wednesday update

SHORT TERM: USD drops market rallies, DOW +31
Overnight all the Asian markets were higher. Europe opened higher and closed +0.70%. US index futures were higher overnight on the decline in the USD. At 8:30 the weekly Jobless claims improved: 466K v 501K, Personal income was flat: +0.2% v +0.2%, but spending was higher: +0.7% v -0.6%. Also PCE prices rose: +0.2% v -0.6%, but Durable goods orders declined: -1.0% v +2.0%. As trading picked up in the first half hour the market started to rally. At 10:00 New homes sales reportedly improved: 430K v 405K, Consumer sentiment improved: 67.4 v 66.0, and the FED issued the following announcement: The market continued to rally until 11:30 when the SPX hit 1111. A small pullback followed over the next hour to SPX 1108 by 12:30, Then the SPX retested the day’s high 1111 at 3:00 and closed there. For the day the SPX/DOW were +0.35%, and the NDX/NAZ were +0.35%. Bonds were up 16 ticks, Crude gained $1.85, Gold rallied $22.00, and the USD was lower. Support for the SPX moves up to 1107 and then 1090, with resistance at 1133 and then 1168. Short term momentum touched overbought early in the day and then closed there. Tomorrow, the Thanksgiving holiday is celebrated and markets will be closed. Also there will be limited trading on friday, usually one of the most inactive days of the year. We celebrate Thanksgiving in appreciation of what we have. This yearly holiday is to remind us that it should be a daily event.
Despite another downtrend low in the USD and positive economic reports the market opened flat, trading around SPX 1105. On typical days during this uptrend, the stock market would be making news highs. The long term pivot at SPX 1107 continues to be formidable. Also of note is the activity over the past three weeks. On monday Nov 9th the market spiked higher after sunday night selling in USD and closed at SPX 1093. The rest of that week the market churned: 1093, 1099, 1087 and 1093. On monday Nov 16th the market spiked higher again after sunday night selling in the USD and the SPX closed at 1109. Then it churned again with daily closes of 1110, 1110, 1095 and 1091. This week, thus far, sunday selling in the USD pushed the SPX higher again on monday to an 1106 close. Since then, despite more USD selling, the SPX has closed at 1106 and 1111, with friday yet to go. During the last uptrend top in June the market churned for a couple of weeks before heading lower. Enjoy the holiday, and best to your trading on friday! 
MEDIUM TERM: uptrend
LONG TERM: bear market rally
Love oneself, or love oneself and all others. It’s a choice.
Your future depends on it. Time is short. Make the choice!

About tony caldaro

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62 Responses to wednesday update

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  2. S2 says:

    I mentioned a couple days ago that I received information (anecdotal from multiple friends and neighbors) that banks are now moving to complete their delayed foreclosures probably due to them getting all the taxpayer and investment capital they need with some real estate speculation returning. Well, today while visiting family on Thanksgiving, I was told by my brother-in-law that his family took a $200K+ paper hit and $100K+ cash hit to move out of their South Florida house into a large apartment closer to my sister-in-law\’s new pediatric surgeon position in another area of South Florida but they figured they\’d lose more hanging on to it for years as a 2nd house. They have already been struggling for years paying off her medical school debt and recuperating from his multiple layoffs while being in a very expensive house. Even people with extremely high-paying jobs can suffer in places like FL, CA, OH etc. Then, my BIL told me they have a bank executive friend that told them that a large group of banks are moving to complete foreclosures in 3-4 waves thru March. Matches the other info I found a couple days ago. There may be a 1-2 month lag in economic data but the stock market should sniff out the change early. The shi* is gonna hit the fan soon I\’m afraid even if there\’s some BS to keep things glued together thru the New Year. Remember Oct/Nov also marked the beginning of the next rise to multiple peak mortgage rate resets in 2010-2012, so that will line up a ton of new foreclosures behind the ones being completed thru spring 2010. Spring 2011 will be the first possible real turning point for real estate but Spring 2012 or 2013 is much more realistic.Regarding the margin calls I mentioned, keep in mind the margin calls due to new leveraged ETF regulations are not until Dec 1st, so if SPX could somehow bounce back to new highs by Dec 1st, the effect could very well go the other way. I don\’t think that will happen if key levels like 1085 and Tony\’s OEW 1090 pivot are broken, but I just want to warn in case this Dubai event turns out to be a one-off scare.


  3. Bud says:

    Margins and Gov and Gov actions. The recent increase in Margis for Leveraged ETF\’s should not bea surprise. Changes in margin requirements from say 50% to75-80%, would seem to be moreof a market negative. In history, the Gov can also change market trading hours. While, not seenrecently, nothing would surprise me. Gov changes in our ability to trade, would all be seenas a negative. Increasing the trading cost, or Cap Gains would be just another means of control.When you have a Gov that is indebt to 70% of its GDP, we have to expect them to go into ourpockets and get money.


  4. R. says:

    Hello,I thought I would post some observations about P3 and possibly coming down from this wedge. First for some fundamentals the M1 multiplier stands at .831 in the feds latest reporting period. For a comparison in a healthy economy where credit transactions are taking place between parties with customary confidence this rate is commonly between 3.00 and 2.50 historically. During the first leg down of this supercycle wave it collapsed to 1.00 and has gradually worked it\’s way lower. Despite all the Fed\’s programs and moving debt off bank balance sheets on to Fed balance sheets this indicator still declines. The reason is the consumer prefers cash over credit at this time and bank liquidity has not improved, so the banks are hoarding reserves. A perfect storm.I expect this rate to collapse to .500 or less which creates a big problem for the Fed and for that matter all financial institutions. Im fact the banks,REITs and other financials topped in this last previous top in October and finished there 1st wave down. Now the Financials have finished wave 2 up and started wave 3 down.Another big problem is the USD and Yen carry trades. The FED has fostered a zero interest rate policy hoping to enable banks to reliquify faster with the rise in the stock market. This has reflated a equity bubble and many stock have hit their final multi year highs, as a example, AMZN,IBM,and various others including the BTK index. A major reason for the crash in 1929 was the pools were formed and many stocks ran up 3 and 4 times in value in a very short time. This recent rise of the 666 S&P low is similar in time span.Two days before the slow motion crash of 2008 the Fed drained liquidity. With the USD in freefall the Fed could find itself having to drain liquidity again if the dollar decline gains momentum on the downside. A break of the 73-72 area could signal a currency crisis. With the cross currents of the unwiding of leverage in the carry trade, this market could easily elevator down.I think tonights futures action will be very volatile and all eyes will be on the USD and all equity markets world wide. If we do not bounce, many stops will be hit further and this decline could drop to the 9000 area very easily. That\’s it and enjoy your Turkeyday.


  5. tony says:

    Happy Thanksgiving all!Appreciate all that you all do to make this an informative blog.


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