SHORT TERM: FED announces QE 3, DOW +207
Overnight the Asian markets gained 0.1%. European markets opened lower and lost 0.3%. At 8:30 weekly Jobless claims were reported higher: 382K vs 365K, and the PPI was reported higher: +1.7% vs +0.3%. US index futures were lower overnight, but the market opened unchanged at SPX 1437. The market then started to drift higher, hitting SPX 1440 by 11:30. Then after a pullback to the opening level, SPX 1437, by 12:30 the FED released: http://www.federalreserve.gov/newsevents/press/monetary/20120913a.htm. The market immediately soared as the FED announced QE 3. At 2:00 the Budget deficit was reported higher: -$190.5 bln vs -$134.1 bln. The rally continued until around 2:30 when the SPX hit 1464, and the FED released their economic projections: http://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20120913.pdf. After that the market pulled back to SPX 1458, and then closed at 1460.
For the day the SPX/DOW were +1.60%, and the NDX/NAZ were +1.40%. Bonds gained 15 ticks, Crude rose $1.10, Gold soared $33, and the USD was lower. Medium term support for the SPX now rises to the 1440 and 1386 pivots, with resistance at the 1499 and 1523 pivots. Tomorrow, we get reports on Retail sales and the CPI at 8:30, Industrial production at 9:15, then Consumer sentiment and Business inventories at 10:00.
The FED had hinted on a potential QE 3 during their FOMC minutes released on August 22nd. The market closed that day at SPX 1413. We noted, on August 30th, the probabilities of a QE 3 were at their highest since the summer of 2010. The chairman’s speech at Jackson Hole, August 31st, did not add anything further. The market closed that day at SPX 1407. Today the FED announced they would start purchasing, outright, $40 bln/month in MBS and USB until the economy strengthened and the unemployment rate declined. This is in addition to some $180 bln in MBS that will be purchased through the end of the year in Operation Twist.
Now we have Europe’s ECB making unlimited purchases of short term securities in selected european countries, and the US FED making unlimited purchases of long term securities in the US. The ramifications of such a two-fold event will take some time to sort out. Our first response, subject to change, is new all highs in the US stock market.
Today’s market action was quite good for the medium and long term. This uptrend has now rallied to our fibonacci resistance at SPX 1463/64 for Intermediate wave iii. The market is extremely overbought short term, and a pullback of some degree would naturally be expected at this point. Adding to the possibility of an Intermediate wave iii high, is a negative RSI divergence between Minor wave 3 and Minor wave 5 on the daily chart. Since this does look like an important level we’ll treat it as pivot. This would imply: this rally continues if SPX 1472 is reached, or it rolls over into an Intermediate wave iv pullback if SPX 1355 is reached.
Short term support is now at SPX the 1440 pivot and SPX 1422/27, with resistance at SPX 1463/64 and the 1499 pivot. Short term momentum is extremely overbought. The short term OEW charts remain positive from SPX 1412, with the swing point now at 1432. Best to your trading!
MEDIUM TERM: new uptrend high
LONG TERM: new bull market high
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Tony, would you be able to maybe make some further comments or place target prices on the KKR daily /weekly chart? I’ve been trading them quite a bit the last two months. Looking to see what time frame you think their all-time high will be taken out on this major wave 3 push and also what sort of intermediate and minor count you have for them right now?
Saf,
We carry KKR in the public charts:
http://stockcharts.com/h-sc/ui?s=KKR&p=D&b=3&g=0&id=p28889673900&a=211801353&listNum=11
http://stockcharts.com/h-sc/ui?s=KKR&p=W&b=3&g=0&id=p11339076225&a=211801149&listNum=11
Today KKR finally broke out of its yearly trading range to make a new 12 month high.
We like private equity, and the yields are not bad either.
We believe it is in the third wave up from the May $10.93 low.
Should get a pullback soon, and then a higher high.
Maybe even an all time high.
We follow Carlyle too.
FedPro: “Financial crisis? We’ll make it like it never even happened.”
The Apple has topped … and missing that $700 print by this much!
AAPL has not topped – far from it. It has to pull back from time to time of course but longer term its going way higher…more new products coming and already I5 has more demand that targeted!
You misunderstand Tommymeboy, it is nearly 3:30 PM on a Friday afternoon, and I would bet that there is no chance that AAPL will make a new all time high today.
I’m a day trader, and when I say something has topped, I mean it has topped for the day.
I may be wrong about that, but I’m done. And besides, new session lows are far more likely than highs on Apple given the way the tape has been running.
By the way, I have never owned an Apple product, nor has anyone in my family. I am leaning toward replacing my Android HTC EVO with an iPhone this December. If I do, sell Apple hard, ’cause I am “the” late adapter. For the record, I bought my first PC and signed up for AOL on March 10, 2000. When a company finally gets me to buy their products, it is over. Don’t believe me? How about this: I had my first prime brokerage account approved and opened by Bear Sterns on March 14, 2008.
No excuse me while I try to book my first flight ever on Priceline while I enjoy a fresh cup of Green Montain coffee that I made on this new fangled coffee maker I bought on September 20th of last year.
We just got our first Ipad a month ago – I’m ALWAYS late. This tells me though there’s still a large untapped market as these products mature. I don’t daytrade anymore so I’m looking at it from an investor’s viewpoint.
THD
Bravo !
As Obi wan would put it “This is not the Financial crisis you are looking” and with a wave of his fingers you have forgot all about it
Move along – move along….
Tony, I see three waves from 1267 up today and I am curious if this huge 207 points rally could be only a “B” wave ? Impossible, right ??
Mario,
No B wave charactistics present
Perfect !!…then, we should have enough time to jump into the market once wave iv ends.
Thanks
Interesting study, to estimate where the Intermediate W3 will crest. 1463,
sounded great, now I am thinking 1488-1490 – Hell, it might be 1530 as well….
Thnanks for your reply on XIV, Tony……Bud
CRB has put in a significant low
in all likelihood, it is a multi-year low of a righ-translated cycle structure
food, energy prices have been firming, PM have joined the party with bang after bang with miners, for a change after a long time, outperforming
when was another period of recent history when economy was bad, and commodity prices did well?
Is this all going to be recorded by hind-sight economists as another period of stagflation?
another period of stagflation
Sorry for my previous chart.
Here is again:
http://scharts.co/O3NFby
Hi Tony, since 1372 is seen, you think 1499 is the next target?
meant 1472 rather than 1372!
Submitted on 2012/09/14 at 9:49 am | In reply to pbnj123.
Pbnj,
Would think since we cleared this SPX 1463/64 pivot like level the market could move to the next real pivot 1499.
okay thanks Tony.
Short Term W3 Targets for DOW SPX NASDAQ NDX
http://www.wavegenius.com/2012/09/14/elliott-wave-noon-update-video-for-9-14-12-3rd-wave-targets-youtube/
http://scharts.co/R4aJBZ
GL
Note 10 year Treasuries spiking to just under 1.9% now. This is bullish activity as funds begin their seismic shift from perceived safety to risk. Mountains of funds likely headed to equities over the intermediate/longer term…
Thanks Tommy B
Does this mean $103-105 CL ?
no clue…
that makes 2 of us Tommy thanks
hahaha … did you move from pit to pit in your floor trading days?
Hey Tony
haaa Not at all.. I was stuck in that SPU pit like a tick in a dog.
My membership limited me even if I wanted to jump around .
I had an IOM so I could of traded Naz futures Lumber and options on any futures contract on the floor but I was truly a one trick pony.
I’m trading ZN this week but I’m truly a CL trader who is still pissed that he sucks at trading ES
Clearly you are one of the best CL traders around.
See being semi-retired has its advantages
wow…maybe around this blog.. and at my last count I was the only one trading it hahaha
Ur one humble hombre.. OEW shook up the world these last 5 years
Thank u Tony
Sir Bond and RC,
Seeing 2.10% yield for the 10 YR next.
I trade bonds, too
well, not much trading, just a short for weeks and one reduction to make sure I won’t lose much of the low was not THE LOW
BTW, Mr. T, can the current thrust be a 3 of a 3 and not a 5 of a 3, it has so much force and so many gaps
possible … time will tell
Seems like I am not the only one who thinks it’s Prints Ahoy till the cows come home
I think I beat Gross to that
http://www.zerohedge.com/news/bill-grossbuy-real-assets-gold-house
Gross has been buying MBS all year.
It pays to be an advisor to the FED.
+1 Tony
BTW I’m officially a ZN trader now…I’m playing 70′s disco music and growing my hair
Should we call you Lee Bond now
I never miss what he writes, he usually tells you straight up what he thinks, and, what he thinks has a habit of coming to pass as what it is
in prior occasions, both short and intermediate cycles of S&P tended to stretch and peak late in the timing band when there was lubricant applied by central bankers
The next time frame for both short and intermediate cycle lows are in October
I have little doubt at present that we are dealing with a right-translated cycle structure (higher highs, higher lows), I just wonder if the current intermediate cycle is going to stretch itself into Novemeber or not
Piazzi,
Have been looking for SPX 1499 by yearend.
Next month starts Q4 … yearend
best, or easiest would be to get some kind of correction to qualify for an intermediate cycle low and then run up
that way the phasing stays on track and we’ll have a better chance of following and timing
otherwise, everything will be stretched and skewed and I won’t be able to even try to time a low for long entry — just riding what is on tab already
It’s happened before
another thing is is that, typically, stretched cycles are followed by contracted cycles and they may cause a more severe correction as a reaction — a wave 2, maybe, if this intermediate cycle stretches too far
Good morning all
Okay Tony we just hit the 1472 “This would imply: this rally continues if SPX 1472 is reached” – does this then mean we continue or is this where 5 would end to complete major 3?
Thank you
Cheers
Pbnj,
Would think since we cleared this SPX 1463/64 pivot like level the market could move to the next real pivot 1499.
just putting this out there…My mother n law called me @ 9:20 am CT asking about the markets
Lee – just asking – when was the last time she did that
Tony does the feds action change your longer term outlook for 1550 mid next year before a sizable correction of around 50%?
Thank you
Quite likely … we may be looking at 1650-1700
Will sort it all out this weekend
Hey pbnj
The last call where my wife said the dreaded “She wants to talk to you ” was last November. She’s a good ole gal to be honest and she’s retiring in 2 years and as u guys know interest rates aren’t getting it done for folks in her situation . She just wants to keep her $ and drink Box wine
OMG – Lee you really crack me up “box wine” – love it
Cheers
Good day, all.
Well, what to do after the euphoria ?… only one idea comes to my mind. Take profits. All the profits. I may not be the only one that didn’t like what the Fed announced yesterday. It is too easy. Too much. “Vida Loca”.
Let’s wait one or two weeks and see how the market will digest that “endless” QE.
Have a great weekend.
I have updated the “programs” chart which shows when the different actions by CBs took place.
http://screencast.com/t/HwzHe5pB
A interesting point is that the different programs have “effectively” set a floor under the stockmarket e.g. QE1, QE2, LTRO1, LTRII, OMT, QE3. With that said is 1270 the Draghi/Bernanke PUT? I think so.
thanks Magnus … excellent chart
Thanks Tony
SPX is finally popping the upper 200 day bb.
Bulls on parade.
thanks Rob,
Always kind of liked that group
1420-1430 looks like a first area of support
http://markettime.blogspot.ca/2012/09/s-500-september-13-2012.html
SPX 1422/27 … agree
endless QE !!!
funny
This is not good news, Tony.
I don’t like that at all.
Mario,
The bubble will burst a month or two before the FED pulls the plug.
“until the economy strengthened and the unemployment rate declined”
Until every perma bear out there is creamed out of life and all the cows (bulls) come home to Papa
Heard permabear numero uno now has an alternate bullish count
why am I not surprised?
is it a B wave that is scraping the sky?
that’s all I know … only heard today
Numero uno telling his dog the new Alt count
http://i.imgur.com/bSMFA.gif
too funny Lee
well, to each his own, but how much more clearly than this should someone speak
“First, the FOMC will strongly resist deviations from price stability in the downward direction.”
August 27, 2010
http://www.federalreserve.gov/newsevents/speech/bernanke20100827a.htm
PCE just dropped close to 3%.
Too close to deflation for the FED
good observation, tony
Tony
You mentioned that PCE 3 % threshold in an earlier update.
Spooky good ….Fed Whisperer good…
You’re not too bad at this stuff
Lee,
Borrowed the FED’s crystal ball
Ben and I went to different colleges together =)
Nothing new on his subscriber site…will check tonight’s STU…
LOL!! wow, what do we have here: “come to papa” waves and a big, bad alpha dog…I am lovin’ it !!…you guys are much funnier on up days than on down days…conclusion: up days are better : )
All this stimulus is tremendously good for the whole consumer train, which leads to employment, pension plans being made whole, more taxes being paid (pay off the debt anyone, provide wealth to future generations etc.)
Now we need the banks to lower margin requirements, so more can participate.
Of course the ‘zerohedge’ followers (seems most of the media too) are preoccupied with negativity and no alternate suggestions.
Dow 20,000 seems good to me.
Thank you Ben………and Tony too!
….and Obama.
Exactly Fiona. Fed doing what they were created to do – smooth out the cycles and attempt to circumvent deflationary scenarios after all we’ve learned – while Permabears call them unAmerican or unpatriotic. Ignorance is their biggest problem. Its always easy to pick apart someone’s work in a stressful position. We can always do better huh? Rogers, Schiff, Prechter would have austerity and rate increases causing unemployment to SOAR and a deep prolonged (decade+?) depression with people starving in the streets and crime run rampant… yeah listen to these self proclaimed pros. Bernanke has done as good a job as can reasonably be expected by anyone post Greenspan . Kudos to him. Eventually his stimulus will cause a self sustained traction in the economy with increased employment and tax receipts causing debts to mitigate longer term.
Very impressed, even after 3 years of reading this blog every day. Thank you.
Tony short covering into close??? 1355 weak earnings??
After Major 3 … possible
Tony, do you think the negative divergence on the daily will prevent that 1472 level from being breached? Thanks.
Vikasrao,
Lot of upside moentum into the close.
Only the market knows for sure
Yes, you can clearly see that from McClellan break through downtrend line
also, structurally, the rally looks good and has steadily improved (OEW and MAI indicators)
http://markettime.blogspot.ca/2012/09/s-500-september-13-2012-2.html
the trend is your amigo
Thanks for all the great work Tony! I already await the Weekend Update. Your targets and pivots have been spot on. (Also, regardless of any opinions on the need or effectiveness of QE3…thank you Uncle Ben.)
Nice job Tony! Waves 4 are so tricky and you got that minute IV figured out perfectly( among other things). Kudos to you Tony and your OEW group, and thanks everyone!!
Tony, are you still thinking an Int iv could take us as low as high 1390′s? or has that level moved up now since we made it to the 1463 pivot? cheers and thanks for all the guidance. -rc
RC, set the parameters in the update.
Fourth waves during this bull market have been fairly weak.
Somewhere between 1396 and 1427 should hold.
muchas gracias!