wednesday update

SHORT TERM: market closes lower after rate cut, DOW -37
Overnight all the Asian markets were lower, and Europe was as well. US stocks opened on the downside as they have done for the past few days, but rallied back to unchanged by 11:00. After that the market went on pause, as it usually does just before a FED FOMC decision. At 2:15 The FED announced a 50 bps cut in fed funds, on the heals of a Q4 GDP report of only +0.6% growth: The market surged on the news, rallying to 1386 by 3:00. But that was the high of the day and the market sold off dramatically in the last hour of trading, and in the after hours market as well. For the day the SPX/DOW lost 0.40%, and the NDX/NAZ were mixed. Support for the SPX remains at 1344 and then 1327, with resistance at 1364 and then 1383. Short term momentum spiked higher on the rally, but is now heading lower. It was certainly an uninspiring day for those expecting this rally to continue to somewhat higher levels. FED days are usually quite volatile, and this one was certainly no exception. During today’s rally the minimum target of SPX 1383 was hit near 3:00. This level represents a fibonacci 38.2% retracement of the entire bear market decline thus far. Naturally a 50% retracement would have been preferred. But FED decisions have often been turning points in this bear market thus far. And the markets decision was most certainly to the downside after the short lived euphoria of an accommodative FED wore off. We should know if that was indeed the top of this rally in the next couple of days. Tomorrow, before the open, the core PCE will be reported, along with the Chicago Purchasing Managers index, and the unemployment report. On friday is the jobs report, and ISM. Best to your trading!
MEDIUM TERM: continuation of the rally from the SPX 1270 is now threatened
LONG TERM: bear market

About tony caldaro

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5 Responses to wednesday update

  1. tony says:

    Hi Marc … it did appear to me that this rally did not get sufficiently overbought too.
    Some of the weak sectors are showing strength, which could push the general market higher.
    But it certainly is volatile.
    Hi … when this rally looks like a wave 4 I\’ll post it as such.
    Thus far the entire decline looks like a zigzag.
    Hi Newbie … Major 4 ended in August 2007. That\’s absolute.


  2. Neo says:

    sorry i mean Major 4 has potentially completed but not Major 5.


  3. Neo says:

    hi Tony,
    It seems like it will take you a while before you realize that it is Wave 4 and we have yet to see Wave 5 :).


  4. pascal says:

    Been watching this blog for a while. Although I like Tony\’s analysis he has been correcting most if not all his counts. I do appreciate his correcting himself and admitting his overly bullish counts.
    This may be a wave 4 at the moment with a fifth to follow on the down side before resuming back up.
    Gold\’s count on the upside is may be amazingly large. The EW shows how bullish it is, I think there is plenty more to come on the upside here. There is no top here and won\’t be for a long time. People are positioning themselves for gold\’s upside.


  5. marc says:

    Hey Tony,
    Assuming that 1270 was major Wave A off the highs which it certainly looks like,  I have a hard time believing that the B wave up completed today at 1385 based on time, the charts, the rsi, and all the other indicators.  To me it makes sense that a wave within the larger wave completed but I was wondering your thoughts on this?


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