wednesday update

SHORT TERM: market opens higher, then resumes downtrend, DOW -185

Overnight the Asian markets gained 0.6%. Europe opened lower and lost 0.9%. US index futures were higher overnight. At 8:30 the PPI was reported lower: -0.2% vs +1.1%, and Retail sales were reported lower as well: -0.3% vs +1.1%. The market opened higher at SPX 1377, rallied to 1380 in the first few minutes, then began to pullback. The SPX had closed at 1375 yesterday. At 10:00 Business inventories were reported higher: +0.7% vs +0.6%. The market continued to pullback until it hit SPX 1365, the 1363 pivot, at 11:00. A rally attempt followed, topping at SPX 1371 by noon, then the market headed lower again. At 2:00 the FED released its FOMC minutes: http://www.federalreserve.gov/newsevents/press/monetary/20121114a.htm. After this the downtrend starting making new lows. Heading into the close the SPX hit 1353, then closed at 1355.

For the day the SPX/DOW were -1.40%, and the NDX/NAZ were -1.35%. Bonds gained 1 tick, Crude rallied 75 cents, Gold added $1, and the USD was lower. Medium term support now drops to the 1313 and 1303 pivots, with resistance now at the 1363 and 1372 pivots. Tomorrow: weekly Jobless claims at 8:30, along with the CPI and NY FED. At 10:00 the Philly FED, then at 1:20 FED chairman Bernanke gives a speech on Housing.

The market opened higher today, hit SPX 1380, pulled back to unchanged at 1375. Then it quickly broke through the downtrend low at SPX 1371, on its way to 1365. After setting up a positive divergence at that low the market tried to rally. But the rally came up short, at the previous SPX 1371 low, and the market headed lower. After that the market broke through the OEW 1363 pivot heading into the close. This was a bit of a surprise.

Thus far this downtrend has declined from SPX 1475 to 1353: 122 points. The Minor C wave, (counting Minor A @ SPX 1426 and Minor B @ SPX 1464), is now approaching 2.618 times the length of A. This will occur at SPX 1345/46, which is also a 61.8% retracement of the uptrend. There is a positive divergence on the hourly charts. But the daily charts lost their positive divergences today. Excluding Primary II, the largest downtrend of the entire bull market has been 134 SPX points. It bottomed the day after Thanksgiving in 2011.

Short term support drops to SPX 1342/47 and 1333/38, with resistance at the 1363 and 1372 pivots. Short term momentum is quite oversold and displaying a positive divergence. The short term OEW charts remain negative, with the swing point SPX 1389. Best to your trading!

MEDIUM TERM: new downtrend low

LONG TERM: bull market

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

About tony caldaro

Investor
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105 Responses to wednesday update

  1. pbnj123 says:

    Nice to finally see a day where we are not closing on the lows ;-)

  2. LX says:

    Long .ESZ for a swing…DJIA new low SPX and Nas not

  3. H D says:

    Don’t mess with the golden ratio! today was a good day. Didn’t lose any money. Cya’s

  4. kvilia says:

    My guy told me to close short positions, so I did :)

  5. piazzi says:

    Tony said:
    “Zero Hedge is like Chicken Little … the sky is always falling”

    and ground is always sinking at the same rate, so, relatively speaking, we never get to touch the falling sky — BUMMER!!!!

  6. vishal409 says:

    Lee, your twitter guying spotting some Institutional buying?

  7. ajaysinghi says:

    As suggested yesterday, indices did make new low. Remains to be seen if there is any bounceback.

  8. H D says:

    Bear trap below 1350? Some r buying here. GL

  9. ronini3 says:

    PG looks can be a play on the hourly chart. Waiting to see the next bar. 65.83 is most likely the low for this down move, if not, a marginal low in the next few bars.

  10. H D says:

    Shake N’ Bake. always a fav in my house. Scalporama.

  11. LX says:

    1 last thing ..I think there’s some buying going on in ESZ..GL

  12. LX says:

    Jump in Jobless claims blamed on Sandy…I didn’t realize that Pennsylvania and Ohio were hit that hard…Think for urselfs and have a great week !

  13. ko68 says:

    A bottom probably in place this week Tony?

    RSI14 at 27-level seems attractive to me.

  14. M1 says:

    The Dow is laying at the 20 mma….. http://scharts.co/X4Pmpb
    This level should be a good support.
    GL

  15. pas1968 says:

    Hi Tony,
    Looks like Shanghai in the process of making the ’5′ bottom?
    How low will ’5′ be will be interesting to see.
    So when Shanghai turns up again will it be time to buy?
    Cheers
    Paul

  16. deltastrikejj says:

    interesting that % of stocks above their 200 day-MA has fallen to under 40% as of today. this level has been a good zone for registering intermediate extremes as shown here.. http://www.barchart.com/chart.php?sym=$MMTH&t=BAR&size=M&v=0&g=1&p=D&d=X&qb=1&style=technical&template=

  17. Igor says:

    A Technical Analyst and a Fundamental Analyst are chatting about the markets in the kitchen.
    Accidentally one of them knocks a kitchen knife off the table landing right in the fundamental analyst’s foot!
    The fundamental analyst yells at the technician, asking him why he didn’t catch the knife?
    “You know Technicians don’t catch falling knives!” , the technician responded.
    He in turn asks the fundamental analyst why he didn’t move his foot out of the way?
    The Fundamental analyst responds, “ I didn’t think it could go that low”.
    http://allstarcharts.com/i-didnt-think-it-could-go-that-low/

  18. M1 says:

    Thanks, Tony.
    The trend line support was broken (Dow)…..http://scharts.co/PAPVI5
    Now, the Dow is laying at the 20 mma….. http://scharts.co/X4Pmpb
    I am expecting a stronger turbulence (up and downs) if this support is broken in the short term.
    GL

  19. maks12 says:

    Tony, does losing the 200 day affect your outlook any?

  20. Hi Tony,

    I saw you took down the alternate count on FB. Stock had a big move today.. is there a price level that would cause you to reevaluate the primary count? Maybe there was just a short squeeze today and it will head lower later this week.

    • tony caldaro says:

      Kyle,
      FB has been a contrary stock since its IPO.
      Usually the market rallies and FB falls, and via versa.
      Still in a downtrendm despite today’s advance.
      Which was also odd: rallying with the release of 800 mln shares.
      Was quite nice of the market to give those sellers a better price, while the stock market was down over 1%.
      Toyed with that alternate count, but it didn’t make much sense.
      cheers!

  21. The Homeless Daytrader says:

    Down we go …

    Bulls need to make a stand above 12035, or it is game, set , match.

  22. Greg Polites says:

    Hi Tony; We’re half way in one day to the drop we discussed yesterday – SP 1325 (http://hgpolites3.wordpress.com/). Does this size of a drop increase the probability we’re in a primary wave IV pullback – or – something larger?
    Cheers,
    Greg

  23. Gary Dean says:

    Hey Tony-I am not sure I am understanding the largest drop of the entire bull market was 134 points. There was a 300 point drop in 2011 and just the last one this year was 190 points +-. Thanks in advance. G-

  24. Tony, the pullback has been much more than expected for this wave type. Any need to change the long term outlook yet?

  25. pbnj123 says:

    I know hope is no trading strategy – but I hope we get a sizable bounce and soon…

  26. vorfahrt says:

    Maybe we need a 150+ comments day before the bottom again…

    • CB says:

      =) ..I think there is a law that says that the market will always continue to move in a direction that nobody anticipates/understands, and it’ll continue to do so until….well, until everyone understands everything completely =) and then the market will violently reverse its direction and nobody will understand anything again…

      • CB says:

        =) oh wow, when at least 1 person agrees w/me that’s a good day for me Tony! Theorizing is good, but monetizing is better =) just ask Lee cuz I think he’s really the only one that truly knows how important it is to be ahead of the crowd to be successful at this game..

  27. tony caldaro says:

    CB,
    Wild day … bears are pounding the markets.

  28. CB says:

    “It bottomed the day after Thanksgiving in 2011.”
    Thanks Tony….So the Grinch is not gonna steal our Christmas after all , is he? =) ..geez, they’re really aiming for a new high somewhere near 12/21, aren’t they..

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