wednesday update

SHORT TERM: gap up and go day, DOW +162

Overnight the Asian markets gained 0.7%. Europe opened higher and gained 1.2%. US index futures were higher overnight. At 8:30 Housing starts were reported higher: 946k v 907k, Building permits lower: 990k v 1018k, then at 9:15 Industrial production was reported higher: +0.7% v +0.6%. The stock market gapped up at the open to SPX 1856, then pulled back to 1848 by 11am. The SPX had closed at 1843 yesterday. The market then rallied to SPX 1858 by 12:30 as FED chair Yellen was giving her speech:  After a pullback to SPX 1852 by 1pm the market moved higher again. At 2pm the Beige book: Heading into the close the SPX hit 1862 and closed there.

For the day the SPX/DOW were +1.05%, and the NDX/NAZ were +1.30%. Bonds lost 8 ticks, Crude added 15 cents, Gold ticked up $1, and the USD was higher. Medium term support remains at the 1841 and 1828 pivots, with resistance at the 1869 and 1901 pivots. Tomorrow: weekly Jobless claims at 8:30, the Philly FED at 10am, and it is Options expiration day.

The market gapped up at the open today for the second time this week. But for the first time this week it did not experience a sharp selloff in the NDX/NAZ. Thus far the SPX has retraced about 61.8% of its 1897-1814 downtrend, when reaching 1862 today. Since the wave activity off the SPX 1814 low was quite choppy, it is difficult to determine if this rally is just a B wave in an ongoing downtrend, or the beginning of a new uptrend. Should the SPX close above the 1869 pivot tomorrow then a new uptrend is probably underway.

Short term support is at the 1841 and 1828 pivots, with resistance at the 1869 and 1901 pivots. Short term momentum ended the day quite overbought. The short term OEW charts remain positive from SPX 1838, with the reversal level now 1843. Best to your trading options expiration and your three day weekend!

NOTE: Will be taking a road trip over the holiday weekend: Friday markets are closed. Will not be available Thursday, Friday, Saturday or Sunday. May be able to do the Thursday update, and Weekend update, but no guarantees. Options expiration this week is Thursday.

MEDIUM TERM: downtrend

LONG TERM: bull market


About tony caldaro

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146 Responses to wednesday update

  1. zvyezda says:

    Jedi, good work! Thank you.

    A Blessed Easter to all!

  2. 10 Year Treasury FVX.X Comparison on Monthly time frame to SP 500

    Federal reserve major tool, they use to crash stock market, is by raising interest rates. Mr. Alan Greenspan back in 1987, crash the stock market with his interest rates hikes. Currently, the 10 year is rising, so, the markets should correct very soon, question, is the degree of the rise, some feel it would take at least 3 % ten year level! for serious effect on equities. I tend to agree.

    But one must respect, evidence, when, comparison are done on the SP 500 monthly time frame and FVX ten year treasury, when, rate rises, SP 500 corrects.

    May 1, 2013 lows in rates, to April 17, 2014 highs, trend change in rates.

    Most likely, April to May period, if, the Federal reserve keeps tapering, and allows rates to rise further, conclusion can be drawn, Markets will correct some.

    Monitor and adjust with where money will flow. You can draw trend channel line, from 2007 highs to 2011 highs, on ten year treasury, and observations, very clear, rates are breaking out higher.

    Capital Flows will move swiftly, in the markets.

    Happy Easter!

  3. mjtplayer says:

    Hey all, thought I’d share this piece on gold from Tom McClellan. Tom is more of a “big picture” guy, but it lines-up with the bearish activity and lousy price action. He sees a bottom, of some sort, in or around July. That’s what I’m looking at too, my downside price target of $1,050-ish by this summer or early fall.

    • Totally agree with you, Mjtplayer. Check out the “big picture” and the trendline (chart below). Ready, set, go (down) any time now. Price hasn’t tested that area since it rose — it will. The 10MA is key for price to hold in order to rise — not seeing it happen.

      • mjtplayer says:

        Looks like a lot of prior activity around the $100 area in 2008 – 2009 for GLD, no doubt this will act as a magnet and important psychological level. Could a test of $100 in GLD be the bottom? Me thinks so, $100 GLD would be about $1,040 – $1,050 spot.

        If we do get down to this area in the months ahead, can you imagine how bearish sentiment will be towards gold? I’ll be looking to go heavily long if this scenario plays out…

        Silver and gold miners should get a bigger percentage bang higher off the lows, I’m expecting silver to drop to the $15 – $16 area when gold bottoms, miner’s via GDX to drop to $15-$16 too (test of the 2008 lows). A race to $15 – $16, who wins – spot silver or GDX?

    • blackjak100 says:

      I totally agree as well! I’m just not sure when it will happen since I would like to see the top of the weekly downtrend channel touched to complete a Primary 4 correction before moving towards $1050 in Primary V down. Currently, this resides around $1440-$1450.

      I’m a shorter term trader anyway and looking at the chart, there’s a clear line in the sand at $1278. From $1392-$1278, it’s clearly a 3 wave structure. The key problem I’m having is the rise from $1278-$1331 a 3 or 5? If it’s a 3 (X), we are heading to at least $1200 as a WXY. If this is the case, $1278 should be broken rather quickly early next week to the downside in wave iii of a of Y. If it’s a 5 where $1278 will hold, this open the door to at least 2 more possibilities which I’ll discuss if and when it happens.

      Bottom line, it’s safe to be short on a break of $1278 and long if $1278 holds. You have to be fairly careful with Goldman calls as they tend to be opposite of what will happen. In the end, I think they will be right but the target is still 6-10 months away.

    • blackjak100 says:

      I’m neither short or long gold at the moment, but plan to trade it very soon. See my reasoning below. Check out the link below in the middle of the page. This suggests gold is going higher in the near term. $1278 is the ulitmate key!

  4. PART IV:
    * GOLD: Speaks for itself (see chart below):$GOLD&p=W&yr=5&mn=9&dy=0&id=p30439092229&a=346069747&listNum=5
    * VIX: Suggests more movement down (see chart below).$VIX&p=D&st=2012-08-02&en=(today)&id=p46200032009&a=312144717&listNum=7
    Have a nice weekend, all! WE MISS YOU, TONY! Your blog’s a mess (when the boss is away, the kids will play).

    • fionamargaret says:

      Jedi, on the Gold chart, go to base of chart and press the P&F – suggests bullish.

    • Fionamargaret, Wouldn’t disagree, but won’t play it until it clears the weekly. I bought a couple of weeks ago (or less than — can’t remember) and the play was only a couple of days before I had to exit with a tiny 2% profit … and it then quickly dropped. Too choppy for me right now. If you have entered, hope you make a killing — I mean that sincerely.

    • mjtplayer says:

      Look at you Jedi, filling the master’s shoes – nice work!

      Gold: I’ve been short since $1,340 – $1,345. The drop on Tuesday had to be disappointing to the bulls, as well as the anemic bounce that was unable to stay above $1,300 or even make it up to the $1,310 resistance. It’s hard to make a bullish case in the short-term, if $1,280 is broken then $1,250 in short order. If $1,250 is broken, then we visit the lows at $1,180 again – simple. On the upside, gold needs to rally and close above $1,335 then $1,390 – that would really gets peoples attention. Until then, the trend is down…

  5. PART III(b):
    Also, what is bullish (at least short-term rally), is that many charts are showing MACD hook-up (buy on hook) after they have been destroyed. Also , those fans on the moving averages are going to get filled in with price. A couple of examples below:

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