SHORT TERM: market still choppy, DOW -33
Overnight the Asian markets gained 0.2%. European markets opened lower and lost 0.4%. US index futures were higher overnight, and the market opened higher at SPX 1448. The SPX had closed at 1444 yesterday. Within the first few minutes of trading the SPX hit 1452, the high for the day, and then began to pullback in another choppy session. At 10:00 the SPX hit yesterday’s close at 1444, bounced to 1450 by 10:30, then pulled back to 1440 by 11:30. After another rally attempt, this time to SPX 1445, the market pulled back again. By 3:00 the SPX had reached 1439, and then rallied to close at 1446.
For the day the SPX/DOW were mixed, and the NDX/NAZ were +0.20%. Bonds gained 1 tick, Crude slid 75 cents, Gold slipped $2, and the USD was lower. Medium term support remains at the 1440 and 1386 pivots, with resistance at the 1499 and 1523 pivots. Tomorrow: ADP at 8:15, ISM services at 10:00, then the FOMC minutes at 2:00.
For the second day in a row, the market rallied at the open and made its high for the day before 10:00. Then it spent the rest of the day in pullback mode until nearing the close. This market appears to be looking for leadership. While market action has been quite choppy, since wednesday’s potential Intermediate wave iv low at SPX 1431. We continue to see these rallies and pullbacks as a base building process for eventually new bull market highs. The only thing that would change this view would be first a pullback to SPX 1436, and then below 1431. This would suggest the Int. iv pullback is still underway.
Short term support remains at the 1440 pivot and SPX 1422/27, with resistance at SPX 1463/64 and the 1499 pivot. Short term momentum hit oversold during today’s pullback, then bounced over neutral at the close. The short term OEW charts are still in neutral with the swing level at SPX 1447. Best to your trading!
MEDIUM TERM: uptrend
LONG TERM: bull market
Hi Tony – for FB if the tentative B gets taken out, what would the logical target be? Would it normally be 38.2 or 61.8 of the A-B-C major down? Thx, appreciate your feedback. Hfm.
In this case 38.2
3:07 PM The Syrian civil war spills over as Turkey says it has struck targets inside Syria in response to a mortar attack on its soil.
??? october surprise??
Would think a disruption in supply would drive prices higher.
it would seem so…Turkey is a part of NATO, isn’t it…and NATO can turn this into a big deal if they want to…we could really use a little strategy sesh with Dr. Cruda Lee, but I am already starting to sound like a broken record, so I’ll stop for a while …Lee, can you tell us what’s the latest in the oil patch?
Tony, do you know of any ETF that would be a good proxy for the roaring mortgage-processors?
no CB
thanks Tony. I am looking at charts like NSM and experiencing feelings of deep regret….. gonna have to do something about it..
I wonder if anyone in the Repubican Party has ever looked at the economy of Norway?
Here’s an extract from Wikipedia:
“The economy of Norway is a developed mixed economy with heavy state-ownership in strategic areas. Although sensitive to global business cycles, the economy of Norway has shown robust growth since the start of the industrial era. The public sector is among the largest in the world as a percentage of the overall gross domestic product. The country has a very high standard of living compared with other European countries, and a strongly integrated welfare system.”
According to the Republicans Norway should have gone bankrupt decades ago; but instead they’ve ended up with a higher standard of living than the US (according to the UN Human Development Index).
Seems to run completely counter to conservative economic thinking.
Perhaps the Northern European Social Welfare State Keynesian model can deliver a better solution for America than another dose of 1980′s style Friedmanomics?
Yeah, except they did not bring slaves years ago, and there are very few moochers there. If everything was that easy, there would be one model of success for all countries, and perhaps few people tried even name it communism. Did not quite work that way in Russia or N. Korea.
Not really a fair comparison: there was never a mixed economy in Soviet Russia, and unlike Norway it was never a democracy.
It seems odd to me that most Americans assume Friedmonomics worked, when the average real-terms wage packet in the US has been falling since the seventies!
Compare this with the Keynesian Post War Boom of Truman and Eisenhower, which delivered dramatically lower unemployment than the 1980s, or even the 1990s.
Eisenhower’s economy was mixed, with high levels of Federal spending on infrastructure (e.g. the Interstate network).
Alex,
Standard of living, in US, peaked in the early 70′s agree.
Then, it only took one income earner for a fmaily to live comfortably.
Now it takes two.
Sure the vikings brought home many slaves from their raids across Europe.
“Sure the vikings brought home many slaves from their raids across Europe.” -lol… wow, I didn’t know that .. maybe they didn’t interbreed, though..and kept their insular point of view…insular nations are always quite original =) …look at the UK, and Iceland recently
Thanks everyone. Hope that bearish pennant some folks see in SPX is not going to materialize tomorrow AM…. or maybe its not bearish.. and I see piazzi menioned 1400s in his comment…if I understand that cycle low window till Oct 4 correctly…
Any opinions on Crude here? – I’m still sitting on a USO position and it is a loser. The stock market is a winner for any brainless person, why did I choose to “diversify” with this commodity? – Duh.
Thanks, guys.
USO is a bad proxy for Crude.
Try DBO
would it really matter when the underlying issue falls into a cyclical low?
For the short term no.
But USO historically has had major slippage
I have personally washed my hands and accounts clean of all (non-PM) commodity ETFs. Either contracts, or contract options or nothing at all
contango is a problem with ETN’s
my methods indicate that crude has been working towards an intermediate cycle low due, “”"”Theretically/statistically”"” in the sep 7-oct 5 time frame
you have been holding it while it’s been working on its intermediate cycle low
mind you, cycles may stretch beyond theoretical/statistical windows, and we are getting close to election in US
vorfahrt – these two charts get updated EOD so they don’t show toda’s data yet yet ..both show support around $88 however. http://screencast.com/t/FxTa544c
http://screencast.com/t/rEN3BOmD isn’t it interesting that oil dropped hard on building inventories…crude oil sentiment must be extremely bearish by now….is there such a thing as crude oil VIX, anyone??
Thanks for the cycle info. Piazzi. Interesting!
dropped hard on lower inventories, rather…my bad
CB,
Crude may be dropping on the currency crisis in Iran
great point Tony. Maybe the powers that be decided a while ago that instead of starting a messy nuclear war, we could finish those guys off economically – cause them to implode internally by keeping a lid on oil prices….that’s a genius idea, of course…except applies equally to Saudi Arabia…. But yes if we have a friendly regime in Iran, we’ll have plenty of oil again…
yah, and the only people who make money on ETNs with rich contango are the ETN opeartors
Thanks to Tony, piazzi and CB for the comments! You guys are awesome. I think I will switch trading vehicles,but selling the position outright now does not seem to make sense. Looks indeed like an intermediate 50% correction of the recent move up including gap fill.
What I did not like about this is that PMs and stocks trade sideways or up, but crude got trashed. Two up, one down.
http://stockcharts.com/def/servlet/SC.pnf?chart=USO,PLPADANRBO%5BPA%5D%5BD%5D%5BF1!3!1.0!!2!20]&pref=G
W3 targets on .786 breakouts
http://www.wavegenius.com/2012/10/03/elliott-wave-noon-update-video-for-10-03-12-w3-targets-on-breakouts-youtube/
The market is always right. So it has the last word.
GL
+1
Nothing. I am getting tired. See you later.
GL
Hi Tony, When are the Fed minutes out and would they likely cause a significant move in either direction (do they generally). I have us coming into a bearish time frame in the next day or two and don’t like this recent action in the short term though I understand the argument for consolidation before breaking up and out again. Thanks, Alex
Alex,
Typically there is a lot of market movement after the minutes.
Ok thanks for that. For now I am looking at one more move up in the next couple of days but for all I know it could as easily do the exact opposite. Cheers. Stops are in place.
This market has to skyrocket. Labor market is improving. The Fed won’t stop printing money and “bad debt” around the world will be bought by central banks.
What also could we ask ?
write off credit card debt ?
maybe there’s still a contingent of investors that care about valuation, earnings and earnings growth…?
What’s earnings and earnings growth ?
Valuations are not nreasnable at all right now. Further if you back out cash they get cheap. Compare this to the Tech bubble back in 2000 where PEs averaged over 30 on the dow and were to the moon on the Naz with bond rates considerably – way – higher than today… We’ve got a long run ahead of us.
Make that “unreasonable” !
Nah, everyone follows Jim Cramer now
The most compelling studies I’ve seen – that is, equity return models that have the best historical track record for predicting future equity returns over longer time periods (3, 5, 10yrs) – mostly suggest present valuations are not attractive. The best models tend to rely on some component of dividend yield, dividend growth and changes in valuation (multiple). In assessing the valuation component, folks tend to look at longer term mean-reversion metrics, such as current Schiller P/E vs. trailing 10-yr P/E. By all these metrics, equities are not cheap. Despite what Jim Cramer says.
But, it’s a market, so everyone is entitled to – and encouraged to have – their own opinion! cheers
Place your bets per your beliefs.
a drop into 1400-1410 in the timing band for a cyclical low for additional longs followed by a continuation of the uptrend
S&P futures channel
http://markettime.blogspot.ca/2012/10/s-dece-futures-oct-3-2012.html
Hey everybody. I was just wondering what people’s thoughts were on FXI. Good dividend and it looks like it could start to rally soon.
Thanks Tony for all of your posts. Thanks to everyone else as well for keeping things interesting.
B
And by rally I mean it could rally even more than it has in the past while.
Thanks.
just a thought , cuz I have no position in it – looks like it’s stopped at the 200dma for the 3rd time now…maybe a candidate for re-testing that recent low, again?…33.50 ish looks key… GL BC!
meant 33.50ish = key support…
Thanks!
Thanks, Tony.
many thanks,Tony, for all the work you do and share with us here!
Never heard of that survey but since BOFAML is kind of a big deal
maybe one should pay attention to that..
http://www.alsosprachanalyst.com/markets/wall-street-strategists-remain-bearish-says-bofaml.html?utm_source=dlvr.it&utm_medium=twitter
CB,
Had heard money managers were the bearish they had been in many years.
That chart suggests the same.
They’re telling us what you’ve already told us,Tony.. onwards and upwards from here…with a few occasional bumps as always..=) nice job on int. IV,Tony! …I was staying up till 1 am like a desperado the other day to clean up my short…unnecessarily as it turnd out a little later on…so all I can do is laugh at myself from time to time and try to go with the flow…waiting fot that swing point to be confirmed…or not, preferably sooon
GL CB!
thanks Tony! Hopefully this market gets interesting enough for pros like Lee to want to stop by sometime and rally the troops again
This chart says it all. They’re gonna have to chase at some point. Most managers are having a poor year – in fact the poorest in 6 years. Lots of money on the sidelines waiting to enter. Once bonds turn down in earnest we should see some powerful moves higher. Another huge catalyst will be the resolution of the “fiscal cliff” – which WILL happen. Gonna be fun for a while.
fiscal year-end on oct 31 for some folks…
I’ve just concluded doing a large study for my firm regarding the fiscal cliff, market assumption, implications and scenario analyses, and one of my key takeaways is that there is a massive divergence between the expectations of market participants/market strategists and political analysts regarding the probabilities of outcomes. That is, the street is typically overly optimistic about the ability and willingness of politicians to make rationale decisions.
In talking to the market strategists at most of the top banks over the last few weeks, it was clear that in their own client conversations with other clients there is a broad sense of “it will be resolve” or “it will be punted.” I don’t think many folks in the market are prepapred or positioned for political stupidity to occur at year end. Since everyone already expects it to somehow go away or become a non-event, I feel like the tail risk is down and not up. Talk to some Washington insiders like Stan Collender and Keith Hennessey and you’ll discover that the views of those who actually understand the competing political motivations and machinations of the parties involved are much less optimistic about a nice clean resolution of our fiscal issues by year-end. Just my two cents
Major wave 4 RC?
RC – Major Bradley Turn Indicator 22/12 (possible Major 3 high) followed by another Major one in late January 2013. Maybe that’s your Major 4 ‘done and dusted’ (just putting it out there). There are 3 more in 2013 – mid-June (potential high Major 5 P3?), early Oct (potential low Primary IV?) and mid-Nov (Primary V high?).
It’s definitely too far out to predict such things but worth bearing these dates in mind.
Tony – re Major 4, sounds pretty reasonable to me