monday update

SHORT TERM: market rallies on Citigroup deal, DOW +397
Overnight the US government announced a deal to help stabilize the troubled financial giant Citigroup: The Asian markets were relatively unaffected as they closed mixed. Europe, however, opened higher and closed +10.1% on the day. US index futures were higher overnight and the market gapped up at the open to SPX 818. After a small pullback to 10:00 and SPX 809, the NAR reported existing home sales fell to 4.98Mln v 5.18Mln. The market then resumed its rally. At noon the SPX hit 842, and while president-elect Obama was announcing his recent appointments, the market pulled back to 827 and then resumed its rally. Just past 3:00, the SPX broke through the 848 pivot, hit 866 and then pulled back into the close. The market has now rallied nicely for two days in a row. At the close the SPX/DOW were +5.70%, and the NDX/NAZ were +6.30%. Bonds lost over one point, Crude gained $4.70, Gold rallied $32.00, and the Euro rallied as well. Support for the SPX now pushes up to 848 and then 789, with resistance at 912 and then 935. Short term momentum is extremely overbought. Tomorrow, the first revision to Q3 GDP will be announced at 8:30, then Consumer confidence at 10:00.
The short term wave count we have been following recently, for the 5th wave of this downtrend, ran into trouble today when the SPX rallied above 849. It’s been very difficult to keep on top of the market during this prolonged downtrend. There appeared to be some buy orders at the close, as the SPX/DOW continued to edge higher long after the closing figures would be posted. First time this has occurred in a while. The market seems to be encouraged by the government’s response to the problems at Citigroup, and the positive DOW/NDX/NAZ divergence to the SPX after it broke its02 lows. May be signs of positive things to come. Best to your trading!
MEDIUM TERM: downtrend low at SPX 741
LONG TERM: bear market

About tony caldaro

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90 Responses to monday update

  1. tony says:

    Hi Joe,
    Yes, noticed that as well.
    Players will become scarce starting tomorrow until next week.
    Should be light volume and, for now the market can move easily either way.


  2. Prakash says:

    Hi Tony,Is it possible that all the indices are in some ending diagonal pattern with \’d\’ over as of today (Like in DOW pattern) and the final wave down about to start? It seems people have gone way too bullish with this 2 day rally with P/C ratio registering 2 low values, poor breadth and new lows continuing to soar without any divergences etc. To add, USD (as tracked by ETF UUP) seems consolidating and TLT almost hit fresh highs today. In the past, TLT has been a leading indicator for market rallies/declines…Joe


  3. Palroy says:

    If you draw the TL down from 1008, today\’s action successfullly tested this TL from above!


  4. Palroy says:

    Seems like a struggle today; not uncommon near a turning pont in the market.
    XLF up ~ 5%
    NDX down 1% with DOW/SPX up a bit.
    NYSE A/D ratio closed at the best of the day with NYMO going poitive.  Looks like stock buying into the close.
    CBOE call buying hgh for two days??


  5. Palroy says:

    SPX pattern reminds me of 17 Nov (double top with negative divergence)!
    NYMO went postive today, however.
    CBOE call buying high.
    Could be three days up on declining volume.
    Smells like a B wave up.


  6. Forum says:

    This looks like a complex correction. Out of my leauge. After about 1:00 I\’m fairly lost.


  7. Bud says:

    My 2 Cents….SP500.
    11/21 completed W3 of 3 Down. 741.
    Wave A of 4 up, completed at 868.
    Correction  Wave B down.
    Minor (a) may have completed at 834.
    Now, I only see 5 waves completed at 834.
    In process is (b) up.  Of course should
    remain below 868,  then a final (c)
    decline  into Wednesday below 838
    816-810.  Then Wave B down would be
    Friday 28th, C wave up begins in earnest.
    Final High for W4 935-945.
    12/1  Market Decline to below 741…. 
    Now, if any of my guessing is correct.
    It will be pure luck.  As I am way out of my element.
    But,  just having fun….


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