friday update

SHORT TERM: market rallies after Jackson Hole speech, DOW +135

Overnight the Asian markets were mostly lower. Europe opened higher but closed -0.85%. US index futures were lower overnight, and at 8:30 Q2 GDP was reported in line with expectations, but lower: +1.0% vs +1.3%. The market opened lower at SPX 1154 and began to decline. The SPX had closed at 1159 yesterday. Nearing 10:00 Consumer sentiment was reported higher: 55.7 vs 54.9. Then at 10:00 FED chairman Bernanke gave his Jackson Hole speech: The market then spiked lower to SPX 1136, got oversold, and then began to rally. Around 2:00 the rally hit SPX 1181. A pullback to exactly SPX 1168 followed until 3:30, then the market bounced to close at 1177.

For the day the SPX/DOW were +1.35%, and the NDx/NAZ were +2.50%. Bonds gained 8 ticks, Crude added 10 cents, Gold rallied $46.00, and the USD was lower. Support for the SPX now jumps up to 1176 and then 1168, with resistance at 1187 and then 1222. Short term momentum hit oversold at the low and then turned overbought at the high. Last night the FED reported the Monetary base had declined for the sixth straight week. Today the WLEI continued its decline: 47.9% vs 49.9% and is nearly signaling a recession is on the way. Public sentiment remains bearish and around 1980 lows: 20.7% vs 19.9%.

Another wild day following a FED statement. The market opened lower on continued weakness in overseas markets. After the FED released Bernanke’s speech the market sold off rapidly. Then just as suddenly, exactly at the 1136 pivot, it turned around and started to rally. We had a similar event after the FOMC statement on August 9th. Then the market spiked down to SPX 1102 right after the statement, and rallied to close at 1173. That spike down may have been the downtrend low. Today’s action was not as dramatic, with a drop to SPX 1136 then a rally to 1181. Nevertheless, it appears we will get a WROC buy signal. These signals are usually a leading indicator of an OEW uptrend confirmation. More on this in the weekend report. Best to you and yours this weekend and week!

MEDIUM TERM: downtrend low SPX 1102

LONG TERM: bear market highly probable


About tony caldaro

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13 Responses to friday update

  1. Pingback: friday update

  2. 3-3-5 pattern from 1370 highs, 13 fibonacci weeks of decline, 13 fibonacci months from the 2010 lows to 2011 lows. Sentiment at 50% bears at low, VXO at 50 which is super high fear index level. 5th wave that never finished but truncated. Pots and Pans , europe problems, Greece, banks, debt downgrades…and the SP holds 1101 the whole time. For sure I’m the only clown out here who thinks primary 2 ended at 1101, or at least …”may well have”. I guess we will see. That is what makes forecasting so fun. Gold is the one to watch this week, should be really interesting. Best trading to all, and great work Tony as always.


  3. gselsidi says:

    So wait what happens if this WROC signal flashes an uptrend. Does that mean bear market averted? Bull to resume?


  4. Tony: The entire move from the 8/10 post Fed low near 1100 is one giant triangle, retracing about 76% of the previous wave, give or take a few ticks. 1097->1206->1118.50->1188->1132->1179 (ES). The first move was the 38% retrace of the move down, followed by 76% retraces off the initial moves.

    Given the context should the triangle not be a continuation pattern portending further downside? Europe can continue to provide the news to go down.


  5. M1 says:

    Thanks Tony,
    I will wait until monday after the close before I make some new numbers. Not so sure this rally may continue next week.


  6. fionamargaret says:

    Now I much prefer the analysis today Tony – I would like to think the bull was just waylaid.

    Yes, I look at my charts, and they are bleak, but if Trichet………..!


  7. tommyboys says:

    Tony I know what triggers a WROC sgnal is proprietary but can you tell me what the acronym (WROC) stands for ? TIA


  8. wldcttr says:

    thanks tony. those of you in irene’s path, stay safe & sound.


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