SHORT TERM: another gap down opening, DOW -34
Overnight the Asian markets lost 0.9%. European markets opened lower but gained 0.5%. US index futures were lower overnight, and at 8:30 the PPI was reported lower: -0.2% vs 0.0%. The market gapped down at the open to SPX 1350, dipped to 1349, and began to rally. The SPX had closed at 1358 yesterday. Around 10:00 Consumer sentiment was reported higher: 77.8 vs 76.4. Nearing 11:30 the SPX hit, the now familar, 1366 level and then began to pullback. The pullback continued all afternoon and the SPX hit 1353 at the close.
For the day the SPX/DOW were -0.30%, and the NDX/NAZ were mixed. Bonds gained 9 ticks, Crude slid $1.25, Gold dropped $13.00, and the USD was higher. Support for the SPX remains at the 1313 and 1303 pivots, with resistance at the 1363 and 1372 pivots. Short term momentum vacillated around neutral, then headed toward oversold near the close. Today the WLEI was reported higher: 50.0 vs 49.4.
Yesterday, after hours, JPM reported a $2 bln trading loss in derivative trading. Index futures sold off and bounced around during the night. The market gapped down again, 4th time this week, at the open and then began to rally. By 11:30 the SPX was right back at 1366, matching tuesday’s high and thursday’ high. Wednesday’s high was 1364. While the market did head lower from an apparent contracting triangle it immediately reversed creating another short term pattern. It has been that kind of week. We’ll cover the short term wave count in the weekend update.
Short term support remains around SPX 1340 and the 1313 pivot, with resistance at the 1363 and 1372 pivots. Short term momentum is nearing oversold. The short term OEW charts remain negatively biased from SPX 1395, with the swing point now in the upper 1363 pivot range. Best to your weekend!
MEDIUM TERM: downtrend
LONG TERM: bull market
Great analysis, Tony!
I don’t quite understand this:
“When the DOW confirms its downtrend the entire correction, from early April, will be close to over.”
Is this DOW theory reverse logic?
I have no doubt this is correct, but could you explain the background?
Thanks
Hi Scout, Thought I explained it with this:This market has had an interesting series of events unfold during the past month or so. The DOW, however, has kept us on the right side of the market. Major wave 3 topped in early April at SPX 1422 and the market began to correct. The DOW confirmed the new downtrend, while the other major indices did not. The DOW bottomed early and started to rally with the other majors. Then the SPX make a double bottom just under 1360. As all four major indices rallied the DOW made a new high and confirmed an uptrend. This was not the usual launch of a rally higher. It was the end of the counter rally. Then all four majors began to decline. Currently the SPX/NDX/NAZ are all in confirmed downtrends, while the DOW is not. When the DOW confirms its downtrend the entire correction, from early April, will be close to over.Notice the DOW confirmed A, confirmed B, and now waiting to confirm C.
additional shares of $cbou, $tpx and $hlf will be added to value portfolio A at monday’s open:
week end roadmap:
http://standardpoor.wordpress.com
Hi Tony, I’m still finding the JPM disclosure after the market close on Thursday VERY strange and baffling.
1) All this past week there has been a Congressional hearing focused on the “Volcker” rule, which Volcker says is necessary to reign in risky and dangerous proprietary trading by “too large to fail” banks.
2) Jamie Dimon has been probably the biggest vocal criticist of Volcker.
3) It was already pretty well known that JPM was involved in large, market moving, and maybe reckless proprietary trading. I don’t believe this “marked to market” (unrealized/paper) loss even necessarily needed to be disclosed, especially in the way in which it was done, and the way I understood it, there was actually a slight net realized trading gain, so why was it suddenly disclosed? Now marked to market losses are back in vogue? Was there a benefit or some kind of connivance to “disclosing” this information, perhaps outweighing any black marks to JPM’s/Dimon’s reputation? I wonder if they actually even intend to unwind the trades over the next months.
4) Is there more to this than meets the eye, or am I missing, misinterpreting, or misunderstanding something?
I’m always the skeptic, especially when it comes from the “too large to fail banks” and something smells real fishy here, IMO.
Whichway, Last week the banksters and Bernanke all met at the NY FED.We suspected it was all about housing.But there may have been other things on the agenda
http://3.bp.blogspot.com/-3vdMdeCrt8I/TnpJQ34M7AI/AAAAAAAAJ1o/hxkrAFYC1Vk/s1600/SPXDAILY.png
http://4.bp.blogspot.com/-w8qCWf8Gca0/T62xkjSxQ2I/AAAAAAAAMS0/mQ68PcVU63E/s1600/DJIA.png
Do they look similar ?…
Friday’s Market
http://5wavemodel.blogspot.com/
Silver COT report… sadly small traders have so little control over all the manipulation in metals..can never win unless you buy and hold!
http://www.safehaven.com/article/25402/silver-cot-cftc-commitment-of-traders-for-period-426-58
sai
Why the market might be close to putting in a bottom. Please notice the green fan line. Fibonacci Fan Lines can be powerful tools when drawn correctly. The idea is to connect from a low point to a high and then the fan lines represent the Fibonaccia Retracement levels but with time AND price rather than just price. Well, the 1010 low was a meaningful one and the 1370 high was meaningful as well. It also corresponded with a 5 wave advance for those that believe in Elliot Wave analysis. I myself am not a huge follower but do not dismiss it out of hand. Ok, so I made a bunch of markings on this chart so that I could highlight just how meaningful this fan line has been. The blue circles represent points at which the fan line acted as support or resistance and as you can see it has worked wonderfully. I also circled a few oscillators as they are forming bullish divergences AT THE SAME TIME as the market has already touched the fan line (that is not to say it will not revisit the fan line as I suspect it actually will). Please note CCI and RSI. Both are momentum oscillators. They got oversold when the market first sold off to 1358 but despite the market now being lower than those levels, the oscillators are at higher levels. A BULLISH divergence. It suggests that while the market is making a new low in prices, momentum and relative strength is actually improving. A bullish signal. Does the Fan Line act like a brick wall? NO, but the area can act as great support. Many technicians are looking for 1340 to act as support. That would be below the fan line but is very possible. I am of the opinion that the market might break below 1340 washing out all the technical traders while bottoming somewhere between 1330 and 1340. Either way, it seems like the market is close to making a bottom.
http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=1&mn=11&dy=0&id=p25483916497&a=248174651&r=1336783011501&cmd=print
thanks Michael!
You mean valunvstr please. Thanks.
Hello – my work agree’s with your presentation. What, I might suggest
you also do is. Not get locked into a strickly SP500 analysis. For example.
Look at the NYSE index, as well as the Morgan Stanley Cyclical Index (CYC).
Either index, wil help clarify the current pattern regarding the newer price
low requirement….
My work, is confirming that odd;s favor a price low (W4 Low), is in place.
Thanks Tony
Working on the screens is and remains one of the hardest things I’ve ever done as far as trading.
Trading in the pits gave me no advantage on the screens personally except being familiar with the products. I traded SPUs exclusively for over 18 years and now it’s my No.3 contract I trade behind CL and ZC.
Hats off to you guys
That’s amazing Lee! It shows that you have an incredible ability to learn and grow. It doesn’t get much better than that in life. You are an inspiration to all of us Lee.
)
Thanks Tony.
Lee, Certain the transition took some time.
I noticed some of you discussing previous blow-ups in the market – Tom McClellan was on your wave-length – enjoy!
http://www.mcoscillator.com/learning_center/weekly_chart/?utm_source=McClellan+Chart+In+Focus+-&utm_campaign=db0de494c5-CIF_Is_JPM_The_Burning_LOH_5_11_2012&utm_medium=email
Good stuff Tony.
Thanks Fiona. “The target is marked by the burning LOH.” – I like it.
JPM just downgraded to A+ from AA- by Fitch. While folks normally say, “Fitch… who?”, the bonds are still gapping out another 5-10bp or so, with CDS also out +10bp more. have a good weekend folks!
You too RC – I just would like more sleep!
R C
Ur too fast today !
Have a gooden !
it’s this new job. forcing me back into my A-game of old. had gotten soft and lazy in my last job. haha time to re-challenge myself!
best of luck RC!