friday update

SHORT TERM: market drifts higher, DOW +75

Overnight the Asian markets lost 0.1%. European markets opened lower but gained 0.1%. US index futures were higher overnight. At 8:30 Retail sales were reported higher: +0.2% vs +0.2%, and the PPI was reported higher: +0.3% vs 0.0%. The market opened higher at SPX 1687, ticked up to 1688, and then began to pullback. At 10:00 Consumer sentiment was reported lower: 76.8 vs 82.1, but Business inventories were reported higher: +0.4% vs 0.0%. By 10:30 the SPX hit yesterday’s low at 1682, and then tried to rally. Around 2:00 the SPX hit 1689, dipped to 1686 just before the close, and ended the week at 1688.

For the day the SPX/DOW were +0.40%, and the NDX/NAZ were +0.15%. Bonds gained 6 ticks, Crude slipped 10 cents, Gold added $2, and the USD was lower. Medium term support remains at the 1680 and 1628 pivots, with resistance at the 1699 and 1762 pivots. Last night the FED reported the M1 multiplier ticked up: 0.742 vs 0.741. Today the WLEI was reported higher: 54.1% vs 53.9%.

The market opened higher today, then traded within yesterday’s SPX 1682-1690 range for the rest of the day. Not much of a change from yesterday after this eventful week. The SPX/DOW have been acting a bit more impulsive since last Friday’s SPX 1654 low. But since the rally from SPX 1627 started in such a choppy fashion. One can not be certain if this is a counter-trend rally, or a new uptrend. With both the SPX/DOW less than 2% from their highs we should find out soon.

Short term support remains at the 1680 pivot, and SPX 1658-1667, with resistance at the 1699 pivot and SPX 1710. Short term momentum continues to display a negative divergence. The short term OEW charts remain positive with the reversal level now SPX 1674. Best to your weekend!

MEDIUM TERM: downtrend inflection point

LONG TERM: bull market


About tony caldaro

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31 Responses to friday update

  1. M1 says:

    I wonder how many readers woke up early today and are waiting for you to post your weekend update =)
    have a great weekend.

  2. $SPX $SPY $UVXY $NUGT, the “Hold On, Hold On” roadmap for monday:

  3. Hello. Just found this place. Looks interesting. May be way over my head. Will watch for a few days if thats okay.

  4. Waiting to short AAPL, but not right here. Would feel more comfortable with a few days up to 485 then rollover to work off the oversold condition. 400 should come fast after that. Have a nice weekend all!

  5. student8888 says:

    Tony, what was the shortest Major wave during this bull-market?

  6. Pingback: Risk-Reward Report – 2013.37 | The Risk-Reward Report

  7. I disagree that the move up has been made in choppy fashion. I’ll illustrate in two ways, first by comparing it to the initial decline, and second by putting on a trader’s hat.

    The way down (1709-1627 SPX) was 81 points. Two gap days of the seventeen day decline accounted for 51 points, or 62.5% of the decline. Those two gaps were greater than 5 handles. Gaps can be indicative of market price mismatches.

    Aug 14, close.1685.close
    Aug 15, open..1679.close.1661 for 24 pts
    Aug 26, close.1657
    Aug 27, open..1652.close.1630 for 27 pts

    The two big gap down days were preceded by key reversal days: we made a HOD early off the open, and then closed down on the dead lows.

    Now let’s look at the way up (1627-1688 SPX) so far. There have been no gaps greater than five points. The two largest gap days account for 19 pts less than 25% of the up move. The two largest gap ups we have are:

    Aug 30, close.1633
    Sep 04, open..1636.close.1639 for 06 pts
    Sep 09, close.1671
    Sep 10, open..1674.close.1684 for 13 pts

    So on the basis of gaps and follow ups. one observation might be that the downward moves were violent, while the upward moves have been measured, and some might say orderly.

    Now let’s put on our trading hats for a moment. Five days were spent near the August 27th low of 1627. Those five days were all at the end of the month and included statements by John Kerry and a British Parliament vote on Syria. The range was 1627-1652, each were tested twice during this period. News bombs imply volatility, but the key is we ended where we started.

    Now let’s look at the two big amplitude days of the upswing, September 3rd saw a 17 point swing, and September 6th saw a 24 point swing from high to low. The two days are Labor Day Tuesday, and Jobs Friday- the monthly non-farm payroll reports.

    Going into a three Labor Day weekend, traders donned their bear suits for an impending attack on Syria. When the attack never came, houses covered their protective shorts in the first ninety minutes, from 1636 up to 1651. Once the shorts had all covered, John Boehner strolls onto the White House lawn and backs Obama on a congressional vote. In fifteen minutes: we plunged in a straight line down eight handles, then followed through into the opening gap for the next couple hours. As it was the first day of month, big money made purchases into the close, 7 handles in seventy-five minutes. For the day, we saw two-way action based on the reaction to the tape bomb that never came and to a tape bomb no one expected (Boehner sides w/ Obama). On a fifteen handle swing, we closed up four handles.

    Let’s look at the second big amplitude day of the rally so far,which was Jobs Friday. If you’re trading it, you know it’s buy the rumor and sell the news. On a jobs Friday, the buying/selling gets exhausted in that hour before RTH and in the opening moments.

    Friday Sept 6th was true to form. From a previous close of 1655, the first ten minutes of trade saw a 7 handle move up. At 09:33, Bloomberg reports Putin saying ‘will we help Syria? We will.’ Ahead of the G-20 that weekend, Russia committed to continued delivery of anti-aircraft missiles to Syria. The traders were setting up to go short, and the Russians poured gasoline onto that fire.

    From 9:40-10:00, they ran it down 22 handles: 1662->1640. That took the market down a level equal to the post Labor Day close and tested that gap. Did something get lost in translation, the market said ‘da’, and they proceeded to fade the fade of the fade. From 10:00-11:00, we round-tripped it 20 handles, and tacked on another 6 into the late afternoon. By 15:00, it was risk-off Syria into the weekend, and they sold em hard into the close, seven handles. On a twenty-six handle day, we ended down just 1.5 SPX pts.

    So, if we review the events objectively, we can say that the gaps on the way downwards were more violent than the ones on the way up. If we look at September’s days with the greatest amplitude, we can see that they were news bomb days. But even on the news bomb days, the total moves added up to only 5.5 handles on 41 pts worth of two-way trading. That ain’t much folks.

    The recent advance may appear choppy on a chart. In context, however, the market held up to two improbable news bombs: Boehner backs Obama on attack, and Russia to defend Syria. I’d say that a change of only 5.5 handles is as smooth as a duck on water. So, if a choppy advance is a factor in looking askance at the move, I might reconsider.

    Now some grist for the bears. Now some grist for the bears. On the announcements of QE1-4, the traders initially faded it:

    QE1: Nov 25’08 SPX 0888->0815 in one week
    QE2: Nov 03’10 SPX 1225->1189 in three weeks
    QE3: Sep 13’12 SPX 1474->1343 in seven weeks
    QE4: Dec 12’12 SPX 1438->1401 in three weeks

    While the world may think of the first move as the Bernanke bounce, the traders call it the Bernanke top. If there is limited or no taper, that may be a QE4.5. Just something to keep in your back-pocket come the FOMC press conference next Wednesday.

  8. Good night, Tony — thanks!!

  9. Nky says:

    Thanks Tony.
    Regarding the SSEC, is it in conformed uptrend? I see “up trending” being printed on the daily, however the wave labels seem out of date- w4 (of C) is overlapping w2.
    Also, would you consider B finished at 1434 on Gold?

  10. bouraq says:

    End of the week charts

  11. kloutt says:

    i have given up trying to swing trade this nutty psyKo market and now i am scalping it along with the BOTS !

    looking for stops to run in both directions ….looking for 3wave moves to counter trade

    its profitable !

  12. hucky2 says:

    SPX daily chart almost has 2 inside days in a row which could be bullish
    The 15 min chart has some type of ending diagonal forming which should be bearish?

    • Nky says:

      the pattern is identical to those of July & March this year where spx also had 7-8 days up, in both cases it went up about 10pts higher the next day.

  13. pugsma says:

    Tony very interesting week for the SPX.

    mREIT’s looking interesting again from at TA Perspective.

    Have a great weekend !

  14. student8888 says:

    Tony, what odds is the OEW group giving the B-wave count vs. Major 5? Hope you will provide some insights on the weekend report. Take care.

  15. Thanks Tony,
    Mr. Market not giving us any fat pitches.

    • Young Tom says:

      These come to mind, Phil Niekro and Hoyt Wilhome, famous knuckle ball pitchers. If the mkt can survive the onslaught of news next week, Tapering, Summers, Debt ceiling, and finally Syria, probably new highs. My wife is a lot wiser than me, and it’s never whats behind door #1, my guess Syria throws the biggest knuckle ball.

  16. CB says:

    Thanks Tony!

  17. daking66 says:

    bulls sharpening their horns.

    have a great weekend EWites!

  18. lunker1 says:

    Thank Tony.
    Good job all limiting posts.

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