friday update

SHORT TERM: volatile session, DOW +4

Overnight the Asian markets lost 0.9%. Europe opened lower and lost 0.1%. US index futures were substantially lower overnight, then rebounded when the FED released this: http://www.federalreserve.gov/newsevents/press/bcreg/20121109a.htm. At 8:30 Export (+0.2% vs +0.7%) and Import prices (+0.3% vs +0.2%) were reported higher. The market opened lower at SPX 1374, dipped to 1373, and then started to rally. At 10:00 Consumer sentiment was reported at a five year high: 84.9 vs 82.6, and Wholesale inventories were reported higher: +1.1% vs +0.5%. At 10:30 FED governor Duke’s speech was released: http://www.federalreserve.gov/newsevents/speech/duke20121109a.htm. Then at 12:00 the FED made this release: http://www.federalreserve.gov/newsevents/press/bcreg/20121109b.htm. The market continued to rally until about 12:30 when the SPX hit 1391. At 1:00 President Obama spoke about the pending Fiscal Cliff. By 1:30 the SPX was trading at 1379. It then tried to rally again. By 2:30 the SPX had rallied to 1388, but headed lower again. At 3:30 the SPX retested 1379, bounced to 1385, then ended the week at 1380.

For the day the SPX/DOW were +0.10%, and the NDX/NAZ were +0.40%. Bonds gained 1 tick, Crude rallied $1.00, Gold slipped $2, and the USD was higher. Medium term support for the SPX remains at the 1372 and 1363 pivots, with resistance at the 1386 and 1440 pivots. Today the WLEI was reported lower: 55.1% vs 55.9%.

The market opened lower today, made a new downtrend low at SPX 1373, (the 1372 pivot range), then rallied to 1391, (the 1386 pivot range). The market then pulled back to SPX 1379, rallied to 1388, and retested of 1379, (all within the 1386 pivot range). The most noticable technical on the day was that we can now count five waves down from the early November SPX 1434 high. More on this in the weekend report.

Short term support remains at the OEW 1372 and 1363 pivots, with resistance at the 1386 pivot and SPX 1396/98. Short term momentum bounced to neutral today, after being extremely oversold, then ended the day near oversold. The short term OEW charts remain negative with the swing level now SPX 1404. Best to your weekend!

MEDIUM TERM: downtrend makes new low

LONG TERM: bull market

CHARTS: http://stockcharts.com/public/1269446/tenpp

About tony caldaro

Investor
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15 Responses to friday update

  1. fishonhook says:

    What happened to all the ‘positive divergences’ ? Seems like reading tea-leaves is just as likely to be write.

    • The Homeless Daytrader says:

      Divergences are coincident indicators, not predictive. There are certain price action patterns which, when accompanied by a divergence, provide a low risk entry at a potential turning point . by “low risk” I do not mean that there is a high likelihood of winning your bet. Rather, by “low risk” I mean there is a realtively small amount separating your entry price from your stop loss (such as when Lee points out a “cheap” short or a “cheap” long).

      On a daily chart, for example, my entry, if trading a price pattern accompanied by divergence, would be a higher daily high than the day that marked the bottom. My stop loss would be below the low of the day that marked the bottom.

      Also, I do not need divergence to trade. In my opinion, too much is made of them. If price action itself indicates a potential bottom or top, I’ll take the trade. I always trade with a stop loss.

  2. Tony, What’s the worst case scenario for this correction to end at ? After which this bull count becomes doubtful. Thx

  3. robslob64 says:

    I’ve asked this before and forgot…what does WLEI stand for?

  4. CB says:

    thanks Tony! Do you think that crude oil has bottomed ST/MT? TIA.

    • tony caldaro says:

      CB,
      Positive divergences, hourly and daily, plus up this week.

      • CB says:

        thanks Tony! That sounds really good. Maybe the new Chinese leadership will try to pour gazillions into their economy now, which could really help the ‘material world’ recover. Looking forward to ur weekend update.

      • magnus1234 says:

        @CB: Your Chinese thinking is very much the way I think. The Ch have just been waiting for the congress to end and then will add more stimulus.

      • CB says:

        that’s interesting, Magnus. Thanks. We should know pretty soon then. One would think that the new guy just has to start things on a very positive note..otherwise, social unrest might follow.. and they def. don’t want to see that..

        Great weekend update Tony. Maybe I have missed the info. when you discussed QE3 (in which case could youp ls. direct me to the appropriate date?) …how big is QE3 compared to Qe2? and how does QE3 change your view that primary III should top @ around 3. tln. in monetary base. Thanks Tony.

      • tony caldaro says:

        CB,
        Have not put any definitive numbers of QE 3, publicly.
        There is thus far a two month delay in seeing anything in the monetary base…normal

      • CB says:

        thanks Tony. Appreciate the info.

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