thursday update

SHORT TERM: market surges after USD declines, DOW +173
Overnight the Asian markets were mostly higher. Europe opened lower and closed -0.70%. US index futures were higher overnight but pulled back when the weekly jobless claims were reported at 627K v 612K, and the Q1 GDP revision came in at -5.5% v -5.7%. The market bounced around at the open and hit yesterday’s low at 896 within the opening minutes. That was the low for the day. As the market started to rally FED chairman Bernanke’s testimony was released just past 10:00: At 10:30 the SPX hit 910, near the 912 pivot, and the USD started to rally. While the USD was rallying the SPX hardly budged, pulling back to 906 by 11:00. Then when the USD started to decline the SPX resumed its rally. At 12:00 the FED released the following statement: At 1:30 the SPX hit 921 and then began to pullback. This represents a 32 point rally from tuesday’s SPX 889 low, and it’s the biggest rally since the market started its decline from SPX 956. For the day the SPX/DOW were +2.10%, and the NDX/NAZ were +2.05%. Bonds were up a full point, Crude gained $1.50, Gold added $4.00, and the Euro was higher. Support for the SPX jumps up to 912 and then 848, with resistance at 935 and then 961. Short term momentum was again overbought at today’s highs after pulling back to neutral earlier. Tomorrow, Consumer income and Personal spending at 8:30, then a Consumer sentiment reading at 10:00.
We were a bit surprised by the strength of the market rally today. Yesterday the DOW made new lows for the decline and we expected downside momentum to continue. Instead the market retested the the 896 low and then rallied over 20 SPX points. Clearly Minor wave 3 was not underway. This became apparent when the SPX did not break as the USD rallied this morning. As a result of today’s activity it appears that the short term count has morphed into a slightly different count. We now consider the entire decline from SPX 956 to the recent low at SPX 889 as Minor wave 1. This choppy rally from that tuesday low is Minor wave 2. Resistance for Minor wave 2 would be at SPX 927 (the 4th wave) and the 935 OEW pivot. After this rally concludes, then Minor wave 3 should be underway. Best to your trading!
MEDIUM TERM: uptrend that may have topped
LONG TERM: bear market

About tony caldaro

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100 Responses to thursday update

  1. Impulsive says:

    have a nice weekend, Tony…viva global warming!


  2. tony says:

    Enjoy the weekend guys.Has rained nearly every day for a month straight in NYC.We actually have sun today.Must be global warming.


  3. Impulsive says:

    puddy, trust me, I love the instant gratification…It feels wrong if the price doesn\’t move in my direction right away… : )MCK, yeah, please make that happen..we almost touch 50% retrace on cash…kick this sucka into the abyss…Have a nice weekend all..


  4. tony says:

    Hi Paul,Correct on the DOW count.


  5. S2 says:

    Definitely bad negd on multiple timeframes with that final slight top. Possible EDT C to finish abcXabc from 889, but it was shallow and weak so hard to say. Would require a sharp move down Monday. My 15min indicators are certainly in position to rollover hard on Monday. Problem is Nasdaq narrowly surpassed and closed above its June 19th top unlike SPX/Dow, so the 1-2-1-2 count is eliminated there unless you allow fudging 1 pt closing overlap.My daily indicator is likely to issue a "continue down" signal, but just like yesterday\’s "continue up" signal, it\’s a fool\’s bet while we\’re in this 910-930 range unless you pick the edge of the range with tight stop. I mentioned last night that 9 of 22 cases of NYAD near 1890+ led to a narrow range day of about 2% or less near the opening price. Make that 10 of 23. But, we almost got 1% downside too which had 50% odds and we didn\’t get more than 1% upside which was 95% odds. Still, the NYAD, VIX and ISEE indicators I mentioned yesterday usually stretched into 2-3 days so downside is likely still favored. Most of my analysis last night will apply for Monday but I\’ll review and update before then. Good luck and enjoy your families.


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