wednesday update

SHORT TERM: another gap up opening sold, DOW -99

Overnight the Asian markets gained 0.4%. Europe opened higher and gained 0.7%. US index futures were again higher overnight, and at 8:30 Durable goods orders were reported higher: +2.2% v -1.0%. The market gapped up at the open to SPX 1875, nudged higher to 1876, and then began to pullback. The market had closed at SPX 1866 yesterday. Then just like yesterday, the day before, and the day before that, the Growth indices led the market lower. With only two 4 point bounces along the way the SPX closed the opening gap and hit 1858 by 2:30. The market then bounced to SPX 1864 by 3pm, but headed lower and closed at 1853.

For the day the SPX/DOW were -0.65%, and the NDX/NAZ were -1.35%. Bonds gained 11 ticks, Crude rallied $1.00, Gold slid $10, and the USD was flat. Medium term support remains at the 1841 and 1828 pivots, with resistance at the 1869 and 1901 pivots. Tomorrow: Q4 GDP (est. +2.6%) and weekly Jobless claims at 8:30, then Pending home sales at 10am.

The market gapped up at the open today, hit its high in the first hour, and then began to retreat. The same exact pattern for the past four days. The net result of the past four days, even after three gap up openings, is a net loss of 19 points. This reminds me of the first full week in January. Then we had four gap up openings for the week, three of the four were sold, with a net gain of only 11 points. The uptrend topped three trading days later, and the market entered a three week correction losing 6.1%. That time the selling was led by the DOW. This time it appears to be the NDX/NAZ.

Short term support remains at the 1841 and 1828 pivots, with resistance at the 1869 pivot and SPX 1884. Short term momentum hit overbought today then immediately retreated to oversold. The short OEW charts continue to vacillate with the reversal level now SPX 1865. Best to your trading of Q4 GDP day!

MEDIUM TERM: uptrend weakening

LONG TERM: bull market


About tony caldaro

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157 Responses to wednesday update

  1. rc1269 says:

    as per usual there seems to be some confusion around what the VIX is and is not, and what it tends to do at tops, bottoms and everywhere in between
    to be clear, its predictive power especially over shorter timeframes is dubious. vix futures also have shown little to no predictive power. the VIX is, however, a nice *coincident* tool for evaluating the general state of things.
    but look gentlemen – the VIX will not be high when the market is at a top, especially not at an interim top. saying that we cannot/will not go down because the VIX is low misses the very essence of what it is: interim tops can come at VIX all time lows; major tops form when vol is still relatively low but has been trending upward to a higher status quo; and vice versa for bottoms.
    you might notice that the VIX spikes *after* the market has tanked. does that mean that’s a good time to be selling? not likely. so i’m not sure why anybody believes that a low VIX means that it’s a good time to be buying.
    all that said, what i believe the VIX can help you with is identifying longer term changes in sentiment. such as how the VIX MAs began moving upward during 2007 even as the SPX was making new highs. i think that is valuable. looking at it daily and weekly though i think is expecting too much from it.
    in my opinion, right now VIX and its MAs have based and are gradually moving with an upward bias. to me that says that a) we could get an interim dip, or nothing, in the near future, and b) we’re still probably a little ways away from a major top. but even that should just be one small part in the whole mosaic of variables.
    just my two cents. cheers


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