wednesday morning

SHORT TERM: market gaps up on GM/UAW pact, DOW +65
Overnight the Asian markets were mixed, but Europe came in 0.80% higher on the GM/UAW settlement. It was announced at 3 AM. The market gapped up on the news despite a worse than expected durable goods report. Within the first few minutes the SPX hit 1526, and the NDX made another bull market high. The only index making new bull market highs during this uptrend, thus far. Bonds are down about 1/2 point, Crude is up 30 cents, Gold $1.00 higher, and the Euro is lower.
Support for the SPX remains at 1506 and resistance at 1530. Short term momentum is rising into slightly overbought levels. Yesterday’s early selling tested support at 1506. The market held and has started to rally. This low should have completed Micro wave 4, as labeled on the charts. Expecting the market to again try to break through resistance at 1530, which has been a bit formidable of late. With the FED in accommodation mode, futures suggest another rate cut in late October. The Techs should continue to lead the way higher. They are quite overbought at the moment. Best to your trading!
MEDIUM TERM: bullish, targeting SPX 1620
LONG TERM: bullish 
   
 

About tony caldaro

Investor
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10 Responses to wednesday morning

  1. tony says:

    Hi Peter,
     
    Was expecting a retest of the lows with a certain oversold level.
    It did not occur. OEW has confirmed uptrends in all the indices.
    The market is extending Major wave 3 again, thanks to the FED action.
    I can only anticipate the future, can\’t predict it.
    Major wave 4 will have to wait for another time.
    The credit crunch was caused by subprime mortgage lock-up.
    Lowering the discount rate will help that situation.
    The decline in the USD is an G – 8 orchestrated event. Nothing new.
    best regards,
    tony
     

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  2. peter says:

    Hi Tony,
     But the Fed cut seems to be inspiring you to quickly change your Elliott wave count, even before there is any proof that this is not a B wave up in SPX ……How can you so quickly change from the \’rule of alternation\’ "flat "scenario you believed for so long?….You seemed disappointed that your lower pivot point target was not hit for a major 4…but this target is not etched in stone….so your logic is not understandable to me.
     I am spending most of my time reading and listening to top economists from major financial and research institutions.
      The fed cut can be seen as just helping the banks and brokers out of a crisis…and causing the OCT adj mtg\’ to reset lower at 6.75%…NOT helping and actually raising the interest rates that most  other people and businesses actually borrow at.
     So intermediate term the fed cut is not that much of a help…and the arguments that it the fed cut hurts the dollar causing less foreign buying of our bonds seems very strong.
      That inspires me that a sizable correction should be seen unfolding now or soon in the Elliott count…or at least we should be more guarded about that happening. 
     The long term SPX chart seems to allow that either a major 3 or primary 3 wave has ended….and the 4 wave could last a while.
      This is without even considering geopolitical wild cards like Iran that so many western nations are now speaking so strongly against.
    best regards,
    Peter F
     
     

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  3. peter says:

    Hi Tony,
     But the Fed cut seems to be inspiring you to quickly change your Elliott wave count, even before there is any proof that this is not a B wave up in SPX ……How can you so quickly change from the \’rule of alternation\’ "flat "scenario you believed for so long?….You seemed disappointed that your lower pivot point target was not hit for a major 4…but this target is not etched in stone….so your logic is not understandable to me.
     I am spending most of my time reading and listening to top economists from major financial and research institutions.
      The fed cut can be seen as just helping the banks and brokers out of a crisis…and causing the OCT adj mtg\’ to reset lower at 6.75%…NOT helping and actually raising the interest rates that most  other people and businesses actually borrow at.
     So intermediate term the fed cut is not that much of a help…and the arguments that it the fed cut hurts the dollar causing less foreign buying of our bonds seems very strong.
      That inspires me that a sizable correction should be seen unfolding now or soon in the Elliott count…or at least we should be more guarded about that happening. 
     The long term SPX chart seems to allow that either a major 3 or primary 3 wave has ended….and the 4 wave could last a while.
      This is without even considering geopolitical wild cards like Iran that so many western nations are now speaking so strongly against.
    best regards,
    Peter F
     
     

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  4. tony says:

    Hi Booker,
     
    Good point about the portfolio adjustments.
    Mutual funds basically chase the leaders, and make adjustments to their holdings to look good at the end of the quarter.
    Heard yesterday, 90% of the mutual funds are underperforming the SPX this year, 90%. 
    The Tech break I was referring to was only short term.
    The cyclicals look to be to seeking new leadership now, besides just GS. 
    GM and the auto sector might fill that void. 
    cheers! 

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  5. booker says:

     Hey Tony,
     
    Re: your comment "tech may take a break." I\’m thinking that the reason the SPX acts like it\’s swimming through tar while the NDX streaks ahead is where we are in the calendar. As the third quarter comes to a close, there could be some portfolio realignment, gussying things up. Plus some early tax loss selling. So what has not worked (financials, home builders, retail) gets sold, and what has worked (GOOG< RIMM< AAPL) gets chased. IF this theory is correct, and the market does move higher, in the fourth quarter the SPX should begin to move out of this area with alacrity.

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  6. tony says:

    Hi Peter,
     
    China beats to its own drum. 

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  7. tony says:

    Hi joe,
     
    SPX 1506 was met yesterday.
    Techs may take a break (made new highs to day again) while the cyclicals rally.
    Yes, SPX 1556 comes after 1530.
    Techs are only overbought short term, could resolve that in a day. 

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  8. peter says:

    Hi,
    China.
    OEW has Major 3 completing in china. Previous 4th wave, of one lesser degree, SUPPORT is 21% to 57% lower on the China chart …This gives me more belief that we are in final stage of a B wave in SPX.
    Whether China inspires our sell off or USA  or something else inspires China…Things seem too risky here.

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  9. Prakash says:

    Hi Tony,I am surprised that you expect minor 4 to be over – how can the combination of tech being overbought and start of minor 4 be in conjunction? If S&P were to break above 1530, wouldnt 1555 be next? wouldnt that move in S&P take techs even higher and make it even more severely overbought? is it likely? Joe

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