SHORT TERM: gap up opening continues rally, DOW +128
Overnight the Asian markets gained 0.5%. European markets opened higher and gained 1.7%. US index futures were higher overnight too. At 8:30 the CPI was reported positive: +0.6% vs +0.6%. At 9:15 Industrial production was also reported positive: +0.4% vs -1.2%. The market gapped up at the open to SPX 1446 and continued to rally. The SPX closed at 1440 yesterday. At 10:00 the NAHB index was reported at a 6 year high: 42 vs 41. The rally continued until around noon when the SPX hit 1456. Then with an extremely overbought short term condition the market started to pullback. Just past 3:00 the SPX hit 1451, and then rallied into the close to end the day at 1455.
For the day the SPX/DOW were +1.00%, and the NDX/NAZ were +1.30%. Bonds lost 15 ticks, Crude added 25 cents, Gold rose $11, and the USD was lower. Medium term support rises back to the 1440 and 1389 pivots, with resistance at the 1499 and 1523 pivots. Tomorrow: Housing starts and Building permits at 8:30.
The market gapped up today, and continued yesterday’s rally as the SPX hit 1456. This is now a 30 point rise in just two trading days. A bit more than a 61.8% retracement of the entire 45 point decline. With the NDX/NAZ in a confirmed downtrend, and the SPX/DOW caught somewhere in the middle, the current situation is a tough call medium term. The OEW short term charts, however, swung positive at the open for the first time since the recent decline began. Tech stocks and AAPL performed well, but the banks did not. Short term the market is positive but extremely overbought. The next pullback/decline should give us a clearer picture medium term.
Short term support is at the 1440 pivot and SPX 1422/27, with resistance at SPX 1463/64 and the 1499 pivot. Short term momentum ended the day quite overbought. The short term OEW charts turned positive with the swing level now SPX 1443. Best to your trading!
MEDIUM TERM: uptrend in jeopardy
LONG TERM: bull market
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10 yr Bond
blast off. might get one more ST buy of the dip, but this baby is moving to 2% methinks
*as i said*
Thanks RC !
I’m macro and cheese
but it’s nice to get paid every now and then for the effort.
The season of the VIX is upon us if you listen closely here.
hahahaha nice Tony !
So that’s Lohan’s Out of Jail free card secret.
Lee, thanks ! Can you tell us :are you holding short overnight, or day-trading it. thanks.
Is the 30yr bond as good as the 10yr bond for trading if one would want to short it., anyone? thanks
Market looking nice and resilient here. Nice little pullback to cool things off for a day or two. Housing on FIRE – awesome numbers – and should support this bull longer term…Most European and developing countries just beginning bulls breaking out of bases. We’re at a rare point in history for investors here. Thing of beauty.
Agreed tommyboys
Tony – let’s just suppose major 3 completes at 1499 – what would you believe major 4 levels/targets to be. Not trying to get ahead of things just trying to get a visual on your SPX daily and weekly charts.
Thank you
It would have to be quite short like Major 4 of Primary I, to avoid an overlap
NASDAQ 5 up intraday
http://www.wavegenius.com/2012/10/17/nasdaq-visual-chart-5-waves-up-from-the-3-day-low/
Hi Tony, does $cad looks like it has completed a C up on your daily chart yet? Or it’s still in some kind of a wave 4 pullback with w5 to come? Thanks.
http://stockcharts.com/public/1269446/chartbook/163106341;
Hi Mont
negative divergence at high suggests lower
If this market wants to give us a downside surprise, I may expect something like this count.
http://scharts.co/R9PHUZ
http://www.marketwatch.com/story/10-greatest-market-crashes-2012-10-17
What do you think, Tony ? would OEW agree ?
Not with all of them
Good to know that =)
http://en.wikipedia.org/wiki/List_of_stock_market_crashes
Tony, Interim V looks on?
Tony – odd behavior in DOW vs. SPX today – market weighted components under performance in DOW the reason?
Thank you
PB,
IBM missed on revenue, and INTC disappointed
resilient
hello Tony. you say big number for vix in the coming months. what´s target and time frame?. it means you expect a bigger correction before final leg up in markets that can take months?
Per,
No specifics yet. But we think the VIX recently ended its bear market.
http://stockcharts.com/h-sc/ui?s=$VIX&p=W&st=2006-07-01&en=(today)&id=p49683920464&a=177859798&listNum=11
SPX on verge of breakout after ABC flat
http://www.wavegenius.com/2012/10/17/spx-visual-30-day-1-minute-chart-on-verge-of-breakout-after-abc-flat/
RUT vastly outperforming, it has been a long wait….
all shorts successfully squeezed out now? rallied back to 76.4% retrace. feels like a short term trap here
and VIX has been resilient lately. the last time the SPX was at 1460 – abt 10 days ago – the VIX was a point lower.
VOL increases as a bull market rolls into its last year or so.
We’re expecting big numbers again in the months ahead for the VIX
starting to look pretty Int wave V-ish…
Agreed
But still wondering about the potential “a” on the SPX 60 minute chart Tony has.
Makes me wonder.
Tony is there a level if passed that “b” would not be viable and this would indeed look more like a V?
Thank you
Cheers
PBnj,
Have an alternate count on the DOW.
SPX 1463/64 looks important.
Ahh – yes – I see it now
Man your good – always one step ahead of my next thought
Thank you
Cheers
Gr8 question pbnj, thanks. Was wondering abt. the same thing ..just wasn’t sure how to ask .. And thanks Tony.
wow, another strangely strong economic number heading into the election. surprising!
Enron/Worldcom numbers.
Or, the economy is actually improving as expected.
improving, yes. blasting off? hmm…
http://caldaro.wordpress.com/2012/01/22/has-the-us-housing-market-really-bottomed/
http://caldaro.wordpress.com/2012/03/20/quick-update-on-housing/
http://www.businessinsider.com/case-shiller-june-2012-8
i agree. not refuting that housing has likely bottomed. it was more a comment around the uncanny and convenient very strong economic data beats vs. estimates, across multiple indicators. this just being yet another one.
Timing is a bit odd, but the WLEI has been rising since Q4 2011
just curious, do you know how much of the WLEI is driven by equity gains and rate declines? i know those are two components of LEI but haven’t ever dug into the weightings.
Had the weightings once.
Did not notice it too heavily weighted in equities.
Did notice many bears comparing the LEI to the SPX
gotcha. that seems consistent with what i recall as well (the weights weren’t that meaningful). though if one believes in the reinforcing/momentum effects of a rising stock market on confidence and economic activity, i don’t see any problem with there being a positive correlation between the LEI and SPX.
Agree,
Actually the WLEI has been more negative, at times, than the stock market in recent years.
The 30-share BSE Sensex opened Wednesday’s trade with more than 100 points gap up following strong earnings from US that lifted Wall Street 1% yesterday.
nifty tips free trial
i don’t think we can attribute any US rally to strong earnings. at least not this quarter
Thank’s Tony
Looks like the nyad cumulative will beat the indices to 52 week highs.
http://scharts.co/V5IIw5
Bull market viking death march continues. Go Giants & Tigers
http://yohvLmPpdEutu.be/8wU
There are years of suppressed bullishness looming since wave 1. This bullishness is like a leap of faith that will unwind towards christmas. Two small bubbles on macd will be followed by one big bubble that will take us to 1800 on SPX, thats my take on it. There is just too much aggressive pessimism in the market for things to stall.
Rob,
That bull market indicator still looks good
Thanks, Tony.
I see you updated the charts and we may have several alt counts, now.
I wonder where should we look to get more clues ? DXY, SOX, TRAN ?
DXY probably
Hey man, I wasn’t ridiculing you, I was just trying to watch your back. In your original question you had stated ” the low of Friday should hold for a few weeks at least even if S&P stalls”. I just wanted you to know that Friday’s low could be taken out tomorrow or Thursday. The S&P just rose 30 points in 2 days, it surely can drop that much and more in the next 2 days.
“should” is different than “will” in my vocabulary
first rule of my trading book is to define exit strategy
what you described, to me (and I may be wrong), sounded like trading breakouts. That is not just how I trade and use cycles
and, I don’t gibe a hoot who might be ridiculing or not
and, I don’t really care what others may or may not think of my methods — to each his own, to you your own, and to me my own
oh, wait was that that terrible drill sargeant…in…what was that movie with Bill Murry??….lol…that’s so funny Lee…..Okey dokey, everybody is relaxed now… =)
you quoted incompletely, you omitted the qualifying conditions: “If I am correct assuming that we have had at least a short-term cycle low”
there is always a possibility of anyone to be wrong
yesterday, I said about the trailing stop, that is for the possibility of being wrong
I do what I do, and I am, so far, quite comfortable doing it
Chill out man, I honestly was just trying to help you out. D
I liked Tonys Dry bulk BDI analysis, and this sector is continuously beaten down along with Solar and Nuclear plays, track some of the solar plays they follow the inverse founds for the last couple of years. Catching the bottom in these sectors is difficult, however bleak it may be I think Asia should strengthen together with USA and then hopefully drag Europa along. Its always us the traders (or the bots) that can turn a trend and at some point investors think enough is enough, then it miraculously turns. End Oct to early Jan is a favorable time in stocks so why shouldnt we follow Asia upwards (I think Japan will be very strong if they vcn break the trading range of the last couple of years. After the financial crisis they did a somewhat non symmetrical ABC up and then many ABCs down from the top that could( in whole) constitute a 5 wave structure made from mostly ABCs and a 5 wave structure from 10 000 to end the 5 th wave. After the last decline small bumps with higher highs and higher lows. As I see japan its stuck in a tight range where trend is tilting upwards. Lets see….it could be a 3-5-3 and then we would be in for a great rally.
Its always us the traders (or the bots) that can turn a trend and at some point investors think enough is enough, then it miraculously turns.
low risk folio is up 7.0% vs. $iwr down 1.12% benchmark since inception about 1 month ago.
from blog yesterday:
Submitted on 2012/10/15 at 7:03 pm
1. closed 20% allocation of tna shorts from 61.43 at 59.46 for a profit of 3.20%.
2. closed out additional 10% allocation of tna shorts from 58.60 at 59.46 for a 1.46% loss.
3. added 20% tna long allocation at 59.47, in addition to high risk folio, roadmap folio and low risk folio i am now 70% long, no shorts.
Upward .786 breakout levels
http://www.wavegenius.com/2012/10/16/elliott-wave-forecast-video-for-10-17-12-upward-786-must-break-levels-youtube/
Tony, is the major 3 interim iv finishing at the recent lows and now v possible?
possible
Tony Tough to follow since Fri! Oversold bounce or more to come?
Les,
Short term up … SPX/DOW is influenced by an uptrend
Spain got affirmed investment grade (Baa3) by Moody’s after-hours, as an fyi. Many (including myself) thought there was a good chance they would be downgraded to below investment grade. But, as is the case with most anybody with power these days, Moody’s ignored their own rating criteria and just kept them IG. Another notch in the rating agencies’ belt of failures and further feeding the ‘maybe if we just ignore it, it will go away’ mentality. Good work guys.
Ratings agencies are all but played. They’ve lost all credibility on Wall Street and Main Street and are ignored by both. We too many conflicts with these guys. Most now take a contrarian view here.
Well, yes and no, Tommy. I agree with the lack of credibility. However, I wish it were that simple and that was the end of it. Unfortunately, there are far too many aspects to our markets that still rely on them. As long as that is the case, they will always have a meaningful effect on the real outcomes in the market.
For instance, if Spain were downgraded to junk, any banks who have posted Spanish bonds to the ECB as repo collateral would have to retrieve those bonds and post new collateral; unless and until Spain agrees to be part of the ESM mechanism, their bonds would not be admissible collateral (if downgraded). This has real effects, which I’m afraid cannot be ignored no matter how worthless we think the agencies are.
If there were just the completely ineffectual voices we all consider them to be, it wouldn’t bother me so much. The fact that so many financial contracts rely on them to maintain relevance, and their unwillingness to do so, is what upsets me.
They rate whom they’re retained to rate…fox watching henhouse. Model rapidly eroding – ultimately to fade into oblivian.
Hey Mario
I think something got lost in translation . Cheers!
All these charts look promising
http://scharts.co/QTZvnm
http://scharts.co/XbiriT
http://scharts.co/Xbizij
However, the tech sector is still weak (in my opinion) and it may be vulnarable yet.
M1, Cabo Blanco is the old fishermans-town of Ernst Hemingway, and they serve wonderful Cerviche there. However the wave is hollow and to me its all one closeout… if skilled enough its a master place. Here in Chicama we enjoy the longest left-hander but its still fast peeling and difficult.
Thanks, Tony.
It is amazing how things change in one single day. Someone did mention yesterday abt trading the trend…(down). Another, abt a drop of 40%.
This shows all of us how tough is making a call.
I did sell my long positions (blue chips) (75%) at the open. kept my short positions in the tech sector (75%).
.
Hey Mario
It is tough..but to be fair the guy u posted saying he see’s a 40% decline was in the next 12-15 months so he’s looking better and better
=)
Don’t take my comments too serious.
I may join your bearish forecast when the market give us some more clues.
Enjoy the evening
Bonds….Just do it
If I am correct assuming that we have had at least a short-term cycle low, the low of Friday should hold for a few weeks at least even if S&P stalls
selling puts (or put spreads) into oversold on daily frames has been fine and dandy for quite some time in this market
That is a negative, to confirm Friday’s low @ (1425.63) low you would have to take out the previous Friday’s high of 1470.96. Also remember that the previous high on 9/14 was (1474.51), from there it went to (1430.53) on 9/26. From the (1430.53) the S&P then made a lower high on 10/5 of (1470.96) than the previous 9/14 high of (1474.51) on 9/14. It then on to make a lower low than the previous 9/26 (1430.53), when it made the (1425.63) low this past Friday . Lower lows, lower highs=downtrend. Higher lows, higher highs=uptrend. Hope that helps, just start looking at the charts, it’s a lot easier when you have a visual.
that is not how cycles work — sorry!
Piazzi, thanks, What’s your next window for a cycle high, if you have it available pls. Thanks.
short-term and intermediate tops, unfortunately, have not been coming at any tradable pattern pattern that I could use
Martin Armstrong has long-term cycles and he looks for tops in his confidence model but shorter term he has a bunch of dates and he says they are only turn dates not that what direction he predicts
a couple of other cycle practitioners I have studied who have more practical trading models go low to low
but what I can say is that a cycle is right-translated, then the top has a probability of coming after the mid-point of its low-to-low window
I just wait for a probable low in a timing band and go for a trade and see what happens — I either stop or get to ride some sort of a trend — either short, or intermediate
Thanks Piazzi. Appreciate it!