friday update

SHORT TERM: OEW 1061 pivot holds and market resumes slide, DOW -250
Overnight the Asian market were mostly higher. Europe opened higher but closed -2.65%. US index futures were slightly lower overnight. At 8:30 Personal income was reported flat: 0.0% v +0.1%, and Consumer spending was reported lower: -0.5% v +1.4%. The market opened slightly lower at SPX 1063, and dipped down to 1058 when the Chicago PMI was reported higher: 54.2% v 46.1%. The market then rallied to SPX 1062 by 10:00 when Consumer sentiment was reported higher: 70.6% v 69.4%. After that the USD index started to rally and the stock market headed lower. By 11:30 the SPX broke through the OEW 1061 pivot and continued lower. By 12:30 the SPX was within range of the OEW 1041 pivot. Then at 1:30 the SPX hit 1035, a new low for the decline, and tried to rally. The SPX rallied back to 1043 by 2:00 as it was now straddling the OEW 1041 pivot. As the market started heading lower again the FED made the following press release: At 3:00 the SPX made a new low for the day at 1034, still within the 1041 pivot range. Then the FED made the following press release: For the day the SPX/DOW were -2.65% and the NDX/NAZ were -2.55%. Bonds were up 28 ticks, Crude dropped $2.95, Gold slipped $1.00, and the EUR was lower. Support for the SPX drops to 1018 and then 990, with resistance now at 1041 and then 1061. Short term momentum remained extremely oversold into the close. Wednesday and thursday, btw, was the 80th anniversary of the 1929 crash.
Yesterday’s strong rally ended within the range of the OEW 1061 pivot. Today the market reversed yesterday’s entire rally and made a new low for the decline at 1034. This represents a 67 point decline from the SPX 1101 high, the largest drop since the uptrend began in early July. The count we have been following from the SPX 1101 high continues to track the market: wave 1 SPX 1074, wave 2 SPX 1096, and wave 3 underway. Wave 3 has been subdividing as follows: wave 1 SPX 1075, wave 2 SPX 1092, wave 3 SPX 1042, wave 4 SPX 1067 and wave 5 currently reaching SPX 1034. At today’s low the short term charts are sufficiently oversold to end wave 3, and the hourly chart is displaying a slight positive divergence. The VIX, btw, is now in an uptrend. Best to your weekend!  
MEDIUM TERM: uptrend in jeopardy
LONG TERM: bear market
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About tony caldaro

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35 Responses to friday update

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  3. Wiggin says:

    x – the FED has been heavy into this for well over a year. Don\’t assume mkt can\’t go down with them doing everything they can to hold it up, like last Sept – March … gl


  4. x says:

    Tony, OK. Found it Lets see what happens after initial correction. If gover. keeps hands off, perhaps, ends in 2010. If not, longer drawn out process… I was expecting further pullback in silver, Thanks.


  5. tony says:

    Hi X,The 2010 and 2012 scenarios were covered in last weekends update.Expecting an ABC flat in Gold/Silver to alternate with the Int. wave 2 zigzag. Wave A should be complete.Crude has shown surprising strength. Did expect the $50 level after it completed five waves up.But the fifth wave decided to extend instead.


  6. tony says:

    Welcome Eduard!


  7. tony says:

    S2,We all thank you for all your work.


  8. S2 says:

    Just got back from the first 2 of my kids\’ 4 games. Couldn\’t help but add a few thoughts. BTW, Daneric posted some great charts last night that match my thinking pretty well. His USD chart projection would certainly allow an SPX test of 1020, but I think it will hold. I kinda like the count that says Friday\’s last hour ended a wave 4 flat to 1041 (that was my minimum target) or needs a small E wave up to complete a wave 4 triangle, because an 8-12 pt rally Monday morning might cause too much short covering to allow anotehr swoon but it\’s possible. I\’ll scale in short Monday morning unless there\’s a large gap down, and then I\’ll scale in long after 5 waves looks possible below 1030.Anyway, a few more thoughts. 1. VIX skyrocketed this week and may have one more small jaunt up, but there is a high risk that VIX could retrace heavily this coming week making options a very risky proposition even if you get the direction correct unless you can catch an intraday small wave 3 and sell quickly. I\’ll stick with 3x ETFs after another low until SPX nears the wave 2 top and VIX is much lower after the Fed and probably the unemployment news.2. Even after the 956 top when the 20dSMA was broken, there was a wave 4 of A retest of the 20dSMA a few days later followed by a 65% retrace a few pts above the 20dSMA for wave B in less than 7 days. Sounds familiar doesn\’t it? It\’s just like all the bear market wave 1-2s I described last night except that one was an A-B like August 2007, which also behaved the same.3. I looked back to the 2000-2003 bear market, and the 20dSMA retests for wave 2/B worked nearly 100%, but, unlike 2007-2009 in which piercings/touches were the rule, you had to allow for +/- 1%. 2000-2003 seemed a lot more choppy with ABCs than 2007-2009 and the only cases where I saw the 20dSMA surpassed were after larger wave completions like I expect to happen once SPX reaches 850-900 and after the 20dSMA was only marginally broken to begin with. If you extend the 20dSMA retest projection to +/-1%, then 1060-1080 is the area to watch…still fits the data I presented last night.4. Another potential target for wave 2 is the gap down from 1066…I mentioned Friday morning that it would likely be filled this coming week if it wasn\’t filled Friday and it wasn\’t. I\’d like to see it filled and reversed intraday with no gaps unfilled until the heart of wave 3 of 3 of 3 begins at 1000-1020. I say that partly because it\’s one less thing to worry about as a bear, and, if SPX travels 1101–>850-900, a nice 50-70% wave 2 retrace would likely be 1000-1020 to clean up any gaps but I don\’t want the gaps any higher than that.5. If 1101–>1025ish ends up being wave 1 (~76 pts) and we bounce back to 1070ish, wave 3 is likely to treval 1.5x-2x w1. 76*(1.5 to 2)=114 to 152. Then, 1070-(114 to 152)=956(hmmm) to 918. So I\’d say wave 3 is likeliest to end at 900-960 depending on how the rest of wave 1-2 plays out. To drop 110-170 pts in a 5-wave wave 3, wave 1 of 3 should be 40-80 pts. From 1070, that projects to 990-1030. That fits my belief that wave 1 of 3 will break 1020 and end around 1000-1020 with a bounce from there in order not to finish near 1000 at November 20th OPEX.If this all works out as I\’ve laid out, I might be retiring by the end of the year (not really but livin\’ large anyway), but please god give me patience, the ability to execute my analysis and the ability to stop out and reset when the technical story changes as is bound to happen. Good luck.


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