wednesday update

Posted on August 31, 2011 by tony caldaro

SHORT TERM: rally makes new high, DOW +54

Overnight the Asian markets were all higher. Europe opened higher and closed +2.45%. US index futures were higher overnight as well. At 8:15 the ADP jobs index came in positive: +91K vs +114K. The market opened higher at SPX 1219 and continued to rally. The SPX had closed at 1213 yesterday. At 9:45 the Chicago PMI came in better than expected, but lower: 56.5 vs 58.8. At 10:00 Factory orders swung to the positive: +2.4% vs -0.8%. Just past 10:00 the FED released the following: http://www.federalreserve.gov/newsevents/press/bcreg/20110831a.htm. Around 10:30 the SPX hit its high for the day at 1231, then started to pullback. Around noon the SPX found support at 1219, rallied to 1227 by 1:00, and then headed lower again. At 2:00 the FED issued: http://www.federalreserve.gov/newsevents/press/orders/20110831a.htm. Nearing 3:30 the SPX declined to 1209 before rally into the a 1219 close.

For the day the SPX/DOW were +0.50%, and the NDX/NAZ were +0.15%. Bonds lost 14 ticks, Crude dipped 5 cents, Gold slipped $13.00, and the USD was higher. Support for the SPX remains at 1187 and then 1176, with resistance at 1222 and then 1240. Short term momentum displayed a negative divergence at today’s high. Tomorrow, weekly Jobless claims at 8:30 along with Q2 Productivity. At 10:00 ISM manufacturing and Construction spending. Then around noon a speech by FED governor Duke on housing, and monthly Auto sales. The monthly Payrolls report is on friday.

The market made a higher daily high for the third day in a row off of friday’s SPX 1136 low. At today’s high, SPX 1231, this rally (Intermediate wave c) now has a 1.382 (SPX 1233) relationship to its predecessor (Intermediate wave a). The previous rally rose from SPX 1121 to 1191. Should it continue higher there will be a 1.50 relationship at SPX 1240, and a 1.618 relationship at SPX 1249. Today’s negative divergence, however, started the biggest pullback since this rally began.

Short term OEW charts remain positive. The threshold is now just under SPX 1200. Short term support is in the low 1200’s then the 1187 pivot. Short term resistance is again at the 1222 pivot, 1231 and then the 1240 pivot. If this market pulls back into the 1187 pivot again it should set up another rally. Best to your trading!

MEDIUM TERM: downtrend may have bottomed 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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45 Responses to wednesday update

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  1. canadianloonie says:
    September 1, 2011 at 2:23 pm

    Thanks again Tony!!

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  2. canadianloonie says:
    September 1, 2011 at 1:54 pm

    Hi Tony
    2 quick questions
    are we in a recession and is the
    Swiss franc going to tank?

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  5. CB says:
    September 1, 2011 at 11:38 am

    Great, helpful points, everyone! Thanks as always, guys.
    Just a quick note about Ichimoku clouds, which are always exciting to look at, esp. since they combine price & time. http://screencast.com/t/1vVVovi3fC These shaded areas are support/ resist. areas & the thicker they are the stronger they act. If we take a look at $spx right now, we can see that if we start to move up quickly (as we seem to be doing now), we could go up to 1270-80 pretty quickly. If we stall for a few days, well get into that cloud of resist. (roughly 1190-1230) and we’ll get stuck in that range for a while. It would be interesting to know if you guys have any cycle dates coming up in the next few days/weeks to try to see how it may play out.
    In any case, the strong hands are sitting on the inventory right now, & since everyone and their dog knows that the market is going up ST & the swift action to 1270 is quite juicy, they are trying to shake out the weak hands who have apparently started chasing now…hence the action like we’re having today…we could pull back to ca. 1200 and things would still be bullish…so, a whole lot of shaking going on.. strong hands were buying through all the “bad news”…now we’ve suddenly had some better econ. news (or views) (the talking heads went from from “high recession risk”, to “just slow growth,” right?).. my point being that he story changes depending on who is long or short…and even fibs & other technicals act differently depending on who owns the stuff…Here are some ST daily offset MAs that I watch… http://screencast.com/t/XCuo7idI862 they are in a bullish alignment now…again 🙂

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  6. H D says:
    September 1, 2011 at 11:32 am

    choppy chop! 4th of something or even a triangle me thinks. 😯 more upside? I like those fib ext Tony. Thanks. Will be watching those numbers.

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  7. dwr51 says:
    September 1, 2011 at 10:47 am

    This market today seems unwilling to give up the 1222 pivot. I’m not sure who will eventually win this battle but from what I see on the charts I use I like the bulls chances but I am being very careful with my money as I am sure all of you are. I sure believe that Tony is right in the long term about a Bear market as one thing I see is big moves up on percieved good news and a slow trend down overall which is just the opposite of Bull market behavior.
    Best to all
    Dave

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  8. trendrecognition says:
    September 1, 2011 at 8:35 am

    Hi all,
    I agree with Tony that the Medium-Term picture in $SPX is bearish (both daily and weekly chart look bearish to me), but some further recovery of the recent big losses is likely. While I can’t see a bullish outlook on the daily and weekly chart of $SPX, I’ve recently found one potentially bullish count in $NDX, so I’ve decided to present it here. For now, this bullish count is only an alternative to the top idea that the market is already in bear market, but one should keep it mind.
    What’s the count? – basically it suggests we had an Expanding Triangle from Feb top to Aug low (second (X)-wave) and right now the market is moving up back twd its June’s highs (in wave (Z)). here’s the link of the count, comments are welcomed.

    Alexander

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