wednesday update

SHORT TERM: market soars on Kohn’s comments and beige book, DOW +331
Stocks gapped higher this morning after the vice chairman of the FED Kohn suggested that rates will not be going up anytime soon, and banks should be more accommodative at the loan window. Within the first few minutes of trading the SPX rallied past the resistance pivot at 1438 and continued higher. By 1:30 it challenged the next resistance pivot at 1462, steadied, and then moved higher again to close at 1469. Quite a performance considering the much beaten down financial sector rallied 5.7%. At the close the SPX/DOW gained 2.7%, and the NDX/NAZ added 3.1%. Bonds closed about 3/4 point lower, Crude was off $2.90, Gold lost $9.00, and the Euro was slightly lower. Support for the SPX is now at 1462 and then 1438, with resistance at 1484. Short term momentum is getting extremely overbought.
Today’s rally displayed many of the characteristics of a potentially sustainable advance: broadbased including techs and cyclicals, and the financial sector was strong as well. It could be the beginning of another uptrend, but it certainly wasn’t the end of Major wave 4. This happens to be the first two day rally in the entire month of November. Ever since the FED provided that meager 25 bps cut on Halloween. Suggest to observe XLF/GS/AAPL for signs of a continuation tomorrow. If the financials can enter an uptrend, it’s likely the market will have an all clear signal for the customary year end rally. Certainly at minimum it’s still a bull market!
MEDIUM TERM: correction trying to reverse
LONG TERM: bullish

About tony caldaro

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6 Responses to wednesday update

  1. tony says:

    Hi Greg … same remarks as in the below comment.
    Hi Marc … A Major wave 3 top fit nicely with the 1556 high.
    The new high fits within the parameters of an irregular top, alternating with the simple Major wave 2 correction.
    Granted the market has been a bit complex after the July highs. Think the FED intervention on expiration day in August had something to do with that.
    Hi Peter … Most times everything is quite clear. This is not one of those times =)
    Historically, I  have all the records back to 1885 … the year.
    The waves that are done, are done. Any time!


  2. tony says:

    Hi BH,
    Good question.
    Even though the market may rally from here thisis not a Major wave 4 bottom.
    The market needs to get sufficiently oversold to establish that low.
    Thus far it has not.
    If the market starts uptrending from here. It certainly was a low of some degree.
    But not Major wave 4.


  3. peter says:

    Hi tony,
     You said "It could be the beginning of another uptrend, but it certainly wasn\’t the end of Major wave 4."
     I hope to hear more on that.
     For seasonal trader fans:
     Sy Harding\’s Macd buy signal on his \’Macd-adjusted seasonal trade\’ just kicked in intraday even with the SPX off 5 pts at the open.
     This has been a great trade in bull markets except when they turn into a bear market surprise….in Oct 2000 the Macd buy signal occurred and the SPX failed at the 200 day moving avg and kept going down a few years. Ha ha.
     SPX has not far to go to get over the 200 day this year.
     Thanks for the historical perspective on Primary wave V and the supercycle ending in 2000….also thanks on the shortcomings of Dow Theory.
    best regards,
    Peter F


  4. marc says:

    Hey Tony, just wondering how much higher can we effectively go without the Maor wave 4 being in place.  Can we go to new highs considering we already did that .  I noticed that Major wave 3 complted at 1555 and yet in October we went to 1576 exceeding the Major Wave 3.  How was that possible or better why wasnt the top of major wave 3 at 1576?


  5. greg.kesselring says:

    Hi Tony,Great blog you have here.  I\’m with the above poster who wonders why you can say that today\’s up move was certainly not the end of major wave 4.  Couldn\’t wave 4 have unfolded as an expanded flat, the C wave having completed a couple days ago at 1406?  It\’s true that 4th waves are often long drawn out affairs, so it could unfold as a double or triple three, but would it have to? Can\’t a 4th wave sometimes be a simple correction, a flat or a zigzag? How can you rule out for sure the possibility that major wave 4 will not turn out to be an ABC flat?


  6. BH says:

    Hi Tony:I enjoy reading your blog.  I am curious about your comment that today certainly wasn\’t the end of wave 4.  I saw prices gap above the downsloping trendline from a 3 week long descending wedge formation and rally strongly from the gap open.  Internals were extremely strong today as well.  Why couldn\’t Monday\’s lows have marked the end of wave 4?


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