Thursday update

SHORT TERM: higher open rally continues, DOW +56

Overnight the Asian markets gained 0.2%. Europe opened higher and gained 0.6%. US index futures were higher overnight. At 8:30 personal income/spending were reported higher, as was the CPI, and jobless claims were reported slightly higher. The market opened 6-points above yesterday’s SPX 2458 close, and continued to rally. At 9:45 the Chicago PMI was reported unchanged, and at 10am pending home sales were reported lower. Around 10:30 the SPX hit 2470, pulled back to 2464 by 11:30, then moved higher again. In the last hour of trading the SPX hit 2475, then dipped to close at 2472.

For the day the SPX/DOW gained 0.40%, and the NDX/NAZ gained 0.95%. Bonds added 6 ticks, Crude rallied $1.15, Gold rose $14, and the USD was lower. Medium term support remains at the 2456 and 2444 pivots, with resistance at the 2479 and 2525 pivots. Tomorrow: monthly payrolls (est. 170K) at 8:30; then ISM, construction spending, consumer sentiment and auto sales at 10am.

Since Tuesday morning’s gap down SPX 2428 opening low the market has now rallied 47-points with only two 6-point pullbacks along the way. The market’s best rally in over a month. The NDX/NAZ are +2.5% for the week, the TRAN/R2K +2.0%, SOX +3.0%, and Biotech +8.0%. Does this broad/steady participation suggest an SPX hourly chart third wave? Despite lots of short-term counts floating around, the market currently appears to be on cruise control. Short term support is at the 2456 and 2444 pivots, with resistance at the 2479 and 2525 pivots. Short term momentum ended the day quite overbought. Best to you NFP trading!

MEDIUM TERM: market inflection point

LONG TERM: uptrend

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

About tony caldaro

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177 Responses to Thursday update

  1. soulsurfer says:

    Been a while since I shared a posted of mine here, but as usual I am AWOL 😉 Anyway, a rare signal flashed across my screen today: VIX:VXV ratio below 0.75. I wanted to share this and possible implication with you all, simple as an FYI.

    http://investingintelligent.com/2017/09/01/vixvxv-ratio-dropped-below-0-75-what-does-this-mean-for-the-stock-market/

    GL!
    Soul

    Like

    • aahmichael says:

      By way of chance, the monthly candlestick for August 2017 is also the same candlestick as April 2012, December 2014, August 2016, and September 2016.

      Liked by 1 person

    • Hi Soul,

      I just want to point out something and clarify. Please correct me if I am wrong. You say

      “Hence a high ratio (>1.25) means a high current volatility, but expected lower volatility 3 months out, whereas a low ratio (<0.75) means traders and investors expect very little to worry about 3 months out. "

      The first part is perfect. It suggests the implied volatility now is 25% higher than what is expected in 3 months.

      For the second part, it seems to me that a ratio of 0.75 means the volatility now is less than what is expected in 3 months; in fact, whatever the volatility is now, the ratio says that 3 months out you can expect the volatility to be 33% more (i.e., 25/75). So there would be more to worry about 3 months from now instead of now, which is the reverse of what you said.

      If I am wrong please let me know. It's an interesting ratio and not one I have seen before. So thank you for introducing us to it.

      Best wishes,

      Joseph 🙂

      Like

  2. Page says:

    Have a nice weekend all.
    Cheers and don’t forget to donate to Harvey relief.

    Like

  3. Mary773 says:

    Major turning points are not always accompanied by sentiment extremes, but they are almost never accompanied by the current sentiment readings.

    http://stockcharts.com/h-sc/ui?s=!AAIIBULL-!AAIIBEAR&p=W&yr=20&mn=11&dy=0&id=p16356900940&a=542337198&listNum=33

    And in a bull market, SPX consolidations accompanied by AAII surveys revealing more bears than bulls have been buying opportunities. Past is not always prologue, but this is a game of probabilities. If the bears are right, we should see lower highs and lower lows with ample opportunity to get out/get short (barring a news event like WW III). In reading the pessimistic comments, the usual rationale seems to be that the market is “too high”. Hasn’t it been “too high” for years? I do not care if the market goes up or down. I just want to be a bull during a bull market and a bear during a bear market. So what is the trend? And if there has recently been a major trend change, what is the evidence? I am always eager to learn new things.

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