Wednesday update

SHORT TERM: gap up opening then reversal, DOW -41

Overnight the Asian markets gained 0.4%. Europe opened lower and lost 0.2%. US index futures moved higher overnight, and at 8:15 the ADP was reported higher: 263K v 245K. The market gapped up at the open to SPX 2368 and continued to rally. At 10am ISM services were reported lower: 55.2% v 57.2%. At 10:30 the market reached the cusp of the 2385 pivot range then pulled back to 2369 by 11:30. Another rally took the SPX back to 2378 by 1:30, then the market started to pullback again. At 2pm the FED released: Then the market started to selloff. At 3:30 the SPX hit 2351, bounced to 2357, then closed at 2353.

For the day the SPX/DOW lost 0.25%, and the NDX/NAZ lost 0.50%. Bonds gained 6 ticks, Crude slipped 20 cents, Gold ended flat, and the USD was lower. Medium term support remains at the 2336 and 2321 pivots, with resistance at the 2385 and 2411 pivots. Tomorrow: weekly jobless claims at 8:30.

The market gapped up at the open today for the first time in two weeks. The opening jumped over Monday’s SPX 2366 high, then cleared the resistance at SPX 2370. After that the market rallied to the 2385 pivot range and ran into new resistance. After a pullback and then rally back to SPX 2378, the market sold off following the release of the FOMC minutes. The FED had discussed, along with rate increases, reducing its balance sheet starting this year. In the last two hours of trading the market gave back its entire 18-point gain for the day, turned negative, and ended the day negative. The market continues to struggle to make upside progress, and the activity from the recent SPX 2322 low looks choppy. Typical activity in an ongoing downtrend. Short term support is at the 2336 and 2321 pivots, with resistance at the 2385 and 2411 pivots. Short term momentum ended the day oversold. Trade what’s in front of you!

MEDIUM TERM: uptrend under pressure

LONG TERM: uptrend


About tony caldaro

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169 Responses to Wednesday update

  1. micky says:

    hit 3rd support, it holds or not, so if taken out before a higher high than today, then lower lows should be on the way.

  2. pooch77 says:

    This not good

  3. Dex T says:

    Looks like with Fed minutes tightening is definitely on the cards- they want to trim the massive balance sheet.

    Next scheduled rate increase of 0.25 is at the June 16 meeting.

    Also not being discussed much is the mention in the Fed minutes of possible stock market overvaluation.

    • tommyboys says:

      One or two governors opine on the market – hilarious! They’ve been dead WRONG on the economy at EVERY SINGLE turn. Making ANY call on the stock markets which are effectively orders removed from the economy is a complete waste of air… meaningless. You’d do well doing the polar opposite of what any of these guys have to say about the markets.

      • tony caldaro says:

        Clearly, sustained low inflation implies less uncertainty about the future, and lower risk premiums imply higher prices of stocks and other earning assets. We can see that in the inverse relationship exhibited by price/earnings ratios and the rate of inflation in the past. But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade?
        December 1996

  4. blackjak100 says:

    NYAD at new ATH strengthing as the day moves on

  5. Last one for this afternoon.
    Putting my head on the guillotine and adding GDX(20%).Doing this before “Jobs Friday “may be hazardous to my bank account.A huge number would send the DXY over 101 and 2378 SPX tomorrow.We’ve had bullish crossovers on gold weekly,GDX daily and are above the 34 d in price for 4 days running.IF its a minor 4 on SPX,this trade should do well.If not…they got me.
    A less than stellar jobs number would boost bonds,gold and probably sink the dollar and stocks.Dollar support at 100.10.Break that and the confetti comes down.
    GDX stochastics got over 80 for the first of needed 3 days to embed.Worth a shot imho.Fed day and jobs day are two sure chances for big moves–and usually jobs day is stock bullish.Silver over 18.50 and gold over 1264 tomorrow is a must,and that can only be done with a disappointing jobs number.
    The talk today is no healthcare overhaul and probably no tax cuts this year (Neil Cavuto’s opinion.Smart guy).So goldfingers crossed.

  6. gary61b says:

    ES below 2357 and it slides down

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