Wednesday update

SHORT TERM: another volatile FED day, DOW -223

Overnight the Asian markets gained 1.2%. Europe opened lower but gained 0.8%. US index futures were lower overnight and the market gapped down at the open to SPX 1896. The market had closed at SPX 1904 yesterday. After an opening bounce to SPX 1903 the market dropped off to 1887 just past 10am, and then started to rally. At 10am New home sales were reported higher: 544K v 490K. The rally continued until 12:30, along with a rally in Crude, to SPX 1917. The market drifted lower to SPX 1906 just ahead of the FOMC statement and forecast at 2pm, and then started rising just before their release: http://www.federalreserve.gov/newsevents/press/monetary/20160127a.htm, http://www.federalreserve.gov/newsevents/press/monetary/20160127b.htm. Right after the statements the market hit SPX 1916, an then headed lower. The initial reaction was down to SPX 1894, up to 1904, and then selling to 1873 just past 3pm. After that the market rallied to SPX 1885, then dipped to close at 1883.

For the day the SPX/DOW lost 1.25%, and the NDX/NAZ lost 2.35%. Bonds gained 2 ticks, Crude rose 50 cents, Gold rose $4, and the USD was lower. Medium term support drops back to the 1869 and 1841 pivots, with resistance at the 1901 and 1929 pivots. Tomorrow: weekly Jobless claims and Durable goods at 8:30, then Pending home sales at 10am.

Volatile day! After the market opened with a gap down, hit SPX 1887, and then rallied past 1909 we marked Monday’s 1876 low as Int. B. Then the market hit SPX 1917, dipped, and hit 1916 just after the FOMC statements. After that it was all basically downhill for the rest of the day. In the last hour of trading the market dropped below SPX 1876, suggesting the entire pattern from 1812-1917 had completed with a complex double zigzag: 1909-1876-1917. At first glance this rally looks too small to be a Major B uptrend – no confirmation either. Some in our group have mentioned it could be just Int. A of Major B – possible. With the market in bear mode, and risks mostly to the downside, will accept the completed pattern, await more market data and see where it leads. Project, monitor and adjust. Crude, btw, hit its highest level of the week just before the market sold off. Overall, being long in a bear market for anything more than a short period of time, is as risky as being short in a bull market. Short term support drops to the 1869 and 1841 pivots, with resistance again at the 1901 and 1929 pivots. Short term momentum hit overbought right at today’s high and went right down to oversold. Best to your trading this volatile market!

MEDIUM TERM: potential uptrend hits inflection point

LONG TERM: bear market

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

About tony caldaro

Investor
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276 Responses to Wednesday update

  1. manunidhi21 says:

    Tony.
    What if Russia and Saudi do reach a deal and cut production as they did on 15th March 2009 to the braoder markets.
    http://www.theguardian.com/business/2009/mar/15/opec-rules-out-oil-production-cut

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  2. uncle10 says:

    Been going through charts of all the companies after earnings. Wowza! More proof there is no liquidity in the markets. up or down.

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  3. b already had an a, a b and a c1 now in c2

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  4. kvilia says:

    Speaking of gut feeling – Tony, anything you could share with us today?

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    • tony caldaro says:

      Q4 GDP tomorrow might be better than expected

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      • kvilia says:

        This would be a nice break for those of us trying to unload long positions and enter short positions if this trading range broke upside for a few days.

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      • EL MATADOR says:

        GDPNow as of today expects 1.0% while estimates are calling for 0.7%
        ….. nonetheless, this will be the 2nd weakest 4Q GDP of the 2009-2015 C1 bull market.
        Year 4 Qtr GDP
        2015 0.70% estimate
        2014 2.10%
        2013 3.00%
        2012 0.10%
        2011 4.60%
        2010 2.50%
        2009 3.90%
        2008 -8.20%

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  5. phil1247 says:

    bought bonds looking for post triangle thrust to 163 ZB

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  6. Gary Lewis says:

    Tomorrow marks the end of January trading. The August SPY low was 191.61. Ummm, that would be an analytical challenge as I’ve been thinking that if we held monthly support at that level, I would be looking for the impossible – P5!. Unfortunately, think I’m spending the long (Mexican) weekend in Atlixco, un Pueblo Magico, outside of Puebla. Wife will be grumbling if I am looking at my computer. 😦

    At this level, SPY will also be hitting the downward trending 20 DMA. Perhaps By Feb 29, the market will have been shaken out and be making progress on the upside? Better we just sell off tomorrow so I can have mole and cemitas on my mind instead of puts and calls this weekend

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