thursday update

SHORT TERM: markets gaps up and rallies, DOW +72

Overnight the Asian markets were +0.4%. European markets opened higher and gained 0.4% as well. US index futures were higher overnight, but at 8:30 the final Q2 GDP was reported lower: +1.3% vs +1.7%. Also at 8:30 volatile Durable goods orders declined: -13.2% vs +4.2%, but weekly Jobless claims were lower: 359K vs 382K. The market gapped up at the open to SPX 1438, bounced to the 1440 pivot in the first few minutes, then pulled back to 1436 by 10:00. The SPX had closed at 1433 yesterday. At 10:00 Pending home sales were reported lower: -2.6% vs +2.4%. Then the market resumed its rally. Heading into the last hour of trading the SPX hit 1450, then pulled back to close at SPX 1447.

For the day the SPX/DOW were +0.75%, and the NDX/NAZ were +1.40%. Bonds lost 5 ticks, Crude gained $2.10, Gold rallied $25, and the USD was lower. Medium term support for the SPX jumps back to the 1440 and 1386 pivots, with resistance at the 1499 and 1523 pivots. Last night the FED reported New home prices at their highest level in four years: $295.3K vs $270.6K. Tomorrow: Personal income/spending and PCE prices at 8:30. Then the Chicago PMI and Consumer sentiment near 10:00.

The market gapped up at the open today off European news. Then it rallied to SPX 1450. This represents a 19 point gain from yesterday morning’s SPX 1431 low. It is also the best rally since the recent Intermediate wave iii at SPX 1475 high. While this was an impressive one day rally, we’re not convinced the low for Intermediate wave iv ended at SPX 1431.

In fact, the market activity since the FED’s QE 3 announcement continues to look very similar to the market activity after the FED’s QE 2 announcement. Then, the initial low was retested again before that Intermediate wave iv completed. Yes, the FED announced QE 2 just before the Int. wave iii high in Major wave 3 of Primary I. What followed, then, was an Int. wave iv flat. This timing is quite odd from an OEW perspective.

Short term support notches back up to the OEW 1440 pivot and SPX 1422/27, with resistance at SPX 1463/64 and the 1499 pivot. Short term momentum hit overbought today, from yesterday’s extremely oversold condition. The short term OEW charts remain negatively biased with the swing point now at SPX 1449. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: bull market

CHARTS: http://stockcharts.com/public/1269446/tenpp

About tony caldaro

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44 Responses to thursday update

  1. hooloo1957 says:

    Tony, Don’t you think That with the 3 small 5 wave patterns of the last 2 days we r triangulating to go lower? Thanks

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  2. tommyboys says:

    ECRI WLI Ticks Up – BIG !!

    A measure of future U.S. economic expansion continued to improve last week, and the annualized growth rate reached its highest level in over a year, a research group said on Friday.

    The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index rose to 126.7 in the week ended Sept. 21 from a revised 125.3 the previous week. That was originally reported as 125.4.
    The index’s annualized growth rate jumped to 3.8 percent from 2.7 percent, hitting the highest level since June 2011.

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  3. Tony, any positive divergences you see? Didn’t quite get to yesterday’s lows though.

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  4. rc1269 says:

    Mkt likes the $76bn Spanish bank capital shortfall. Methinks mkt doesn’t care what that number is.

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    • tony caldaro says:

      RC,
      Didn’t Citibank and BAC each borrow more than that total in 2008?

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      • rc1269 says:

        yeah, not sure if that means this is good news or just yet another non-stressful stress test
        but honestly i don’t know if this capital testing is even relevant for the mkt anymore. we’re so knee-deep in bailouts is anybody even going to second-guess another one? i feel like there are really only two competing issues right now – QE vs economic contraction. whichever one has the greater strength. the rest is pretty much noise. IMO

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      • tony caldaro says:

        RC, maybe you can enlighten me.
        BAC was asked by the FED/TRSY to takeover MER.
        When BAC examined the books they wanted out.
        They didn’t get a choice and were forced to take MER.
        Now states are collecting huge settlements again BAC for the MER deal.
        Am I missing something here?

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      • rc1269 says:

        Tony, I’m afraid you’re not missing anything. While it was clear, from both Ken Lewis’ testimony as well as internal docs, that BAC wasn’t really given the option by the Fed/Tsy to bow out of the deal, officially it was still their choice. *officially.* The Fed and Tsy to this day deny that they forced hands, because, after all, that would be big problem wouldn’t it?
        At the end of the day, it was clear to mgmt after digging into the MER books that doing the deal was not in the best interests of BAC shareholders. And BAC management is liable for not acting in shareholders’ best interests.
        Is it fair? No. Did BAC management really have a choice? No, probably not. Do shareholders care? Also no.
        Just add it to the growing list of ways our country is messed up

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