tuesday update

SHORT TERM: market works its way higher, DOW +21

Overnight the Asian markets were mostly higher. Europe opened higher but closed mixed. US index futures were lower overnight, and at 9:00 Case-Shiller reported a 1.1% month over month price increase in homes. This is the largest MoM price increase since May 2010, and the index has risen 2.7% in the past three months. The market opened lower at SPX 1203, and then bounced to 1207 in the first few minutes. At 10:00 Consumer confidence reported a plunge: 44.5 vs 59.5. The market immediately sold off to SPX 1196, and then tried to rally again. Around 11:30 the SPX hit 1214, a new high for the rally, then pulled back to 1205 by 1:00. At 2:00 the FED released the FOMC minutes: http://www.federalreserve.gov/monetarypolicy/fomcminutes20110809.htm. Then the market started to rally again. Around 3:30 the SPX hit 1220 and then pulled back in the last half hour to close at 1213.

For the day the SPX/DOW were +0.20%, and the NDX/NAZ were +0.60%. Bonds gained 19 ticks, Crude rose $1.50, Gold rallied $48.00, and even the USD was higher. Support for the SPX remains at 1187 and then 1176, with resistance at 1222 and then 1240. Short term momentum dipped toward neutral and then started rising again. Tomorrow, ADP at 8:15, the Chicago PMI at 9:45, and then Factory orders at 10:00.

The market appeared to consolidate today, while moving higher, after yesterday’s strong, nearly 3%, rally. It opened lower, then shook off a plunge in consumer confidence, and still made a higher high for the rally. FED governor Evans set the tone for the day in a pre-market interview: http://www.businessweek.com/news/2011-08-30/fed-s-evans-urges-more-easing-to-reduce-u-s-unemployment.html. Gold spiked during the interview, and the rest of the trading day appeared to be a “risk on” type of day.

As for the technicals. The market rallied today right into the OEW 1222 pivot range and was turned back. The SPX may run into some resistance at this pivot since it has had a good rally coming off the 1136 low. Short term OEW charts remain positive as long as the market holds the 1187 pivot. Short term support is in the low 1200’s then the 1187 and 1176 pivots. Overhead resistance is at the 1222 and 1240 pivots. Best to your trading!

MEDIUM TERM: downtrend may have ended at SPX 1102

LONG TERM: bear market highly probable

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

About tony caldaro

Investor
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61 Responses to tuesday update

  1. liborval says:

    hi tony, one question- when there is qe 3 since 20. september what can be the catalyst for the next leg down. I think with qe 3 there is no significant move down only if Bernanke doesnt announce it in september so it could be a significant correction in the bull now over and we should buying like crazy.

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    • tony caldaro says:

      Hi Liborval,During the past two days two FED governors have come out in favor of QE 3.There was a lot of reluctance for any additional liquidity during the last meeting.Sounds like Ben has his friends campaigning before the Sept. FOMC meeting.The technical damage has already been done to this bull market, as expected.If, and when, they do go ahead with another liquidity injection, or the market acts differently than expected, we’ll report what it suggests.

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  2. kjb0 says:

    All this count confusion….where is “Hector” when you need him ?

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