monday update

SHORT TERM: market resumes rally, DOW +177
Overnight the Asian markets that were open were all lower, and Europe came in lower as well. US index futures were sold overnight, but gradually improved as the market prepared to open this morning. At the open the market bounced around for about a half hour, hitting a low of 1322 right after the Commerce Dept reported new home sales dropped 5% in December, and 26% for 2007. Then the market rallied on the news. By 11:30 the SPX hit 1343, 1349 by 2:30, and then hit 1354 nearing the close. For the day the SPX/DOW gained 1.6%, and the NDX/NAZ added 0.95%. Bonds closed a few ticks higher, Crude was up 30 cents, Gold continued its rally up $18.00, and the Euro was higher. Support for the SPX notches up to 1344 and then 1327, with resistance at 1364 and then 1383. Short term momentum barely reached oversold this morning, but closed slightly overbought in the afternoon. Expecting this rally to continue to the targeted 1410 – 1438 area. Tomorrow the FED starts its two-day FOMC meeting with the results to be announced at 2:15 on wednesday. Also tomorrow, Dec. durable goods order will be announced before the open, and a consumer confidence reading at 10:00. Best to your trading! 
MEDIUM TERM: market bottomed at 1270, rallying
LONG TERM: bear market
SPX60min 
      

About tony caldaro

Investor
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9 Responses to monday update

  1. tony says:

    Hi Nader … could not make heads or tails of that link, sorry.
     
    Hi McKennedy … what a nice term for a bear market: multiple compression.
    Thanks for the update!

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  2. tony says:

    Hi Joe … Yes exactly. Huge (3-5 year) flat.
     
    Hi Steve … Very well put.
    Since August the FED has surprised twice, both times led to rallies.
    Accomodated once, which continued the first rally.
    Then failed to satisfy the market a couple of times, which led to big selloffs.
    They appear to have a lot more power, than most suggest.
    If the market gets its 50 bps cut, the rally should continue.
    cheers! 
     
     

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  3. MCKennedy says:

    This from Goldman tonight:
     

    Considering All Options: Anywhere but here – we see a volatile market within a wide range
    Our US Portfolio Strategists believe trough valuation is still ahead
    During the past four recessions, S&P 500 P/E multiples have compressed an average
    of 22% according to our US Strategists. Since the October 2007 peak, the S&P 500
    market multiple, based on forward EPS has declined 10%, suggesting the potential
    for further downside. Another 10% multiple compression means the S&P 500 would
    trade at approximately 1200 using our Strategists current SPX earnings estimates
    ($83 for 2008), or 1150 using a deeper and more prolonged recession scenario ($79
    for 2008).

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  4. Steve Osborne says:

    Hi Tony,
    Looking at intraday price action over the last 5 days, including today, I noticed that stock indices, gold, and oil stocks are moving tightly together. Very tightly. Even Shanghai, commodities prices and interest rates are in tune. With everybody marching to the same drum, I assume that all the attention is directed toward the incoming Fed decision and comments, which means that the Fed still has a lot of authority. This would be good news for market stability but instead, we must expect explosive volatility once stocks, commodity prices and interest rates all rush out from their common bind to go in their own direction and later, to start reacting to each others reaction. A stock markey rally for example would quickly be spoiled by oil prices itching to return to their previous highs.

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  5. Prakash says:

    Hi Tony,You mentioned Primary A of the bear market to conclude near 1100 and a rally in to 2009 and then a gradual decline to complete Primary C. Are you expecting entire formation be a flat?Joe

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  6. tony says:

    Hi Nuno … interesting indeed, thanks.
     
    Hi John … in the beginning of the bull market the NAZ was acting like it finally came of age.
    Unfortunately from early it started to fail to adhere to clear impulse patterns.
    Went back to the DOW after that, where I\’ve done all my work for decades.
    It\’s still the bellwether.
    cheers!
     
     

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  7. Manal says:

    to the "gentleman" who suggested that Tont go …….
     
    YOU have to be responsoble for your actions (trades).  Don\’t blame someone else for what you did. AND, You should never risk what you can\’t afford to loose.
     
    You can make money with a trend following system.  Sometimes you get whip-sawed and you don\’t catch the turns, but that can be OK too.
     
    Tony,
    In your comments I see that you prefer to follow the DOW.  I thought I saw you write that you thought the NASDAQ was more relevent now.  I would think that an index with 500 variables would be less volital than one with 30.  Over the weekend I might study this (if I have time).
     
    John Mackenroth

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  8. Nuno says:

    Hi TonySince ABC many times have similar waves A and C, just to mention that SPX wed-fri rallied 100 pts, and with this today low at 1323 a 100 pts. C wave goes exactly where you point it: 1423.Regards.Nuno

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