wednesday update

SHORT TERM: market rallies after yesterdays debacle.
Stocks opened higher this morning, turned mixed, and then moved higher again. However, the trading range of the entire day occurred within the first hour or so. The NDX/NAZ made a new low for the move early, and then moved higher with the rest of the market. Today looked like a typical reflex reaction to a sharp selloff. Now that we have day one behind us, the next few days should give us a hint at what to expect in the coming weeks. The short term EW pivots mentioned this morning contained most of the entire days activity: SPX 1404 and 1417. Bonds closed about 1/2 point lower, Crude was again higher +30 cents, Gold was $14.00 lower but GLD recovered, and the Euro was down slightly. At 10:00 it was reported that the Chicago PMI declined to 47.9% indicating a continued contraction in manufacturing in that region. New Homes sales dropped 16.6% in Jan, quite a difference from the 3% rise in existing home sales reported yesterday. Home builders are working off inventory, and it would appear the prices are still too high for consumers. Tomorrow two important economic indicators: Jan Core PCE, and Feb ISM. If the economy continues to weaken as expected, we may get that rate decrease in March afterall. Today Bernanke and Kohl continued their verbal assault of the fiscal irresponsibilty of the current administration, and the continued failure of past administrations, to deal with the future. At the close: SPX/DOW were 0.50% higher, and the NDX/NAZ rose 0.30%. The market recovered a little of yesterday’s decline, but it wasn’t much.
MEDIUM TERM: neutral
LONG TERM: bullish.

About tony caldaro

Investor
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5 Responses to wednesday update

  1. tony says:

    Hi Mhashe,
     
    Tend to agree with you.
    A good setup would be a countertrend rally, and then a test of SPX 1344, as reported over the weekend.
    Should take a few weeks to unfold.
    Thank you for your comments!
     
    tony

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  2. M says:

    Hi Tony, I think there are still some sellers in the stock market. As I commented in Jan, I was expecting this correction. I\’ve been in mostly cash this past month except for a few index and stock puts. I think we\’re near the immediate bottom and we can expect the US stock market start to make a weak retracement up by the end of this week. This time I expect to use the retracement to get fully positioned on the short sell side because I don\’t see any near term demand areas until the SPX gets close to 1340 which is close to your 1360 area. Keep up the great work, your blog is one of the very few I enjoy reading.

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  3. tony says:

    Hi!
     
    The SPX advance from the July 2006 lows was a large impulse wave: Intermediate wave iii.
    Minor waves 1 thru 4, clearly impulsive, completed at the early Nov lows of SPX 1361.
    From those lows, a minor 5th wave unfolded in the form of a diagonal triangle.
    Since diagonal are overlapping waves forming a wedge, I do not label them in numbers, but letters to display the difference.
    Each wave of the diagonal must be a three wave structure, so they would could contain what appears to be overlapping impulse waves. Quite normal. Wave A was quite extended, but as the wedge continued to form, the waves accelerated in time. 
    The labeling is relatively conventional EW. Sorry for the confusion. 
     

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  4. Unknown says:

    I believe it is a generally accepted practice to count diagonal triangles either 1-2-3-4-5 or a-b-c-d-e.  I think the letter terminology is to allow for the fact that each wave of a diagonal is actually a "3" and not a "5".  I usually label them 1-2-3-4-5 as you mention, but Tony probably lists them as letters to clarify to others.  It makes no true difference.  He\’s certainly not throwing out any rules.
     
    Greg

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  5. Mark says:

    Hello
    Your S&P wave count confuses me, since when is ABCDE corrective waves included in a impulse wave count?  If the last waves in an uptrend overlap, these can be counted as 1,2,3,4,5 in a blow off top, an ending diagonal.  If people start start including corrective wave counting in impulse moves, you may as well throw all elliott rules in the bin and just make it up as we go along?

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