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

  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.

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

  4. rc1269 says:

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

    • tony caldaro says:

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

      • 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

      • 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?

      • 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

  5. M1 says:

    Hi Tony,
    DJI broke down.below the lows of sep 26th. NDX, SPX, NAZ, SOX, RUT, MID, SPXEW … did not.
    I am a bit confused. Do you get any clue from this scenario ?

  6. cruda Lee says:

    Morn
    ZC less is more…
    GL guys !

  7. tommyboys says:

    Nice BDI analysis Tony. This could coincide perfectly with a big bull – record breaking – over the coming 24-36 months… time will tell.

  8. M1 says:

    I agree once again. I am not convinced the low for Intermediate wave iv ended at SPX 1431. However, the last and the first day of the month are usually bullish. So the next two days will be quite interesting days.
    GL

  9. StemSki says:

    Hi Tony,
    If Intermediate iv was complete at 1430, then today’s rally looked like a minute iii of Minor 1 of Intermediate v which might have completed at 1450. I could then see Minor 1 ending near the 1360 level before seeing Minor 2 retest the 1440 or below range.
    Is this at all possible?
    minute i: 1430 to 1439
    minute ii: 1439 to 1433
    minute iii: 1433 to 1450
    minute iv: ongoing

    • CB says:

      cool maps Lee!…gee, that’s gonna be sooo bad for our complexion 😉 ..on the other hand that’s terrific news for you guys in the Midwest – no snow or rain in December 🙂

      • cruda Lee says:

        Thanks C B

        Word is the Great Lakes are going to produce some kick butt lake effect snows this winter because of the unusually high lake temps which would really help out the fruit producers in SW MI. and the Ski Hills 🙂

      • cruda Lee says:

        But yes.. You and H D are in trouble 🙂

      • CB says:

        wow, Lee ur so chock-full fascinating facts & ideas that you’d make a great weatherman (yeah, yeah -that Brick Tamland clip you posted comes to mind 😉 or a MI-tourism & business promoter …so, yes I like ur enthusiasm, Lee! :)) Oh, and so sorry to have to dampen all that Lake Effect enthusiasm …cuz u know weather laws are a bit like human laws – if we want something (snow), we often can’t have it …and if we can have something, we just don’t want it then …we are ..’humans’ :))
        I am sure HD is fine in any kind of weather cuz he’s quite outdoorsy 🙂 isn’t he?..& the mall-weather is fine with me anytime….and gee Lee, we’ve really been missing HD here the last few days, haven’t we?…he’s such a great friend of this blog & has done so much to help us all, so I hope we get to enjoy HD’s company here again real soon.
        HD, we know ur a busy guy, doing a great job on several blogs & being in high demand in trading circles, so as always we’d really appreciate if you could find some time for us as well as …and the two of you are just terrific traders, and really terrific working together and it’s a pleasure to see you both in action and having a good time. And It’s good for all of us. Thank you both. And thanks Tony for making it possible as well as everyone else making this an interesting place to share ideas.

      • CB says:

        sorry about my typos guys -it’s getting late…
        should read: chockfull of fascinating, ideas, Lee
        and….thanks everyone for making this an interesting place….
        and whatever else I missed – my intentions were good… =)

  10. budfox9450 says:

    Tony, while Shanghai is briefly below the 2,000 level.
    The appears to be an effort for a near term rally, thus
    went long CAF prior to the close today 18.39 – if she can get
    to $20, I’d be happy – because – that 1600ish level, looks like the
    real target……Bud

  11. Really curious why you are not convinced of today’s rally? Just because of last QE2 action or any other reasons?

  12. Thought you were looking for SPX to get oversold which it did. Now you are not convinced of this rally. Why is that? Thanks in advance.

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