wednesday update

SHORT TERM: pullback extends to 28 points, DOW -125

Overnight the Asian markets were mostly lower: -1.0%. Europe opened lower and had its worse day in four months: -2.6%. US index futures were lower overnight, and at 8:15 the ADP index was reported lower: 209K vs 216K. The market gapped down at the open to SPX 1404 and continued to fall. The SPX had closed at 1413 yesterday. At 10:00 ISM services was reported lower: 56.0 vs 57.3. Just past 10:00 the SPX broke through 1400. Around 11:00 the SPX found support at 1394, rallied to 1399 by 12:30, then retested 1394 by 1:30. After that it tried to rally. By 3:00 the SPX rebounded to 1401, then dipped to a 1399 close.

For the day the SPX/DOW were -1.0%, and the NDX/NAZ were -1.4%. Bonds gained 18 ticks, Crude dropped $1.95, Gold fell $26.00, and the USD was higher. Support for the SPX remains at the 1386 and 1372 pivots, with resistance at the 1440 and 1499 pivots. Short term momentum dropped to quite oversold during today’s decline. Tomorrow, weekly Jobless claims at 8:30. Monthly Payrolls and Consumer credit will be reported on friday even though the markets will be closed for a holiday.

The market gapped down at the open today, broke through SPX 1400, then found some support at 1394. This represents a 28 point pullback from monday’s SPX 1422 uptrend high. This is pretty much in line with the two 27 point pullbacks of the last two weeks, which also contained gap down openings. The rising wedge shaped pattern, that was created during all this activity, appears complete at SPX 1422. This pattern could have terminated Intermediate wave v, Major wave 3, and the Nov-Apr uptrend. At 10:00 we posted a tentative ‘green’ Major wave 3 label at the uptrend high on the SPX charts.

What was previously support has now become resistance. Short term support remains at the OEW 1386 and 1372 pivots, with overhead resistance at SPX 1414, 1419 and then 1422. Short term momentum bounced a bit from quite oversold. The short term OEW charts turned to a negative bias on the gap down opening. Should a downtrend be underway, we would expect the SPX to find support between 1300 and 1340 and end the correction in May. There should be very good support within the 1291-1313 OEW pivot zone. Best to your trading!

MEDIUM TERM: uptrend may have ended at SPX 1422

LONG TERM: bull market

CHARTS: http://stockcharts.com/public/1269446/tenpp

About tony caldaro

Investor
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59 Responses to wednesday update

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  4. kvilia says:

    Tony,
    Another link to ZeroHedge after being really uneasy with your housing prognosis.
    http://www.zerohedge.com/news/second-foreclosure-tsunami-coming-and-about-kill-any-hopes-housing-bottom
    Ilia

    • tony caldaro says:

      Hi Ilia, If you want to keep an open mind suggest not reading that permabear site. cheers!

      • kvilia says:

        Tony,
        I tend to over read perhaps, going for permabull, permabear and anything in between :)
        Long term I remain bearish over global debt related complications and naturally enjoy permabear reads more than anything else, at the same trying to stay open minded.
        Thanks for your input!
        Ilia

  5. Lee says:

    Morn

    It can’t be this easy can it ?

  6. pbbilly says:

    Hi Patrick. Is there a specific target or activity in Gold which will move the Alternate count to the Primary count?

    Thanks,

    Billy

    Cheers Tony.

    • redadair says:

      Either a lower low or lower closing low than the currently marked major 4 bottom.

      Patrick

  7. rc1269 says:

    Morning Tony

    More talk about sovereigns this morning, Spain in particular. Increasing chatter about their horrible budget situation and eventual need of a bailout. Not sure the existing bailout mechanism is large enough to placate market concerns under this scenario, but time will tell.

    Italy, Spain and Portugal 10yr yields are +12bp, +10bp and +12bp this morning, respectively. Domestic bank/fin paper is mdoestly wider, call it 2-5bp or so. Euro banks are +5-10bp.

    If Spain truly ends up needing some kind of bailout, I don’t seem many (any?) options at that point that don’t involve substantial Euro printing by the ECB.

    Happy Friday! (effectively…)

    • tony caldaro says:

      RC, From what I’ve heard.The markets have no faith in Spain’s budget.Their stock market is getting close to taking out the 2011 lows.Would not be surprised if the ECB intervenes, in some way, in about a month. cheers!

  8. rfijoydeep says:

    Tony,as per my count we are in a minute (ii)nd wave correction(from spx1422) of minor 5th wave(from spx1340) of Intermediate (iii)rd wave(from spx1158) of major 5th wave(from spx1075) And about to bottom tomorrow @1391-92 level and resume uptrend towards 1500 level before going for a much bigger correction in Intermediate (iv)th wave.
    Gold,Silver should also start their upward move in Intermediate (iii)rd wave of major 5th wave to make lifetime highs latter this year.

  9. My mutual fund portfolio and opinion on the stock market direction update for Wednesday 4/4/12:

    http://bit.ly/HVBeGE

  10. Lee says:

    Patrick

    How do you feel about CL trading $99 ish then $114 +
    Too much overlap to get a move like this ?
    Am I looking at it upside down ?

    Thanks

    • redadair says:

      Think we could see the December 2011 low and then lots of upside. Could may get an irregular intermediate ii if the USD continues to rally. Personally will not be trying to short at this point, but will just wait for iniating long positions.

      Was out in Midland, TX recently and the boom is on big time. Think they have like 400 drilling rigs running in West Texas. It will turn manic when oil gets back up to $150.

      • Lee says:

        Thanks Patrick
        Sounds like it’ll be choppy as ever for a while then. Thanks for the reply and info.

  11. piazzi says:

    Business cycle in this age of :new normal”

    http://www.zerohedge.com/news/you-are-now-here

  12. jaja2121 says:

    Tony
    It’s my belief that given how high expectations for QE3 was (Goldman,Pimco both calling for it in April), the FED wanted to throw some cold water on it. But if you watch the mkt action, especially towards latter half of day, I don’t for one second believe they aren’t active in the mkts.
    There still seems to be a good bid to the tape. Saying that- what would be a minimum retracement for Major 4, or other possibilities.

    • tony caldaro says:

      Jason, Agree. Many, including myself, were looking to 1440-1499 in a few months.SPX 1159-1499 in six months is too much of a rally.With current monetary policy it would have left very little upside for the rest of the bull market.Sell the mornings on Europe, buy the afternoons with the FED.Just speculating of course =)

      • piazzi says:

        if some next European basket case is warming up for its debt problems, then, the previous LTRO and current TWIST are not enough

      • tony caldaro says:

        the PIIGS are acting up again, keep an eye on Spain

      • Lee says:

        Of course :P

      • jaja2121 says:

        Yes agreed. I know the FED claims it’s independence, but being an election year there may have been the strategy to ease off the public display of propping up the stock market into a presidential election. Not to say they won’t do what is necessary if economic conditions deteriorate – but to have the pedal down into November might have been overkill/ and political hot issue.

    • piazzi says:

      I had thought it would be Portugal first, but seems like the Spaniards are trying to beat them to the punch

  13. With regard to gold, has anyone mentioned that the last correction that was this long or this deep was March-October 2008 or 7 months? Gold topped in late-September of last year. Fast forward 7 months and we should be looking at a low here in April. The miners sure look to me like they are seeing capitulation. All the while the HUI/gold ratio is at levels only seen twice since 2001 and gold or silver vs. oil (a good measure of profit margins) are still at very healthy levels for mining companies.

    • mike7x says:

      I think you could be right. With another 2-5% drop possible I think gold and the miners could make a good bottom. As you mention, the miners have been hit particularly hard and may have a very strong rebound. All this without any “new” middle-east concerns. Finally, thanks for the update Tony!

    • tony caldaro says:

      we should be looking at a low here in April agree Ryan

  14. CB says:

    thanks Tony.

    Anyone happen to know whether China re-opens for trading tonite? thanks.

    • CB says:

      4apr12 news item: “China said it would raise the total quota for its qualified foreign institutional investor scheme (QFII), a main channel for foreign investment in Chinese securities, by $US50 billion to $US80 billion.” – so things can’t be THAT bad in China when foreign investors still want to increase their investment there…why would the Chinese increase that quota if there wasn’t any increase in investment interest….and the biz networks had to obsess all day today about some well-known European debt problems when an economy the size of China talks about more investment….oh, maybe some institutions were actually buying today (?) :)) http://afr.com/p/markets/dealbook/china_to_allow_more_foreign_investment_6nkP4XqQY9gozMxTZRe8nM

    • CB says:

      looks like tthey’re staring to trade again at 6pm PDT today

  15. piazzi says:

    you think this year is buy-in-may-and-tuck-away instead of sell-in-may-and-go-away :-)

  16. Lee says:

    Thank You

  17. vorfahrt says:

    Thanks Tony this was an awesome guideline! It really can’t get any better than this. Joe

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