thursday update

SHORT TERM: market rallies on positive economic news, DOW +86
Overnight the Asian markets were everywhere, from Australia’s 1% loss to China’s 9% gain. Europe ended mixed as well. At 8:30 the DOL announced that the weekly unemployment claims dropped by about 10% to 342K. The market reacted favorably to the news opening slightly higher at SPX 1383. By 10:30 the market pulled back to 1371, close to tuesday’s lows. Then holding that level the market rallied over the next several hours to new highs for the uptrend at SPX 1398 by 3:00. A small pullback followed in the last hour and the SPX settled at 1388. For the day the SPX/DOW were +0.65%, and the NDX/NAZ were +0.95%. Bonds lost about 3/4 points, Crude was off $2.35, Gold lost $21.50, and the Euro was lower. Support for the SPX now notches back up to 1383 and then 1364, with resistance at 1410 and then 1438. Short term momentum got a bit overbought at the highs, and is displaying a negative RSI divergence. The near term indicators edged up a bit, and are displaying negative divergences as well. The rally today was fairly broadbased, but seemed inspired by the pullback in commodities. At today’s highs the DOW reached a 50% retracement of the entire bear market, and the SPX moved closer to the 1410 OEW pivot, which is effectively its 50% retracement level. Despite the major indices moving higher, the larger indices and some important sectors such as, the WLSH/NYA/XLF/KBE/HGX failed to make new uptrend highs. Since this rally from the 1257 low still looks corrective we expect a medium term top fairly soon. Possibly as early as tomorrow. Best to your trading!
MEDIUM TERM: uptrend still in place reaching SPX 1398 today
LONG TERM: bear market

About tony caldaro

Investor
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37 Responses to thursday update

  1. tony says:

    Hi Frank … good interview.
    The market has been inspired recently by earnings (mostly USD driven), and the ability of the financials to raise capital.
    If the USD has put in a significant bottom, and long term interest rates are on the rise, as expected.
    It\’s a good time to be raising capital, because one can buy back that debt at cheaper prices in the future. 

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  2. tony says:

    Hi Serg … "Yea, we know Cheney will kill Bush, cancel elections and nuke Iran :)) lol"
    You don\’t kill your puppet, you just drop the strings.

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  3. H says:

    That’s some bullish price action.  The chart is interesting.  I think you may be referring to a rising wedge.  I see a nice bull flag that we just broke out of today though.  We now have closed with higher reaction highs on all major indexes.  Is OEW theory at odds with most TA now?  Does the count change?  Is there still a bear argument?  Hmmmm
    Confused,
    HD

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  4. Piazzi says:

    I am not trying to disagree or god forbid dicredit anything or any one.
     
    But, many of derivatives that have brought the world of finance into its current situation were invented by top notch economists among them some Noble Prize Winners.
     

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  5. Frank says:

    Nobel Prize Winner feel this financial disaster is one of the worst since Great Depression… Long deep recession we going have… I guess Wall Street don\’t think, they think we are pretty close to out of woods already!
     
    http://www.cnbc.com/id/24311464

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  6. Lee says:

    Big week coming …
     
    Drink heavily this weekend. Come back and get\’em next week
    1399.11 is the high so far today is the SPX.
     

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  7. Frank says:

    well, so much for my "BIG M"… 😦

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