SHORT TERM: wild day, DOW -7
Overnight the Asian markets lost 1.3%. European markets gave back yesterday’s 1.8% gain, and then some, losing 2.5%. US index futures were lower overnight and the market gapped down at the open to SPX 1310. The market had closed at SPX 1317 yesterday. In the first 15 minutes, or so, the market pulled back to SPX 1306. Then it rallied to SPX 1312 by 10:00, only to pullback again. Also at 10:00 New home sales were reported higher: 343K vs 328K, and the FHFA housing index was reported higher: +1.8% vs +0.3%. At 11:00 the FED released this: http://www.federalreserve.gov/newsevents/press/other/20120523a.htm. By 10:30 the SPX had hit 1298, bounced to 1303 by 11:30, then pulled back to 1297 by 12:30. After that it tried to rally. At 2:00 the SPX hit 1306, pulled back to 1300 by 2:30, and then rallied again. Heading into the close the SPX hit 1321, then dipped to end the day at 1319.
For the day the SPX/DOW were again mixed, and the NDX/NAZ were +0.35%. Bonds gained 11 ticks, Crude lost $1.45, Gold slid $5.00, 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 hit quite oversold during today’s decline and then rebounded. Tomorrow, weekly Jobless claims at 8:30 along with Durable goods orders.
Quite a volatile day as the market gapped down at the open, traded down to SPX 1297, and then rallied for the rest of the day. The DOW made a new downtrend low during the decline, but the other three major indices did not. This is a positive divergence. Remember the DOW made a new high on May 1st, while the other three major indices did not. That set up a negative divergence. The SPX was at 1415 then, and declined to 1292 afterwards. Today may have signalled the end of the downtrend. But we’d feel more comfortable about that when the SPX clears 1322, see below.
Short term support remains at the 1313 and 1303 pivots, with resistance at SPX 1328 and 1342/47. Short term momentum swung from quite oversold to slightly overbought during the day. The short term OEW charts remain with a negative bias from SPX 1395, with the positive swing point now above 1322. Best to your trading!
MEDIUM TERM: downtrend may have bottomed
LONG TERM: bull market
Yeahh Buddy! Great pivot call Lee.
Everyone have a wonderful holiday.
Thanks H D !
Have a great holiday also H D
on a happier note – mkt looks like it really wants to pop tomorrow. sitting right on that 1320. just waiting to gap over Tony’s 1322 to start the day tomorrow
curious why we’re spiking? Mario Monti comments on Italian TV that ” Majority of Leaders at EU Summit Backed Euro Bonds”
Of course, that’s irrelevant. it only matters if Germany wants Euro bonds. and they don’t. but the retarded algos that run the market aren’t smart enough to filter that nuance
RC,With the austerity Sarkozy-Merkel team breaking up, maybe the Super Mario Bros. will take over with a spend baby spend mantra.
possibly. but Schaeble is the one who says, “no way, Jose (or Mario, for that matter)” and i don’t think he’s going anywhere.
1313 del pivote?
si senor
Dow has been down 15 of the past 17 days (including today). Couldn’t find a single instance when the Dow was red for as many days in the past 10 years…even during the great crash of 2008!!!
Something’s gotto give soon!!
Both bulls and bears getting worn out now…!!
SP500 Time Ratio…138.2…
http://astrofibo.blogspot.ca/2012/05/sp500-time-ratio1382.html
http://carlfutia.blogspot.ca/
Thanks Tony.
thanks Fiona
Some color from a couple traders who trade Index CDS (which trades very tight with equities):
All the accounts they are talking to are afraid of missing the rally. Everyone arguing against the bearish case. So, official investor sentiment might be negative according to AAII, but they don’t think that’s how most accounts are positioned and the mkt isn’t as short as some might think.
Just a little color from institutional credit land.
thanks RC
Thanks RC !
pivot time…again
Tony, does the intraday move above 1322 count?
Timmy, No it didn’t clear long enough
Mkt is holding up quite well indeed, given the bad econ data. Go baby go.
Morn all !
http://blog.registeredrep.com/copsandcrooks/2012/05/24/fees-on-high-end-wealth-management-falling/?utm_source=dlvr.it&utm_medium=twitter
And then there are the online competitors like Wealthfront, MarketRiders and Personal Capital, based in California, which use technology to build customized portfolios for a fraction of what traditional advisors charge. Computers set up to offset computers … nice
My latest count
That’s Bill Haley and the Comets
I am loving the link you’ve posted Lee… ‘hungry innovators” as an alternative to those 40%-ers in managed futures sounds really cool…thanks very much Lee!
What’s a little concerning is that we worked off all of our oversold indicators and we’re only at 1323. Daily is back to neutral at 48; 60 min is overbought at 74. Looks to me like we might have to test 1300 again and perhaps set up a positive divergance on the dailly RSI. just thinkin aloud
Tony, at this point it looks like my alt # 1 may be unfolding. This means the market may be working an important rebound. The count suggests a target of 12700 – 12800 (DOW)
I am starting to get upset. I think I missed a great entry point yesterday. We shall see.
Less likely, but my alt # 3 is still possible.This is the worse scenario. And suggests one last wave down before any important rebound.
By the way, any of them is bullish. I repeat, in my opinion the rally from march 09 lows is over
GL
Mario, We currently have 0 counts of 4 that fit that scenario.
Tony, is it possible counting the possible/expected rally from 12311 to 12700/12800 as major 5 ??
Mario, 12,300 to 12,700 would be well short of Major 3 @ 13,250 and B @ 13,300.What would be the pirpose of those waves if Major 5 would fall 500 point short?
Thx. Tony, then I guess another count may be unfolding.
If you have a few minutes. Some great slides.
http://www.ritholtz.com/blog/2012/05/ubs-morning-call-cyclical-bull-secular-bear/
It seems the double inverted corrective wave scenario played out today, I just missed quite badly on the amplitude. It does bother me that with such a strong rally this afternoon, the SPX couldn’t take out 1328, or even 1325. If we can move above those we should see a pretty good move to the upside. I see a lower open, with support at 1307-1310. If we hold there we could see an attempt at 1328. If not, watch 1300. If we go through that, we could be headed back down.
I don’t follw the DJIA as closely as the SPX, but that Index may have just completed a semi-inverted corrective wave from the 13297 high. These waves signal trend changes. Something to watch.
Steve
http://5wavemodel.blogspot.com/
Thanks 5wave
Thanks Tony.
http://screencast.com/t/IShfUgIDVi5 – 6.66(?) oh, no not again??
)
tomorrow’s roadmap:
http://standardpoor.wordpress.com/
Wild futures swings…
SPX working on a triangle? We should ponder?
5-3-5-3 running zigzag. c wave fails to go beyond a.
edit: 5-3-5
The triangle idea worked for 12 points – D wave down. The symmetry is from 1310 IMO. If you like the set up finding a long entry above 1303 pivot for E wave or 5 up next.
Day 1 of rally attempt …
very favorable activity of the last three days warrants a reduction in shorts and an increase in longs.
Tony, need your help to clear my ideas:
how are you labeling (or how many waves are you counting) 1292-1328 ?…and what abt 1328 – 1296 ?
Not Tony …but if i were to take a crack at it… i think 1292-1328 is a simple wave 1, and 1328 to 1296 is a simple wave 2. Now in a simple 3 up from 1296..
Thanks Rocky, it is not as simple as it looks.
Although I do share this view, note that there are alternative counts. We could still be in a 4th wave triangle of a 5 wave down structure, or we could even complete the zigzag to 1360 or so, turn back and head down for a 5th wave). Keep in mind, there was no divergence on SPX (lower low with indicators making higher high), although without checking I believe the Dow may have had one today.
Major bottoms usually show these divergences.
TAC, The DOW had a +D on the hourly chart.
Thx tac,
1 wave up and 1 wave down … now another wave up … no subdivisions of any importance.
1292 – 1328 was a three waver up.
1328- 1296 was a five waver down. Unless it was three waves.
To me, both 1292-1328 & 1328-1296 are 3w. SPX/DOW may be still in the process of making wave 4 through abc flat or triangle. Hope I am wrong.
ew, yes it looks like wave 4. But it will be complex. So I guess wave 2 should had been simple. Then, I wonder where should be counting wave 2 ?
That’s very good point. Sometimes looking into too much details is not a good thing. I definitely have that problem. If 1328-1296 is 5w, then is it the truncated 5th wave or it is just the 1st wave of the 5th wave? We should find out soon….
Actually w2 is very odd because everybody was expecting zigzag correction to retrace more but it is less than 38percent fib. Maybe this w4 the will go higher, say 62percent fib retracement, so w2 & 4 totally switch position. That will be cool….
Almost forget…no overlapping
Counting squigglies is inherently difficult. The August/September bottom took forever to play out and confused a lot of people.
In that case, turn to volume and other indicators. Is the volume favoring up or down moves (volume increased up and decreased down – a bullish sign).
Was the retest of the lows on higher or lower volume (lower – also bullish).
To me that bodes well in the short term. Long term we may go below 1292 one more time (June/July), but until then I am not panicking.
=) ….very interesting day…. even when the market did almost what I expected, I see something also unfolding.
By the way, I am still in cash. ndx was close to, but never came under 2498. Not upset yet. I have a couple ideas in mind.
Thanks Tony. Interesting day indeed! But before I go full-on Monkees and become “a believer”, I’ll repeat what I said last Wedsnesday, quoting our friend Mr. Cashing – “the market never bottoms on a wednesday.” hah So we’ll see! Of course, if he’s referring to the SPX then we’re still okay, since that bottom was friday.
As an aside…
Bloomberg reporting that, “Facebook Inc.’s underwriters for its initial public offering made gains of about $100 million through their work to stabilize the shares in public trading, said a person familiar with the matter.”
Now, I’m not awesome at math but something about that seems off. They were the bid at $38 the entire first day. millions of shares. and now it’s at $32. i think somebody reversed a sign in their spreadsheet
It’s called a green shoe – google it – if you trade IPO’s you should know what it is.
The underwriters over allocate the stock by 10-15%- in this case I think it was ~63mil shs. Say they bought 1/2 the shoe at 38 to stabilize first day, then next day/2 they buy the other half $3 cheaper. Wholaa they make $100mil. Pretty simple.
i don’t trade IPOs, unless it’s a new bond issue.
yeah, i know what a greenshoe is actually. was mostly just making light of the fact that MS was the only one who made money on the IPO. go figure. God’s work.
RC, When CEO’s think they are doing god’s work then everything they say is “their truth”.
I hear ya, actually I reallyy wouldn’t have known how it actually worked unless I sat next to some who opened these IPO’s. Shocks me sometimes how public demands to be involved yet when it doesn’t go up, its everyone else’s fault. Anyway, MS wasn’t the only ones who made money. If you got stock on the deal , which from what I underdstand is EVERYONE, you made $4 per share for doing nothing. Not much to complain about. But everyone will of course.
EURUSD Fibo 61.8…
http://astrofibo.blogspot.ca/2012/05/eurusd-fibo-618.html
Hi Tony,
What area would you need to see the S&P hit to change your mind on a continued bull market?
Just curious.
Thanks,
Rob
Rob … SPX 1158
Tony,
If you charged for access to this site I would pay it.
Sincerely,
Rob
Rob, If I charged for access I wouldn’t be doing my chosen assignment =)This is a rough market
Tony I just wanted to say thanks for your assignment. I really can’t thank you enough. Maybe someday though. Until then.
you are welcome http://www.youtube.com/watch?v=wS7CZIJVxFY
SILVER Fibo 161.8…
http://astrofibo.blogspot.ca/2012/05/silver-fibo-1618.html
Thanks Tony,
I really like your response a few days ago regarding equities not being that cheap at all. I’m going to sit back and watch how this goes. Maybe follow a wave here or there, but remain mostly in cash. These ups and downs are really hard to trade. Isn’t it usually the news that follows the wave and not the other way around? It seems like for the time being it’s been reversed.
B
Above 1500. You should get even more bullish if we break 1292.
Brent, Sometimes news moves markets, and other times markets are ahead of the news.
Thanks Tony! I believe that historically the couple days prior to Memorial Day are “usually” up. Bottoms UP?
A selloff on Friday wouldn’t surprise me. Most people are afraid to hold over the long weekend with Europe in full swing.
You may be right. Either way IMO a new Uptrend is likely. Hope Tony can confirm. Soon.
Mik,e that Kudlow piece you posted on opex Fri. was interesting…weren’t they using him as the official mouthpiece for the Fed to basically leak the QE3 news (?)….both guests seemed pretty certain it would happen….and after that on Mon. we had that big squeeze….so, that could mean we’re now in the general “buy the rumor, sell the news” timeframe …with the June mtg. marking the potential top…(?)…just a thought..
Hey CB, Both have been expecting some sort of QE3 (as well as more EU easing), especially Don Luskin. IF Ben does do it in June I think there could be buying for awhile, which has happened in the past. That would fit in nice with Tony’s view that a new Uptrend could last through July (SPX 1500?). At some point folks may wake up and move money out of Treasury’s and EU stocks and in to the US (stock) markets. At least 4 awhile. I hope, anyway!
Thanks Mike. Yes, isn’t it amazing how accurately Tony can predict how the Fed will act and what kind of market activity we’re likely to see? What Tony does & shares with all of us is just so invaluable. Thanks Tony.
Great report Tony.
Today took a lot of faith in my analysis to stay put. I had a SPY order at 130 that I removed. In hindsight a bad decision, but trading is emotional nonetheless.
Any thoughts on the breakage of the 1303 pivot intraday?
Why not 1292? Seems to be the real test.
TAC, The 1303 pivot held support today: range +/- 7 points.
Thanks Tony !
Lee seems like as good a time as any to be bullish on Crude.
Just saw this Patrick
Thanks !