SHORT TERM: downtrend extending, DOW -156
Overnight the Asian markets gained 0.3%. European markets, however, continued to decline losing 1.2%. US index futures were higher then flat overnight, and at 8:30 weekly Jobless claims were reported higher: 370K vs 367K. The market opened flat at SPX 1325, touched 1326, and then started to pullback. At 10:00 the SPX hit 1315, the Philly FED was reported lower: -5.8 vs 8.1, Leading indicators were reported lower: -0.1% vs +0.3%, and FED director Alvarez’s congressional testimony was released: http://www.federalreserve.gov/newsevents/testimony/alvarez20120517a.htm. The market tried to rally on the news, reaching SPX 1324 by 10:00, but then pulled back to 1311 by noon. Another rally attempt carried the SPX to 1319 by 1:30, but that failed as well. Heading into the close the SPX hit 1305 and closed there.
For the day the SPX/DOW were -1.35%, and the NDX/NAZ were -2.05%. Bonds gained 11 ticks, Crude slipped 30 cents, Gold rallied $34.00, and the USD was lower. Support for the SPX drops to the 1303 and 1291 pivots, with resistance at the 1313 and 1363 pivots. Short term momentum ended the day at extremely oversold. Tomorrow, options expiration and the Facebook IPO.
The market opened flat today, then broke through our SPX 1321/1322 fibonacci support price cluster before 10:00. After that it found support within the OEW 1313 pivot range. This market has now declined over 100 SPX points, (1422-1305), which is the range of a normal correction. At 10:00 it looked like our abA-B-abC pattern had completed. The market did rally, but only after 9 points it rolled over again to a lower low. The pattern, from SPX 1415 is extending. There are a few alternate counts that are now gaining some traction, if the SPX drops below 1293. We will cover these in the weekend update. Late in the day the market broke through the 1313 pivot and found support at the 1303 pivot. This correction has declined more than expected.
Short term support is now at the 1303 and 1291 pivots, with resistance at the 1313 pivot and SPX 1326. Short term momentum is extremely oversold. The short term OEW charts remain with a negative bias since SPX 1395, and now have a swing point in the low 1340′s. Best to your trading!
MEDIUM TERM: downtrending
LONG TERM: bull market
Thanks P B and C B
TGIF!
would be exciting to know how U R positioned Lee…but I guess it’already 5 o’clock somewhere so I don’t want to bug you too much .. have a good weekend Lee!
Hey H D
Yea ZW took off fo sho
All about 1313 now guys? Thanks H D
Tony – how are we looking?
I know you have the 1291 pivot but can that be considered a support?
Or are we just looking for potentially lower lows?
Thank you
Market extremely oversold and threatening to overlap 1293.We need a rally of at least 10 points
Nice call Tony! Does 2 points help?
Thank you
1 -4 overlap in the SPX today… hope this still qualifies for an impulse up and does not have to be rewritten completely…
Cheap long? Spx
Or stay away ?
Waiting for last 10 minutes before close but don’t like the action
Not stepping in – sleeping well this weekend
Hi Lee..sorry.. slow computer here got delayed here finishing up things . I think it’s OK to try a small long here ( I am). and I won’t be sleeping well based on the daily chart which says we go psbly to 1280ish. But I was waiting for +d on 1 min and we finally got it so, it’s OK to do it with a tight stop I think (which maybe oveshot @ the open obvioulsy). So I don’t particularly like what I am doing but I am doing it anyway…here’s my daily and 1 min charts, fwiw. Amd I amlooking forward to see what this overlap has done to the count.. http://screencast.com/t/wRGYQMOq50un
http://screencast.com/t/ZgjSbWxuD daily have a good weekend all!
the next ext. is @1285 btw and that could have been handles easily today btw, so why didn’t we trade there? …hmm…and of course 200 sma right below…
Thanks Tony!….this market is lovable, isn’t it?
)
Thank god for the precious metals. Whoa!
all this bearishness is starting to make me feel that we are very close to the bottom … perhaps one more swoop to 1293 to freak everyone out before the end of 4 and we move back to all time highs …
This trade may look insane, but I just went 150% short.
Stop loss 150 points above. More comments after the close.
GL
LEE! KUDOS to you on grains. You saw it coming. I got no play on it. The pattern I was watching in wheat failed. That’s a nice way of saying I was wrong
Livestock is perking up too
what would you guys think of companies like mos and pot here?
Not sure if that was the flush dip or a sign of more to come… i cut my longs either way. live to fight another day.
Same same
did anyone buy FB?
sai
83M shares traded at $45. It took em all morning to figure out how to steal $500,000,000 taking it back to $38. The writers will support it there. SVVC CRUSHED!
Do you see SVVC going back up? It was sad seeing the SVVC head…looked like he was ring to cry on CNBC
why own SVVC when you can own FB? JMHO I wouldn’t touch either.
Totally agree.
this SVVC is David’s favorate … around 27 he bought and was up 10%+ when he last commented (unless I missed his next comments) .. I am sure he came out with big profit before big drop.
So long for the bullish count, Tony. That’s why I should not trust EW or OEW or whatever it is. Market has no rules, it can go anywhere it wants. The only hope it will bounce soon, so failed positions can be close at break even. Very likely new downtrend is in the works, we can forget about 1400sh and new tops for SPX.
Actually think Tony and OEW is the best roadmap out there but has nothing to do with risk management. What a waste of a response but like Tony would probably say no hard feelings we all love you anyway.
Has nothing to do with hard feelings. You misunderstood my post. I find Tony’s analysis exceptional but … until market changes it’s mood. Therefore it proves you can only react to the market. That simple. And I don’t think being down 7-8% is a huge risk at this point. Moreover, I never hold anyone responsible for my trades. Not sure where are you coming from.
I remember someone on this post recommending SVVC as a play on Facebook. UGH!!
stock was around 27 when recommended here-went over 30; the poster didn’t say to wait until the IPO day.
That is David. He commented last on Tuesday – holding SVVC strong, another 4.4% up (on 8 or10% of previous day) but as Mike says he never said when to sell. Thats the problem with any blogs and comments.
ASTRO Venus-Saturn…Reversal…
http://astrofibo.blogspot.ca/2012/05/astro-venus-saturnreversal.html
Stocks really giving it the ol’ college try this morning. Fighting for Tony’s pivot!
Sure is trying – but man Europe has me still looking accrossed the pod and it doesn’t seem good today ;-(
FWIW, if Spanish mkt closed right now Banco Santander will put in a bullish engulfing line. Think that could be very good for that mkt. Let’s see how it shakes out!
Hey guys,
I’m noticing quite the difference between CNBC.com and Marketwatch.com’s stock quotes. Can anybody clarify this for me.
Thanks!
Things are back to normal. CNBC was way off this morning with some stocks.
http://www.marketwatch.com/story/forget-facebook-stocks-are-at-serious-risk-2012-05-18?dist=beforebell
“…seeing some very wild intraday moves, with junk debt prices collapsing (yields spiking) while safer Treasuries were aggressively being bid up (yields dropping). The speed and magnitude of this credit spread widening on Wednesday was indeed meaningful. Thursday, that spread widened even further, in a way that suggests that a credit event may be underway in the U.S. and that contagion is here.”
I read that article and have to disagree somewhat with his assertion. The selloff in HY appears to me to be consistent with just about every correction we’ve had since the March 09 low. That includes the minor/healthy correction, not just the collapses of May 2010 and August 2011. In short, I think he’s a little premature in his catastrophe call. Not to say it couldn’t happen; I just don’t see it already there.
I appreciate your response. Hope we’ll see reversal soon.
Morning folks.
First, an observation – there appears to be a lot of hopeful bottom pickers here (myself included, for better or worse). Where are the bears?? The lack of doomsayers has me a little concerned.
On to credit – we’re opening with a decent tone, with the IG CDX about 2.5bp tighter (would say that generally corresponds to about a +1-1.5% move in equities, off the cuff). Bank/fin paper tried to rally earlier and was quoted about 2-5bp tighter, but not really any takers there and we’re back to unch’d. Industrials are probably 2-3bp tighter. Not quite a reversal after the daily 15bp shellacking they’ve been taking.
Spanish and Italian bonds are better today, tighter by 12bp and 10bp, resp. Portugal is all over the map – today they’re out 24bp. Those bonds seem to have about a 200bp monthy whipsaw range.
And for those who didn’t happen to see/hear, we hit record low yields on the 10yr yesterday: 1.69% intraday low. QE or fear…? probably both.
Let’s see Facebook fares vs. the Greek army. cheers -rc
Looking at Menlo Park it appears to be a Facebook army. Btw, wating for the 30YR to hit record lows.Then the Bond bull is almost over.
I’m saying that 950-1050 SPX is POSSIBLE in July. Favoring a bounce between here and 1250-1260 SPX by the close next Tuesday but not betting either way at this point. Have been quite cautious and holding a large cash position for the past month.
http://equitybriefcapital.wordpress.com/2012/05/18/bearish-scenario-gaining-traction/
Ryan – how often do you get his emails?
PBNJ,
Every time the market has teetered since I canceled.
RC,
Lots of bearish sentiment. Are you referring the lack of crash callers?
Yes
I just got an email from Jim Sheperd. I signed up for his service back in early-2008 and his “crash signals” never triggered so I cancelled.
if you cannot see the bear it ‘s because they are spending my money.
to take us to 1270
I also think like many they are coming back for more
FED’s monetary base … quick update
Posted on April 10, 2012
…”The FED’s monetary base did make a new high, in February at $2.753 tln, but appears to have ended well short of our $3.0 tln expectation. Since then the monetary base has contracted by nearly $100 bln. The recent high, in OEW terms, may have completed Primary wave III. This would suggest the base in now contracting in a Primary wave IV.”
M1 says:
April 10, 2012 at 10:56 am
isn’t major wave 2 at 1983 billions ?…. should we look that level for support ?
tony caldaro says:
April 10, 2012 at 11:00 am
Drops have only been about $200 bln before the FED takes action.If we drop that low we’d be back at SPX 1000
Tony, is it worth making another quick monetary base update ?
Mario, $2.753 tln peak, now just under $2.640 tln.A drop of another $80 bln would be no surprise.
Tony – sorry if this seems like a silly question but I am trying to learn and this one has me puzzled – so if there is a drop of another $80 bln – what would that mean for the equity markets? Sorry I just don’t really know how one relates to the other.
Thank you pbnj
The Monetary base is basically what has been driving this bull market.It has risen exponentially since late 2008.Liquidity has to go somewhere.While the FED has acted with what is called QE 1, QE 2 and Operation Twist, the base has been forming an OEW structure.The drop here is quite normal, and there should be one more surge before the entire pattern completes.An increase in the monetary base generally means higher stock prices to follow.
Got it – Thank you Tony
Good news. I finally see this as wave 5 from 1422. Bad news. The downside risk seems to be increasing. It looks like we are forming a succession of 5 wave sequences from 1365. The first one ended at 1326, the next one at the possibly minutes before the close at 1307. This could go on for awhile, with the lower level of our target range very, very much lower. Generally when my model gives such large ranges the move ends in a very volatile way. Let’s hope FB can save the market.
Steve
http://5wavemodel.blogspot.com/
Having said that, I’ll also point out that all waves from 1422 are within their target termination zones, meaning this could also end here. The lower limit for wave 5 from 1366 is 1302. If we can hold above there, we could see a pretty good rally. If we break that, looks like another sequence to the downside. I’ll apologize in advance for playing both sides of the market.
.
Steve
Still think it is a wave 4 Tony ?
It’s all about may 20th….
http://atraccion1982-prophecies.blogspot.com/2012/05/mega-earthquake-alert-for-may-20-2012.html
For those who missed the wave count I put up last weekend warning of possible 5 wave top at 1422… again, many will call it invalid or as tony says… “subjective” which for sure it is… but lets keep an eye on her, as the Fibonaccis line up big time all the way from March 09
http://chart.ly/ka2l28r
Peace
Dave
Thanks David. We shall know very shortly, maybe tomorrow, which way we go.
Hi David. My analysis is not based on EW, but on specific mathematical relationships between the waves. According to my model, I have always seen the move from 667-1422 as a 5 wave sequence, with the current wave a correction of that entire move. My model allows for different types of corrections, so I am not calling for a “doomsday” scenario, but have always said that this corrective wave could be steeper than expected by many. We are currently at a point where we could see the end of a 5 wave sequence, but the current set-up just keeps looking more negative. As always, the market will tell us what it wants to do.
Thanks,
Steve
Good grief, when will we get a break! Maybe the October top at 1292 will serve as support.
Hi Tony, note where you say ” we have a swing point in the low 1340′s’ what does that actually mean? That if we trade up into the mid/high 1340s then the bear correction is over under OEW rules and we are looking then for a good rally?
should have been “while preventing fear to……
Spain is experiencing an increase in the rate of cash withdraw from banks, to a much lower degree customers have gone defensive in Italy too. I think the ECB will intervene much sooner than anyone is currently expecting.
They know that the have to prevent a bank run at any cost.
Greece is all about politics and follows the rhythmic of politics, so just forget any decision/resolution in a short period of time.
Spain/Italy is all about liquidity and an orderly and functioning banking system while fear to spread, this is CB territory (no CB its not your territory! CB=central bank -:) , expect quick actions.
The Fed will take the opportunity to resume printing in style.
It seems that precious metals traders have sniffed this one day before the others.
hey Mak, things were going really well for me..well, until you made that distinction
…lol..
without any doubt you are better than any CBankester of this world by a large margin
haha…when it comes to spending..yes, most def…..ur very nice Makiori , thanks! Cheers!
thanks Tony.
http://screencast.com/t/MVRmkbueZcQ
well, if the market holds 1304 on a closing basis tomorrow, then we can tell that weekly 50 EMA is “practically amazing” ..lol.. cmon the GDP of Greece is 301 Bln. and California’s is 1.9 trillion…go figure why “they” are obsessing about tiny Greece all the time…
CB, This is a period of adjustment.From the mentality of separate countries unified as one, to states within the European Union.Remember, when the US was a union of states.
so true Tony… Thanks. However, it’s an election year here..so it’s all THEIR problem…and there are NO debt problems here, of course…a little too much emphasis on THEIR problems, objectively speaking
“Remember, when the US was a union of states.”…c’mon Tony I am not THAT old…
Moody’s just downgraded just about every Spanish bank. They have a knack for kicking the mkt while it’s down
sure do
They are trying to break Tony’s Major wave 1 high at 1293. They probably think it’s not healthy that one market technician can be so right for so long
Then again if broken, Tony will probably recount Major wave 3 as Intermediate 1 of Major 3, giving plenty of room for the market to keep his bullish count alive ! What is it already, monitor and adjust ?
Thanks Tony !
That why we play the game
Well put
yeah, but then he says “use a little luck” Lee….so which is it easy, or not easy..?
)