Wednesday update

SHORT TERM: gap up opening, pullback, then DOW +1086

For the first three days of the week not much happened in the foreign markets, as most were closed, or open a limited time. The US market, however, was a bit different. Even though there was a half session on Monday, the market tanked to SPX 2351 at the close. Down 65 SPX points on the day. Today was a totally different a story. The SPX closed at 2468: +4.96%.

On March 4th 2009 POTUS Obama stated to buy stocks because they were cheap. The 2007-2009 bear market bottomed only 4% lower and two days later at the infamous SPX 667. On Monday Treasury secretary Mnuchin convened a meeting of the Presidents Working Group (FED, SEC, CFTC and Treasury). On Tuesday, Christmas day, POTUS Trump stated to buy stocks because they are cheap. Did the market respond to the POTUS or the PWG? Keep in mind POTUS Trump tweeted on December 4th that he is the Tariff Man. The market promptly dropped 15.9% over the next three weeks.

If today’s activity was because of the PWG, better known as the Plunge Protection Team, there is certainly more upside ahead in the coming days and possibly weeks. Managed
Markets for a Managed Economy (MM4ME). The rally from today’s SPX 2347 low, the 7th consecutive day of new downtrend lows, looks like three waves thus far: 2414-2394-2468. Short term support is at the 2456 and 2444 pivots, with resistance at the 2479 and 2525 pivots. Short term momentum reached quite overbought during the rally. The daily RSI just came off its lowest level since the 1987 crash. Best to your trading!

MEDIUM TERM: downtrend

LONG TERM: downtrend probable

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

About tony caldaro

Investor
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524 Responses to Wednesday update

  1. Massive quarterly pension fund rebalancing is what is propelling this market higher today. Roughly $64 Billion, as pointed out by several quant analysts on the Street, including Boris Rajavinski of Wells Fargo and even Steve Grasso from the floor of the NYSE care of CNBC.

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  2. vivelaamo says:

    200 week moving average was always worth a strong bounce. Hopefully it can continue…

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  3. bornapittfan says:

    Tony, I’m confused how you call the long term a downtrend if it’s only wave 2?

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  4. Jack kendo says:

    Tony Thanks
    Contrary to Sunday night with so many posters long and loss, there are only 2 posters profit with text book “the biggest single-day point gain ever – i missed.

    cheers!

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  5. Just a thought, It took close to 10 months to break the early Feb lows. Would’nt it be unusual that we go higher than 2530’s so soon.

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  6. 123 abc says:

    Thank you for the midweek update Tony, happy Boxing Day everybody!

    DOW: Following likely invalidated with a move beyond the SPX 2525 pivot….

    BTC

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  7. Lee x says:

    Thx Tony

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  8. lml25 says:

    Slow stochastics are still in single numbers for most equity indexes.NASDAQ got to 12.The next step is to get above 20 for more confirmation of this rally to continue.But the important move was TLT losing its embedded– imho.Later all.

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  9. mcgcapital says:

    I’m out of longs picked up earlier.. pretty incredible move. It’s the biggest but we’ve had 3 similar ones since October and they all marked the top of retraces. People will start positioning short for January once month end rebalance is done

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  10. Thanks, Tony and I gave learned in the past to always contain my bullishness after such big ups, but it was the sustained downs that kept me alert. Old things, like RSI which you just mentioned is important and also other factors did show signs of “exhaustion” on the downside. I did play the bounce and sold on the close…flat.

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