SHORT TERM: new downtrend lows, DOW -73
Overnight the Asian markets were mostly lower losing 1.3%. Europe opened lower and lost 0.7%. US index futures were higher overnight and the market opened higher at SPX 1308. The SPX had closed at 1305 yesterday. Within the first few minutes the market rallied to SPX 1311 and then dipped to 1305 by 10:00. Another rally attempt followed as most awaited the opening of Facebook’s IPO. By 11:00 the SPX hit 1312, and then dropped sharply to 1299 by noon. Again the market tried to rally, this time reaching only SPX 1307 at 12:30 before pulling back yet again. Choppy session. By 3:00 the SPX hit 1295 and tried to rally again. Around 3:30 the SPX hit 1300 then declined to 1292 in the closing minutes before ending the week at 1295.
For the day the SPX/DOW were -0.65%, and the NDX/NAZ were -1.20%. Bonds lost 2 ticks, Crude dropped $1.55, Gold rose $17.00, and the USD was lower. Support for the SPX drops to the 1291 and 1261 pivots, with resistance now at the 1303 and 1313 pivots. Short term momentum is oversold, after hitting extremely oversold. Today the WLEI was reported at an expansionary 50.4%.
The market opened slightly higher again today, but could not get anything going to the upside after several rally attempts. Foreign markets continue to weigh on the US stock indices. The abA-B-abC wave we had been watching since SPX 1366 is now working on a complete double extension. At the low for the day, SPX 1292, this downtrend overlapped the Major wave 1 uptrend high of SPX 1293. This suggests the possible alternate counts noted yesterday are gaining in probability. We will cover this situation, and these possibilities, in this weekend’s update. Best to you and yours!
MEDIUM TERM: downtrend
LONG TERM: bull market
Thanks Tony, great weekend update as usual.
My alt counts are suggesting:
alt 1. an important short term bounce next week and lasting 1-3 weeks.
alt 2. the selloff may continue until the end of the month, before we get the expected bounce.
alt 3. worse case. No comments.
Hope we get some clues early next week.
GL
In my opinion, the rally from march 09 (spx 666) has already ended.
hi tony and blog mates,
In my last post here, My analysis was inline with Tony’s expectations, and i had a reflex point at 1309. Now that 1309 has broken. I will be keenly watching 12257 on dowjones. i have tried my best to put it all together.
Hope you all like this http://niftyewa.in/2012/05/19/weekend-update-covering-sp-and-nifty/
thank you for your input Vikram
Folks are still talking about oversold bounces. As long as everyone is talking about dip buying, I’m sitting on the side. I want to see some actually scared people. Nobody is actually scared yet, except for zero hedge. But he’s always scared. I see “RSI oversold” this and “McClellan as low as August 2011″ that.
Since we’re comparing to May 2010 and August 2011, the trajectory of the MACD currently would indicate that we have at least a month or two before we bottom out, just like the last two times. I’ll wait for a positive divergence on the MACD before getting back in this time. Cheers all, and have a great weekend. -rc
Trin Friday was 0.71….being oversold, and a very high trin – might
very well be a negative omen….leave that to TRIN readers….
correction – Low Trin reading…
Tony,
Interesting count below from another blog. I like it a lot. What do you think?
http://elliotwavetrader1.blogspot.com/2012/05/w4-target-has-been-reached.html
Val,Posted three alternate counts this weekend.That was not one of them.cheers!
Val,
I know you aren’t asking me but IMO Wave 4 looks too deep to me and from a timing perspective wave 4 looks awfully long relative to wave 2.
More on SVVC
So this is how we played SVVC this week. We were buying ahead of this week assuming a Facebook type rally in the shares, even though I knew it was not really warranted… crowd behavior is what we work with. As the stock ran up about 8-9% profit wise to 30.80 I told my subs we may see 32-34 but anyone who wants to take profits is encourage to go ahead and do so. As it sank again to the 29-29.50 ranges, still profitable… I again encouraged anyone to take profits if they wanted. Finally, for those who had not… at 28.25 I said put a stop at 26.70 if still long.
Well, we got stopped out at 26.70 and it ran to 26.20 then 27.10 and bounced around but we were out.
Then today a complete wipe out, getting as low as 19
Now the reason I find this interesting is it closed at 19.27 a share today. They actually have $20.00 per share in CASH right now, and the portfolio of stocks they hold is worth conservatively about $3.50 per share on the LOW SIDE. The Facebook stock alone, even if it drops to $30.00 next week would be worth about $2.10 per share by itself
So now SVVC is actually a value buy…. just the cash and FB stock at $30 assume is 22.10 per share and SVVC closed at 19.27.
Why the discount? A ton of traders who bought up at 28-30 or even 26-27 this week got caught in a trap. Then I think margin call started coming in, then stop losses… then more margin calls and you know the rest
By the end of the day today, the damn fund was trading almost 3 million shares and there is only 8.5 million outstanding!! Of that, $20.00 per share is in cash!!
So now I have to look at SVVC on Monday and consider loading up because even if their entire portfolio of stocks were to go to zero… which is not going to happen… I can buy the fund at less than the cash balance per share
Welcome to the stock market!
You scare me db. Pre load thin freak o break downs…….
Lol
haa.. Mike! Hey, it’s a good day for u to come back and talk to us again…you Taurus, the Bull.. : ) OK, Mike is back so gold is back too… Nice! …Good to hear from you Mike . Talk to you later. Nice kids you brought us, from Iceland, I guess (?)!
LOl… forgetting SVVC… we saw tons of samples of margin induced selling panic/forced liquidation…. watching the mclellan Oscilator too, now at lows not seen since August 2011, even lower than October 2011 lows… and the % of NYSE stocks below 50 day MA is now at 12%, historically VERY low…. pessimism reins
This is when you at least have to start nibbling slowly… pretty much everyone is looking for more downside including me in the markets…. lol
David, I’m new to trading and I really got screwed with this (SVVC) today. Completely my fault. Greed. Not doing my homework. Amateur. Stopped out at 22. I guess the damage could have been worse.
Lessons have to be learned. I’m completely even for the year now, which isn’t a total loss. I’m 50/50. I just need to learn how to get to 70/30.
Thanks for the explanation. I don’t think I have the heart to go back into SVVC, but your argument is compelling.
I keep a journal of my trades. This one goes in the “your greed made you stupid section”.
Cheers to everybody! Have a great weekend.
Gold bottom in place?
http://smartmoneytracker.blogspot.com/
sai
Thanks Tony!
cheers Lee!
No more comments !!
M1 says:
May 16, 2012 at 3:58 pm
You know I have been saying for quite a while that it looked to me we were at an inflection point. Nothing has changed after more than two months. I think it is now at crucial moment. (DJI IS AT ABT FEB LOWS – ALERT).
M1 says:
March 2, 2012 at 5:06 pm
The inflection point may last longer than expected and the market may take more than one month to resolve which way it will go medium term.
I will keep neutral and I will turn bearish if I see a brake of the lows of february. Waiting for any clue to turn bullish again.
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.
Tony, i know this is OEW not EW but are extensions meant to happen in corrections?
Certainly, but they usually occur in uptrends.
Thanks Tony,
Honestly, It was a tough decision shorting the market today, but as I have been mentioning 12535 was the key point for me …
Now, we may or we may not have a short term bottom in place ….we should have the answer next week….but not sure yet what alt count could be in play.
Your weeekend update will be highly expected.
GL
I think the odds have just crossed 50% that we are in a new bear market. If the 2011 drop was Wave A, and the subsequent rebound Wave B, then we could be in Wave C of an expanded flat bear market. There is no obvious way to count 5 waves from October to April, but there is a 3-wave count that has increased its probability due to the drop below 1293 on the S&P 500.
Should the bear market unfold, there will be a heightened focus among the public on economic weakness. The result will probably be the election of Mitt Romney in November.
Have a good weekend,
Samuel
OLD DOW
1932 – 1938 lows …6 years
1938 – 1942 lows…. 4 years
NDX
2002 – 2008 lows…. 6 years
2008 – 2012 ??? …. 4 years ????
thanks Sam
Thank you, Tony. Definitely looking forward to your weekend analysis. Have a great weekend.
I was hoping my 1422 5 wave high count would be totally wrong… but man, its looking possibly right, ouch…. that said, Mclellan Oscilator should be trading pretty close to the August 2011 lows after the close
Well, at least Facebook closed up 23 cents.
Thanks to the underwriters and short covering near the close.
Yeah, I was being a little sarcastic there Tony. What a “fail”. Just wait till the next time “the” underwriters try to (over) price an internet IPO. Haha. Good luck with that.
Heard FB’s CFO picked the price =)