mental blow that you have to shake off quick! Cheers!
Rangers have a potent line up, lots of power.Cards have a good hitting team, lots of hits.Execution will determine the winner.And Ranger pitching will certainly have to improve.The last game in Texas, Cards had 7 hits and 9 walks and only scored 2 runs.They left runners in scoring position 6 innings in a row, and didn’t score. Lost 4-2.Last night they left the bases loaded in the 7th and 8th innings.Execution will be the key.
Tony, just checking back in on NatGas. Any thoughts? Might we have seen the ‘b’ low? What will you be looking for to determine if we’re finally in an uptrend? Seems from your charts that when the time comes, we’d be in c of c of C.
NG has to breakout eventually if Crude continues to rally.Question is when
Good to know. Shall be watching! (Tis the season, isn’t it…?)
Silver sure is making a comeback. Tony/Patrick, not sure where we are in the subwave count. Perhaps in “no turning back” mode now? Would be nice to see a retracement or a breather for long entries. Maybe if/when the S&P takes a breather in a few days. HUI is catching wind in its sails. And gold/silver ratio is dropping. This surge has been breath-taking. And when the metals are on a tear, they don’t seem to want to look back much.
Hope you Nifty/BSE fans enjoyed Diwali. Just need some fireworks in the Indian markets…but gotta get past the ‘c’ wave still…
BDK, We have a 1-2 off the low so far … in early stages of the 3rd now.
Love oneself, or love oneself and all others. It’s a choice. Your future depends on it. Time is short. Make the choice!
Thanks, Tony!
Time IS short (to get into the silver market) and it IS time to make the choice!
Tony,Another view,if 4th wave have bottomed at 1197 instead of 1191 then another high is possible next week after testing the 1261 pivot and my ED count then becomes invalid.But one thing for sure that we are very close to find some kind of top and hard fall after that.
Tony,If my current Spx ED count is correct then watchout for quick retreat to atleast 1191 level where from the trangle started.Remember last time how the 5th wave ended and how quickly,how far it went before bottoming out at 1074.I think we have found the top of the A wave today at 1292.lets see what happens.
thx Joy
Said “no one will be paid cds for Greek bonds”
While back. Now it’s clear that sovereign dept is un hedge-able.
Were setting up for the mother of all dept bunga bunga.
Meanwhile is the benron crashing against a radiation nation and a bankrupt continent.
http://finviz.com/futures_charts.ashx?t=DX
http://www.dailymail.co.uk/news/article-1374520/Japan-earthquake-tsunami-debris-floating-US-West-Coast.html
I’m Gona bet that stuff is hot. Real hot.
That stuff is worse than that oil spill last yr, it seems. thanks Mike. gtk.
3-3-5 correction to 1074, just over 38% retracement. 210 point wave up. Seriously, the wave 3 scenario must be considered… it is what it is…
With that said, I dont much care what the wave count is or the forecast… its easy to see 1306/1310 on my charts and Im trading and having fun… closed IO out today for an 11% gain inside of 24 hours. LTD also hitting highs. Life is good.
130 on the SPY looks like the BOGEY
Then only the brave will short… which is looking like a good move there.
1284 and 1306 were pivots I put out last weekend on the screencast I linked here. This continues to smell like Primary wave 3.
this whole thing is an X- wave from 1932
What a day! The breadth of all market sectors has been improved with no exception. Actually after such a rally I have not been surprised seeing rising BPI across all my market sector model. The numbers I got were different amongst sectors though. Here, what I got starting with the biggest number:
+14% (Basic Materials, Financial)
+12% (Energy)
+8% (Capital Goods, Services)
+6% (Technology)
+4% (Consumer Non-Cyclical, Transportation)
+2% (Consumer Cyclical, Healthcare, Utilities)
I didn’t put green arrows indicating which sector got an uplift today, all of them did. All sectors stay in a buy mode and in a bull confirmed signal.
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3474785&cmd=show&disp=p
Igor,
You nailed it big time and you shared the whole ride and it’s a monster move
Thank You
Thank you Lee. I smell bottoms, it’s my specialization, remember the quadruple bottom in Aug 2010? LOL Just kidding
On a serious note, I think that the market is going to overshoot 1370. At least my calculations are pointing out this outcome. Of course, I gonna watch this market like a hawk every day. No guarantee that I will get it right in the future but sharing observations and ideas is what this site about. Btw, congrats on the CL trades, I’ve heard you are looking for a zookeeper for your couple of giraffes and an elephant 
Hi Igor – do you have some kind of timeline on overshooting and going past 1370?
I see this market rallying with some retraces along the way in line with the 45 and 90 cycles all the way into March/April 2012.
This might indicate a larger ABC is in play.
I should add though that I am always mindful of Tony’s views though and that this is still likely to be very much a bear market rally.
Perhaps a 20+ point drop down to 1261 pivot area over the course of Fri – Tues, before a further rally higher on the back of the Fed statement next week in line with the next Semi-Gann turn date and then a sell the news type event on the 8-10th Nov when EU leaders meet again. Tony mentioned this in another comment before to someone else – saying basically that it all sounds good right now and then you look at the true figures and it doesn’t quite work! If we’re still higher around the 8-10th then I will be shorting heavily into it.
Hi alex, I do my calculations on PnF charts with different box sizes and different box reversals analyzing different vertical and horizontal counts. I look for clusters of projected targets to increase the likelihood that this target will be reached. Unfortunately, the time component is excluded in this kind of analysis. Only the price is taken into consideration. Price targets may be changed or negated depending on the price action. Currently all is pointing out that the new highs are ahead. Actually I have target 150 on SPY. When I don’t know. This target will be negated if SPY falls below Oct lows.
The decline from 1371-1075 was 21.6%. A 21.6% rally from 1075 would be 1307. In addition, a fibonacci 233 point rally from 1075 would be 1308. Coincidence?
EURUSD Fibo…
http://astrofibo.blogspot.com/2011/10/eurusd-fibo_27.html
Tony, on Tuesday you said “Now this uptrend is starting to look like the choppy B wave rally it was expected to be.”
It doesn’t look choppy anymore. In fact the kickoff from 1075 has been anything but choppy. Does this change anything?
Welcome Stock, No not yet.This market started off with a surge, got choppy since then, and now surged for one day.
More than 200 points in 3 weeks looks mega impulsive to me.
Gold broke through the 50% Fib without much trouble today; though it was much weaker than the other precious metals as well as the stock markets. Maybe a sign that it’s running out of steam?
The 62% Fib at 1775 may be a more formidable barrier, as it was following the 2006 spike in Primary III.
N.B. The weekly RSI chart is looking the same as in Primary III; but the price action is quite different!
Alex,
I watch the Gold vs. SPX very closely. It has been trending down for the past two months now but it looks like it is getting ready to turn back to the upside.
I’m not convinced. My gut says Gold may need more consolidation before any substantial move higher. This would also be in-line with the price action in Primary III.
Once the weekly RSI touches overbought I expect a volatile reversal to begin, taking the RSI back down to oversold.
Anyway it won’t be long before we find out.
ASTRO Update Decli Speed 2007-2009-2011…
http://astrofibo.blogspot.com/2011/10/astro-update-decli-speed2007-2009-2011.html
How long did we call the rally off 666 a B wave? anyways… 1291 overbought. stick with the plan. Sell em overbought at pivot and buy em oversold on pivot. Mess up a bunch of times and do it over again.
Never seen anything like this.
Glad someone else can say they have never seen anything like this. I can’t even put it into words but I tried.
http://equitybriefcapital.wordpress.com/2011/10/27/perplexing-to-say-the-least/
“With month end window dressing going on and the new month beginning I think from a timing standpoint we should have a high of some degree in by the close of trading on Thursday of next week. Maybe a sell the Fed decision?”
It seems logical if we can apply the logic to this market
Thanks Ryan.
SP500 Fibo…Time Ratio…
http://astrofibo.blogspot.com/2011/10/sp500-fibotime-ratio_27.html
For what this is worth. There are a number of
astrological similarities for tomorrow with
oct 19th 1987( Black Monday) . Should be interesting.
If this is the B wave rally ending here it shouldn’t spend much
time above or go to far above the 200 dma.
May be one of the 2 best shorting opportunities of 2011.
Good luck to all.
Cheers
Thank goodness, I had the sense to buy a 1240 call to protect my Short. As I trade in the National Stock Exchange of India, I really don’t have the luxury to place a SL. Pretty soon, one will either have the best shorting opportunity in a long while or this whole rally is something else.
In my 13 years of being in the market I have seen volatility before but it usually comes on the downside. It took the market 5 months to lose 296 points. Now it has regained 217 points in a shade over 3 weeks? The only time I have seen this kind of % gain in such a short period of time was the rally off of the March 2009 lows. That made much more sense though as it came after a very nasty 17 month bear market, one of the worst in history. Today? I just don’t get it. The bear market signals I had in September may end up being negated next week at the rate things are going.
EBC, those gyrations are stunning…but, as they say: ‘that market can get there but it cannot stay there’….managed markets like Tony says.
Decline from 1371-1075 was 21.6%. A 21.6% gain from 1075 would be 1307 and we got within 15 points of that today.
WOW! Any guesses on what the FOMC meeting will produce next week, and could the end of the meeting on Wed. produce “the” SPX high? (Will Uncle Ben take action next week, or hold off until the next meeting?)