SHORT TERM: early pullback then mixed finish, DOW -55
Overnight the Asian markets slipped 0.1%. European markets opened lower and lost 1.5%. US index futures fluctuated above and below unchanged, and the market opened relatively flat around friday’s SPX 1407 close. Right after the open the market started to pullback. At 10:00 ISM manufacturing came in lower: 49.6 vs 49.8, and Construction spending was negative: -0.9% vs +0.4%. The pullback continued until 11:00 when the SPX hit 1397. Having retested thursday’s low, with a positive divergence,the market tried to rally. The rally carried the SPX to 1409 by 2:30. Then the market pulled back to close at SPX 1405.
For the day the SPX/DOW were -0.25%, and the NDX/NAZ were mixed. Bonds lost 9 ticks, Crude slid 95 cents, Gold added $2, and the USD was higher. Medium term support remains at the 1386 and 1372 pivots, with resistance at the 1440 and 1499 pivots. Tomorrow, Q2 Productivity and unit Labor costs at 8:30.
The market opened flat today, dipped back down to SPX 1397, and then tried to rally. With this second pullback to SPX 1397 we eliminated the subdividing Minor wave 3 count that was carried on the SPX daily chart. Then replaced it with a potential triangular Minor wave 4. The five abcde waves: 1398, 1416, 1397, 1414 and 1397. The downsloping upper trendline is now just under SPX 1410. A rally above that level, with the double positive divergence, could thrust the market to new highs.
Short term support is at SPX 1402/03, SPX 1396/98 and the 1386 pivot. Overhead resistance is at SPX 1413/16, SPX 1422/27 and the 1440 pivot. Short term momentum displays that double positive divergence. The short term OEW charts will turn positive again with a rally above SPX 1407. Best to your trading!
MEDIUM TERM: uptrend
LONG TERM: bull market
If the ECB sets and guarantees three year rates on sovereigns that would be higher than 10 yr TSY, could that put upward pressure on US rates? Any thoughts out there?
Hey Tony, does the lack of participation from the TRAN concern you much? looks like it broke trendline recently
No, they are in a bear market
those silly transports. thanks!
Igor,
Do you Concur with Stew?
http://buyonstrength.blogspot.ca/2012/09/sep-03-s-500-projected-price-targets.html
Yep…
http://earthquake.usgs.gov/earthquakes/map/
magnitude 7.6 earthquake reported in Costa Rica.
SPX A = C Target and Upward B resistence (30 day chart)
http://www.wavegenius.com/2012/09/05/spx-visual-30-day-1-minute-chart-a-c-target-and-upward-b-resistence/
What if an extreme event ocurrs and the triangle formation on the NYA chart brakes to the downside ? http://scharts.co/SdCSNm
What should we expect ?
Any extreme NEGATIVE event would likely NOT have AS much impact on the markets since this is what sentiment and the markets have been pricing in for months. Its the case where (I believe) if we GET the Lehman style event, the markets will have been correct and may move down marginally further. If we do NOT get the Lehman style event, the markets SHOULD rapidly move higher unwinding the fear trade quickly.. .exciting stuff developing!
I agree. The market is suggesting more upside.
However, if the bears get that extreme event and the NYA brakes that trend line support the triangle pattern suggests an important move down.
By the way, I think the bears will need at least a $1.1T failure to hit the market. Lehman was only abt $691B. (something important: we won’t get the news until it is all done, but the market will tell us in advance).
http://www.flickr.com/photos/gsfc/7936905134/in/photostream
SPX is wound tight….Look for a CME type event
Lee, entering the apex of a two week triangle
Thanks Tony
This is almost as fun as watching the Cards play lately
Amazing
seems everybody is looking for this burst to be upward
Not really – just a few on this board. The masses are still overwhelmingly bearish and frankly scared…
sorry, yes agree. meant “everybody here”. even M1 is bullish now!
What is CME type event ?
“coronal mass ejection” aka blast off. check Lee’s link
http://3.bp.blogspot.com/-Ad3Th6fBn3s/T0mxDY6zrHI/AAAAAAAAGcU/wkAffnwmVa4/s1600/27_1.jpg
Mario
Way to not remain static on ur opinions. Don’t hurt the bears too bad …they’re people too
Thanks. I noted.
The recent curve study has been behaving well.
If support holds, next swing daily low may mean that trading cycle low is set with 1395 area a stopping guide for trades
http://markettime.blogspot.ca/2012/09/s-500-sept-3-2012_5.html
Ready to soar ? http://scharts.co/SdCSNm
The bears will need something (a failure) bigger than lehman, an extreme event ( Black Swan Theory) or a world war to stop the next huge rally.
GL
http://www.nytimes.com/2012/07/22/your-money/bernstein-strategist-makes-long-term-case-for-a-20000-dow.html
He’s giving it 7 YEARS (’til the end of the decade)! I’d say he’s covering his a** – being super conservative. I’ll put it out there and call Dow 20,000 before the end of 2016. If stocks can only return 50% over the next 7 years we might as well look elsewhere. This would be less than a 5% compounded return – not great.
Someone yesterday pointed out that its the “Financial Economy” that’s in trouble. To this I would say Financials will (have) lead the markets. They’re the ones that have been creamed the most over the past few years. Have a look at FAIRX – Bruce Berkowiz’s Fairholme (Financial) fund. He’s up 50% YTD betting on the oversold Financial sector, and leading the SP by about 15% pts. I bet this lead continues for a while.
NYA suggests a 75% increase during the next wave up… 5 years ?
not so bad, isn’t it ?
Mario,
If the world’s economy was growing, and US GDP was over 3%.
Plus this was the beginning of a Secular UP cycle.
Then PE’s could expand again.
They have been contracting for years now.
Tony, where the US$2T + XX leverage will be invested ?
Cash ? I doubt it.
Speculation ? YES.
Does it matter the world is falling ?…I don’t think so. Actually, I think it will help.
As I mentioned, the bears will need an extreme event to derail the bull market/next wave up.
Mario,
In 2008 Trillions of USD’s, in market value, disappeared.
When people panic, hedge fund redemptions and CDS can create a downward spiral.
Still think we go higher in 2013.
But a double/triple top like the late-1970′s to early 1980′s period fits.
Sorry I’ve been away for awhile. I think if the market is going to rally, it should do so from this point. The market has made three attempts at 1395 from 1426, making slightly lower lows each time, and completing a 5 wave sequence. This next wave could carry to 1466. A break below 1395 probably means the rally is over for the near term, with a further correction likely.
Thanks,
Steve
http://5wavemodel.blogspot.com/2012/09/tuesdays-market-090412.html
Agree, I think there is an imminent move coming.
Shanghai keeps printing new closing lows.
China’s official manufacturing PMI fell to a nine-month low in August at 49.2; steel prices are at their lowest level since 2009 and rail cargo volumes have experienced their sharpest fall since 2008.
Although I have seen graphs showing that US equities have mostly led Shanghai to the downside & upside in recent years, but things look quite gloomy in China.
FDX cuts guidance due to weak global economy,
shares tank after hours.
This is more about their “express biz” and company specific. Media is blowing this out of proportion fear mongering recession again…ignore it.
Interesting facts. Thanks you both.
Also, with regard to iron ore, there were some interesting forward-looking statements coming out Vale yesterday
http://www.bloomberg.com/news/2012-08-21/iron-ore-to-rebound-as-china-seeks-cheaper-imports-commodities.html
thank you both…sorry..
Tony, I see global data keeps deteriorating esp. PMIs & there is clearly a global slowdown of significance, whilst equities have mostly risen since June (except china has tanked), what does this mean? (Some markets appear to be curling over so beginning to wonder if data is catching up with equities).
Data often lags the markets.
Well I suppose we will know soon enough which is correct.
Looks like Chinese equities are saying more bad chinese data ahead.
thanks Tony.
well, with that NYAD making a higher high today…
thanks for that nice video on the Universe Tony – it’s like one door closing and another opening all the time..life as we know it
CB.
We’re entering the Age of Man … the man pouring water … Aquarius.
While we are still too primative to possess knowledge.
We are not too primative to share love.
When we come together as a species: a collective of mankind.
Knowledge will be given to us.
Until then enjoy the ride.
Thanks Tony..wow, nice that things are actually getting better every day!! ….I need to google that Age of Man…sounds interesting… Aquarius is (despite all the symbolism) an air sign… a very cool thinker
Social media via internet may be the beginning of us coming together.
thanks Patrick, I get the idea. Like you said “it may.” It’s a nice tool with lots of potential..some people will use it, and some will waste it..so net net…who knows…we’re humans : ) http://www.youtube.com/watch?v=UB3oEHzakOw&feature=youtube_gdata
Hi Tony,
Do you still have 2 scenarios going forward; either breakout to new highs soon or Back to June lows via Dow alt count?
Cheers
70% UP … 30% DN
ASTRO Update Reversal 21 August 2012…
http://astrofibo.blogspot.ca/2012/08/astro-reversal-21-august-2012.html
Thanks Tony
GL everyone !