wednesday morning

SHORT TERM: stocks open higher, turn mixed, then higher again
Overnight the Asian markets were sharply lower responding to the selloff in Europe/USA. China’s SSEC, which started this selloff, rallied 3.9%. Europe came in 1.2% lower again, but our stock index futures were rallying nevertheless. At 8:30 the revised Q4 GDP was released, and was adjusted lower, from 3.5% to 2.2%. For 2006 GDP is now forecasted to have grown at 3.1%, with only 1.9% growth in the Core CPI. At 10:00 Bernanke and Kohn both addressed the House Budget Committee. Stocks opened higher, pulled back for 15 minutes as the NDX/NAZ made new lows for the move, and then turned sharply higher. What is important after a selloff is always the nature of the response to that selloff. This takes a few days to unfold, but usually gives an indication of what is to come in the weeks ahead. We should have some idea by early next week. After yesterdays extreme short term oversold levels, a rally of some sort was expected. Bonds are down 1/4 point, Crude is $1.00 lower, Gold is $17.00 lower, and the Euro is also lower. Technically, most of the damage for this correction was done all in one day. Support for the SPX is at 1378, and then 1361. Overhead resistance is at 1417, and then 1432. These are all pivot points that were established during the advance. Yesterday the SPX closed just below the 1404 pivot created in early Jan. This should act as short term support, while 1417 acts as short trerm resistance. After a few days we should get an idea about this correction, and how it is unfolding. Best to your trading!
MEDIUM TERM: neutral
LONG TERM: bullish. 

About tony caldaro

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4 Responses to wednesday morning

  1. tony says:

    Hi … todays stock market rally was lackluster.
    The NDX did make a lower low early, and remained weaker than the SPX.
    Normally, we should expect the market to correct for several weeks.
    If the current rally does not gain more upside momentum, I\’d expect the lower pivots to be tested: 1361 and 1378.
    Hi Frank,
    Gold was $14 lower today, but GLD was up the eqivalent of $10.
    People panicked yesterday afternoon. Selling everything.
    Today everything normalized again.
    Gold still loks good to me.


  2. Anonymous says:

    Hey Tony:
    according to your quick post from last night, where you stated the low for all last 3 severe sell off was made the day after..todays low on S&P is you think market would bottom out around then or do you think it would break that level and test 1360 range? ..also, is there anyway of knowing how long this correction will last before we move back up? thanks


  3. Frank says:

    Hi Tony,
    Do you have any thoughts on how Gold got sold off after commodity pit closed yesterday?  Do you think is because of gold/metal ETF and people are getting out on whatever they can get their hand on?  Or did people get out of gold just to raise cash?  Or did gold use this opportunity to do some correction after such a long run up (7 week run up)?


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