thursday update

SHORT TERM: gap down opening then rebound, DOW +20

Overnight the Asian markets were again mostly lower: -0.8%. European markets were again also mostly lower: -1.5%. US index futures were lower overnight. At 8:30 the final Q3 GDP came in as expected: +3.0%, and weekly Jobless claims were higher: 359K vs 348K. The market gapped down at the open to SPX 1398. It had closed at SPX 1406 yesterday. In the first few minutes of trading the SPX dipped to 1396, bounced to 1400, and then headed lower. Around 10:00 the SPX hit a new low for the pullback at 1392. Also around ten FED director Braunstein’s senate testimony was released: The market then tried to rally, hitting SPX 1396 by 11:00, but rolled over again. Around noon the SPX retested the day’s 1392 low, set up a short term positive divergence, and began to rally. Heading into the close the SPX hit 1405, then backed off to close at 1403.

For the day the SPX/DOW were mixed, and the NDX/NAZ were -0.30%. Bonds gained 12 ticks, Crude dropped $2.20, Gold slipped $1.00, and the USD was lower. Support for the SPX remains at the 1386 and 1372 pivots, with resistance at the 1440 and 1499 pivots. Short term momentum set up a positive divergence, and then rose above neutral. Tomorrow, Personal income/spending at 8:30 along with PCE prices. At 10:00 the Chicago PMI and Consumer sentiment.

The market started the day with its first gap down opening since last thursday. Then, the market was setting up the Minor wave 2 low at SPX 1387 the following day. That pullback, overall, was 27 points. Today’s gap down, and continuation to SPX 1392, also creates a 27 point pullback from tuesday’s 1419 high. Both 27 point pullbacks, thus far, terminated with a short term positive RSI divergence. The first rally off last week’s low took about four hours, and was 12 SPX points. Today’s rally, off the noon low, took about fours hours and was 13 SPX points. Oddly similar. Are Bots running this market?

The pullback, despite being larger than expected, found support within the OEW 1386 pivot range. This pivot has provided support for three pullbacks now, over three consecutive weeks. One of the three potential short term wave patterns was eliminated today. The ominous D wave of an Intermediate 5th wave diagonal triangle. The other two, a Minute wave ii low and an irregular Minor wave 2 underway, remain a probability and possibility respectively. Short term support remains at the 1386 and 1372 pivots, with overhead resistance now at SPX 1406, 1414 and then 1419. Short term momentum displays a positive divergence. Best to your trading!

MEDIUM TERM: uptrend high SPX 1419

LONG TERM: bull market


About tony caldaro

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44 Responses to thursday update

  1. CB says:

    well, boys and girls if you kindly hold ur shares over the weekend, maybe ( yes, maybe) this benevolent market will get to the next extension… Dr. Lee, we’ll definitely need a steady supply of Mc Lovin from you to sustain us, please 🙂 geez Ben, ur so mean in the oil patch…


  2. ok then, will need to rest my eyes over the weekend 🙂


  3. my perception from the futures is that we just started wave3 following a zigzag 5,3,5 completed during 19th -> 23rd then to 27th then completed yesterday.
    Tony, do you see this one of the possibilities or would you discard?


  4. TONY,would like to repost your line on the market:
    Bull market climbing the wall of worry 🙂


  5. Tony, just read your housing posts. You do some Great work here, thanks!


  6. all major stock indices are back on elliot “PSST” buy signals after having been in caution territory for 1-3 days.


  7. CB says:

    Hi everyone.
    Tony, what sort of number would you need to see on the Shanghai Comp. that would change the intermediate term trend. Some folks see an inverted H & S pattern forming on it – that would be pretty uplifting news for for most markets..commodities etc.


  8. rc1269 says:

    Morning Tony

    I’m starting to get fairly cautious as well. Dialed back the risk substantially the last few days. Credit mkt has really been lagging lately and some of the divergences in the market don’t make me feel too good (you mentioned two of them – Dow and foreign markets).

    SPX looks to me like it could be setting up for a nice H&S top here if we get a rally back to the 1414 point. Economic indicators are definitely slowing down some too, and the Economic Suprise Index has been trending down since January. It is forming a similar trend/situation to when stocks topped out at the end of April last year.


    • tony caldaro says:

      Mornin RC, PCE came in positive again … QE 3 remains on the back burner.Sensing the FED is going to let Operation Twist expire in June.Housing permits have had a good bounce, builders are optimistic, and new home prices are on the rise. European equity markets are not doing too well lately.It may be time for a break. Raised the uptrend threshold to the 1372 pivot.


  9. piazzi says:

    at the recent low, there was a positive divergence between junior and senior gold miners


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