thursday update

SHORT TERM: stocks gap down and stay lower, DOW -112
Overnight the Asian markets were all lower, except Hong Kong which rose after tax cut rumors. Europe came in lower as well, -1.35%, and closed -1.85%. US stocks gapped down at the opening after the revised Q4 GDP was unrevised, and remained at +0.6%. By 10:00, when Bernanke was addressing the Senate, and Bush was spinning the economic outlook to the public, the SPX made a low at 1368. When a rally to 1378 by 10:30 failed to hold, the market made a new low for the day at 1363 by 11:30. This low held at a short term oversold condition, and the market rallied to 1374 by 3:00 pushing the short term momentum back to neutral. The rally immediately reversed and the market retreated into the close. At the close the SPX/DOW were -0.90%, and the NDX/NAZ were -0.60%. Bonds rallied nearly 2 points, Crude added another $2.85, Gold rose $13.00, and the Euro made new highs with Crude and Gold. Support for the SPX remains at 1364 and then 1344, with resistance at 1383 and then 1410. Short term momentum was oversold this morning, but rallied to neutral by 3:00, and then ticked down into the close.
After reaching an overbought condition yesterday in the near term indicators at 1388. Today’s action was weak and these indicators are now declining. The SPX did manage to hold the support pivot at 1364 today, which it has done since it broke above it monday. Tomorrow at 8:30, the core PCE will be released, as well as, personal incomes and consumer spending. Also FED governor Mishkin speaks in NY at 11:00. For the past couple of weeks we’ve monitored SPX 1327 as the important support level. It was tested about a week ago, and the recent rally to 1388 resulted. Now it appears it’s time to concentrate on the support pivot at SPX 1364. If the market breaks below 1360 in the coming days, this will likely signal that this uptrend has completed and the next leg down may be underway. SPX 1396 is still possible as long at 1360 holds. If not, SPX 1388 was probably it. Best to your trading!
MEDIUM TERM: uptrend may have topped, SPX 1360 level needs to hold
LONG TERM: bear market

About tony caldaro

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7 Responses to thursday update

  1. tony says:

    Hi Joe … will do. THX


  2. tony says:

    Hi McKennedy … the first wave down?
    I suppose you are referring to Intermediate wave A.
    If so yes, SPX 1170.
    Hi Kevin … the near term indicators have been working quite well during this bear market.
    Happy to hear you are doing well. Enjoy the weekend.


  3. Prakash says:

    Hi Tony,Terrific call on the top for this bounce! Would be nice if you could mention time and the pivot points to watch for this next down leg in your weekend review. Joe


  4. kevin says:

    It feels good being on the right side of the market. A Big Thank You Tony!


  5. MCKennedy says:

    Hi tony,
    Do you have a tentative target for this first wave down?  Just roughly, I was calculating that if we are going from 1388 to 1100, perhaps this first wave might bottom around 1280ish, basically 1 fib down, & near the Jan lows.


  6. tony says:

    Hi Kevin … been wondering about that myself.
    Sense there might be a mass liquidation of everything, except Bonds and the USD.
    Should help the Bonds top and the USD finally bottom.
    For Commodities, they are long overdue for a correction. But their bull markets should resume afterwards.
    We\’ll have to see how this plays out.


  7. kevin says:

    Tony, If gold tops at the $1,000 level and begins a correction, is it logical to think that gold and the stock market would correct at the same time? You typically think of gold as more of a safe haven during stock market declines. Trying to fit all of the inter-related pieces together!


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