friday update

Posted on March 5, 2011 by tony caldaro

SHORT TERM: Crude rallies – market pullsback, DOW -88

After the close thursday the FED issued the following: http://www.federalreserve.gov/newsevents/press/bcreg/20110303a.htm. Overnight the Asian markets were mostly higher. Europe opened higher, but closed -0.40%. US index futures were also higher, and at 8:30 the Payrolls report improved: +192K vs +36K, also Unemployment dropped to 8.9% vs 9.0%. The market, however, opened slightly lower at SPX 1330 and began to pullback. It had closed at SPX 1331 yesterday. As the pullback continued at 10:00 Factory orders reported improvement: +3.1% vs +0.2%. Then FED vice chair Yellen’s speech was released: http://www.federalreserve.gov/newsevents/speech/yellen20110304a.htm, and FED director Nelson’s Congressional testimony was released: http://www.federalreserve.gov/newsevents/testimony/nelson20110304a.htm. The market continued to pullback until about 10:30 when the SPX hit 1321. The market then tried to rally but could only make it to SPX 1323 by 11:30. Another pullback followed to the support pivot at 1313 by 2:00. With a slightly oversold condition the market then rallied into the close to end the week at SPX 1321.

For the day the SPX/DOW were -0.75%, and the NDX/NAZ were -0.50%. Bonds gained 25 ticks, Crude rallied $2.55, Gold jumped $12.00, and the USD was lower. Support for the SPX remains at 1313 and then 1303, with resistance at 1363 and then 1372. Last night the FED reported the M1-multiplier had declined again. Today the economically sensitive WLEI continued to rise: 56.5% vs 56.1%.

Despite the good Payrolls report the market pulled back today. The continuing rally in Crude may have had something to do with it. The pullback took the SPX back to the OEW 1313 pivot in the afternoon and then the market rallied into the close. The short term OEW charts vacillated from positive to negative and then back to positive again at the end of the day. This market is certainly having a difficult time sustaining much upside progress. However, the tuesday/wednesday pullback found support at exactly the 1303 pivot, and today’s pullback found support at exactly the 1313 pivot. When we consider that last week’s pullback found support just three points above the 1291 pivot, short term, the market is actually making some upside progress. Should have the weekend update posted by sunday. Best to your weekend!   

MEDIUM TERM: uptrend continues

LONG TERM: bull market

CHARTS:  http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1606987

About tony caldaro

Investor
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28 Responses to friday update

  1. MGD says:
    March 7, 2011 at 7:48 pm

    Where is Tony ?

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  2. rfn65 says:
    March 7, 2011 at 5:39 pm

    Patrick M,
    When Major 3 completes in gold, what is your projected low for major wave 4 in gold?
    Thanks, Rob

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  4. Lee X says:
    March 7, 2011 at 11:06 am

    pivot time again

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  5. MGD says:
    March 7, 2011 at 6:53 am

    “Durbin, one of President Barack Obama’s top allies in Congress, said he opposed going beyond the $10.5 billion in domestic, non-defense discretionary spending cuts that Democrats have backed.
    Republicans want $61 billion in spending reductions.”

    Excuse me, isn’t the deficit around 1.3 trillion…so what are they talking about ??

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  6. theyenguy says:
    March 6, 2011 at 12:51 pm

    The chart of Oil, USO, shows that investors, knowing that when a central bank monetizes debt, commodity price inflation follows. Ben Bernanke’s quantitative easing policy has given seigniorage to oil as a globally sovereign currency, as the price of West Texas Intermediate Crude, $WTIC, has risen from 72.5 to over $100 since QE 2 was first announce in Jackson Hole in August 2010.

    Failure of the economic and political paradigm of Neoliberalism occurred, February 22, 2011, as seigniorage failed, with the downturn in distressed securities, like those held in FAGIX, which caused the stock market, ACWI, to turn lower.

    Quantitative Easing 1 and 2 have resulting in an explosion of commodity prices, stimulating social revolutions in Middle East, MES, and African, AFK, countries, which have driven oil prices, USO, to the Septemeber 2008 level, and which have in turn, caused inflation destruction, turning down stocks prices, and creating a loss of seigniorage, that is moneyness.

    Urban Dictionary defines inflation destruction as the fall in investment value that accompanies derisking and deleveraging out of investments that were formerly inflated by money flows to, and carry trade investing in, high interest paying financial institutions, profitable natural resource companies, and high growth companies.

    On March 4, 2011, with oil moving above $103, world stocks, ACWI, succumbed to inflation destruction, and traded 0.8% lower to 48.71.

    The chart of world stocks monthly, ACWI Monthly, shows that an Elliott Wave 3 Down commenced in stocks globally on February, 18, 2010 from a high of 49.24.

    The chart of the S&P Weekly, SPY Weekly, shows that an Elliott Wave 3 Down has commenced in the S&P, the week ending February 18, 2010, when SPY fell from 134.53.

    The turning down of Banks, KBE, means that the world has passed through an inflection point. The world has passed from the Age of Leverage and into the Age of Deleveraging with the exhaustion of Quantitative Easing and with the failure of yen carry trade investing, as seen in the failure of the Optimized Carry ETN, ICI, on the very day that QE 2 was announced.

    Evidence of failure of seigniorage also comes from the Jody Shenn Bloomberg report: “Securities backed by option adjustable-rate mortgages, the home loans that allow borrowers to decide how much they pay each month, dropped for a second week as investors speculated a rally pushed values too high. Typical prices for the senior-most option-ARM bonds fell as much as 4 cents to about 62 cents on the dollar, according to Barclays Capital”.

    Neoliberalism failed February 22, 2011, as seigniorage failed with the downturn in distressed securities, like those held in FAGIX, which caused the stock market, ACWI, to turn lower.

    The Great Bull Market which came through carry trade lending and Quantitative Easing 1 and 2 is history. The short, medium, and long term trend is down. Those who are advising their clients to stay invested long, are doing them a dis-service, as they have cut them off from a profitable short opportunity. Clearly an investment demand for gold has arisen and will remain strong. Wealth can only be preserved by investing in and taking possession of gold, GLD, and silver, SLV, bullion.

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  7. MGD says:
    March 5, 2011 at 7:46 pm

    Have a nice weekend, Tony !!

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  8. rk318 says:
    March 5, 2011 at 9:38 am

    Hi tony, another question for u 🙂 many analyst saying that sensex has made ‘abc’ formation on long term charts is it possible that b wave could retrace nearly 100% ? If it is so, would recent lows break will confirm this probability? Cycle 2 correction is completed in just 1 year according to u can we expect some more pain left for longer term? According to macro economic concerns india not looks in pretty good conditions for prosperous 3rd wave as many concerns are unanswered. We remain objective as well…… According to u.

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    • tony caldaro says:
      March 8, 2011 at 9:55 pm

      Welcome RSS, The ABC down, in the Sensex, started in Nov10 at 21,100. The low, thus far as no uptrend has been confirmed yet, is just under 17,300. Since this is the biggest correction of the entire bull market it is likely over. Unfortunately, however, the price action from the recent low does not yet look impulsive. Waiting for an uptrend confirmation … tony

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