thursday update

SHORT TERM: rebound continues, DOW +71

Overnight the Asian markets rallied: +1.7%. European markets opened higher and also rallied: +2.1%. US index futures were higher overnight as well. At 8:30 weekly Jobless claims were reported higher: 362K vs 351K. The market gapped up at the open to SPX 1361, edged higher to 1363 in the opening minutes, then pulled back to 1358 by 10:00. After that the market rallied again. At 12:30 the FED released the flow of funds: http://www.federalreserve.gov/releases/z1/current/. By 1:00 the SPX hit 1366, pulled back ot 1364 by 2:30, then turned higher. Around 2:30 the FED released this: http://www.federalreserve.gov/newsevents/press/enforcement/20120308b.htm. Just past 3:00 the SPX hit 1369, then pulled back to close at 1366.

For the day the SPX/DOW were +0.75%, and the NDX/NAZ were +1.15%. Bonds lost 11 ticks, Crude added 55 cents, Gold rallied $16, and the USD was lower. Support for the SPX moves up to the 1363 and 1313 pivots, with resistance now at the 1372 and 1386 pivots. Short term momentum hit extremely overbought during today’s rally. Tomorrow, the monthly Payrolls report at 8:30, along with the Trade deficit. Then at 10:00 Wholesale inventories.

A somewhat surprising strong rally today, worldwide, considering the recent downtrend confirmations in half the international indices and an uptrend confirmation in the USD. After the small three wave decline from SPX 1378 to 1340, (1364-1376-1340), which we labeled Minute wave A, we expected some sort of rebound. SPX 1365 would have sufficed, overlapping the first decline at SPX 1364. Yet the market continued on to SPX 1369. However, during the Major wave 2 downtrend the market rebounded 81%, after the first decline, before heading lower again. That kind of rebound would put our current market at SPX 1371 before it rolls over. Should this market rallied beyond that, then the alternate DOW count may be in play. This market appears risky in either direction at this point.

Short term support is at the 1363 pivot, the low SPX 1350’s and then 1340. Overhead resistance is at the 1372 and 1386 pivots. Short term momentum hit extremely overbought today then backed off some. The short term OEW charts have just swung positive with support around 1360. Best to your trading!

MEDIUM TERM: uptrend probably topped at SPX 1378

LONG TERM: bull market

CHARTS: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1606987

About tony caldaro

Investor
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117 Responses to thursday update

  1. I’ve got 1448 as my new target for 5 of major 3

    We are possibly still in 4 as a triangle, but in either case 1340 likely is already THE low of wave 4 with 5 of 3 heading to 1448. At 1448 we will be about 130% of 1074-1292 rally for Wave 3, so 1448 is the minimum upside for me.

    Then we will finish Wave 3 from 1158…. then 4…. then 5

    Then we have 2

    Oh well, we will see… meantime Im having a blast trading

  2. DR CL says:

    2 predictions I will get my Whiskey on tonight and next week Tonys Blog will be on fire.

    Have a great weekend folks !

  3. CB says:

    Igor, if ur around, do you follow any phama stocks?

    • CB says:

      pharma, sorry

      • Igor says:

        Currently, no.

      • CB says:

        thanks Igor…why not?…lol…I’ve just bought AGN…can you tell me whether you like it “on strength” …whenever you have time Igor, if at all possible, just a general opinion..if you could just glance it at please…..no hurry…I am already in it ..

      • Igor says:

        AGN From the technical perspective the chart looks very good. If this is a true breakout than the target 107-109. In case it’s a fake out, watch the support trendline from the August low. It shouldn’t be violated. Swing trade.

      • CB says:

        Igor, thanks! That’s fabuloso. could be worth a pair of Manolos :) (just kidding). Thanks Igor. I really appreciate it!

      • Igor says:

        No problem. That’s kind of chart you should look for ;-) More tight stop can be placed (89-90) if the price will reverse and go into the pattern again. And if it’s a fake out, than a good short is at 86-87, on a break down through support.

      • CB says:

        thanks Igor. Oh, I so hope “they” won’t run those stops just for fun…”they” like to do that so much…

  4. Erka11 says:

    What do you guys make of this extremely unusual trading pattern ? Besides the conspiracy and manipulated market theories, any other explanation on how the market could say in a range of 2 or 3 SP points for hours, like we did today ? This has been happening more and more often, albeit with a larger range, but still quite narrow by historical standard. It mostly happens when the markets moves up, which lately has been 90% of the time if not more. Once the buyers have come in and established a price for the day, a few minutes after the open, the market barely moves until the last few minutes before the close. Could it mean that the bullish consensus is in reality much higher than the numbers we are told ?

    • DR CL says:

      reminds me of 1995 in the SPU’s

      • DR CL says:

        as far as action so far
        but those were different times
        I had a mullet and bought a new car as soon as it needed it’s 1 st oil change.

        J K :)

  5. rc1269 says:

    Despite being a complete un-surprise, the [efficient] market doesn’t seem to be in love with the Greek CDS triggering news. go figure

  6. DR CL says:

    Everything feels trappy to me. So slow in CL and plenty of bulls above $108 this morn.
    I think we gap down Sunday/Monday in equities.
    Too bad I dont get paid to think

  7. stemphos says:

    Hi Tony,

    Is it possible that we just started a Major wave 5 from 1340?

    Wave 1 : 1159 to 1267 (108 pts)
    Wave 2: 1267 to 1202 (65 pts)
    Wave 3: 1202 to 1378 (176 pts)
    Wave 4: 1378 to 1340 (38 pts)
    Wave 5: 1340 to 1375 (currently 35 points)

    Is this count different from your alternate DOW count?

    Aaron

  8. vorfahrt says:

    A real OEW day today. Everything bullish AND US$ up. It really reminds you of the late stage commodity bull where the stock market is already on fire, commodities have their final spike up but the US$ does not tank any further. Thanks Tony for sharing your ideas on this with us. A real eye-opener. Joe

      • vorfahrt says:

        Our local Phoenix RE market seems on fire, too. Who would have thought after the devastation? – At the low end, which always moves first, multiple offers abound within hours of listing. Also, Arizona was 4th worst state by homeloans in delinquency in mid-2009, now we are 20th best and down from ~15% to ~10% within less than 2 years. Not bad at all. This market turns around almost like the stock market did in March 2009. Go America!

    • CB says:

      +1 . Thanks Tony!

      Exceeding the previous high is a only a question of when not if, right? – with that substantial top bullish divergence. -60 min. http://screencast.com/t/LDHAfIQCnCYB although ST we seem to be stuck at that broken daily diagonal line.. maybe 1374is all we’re gonna see today ..

      • tony caldaro says:

        CB, Been waiting for at least 5 point pullback to note that divergence before the close.

      • CB says:

        Thanks Tony. Actually I’ve been wondering how you do that…can you clue us in a little bit on how you do that with measuirng the pullback? I’ve always been like…OK..it’s there , so we’ll deal with it…sooner or later… :)

      • tony caldaro says:

        CB, It’s a combination of a few technical indicators:pivots, fibonacci, market movement, market characteristics and moving averages.Generally look for a cluster of prices.

      • CB says:

        Thanks Tony! Appreciate it.

  9. piazzi says:

    Those who try to time gold for trades may be in for a rough ride

    It’s been a believers’ asset and, IMHO, it still is

  10. piazzi says:

    the recent intermediate cycle has been the longest since March 2009 low

    I have been of the view that the rise into the recent peak was a series of 3s and 4s for a larger 3 like minor 3 or Int 3

    Regardless of how and when it corrects, every intermediate cycle low since 2009 has at least touched 55-day EMA

    we’ll soon know if the recent drop was a wave 4 or a wave A

    1340-1360 is a pivotal area and without breaking it, bears are best be ignored and dismissed

  11. piazzi says:

    Tony: “I’ll vote for #1″

    we still think along the same lines :-)

  12. piazzi says:

    Tony: “Liquidity, liquidity … where’s the best place to put it to work? ”

    the issue is very simple

    is any currency a store of value?

    Is any central bank willing to allow its currency to be a store of value?

    answer that question and the we will have “quod erat demonstrandum” ;-)

  13. long exposure in total portfolio increased to 70.5%, today’s roadmap:
    http://standardpoor.wordpress.com/

  14. DR CL says:

    hey would someone let me know when we make new highs in SPX ? ;)

  15. magnus1234 says:

    It seems like a triangle is forming in Stockholm OMXS30 completing minor 5.1.
    1H
    http://screencast.com/t/G9208NdtXM
    10min
    http://screencast.com/t/gaM67tHObMJL

  16. Hi Tony,

    In one of your comments earlier (long back), you had mentioned that “McDonald Corporation (MCD)” gives the early indication of market topping.

    Are we getting that now?

    Thanks in advance.

    With Regards,
    Praveen Vishnu Shamain

    • tony caldaro says:

      Hi Praveen, MCD is considered a defensive issue like Utilities.MCD announced a bad month the other day, not much help here.Utilities are up but not much. But bonds are down.Also the USD is up today, along with stocks.This is not likely to continue.

      • Praveen Vishnu Shamain says:

        Thanks, Mr. Tony.

      • piazzi says:

        it may continue in some situation

        1. a perception by the market for rising rates as well as steady or improving economy
        2. a perception of the market for a change of the core of the carry, for example, from dollar to YEN or whatever
        3. a perception of the market for a period of demand for dollar and dollar-denominated assets (like equities) for example in a flight of capital from another currency and assets denominated in that currency

        question is: do we have any of the above that may apply

      • piazzi says:

        it may continue in some situation

        1. a perception by the market for rising rates as well as steady or improving economy
        2. a perception of the market for a change of the core of the carry, for example, from dollar to YEN or whatever
        3. a perception of the market for a period of demand for dollar and dollar-denominated assets (like equities) for example in a flight of capital from another currency and assets denominated in that currency

        question is: do we have any of the above that may apply

      • tony caldaro says:

        I’ll vote for #1

  17. rc1269 says:

    Any thoughts here Tony?

    Mkt cutting through overhead resistance like hot knife through butter.

    • tony caldaro says:

      RC, Agree, market needs to make a new high to continue the uptrend.Surprising action today too: SPX up, USD up, and now GOLD up too.Draghi left the door open for more LTRO.Bernanke rumored to be expanding the balance sheet again, but with a sanitized operation.This is what the ECB was doing before Draghi took over.Liquidity, liquidity … where’s the best place to put it to work?

    • Erka11 says:

      Even Tony had toned down his short term bullish forecast and said he was surprised by yesterday’s move ! So you can imagine the rest, the bearish ones after what’s happening today ! All it shows is that EW, be it OEW or another tweaked variant of it, is absolutely useless for short term or even medium term trading, unless you are in a powerful trend and unless you have been lucky enough to chose the correct count, among many many viable alternates, from the beginning. All one can say is that what’s happening isn’t normal. For some strange reasons the market isn’t allowed to correct and that is ultimately a dangerous situation.

    • magnus1234 says:

      It might be far to early but when Operation Twist end in June money will “flow-out” of 10s and BBs talk about sterilized liquidity is like gasoline on fire.

    • rc1269 says:

      Interestingly, I think there is a point where the technicals and the fundamentals of the liquidity situation will need to come to a head. The technical backdrop, as you suggest, is “where else do I put the money?” Everything but stocks and gold look unattractive. But with everybody under the sun easing further into an already very easy environment (liquidity is far from the problem at this point), we will see input cost inflation work its way into the system. I think all the arguments about the relationship between QE and Oil, Gold, Copper, etc… are valid. Meaning, in the end, QE will crush earnings in a low or zero top line growth environment.
      So ultimately the liquidity is pushing money into stocks, while at the same time causing the future value of those same stocks to decline.

      • tony caldaro says:

        So ultimately the liquidity is pushing money into stocks, while at the same time causing the future value of those same stocks to decline. Hasn’t this been the pattern of the gov’t and the FED in recent years?The dotcom boom, housing boom, cash for clunkers, etc.Discount the future into the present.Eventually, next couple of years or so, we’re going to see another 50% drop in stocks.From what level this starts is important. SPX 1600 would be fine.Some of the recent liquidity will be withdrawn, but not all.Some countries will default.Currencies will have to be realigned.Lots of changes coming to the financial world this decade.Discounting the future comes with major costs.But at least no depression this time around or for the next few generations.

      • edelschmied says:

        When I read that I should start to hord some goods … this seems to serious :/

      • Amen RC. I’ve been pulling my hair out for the past 6 months as Treasuries, equities, and commodities each seem to be telling a story of their own. Treasuries are reflecting a risk off environment. Stocks have been going up (mostly AAPL this year though) reflecting “risk on”. And commodities (aside from oil) are still way off of where they were last August/September so I guess they are in the middle. Meanwhile liquidity is the boat that seems to keep all of these up, otherwise we would be in a depression. In my ~13 year career I have never seen this kind of a rally in the equity market while Treasury yields stayed this low for this long. Meanwhile it would seem to be as though precious metals should be going ballistic here. They were until that orchestrated smack down on the 29th but the govt. I feel like I’m playing in a rigged casino.

      • Tony,
        When you say we will see a 50% drop would you be talking about cycle wave 2 following the high of cycle wave 1? Of which, we are currently in major 3 of primary 3? Just confirming your stance.

      • Thanks Tony. I think we can all agree that something has to give pretty soon with regard to the dislocation between equities, Treasuries, and commodities. It would seem as though Treasuries and commodities are due for turns which would confirm the path of equities. Just my take.

  18. I rest my case

    The math didnt work for a wave 2 down from 1377 relative to the october lows and wave 1

    We should see 1427 next up

  19. DR CL says:

    morn
    1371 turns it away for the moment
    blue light special
    GL

  20. rc1269 says:

    looks like the DAX recovered exactly 76.4% of the selloff at this mornings highs. seems to have had some trouble at that level (6886)

    • edelschmied says:

      so that would be a good reason for a downside?

    • magnus1234 says:

      RC, Italian 10s are selling. Do you have a story on that? Real money some told me…but…dont trust it really.

      • rc1269 says:

        Magnus

        Haven’t seen anything material and specific to Italy that would signal widening. A couple things that *could* be affecting it:
        – HFs who leaned on Greek bonds through the crisis could be shifting their sights to Italy now that the Greece trade has reached a new juncture
        – I saw some guys propping a buy TITIM vs sell TELEFO trade earlier. Those two cap structures have been traded as Italy and Spain proxies by a lot of guys, so any shifting around in those bonds could potentiall affect Italy and Spain sovs. (eg, maybe somebody buys TITIM and short Italy 10yr against it).

        Not sure either of these factors are very big. But then, Italy is only +5bp as I write this so could just be good ol’ fashioned daily market noise/volatility. Wouldn’t read too much into that move just yet

    • magnus1234 says:

      Thanks RC appreciate it. I’m selling Bunds today and US 10s are also coming down so this:
      http://screencast.com/t/GPYob7eE8Bkt
      caught my attention but I couldn’t find anything.
      The TIM hedged with 10s is v.s. Telefonica is in fact a good deal :-)

  21. magnus1234 says:

    European bullish EWT count. OMXS30 on the “very” short (30min) term looks like an impulsive wave. OMXS30 reacts very early cmp to SPX.

    OMXS30 daily
    http://screencast.com/t/4xCahLtB0p
    OMXS30 30 min
    http://screencast.com/t/azsqHgElv5qG

  22. pooch77 says:

    Good morning Tony,if we get another attempt at a high early next week and fail would we next test the low of this week before moving on to new highs .TIA Pooch

  23. valunvstr says:

    Look familiar? I thought when I hit the update button that the chart haddened updated to the 2010 rally. The charts are that similar…Uncanny…if you go forward 7-8 days, the market came down to the 50 day moving average at the same price as the original 1173 low. Then the rest of the year was basically straight up. If tomorrow is a modest up day and we see the market sell into next week and maybe early the next, the 50 day might be pretty close to 1340 by that time. It would be an amazing coincidence and a good spot to enter some buy orders. (or wherever the 50 day is if it is in fact tested).http://stockcharts.com/h-sc/ui?s=$SPXhttp://stockcharts.com/h-sc/ui

  24. M1 says:

    Very short term:
    the first wave (wave 1) of A at 1340.
    wave a of wave 2 may be already completed
    wave b of wave 2 should be next.(watch out shorters !!…after that wave c up should unfold)
    GL

  25. M1 says:

    Watching the same charts:

    The one suggesting NDX going up to 3100-3150 and spx up to 1630…
    1. http://stockcharts.com/h-sc/ui?s=$NDX&p=M&yr=13&mn=0&dy=0&id=p03475453942&a=258568990

    The bearish charts. Both suggesting an important selloff may unfold in the coming months
    1. http://stockcharts.com/h-sc/ui?s=$NYA&p=M&yr=13&mn=0&dy=0&id=p90338799719&a=258089896
    2. http://stockcharts.com/h-sc/ui?s=$OEX:$USD&p=M&yr=20&mn=6&dy=0&id=p20300766759&a=258090209

    = Inflection point.

  26. DR CL says:

    Gracias Antonio

    • DR CL says:

      ESH
      weeks low 1338.50 to year high 1377.25
      76.40% = 1368 Robot Hug

      In Chicago news…. they’re already sick of Rahm

      • CB says:

        thanks for the fibs Dr. Lee!
        And Rahm….lol..what’s there not to like?…is he too dictatorial or maybe cause he keeps his kids out of public schools?..

  27. Interesting article for gold and silver followers:

    http://bit.ly/AkQxVJ

  28. radrian6 says:

    Tony,
    The week isn’t over but RUT is printing a textbook hammer candle on its weekly chart after bouncing off the 13-week EMA. The hammer pattern requires upside follow through next week to confirm.

    • radrian6 says:

      On the other hand, the daily chart shows RUT has run up to touch the underside of the trend line it broke on Tuesday — sometimes called the “kiss of death.” With conflicting signals across timeframes, I think your conclusion of “risk in either direction” is the right one at this point.

      • valunvstr says:

        Sorry, I meant the S&p 500. Hanging man at the top of a trend. I like big engulfing patterns but hammers and hanging men don’t see to be too reliable. And this is a great example of how I don’ think they are again. Two totally opposite formations on the two equity indexes. Doesn’t make too much sense to me. I don’t see the Russell ripping higher and the 500 going lower at the same time.

      • radrian6 says:

        I agree Valu — that’s why I liked Tony’s comment about the market having risk in either direction. I’m willing to wait for directional confirmation before taking any serious action.

    • valunvstr says:

      It’s not a hammer. A bullish hammer would be a hammer at the bottom of a downtrend. A hammer at the top of an uptrend is called a Hanging Man, which is a bearish reversal signal if confirmed the following week. I think you have your candle formations mixed up.

  29. CB says:

    thanks Tony!

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