quick update on Wednesday

IN THE SHORT TERM

With SPX crossing 1334 level count in the short term has improved to count underway more optimistic alternate on the daily chart of the DOW. This count suggests that this scope increased seven months intermediate vague remaining the low SPX 1173 Nov10 five. This count remains unchanged. Intermediate five waves, however, is extending and subdivided into waves of a lower than expected. We expect the rally of five waves of SPX 1173 1303 as minor wave 1 and the withdrawal of that day in 1275 as minor wave 2. Minor wave 3, currently underway, started low SPX 1275. This suggests the rest market yet to complete 3 minor, minor 4 and 5 minor before this increase concludes. Expenses General resistance is now at the OEW 1363 and 1372 pivots. Best for your business!

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weekend update

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REVIEW

For the eleventh week in a row the SPX made new bull market highs this week. Statistically that is quite a run as this seven month uptrend continues to extend. Economic reports were plentiful and positive. Thirteen were positive or improving, four negative or weakening, and one flat. The negatives were declines in industrial production, building permits and the M1-multiplier, plus an increase in weekly jobless claims. The NAHB housing index remains flat and bouncing along the bottom. On the positive side; the PPI/CPI were positive, along with import/export prices, retail sales, the leading indicators. On the improve were the NY/Philly FED, business inventories, capacity utilization, the monetary base and the WLEI.

For the week the SPX/DOW were +1.0%, and the NDX/NAZ were +0.75%. Asian markets gained 2.4%, European markets added 1.2%, the Commodity equity group rallied 1.8%, and the DJ World index rose 1.8% as well. US Bonds were +0.5%, Crude added 1.6%, Gold rallied 2.3% (Silver was +8.8%), and the USD declined 1.1%. With the FOMC minutes and Options expiration now behind us we look ahead this week to housing, consumer confidence/sentiment and friday’s second estimate on Q4 GDP. Monday is a national holiday in the US: Presidents Day.

LONG TERM: bull market

This week we will take another look at the OEW characteristics of a typical bull market. Keep in mind a bull market is not confirmed by OEW until there is a long term uptrend. We have been in one for over a year now. Gold, in contrast, has been in a confirmed long term uptrend since 2001.

When we review the SPX weekly chart above, which displays a bear market sandwiched by two bull markets, we observe several technical characteristics. First, during the 2002-2007 and the 2009 bull markets the RSI spends most of its time in an overbought condition and only gets slightly oversold during corrections. Inversely, during the 2007-2009 bear market the RSI spends most of its time in an oversold condition and during rallies gets only slightly overbought. Second, during bull markets the MACD generally remains above neutral during the entire bull market. Then during a bear market it remains below neutral. Lastly, during bull markets the OEW wave patterns unfold in impulse waves (five waves up). While during bear markets they unfold in corrective waves (three waves down). The technical evidence clearly suggests we have been in a bull market since March 2009. This is certainly one picture that is worth a thousand words.

MEDIUM TERM: uptrend high @ SPX 1344

In September we published the following bull market projection based upon the characteristics the stock market had displayed up until that point in time. The market at the time was at SPX 1149: http://caldaro.wordpress.com/2010/09/26/spx-bull-market-projection/. In this tentative projection we estimated a six month uptrend from July10 to Jan11 topping around the OEW 1313 pivot. The market hit that pivot range on February first. But the uptrend displays no signs of reversing yet and we are clearly into its seventh month.

Also noted in the report was the tendency for the uptrends to unfold in three month intervals, or their multiples: Mar-Jun, July-Jan and early Feb to late April. The next window for a potential top, using this bull market characteristic, would be April: nine months.

In regard to price. Since our first price objective of the OEW 1313 pivot has already been met. And, this uptrend continues to extend. Our second price objective of the OEW 1440 pivot is next. Between friday’s close at SPX 1343 and the 1440 pivot is nearly another 100 SPX points (7.2%) and four OEW pivots: 1363, 1372, 1386 and 1440. Notice the large gap between the 1386 and 1440 pivots. This gap is similar to the current pivot gap between 1313 and 1363 pivots.

Are we projecting SPX 1440 by April? Only if the SPX clears the 1386 pivot and remains in this uptrend. In fact, it is possible that this uptrend can extend all the way out until July, twelve months, and then hit the third price objective at the OEW 1552 pivot. If this did occur it would probably be all of Primary wave III, not just Major wave 1. All the anticipated Major waves would have unfolded within the context of one uptrend. Rare, but it did occur once before in the early 1950's. For now, lets take this bull market one OEW pivot at a time.

SHORT TERM 

Support for the SPX remains at 1313 and then 1303, with resistance at 1363 and then 1372. Short term momentum ended the week just above neutral. Tracking an extending uptrend, such as this, is quite testing for even the best technicians. We’re quite comfortable with the labeling of the four Intermediate waves noted in the chart above: wave i SPX1129, wave ii SPX 1040, wave iii SPX 1227 and wave iv SPX 1173. From that November Intermediate wave four SPX 1173 low, Intermediate wave five looked like it would complete at the OEW 1303 pivot in late January. But this uptrend was not done yet, and after the largest pullback since that low the market turned right around and the uptrend started to extend.

Currently the most probable wave count would suggest that Intermediate wave five is extending, and it is currently in Minor wave 3 of that extension. This suggests we still have a Minor waves 4 and 5 ahead of us before the uptrend ends. Minor wave 3 should run into resistance at the OEW 1363 pivot. Which also matches a cluster of fibonacci relationships (SPX 1360-1364) noted in last weekend’s report.

We are also carrying one other potential SPX wave count, which is labeled on the NDX daily chart. We will be moving that count over to the DOW daily chart shortly. The NDX, btw, has already exceeded its 2007 high by 7.4%, and the NAZ is less than 1% below its 2007 high. The very low probability alternate bearish count, labeled on the NAZ chart, will be eliminated. Best to your trading!

FOREIGN MARKETS

Asian markets were all higher on the week for a 2.4% net gain. India’s BSE and Hong Kong’s HSI may have both bottomed in their downtrends, India with a positive divergence, and are both rallying. The other three indices are uptrending.

European markets were also all higher on the week for a 1.2% net gain. All five european indices are in uptrends.

The Commodity equity group was mixed on the week for a net gain of 1.8%. Brazil’s BVSP looks very much like India’s BSE, with a downtrend low on a positive divergence and rallying. The other two indices are in uptrends.

The DJ World index remains in an uptrend and gained 1.8% on the week.

COMMODITIES: the bull market continues

Bond prices remain in a downtrend but bounced off of recents lows to gain 0.5% on the week. 10YR yields nearly hit 3.75% recently, their highest level since the spring of 2010.

Crude is still in an OEW uptrend, despite the recent weakness, and gained 1.6% on the week.

Gold continues to rally from its recent downtrend low at $1308. It gained 2.3% on the week. Uptrending Silver gained 8.8% for the week and made new bull market highs.    

The downtrending USD lost 1.1% on the week. It has remained in a DXY 76-81 trading range since November.

NEXT WEEK

Monday is a national holiday. Tuesday kicks off the economic week with the always interesting Case-Shiller housing report. Identifying the end of this bear market, when it occurs, will impact the largest part of the population. Also on tuesday we have the Consumer confidence reading. On wednesday Existing home sales will be reported. Then on thursday, weekly Jobless claims, Durable goods, the FHFA housing index, and New home sales. On friday Q4 GDP and the Consumer sentiment reading. The FED has only one thing on their agenda. On friday vice-chairman Yellen gives a speech in NYC. Best to your extended weekend!

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last updated Monday

Short term: market ekes out new high, DOW - 5

Overnight Asian markets were all more elevated. Europe has opened more but closed mixed. U.S. future index are slightly lower overnight. The market opened relatively flat dipping SPX 1328 in minutes, then he rallies in 1331 by 10: 30. The SPX closed at 1329 Friday. A withdrawal followed in 1327 SPX at 11.00 am. Then the market has worked its way higher than a new Summit 1333 SPX just before closing and ended the day at 1332.

Day SPX/DOW were mixed and NDX and NAZ were + 0.25%. Bonds gained 1 tick gross lost 65 cents, or increased $6.00 and the USD was higher. Support for the SPX remains at 1313, then in 1303, with resistance in 1363, then 1372. Short term momentum dipped below overbought early in the day, but ends still more overbought in the end tomorrow, retail sales at 8: 30 a.m., with prices of import and export and the NY FED. Then at 10: 00 Business inventories and the NAHB, index housing. Also to the Governor from 10: 00 EDF Tarullo testifies before Congress on Dodd-Frank.

After flat opening this morning market retested its 1331 SPX high fired some return and then made a new bull market high. This increase in seven months continues to expand. The Earl of short-term remains intact in the SPX charts, yet the count displayed on the daily chart of the DOW gaining probability that this market increases. General short-term resistance remains SPX 1334, then the pivot of the OEW 1363. Short-term support now stands at SPX 1323 with OEW 1313-1303 pivots below which. There is a potential negative divergence forming on the hourly chart SPX RSI, but other that the workings of the market continues to look okay. Best for your business!

Medium term: new uptrend high @ SPX 1333

LONG term: market bull.

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last updated Wednesday

Short term: withdrawal extends, DOW-107

Overnight Asian markets were mostly lower. Europe has opened more low, and closed-1. 45%. U.S. future index were higher during the night, but slightly below SPX 1314 open market. It was closed to SPX 1315 yesterday. In the first few minutes, the market rallies to SPX 1318. It is the high for the day. Other withdrawal followed by taking low 1312 yesterday at 1310 just after 10: 00 am. At 10: 00 annual existing homes sales were reported earlier: 5.36 mln vs 5.28 mln. Another attempt to rally followed, but the SPX climbed to 1315 and heading then lower again. Around 12: 00 the SPX is below of pivot OEW 1313 breaking 1303 pivot range interval. 1 H 30 hit SPX 1300 and levels extremely oversold attempted another rally. At 2: 00 a.m., the FED has published as follows: http://www.federalreserve.gov/newsevents/press/bcreg/20110223a.htm. The market and then agrees with pivot 1313 just before 3: 30 a.m. and began to retreat. 3: 30 A.m., the FED published the following: http://www.federalreserve.gov/newsevents/press/bcreg/20110223b.htm. The retreat ends at 1307 SPX where the market closed.

For the day, DOW's SPX was 0.75% and the NDX/NATZ en-1. 05%. Lost links 8 ticks, crude rallied $3.10, but increased from 13 h $00 and the USD was lower. The SPX support drops now at 1303, then 1291 with resistance now in 1313, then 1363. Momentum in the short term was oversold extremely low today. Tomorrow, jobless claims weekly and goods sustainable at 8: 30 am then FHFA home prices and new home sales at 10: 00 pm.

Removing significant yesterday resumed today after a small opening at SPX 1318 rebound. The decline is so far, 44 points SPX or 3.3%, making it the largest withdrawal since point 54 and 4.4% fall in November. Low today there were slight overlap between high SPX 1303 minor 1 withdrawal and this potential miners 4. This brings the integer short-term wave low intermediate four SPX 1173 in question. This also increases the probabilities that a large wave 1 high and a high rise, took place at SPX 1344. Nothing confirmed yet by OEW, keep advised. Intermediary should OEW confirm a downward trend likely support for large waves 2 would be between SPX 1173 and 1227, waves three and four.

Short-term graphic OEW remain negative. The SPX would rally towards 1320 and especially for them to turn positive again. Expenses General resistance is now at pivot OEW range 1313, then 1363 above that. Support is the pivot of the OEW 1303, held today, then 1291 below that. Short term momentum has increased by extremely oversold, but just condition. We remain with the counts displayed pending further market activity. It would seem that this increase in seven months probably ended if gross clears $100 per barrel in the coming days. Best for your business!

Medium term: increase in risk

LONG term: market bull.

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update Tuesday

Short term: removing significant starts the week, DOW-178

The overnight Asian markets were lower. Europe has opened low and closed in %. U.S. future index lost land at the Monday session low and holiday is now open. At 9: 00 pm reported Case-Shiller House prices have been:-2.4% vs-1.6% y/y. At the opening of the market ajar until 1333 SPX and 1325 continued below in the minutes of the opening. The SPX had closed to 1343 Friday. After hit 1325 market rallies in 1336 SPX just after 10: 00 am. It is the high for the day. Also at 10: 00 a.m. consumer confidence was reported earlier: 70.4 vs 65.6. The half-hour after the market traded in a few high points. Then approximately 11: 00 a.m., he began to break less. Around 12: 00 the SPX was low for the day and rated stock in 1315 by worms 1: 30 pm. After a rebound at SPX 1318 by 3: 00 market made its lowf or day at 1312: 0330. Another bounce in the fence has ended the session at SPX 1315.

For the day, SPX and DOW have summer - 1. 75%, and the NDX and NAZ-2.80%. Bonds gained 34 ticks crude climbed $ 7.60, Gold rallies $10.00 and the USD was higher. Support for the SPX remains at 1313, then in 1303, with resistance in 1363, then 1372. Extremely dynamic oversold short-term. Tomorrow, existing sales at 10: 00 pm.

As reported yesterday, fears of a global oil reserves break have generated significant profit taking in many markets around the world. With crude oil soared as $ 9.00 overseas commercial last night - it submitted a party – a flight and collected less risky i.e. bonds, gold and the USD has been underway to some extent.

Technically, the market has just seen its largest removal (32 points), since the low intermediate wave 4-SPX 1173 in November. Short-term graphic OEW suggest high SPX 1344 took end minor wave 3 wave intermediate five. Expected high wave of minor at SPX 1303 be penetrated by this withdrawal, then the count would be questionable and important wave 1 can be completed. SPX-1303 level take a minor wave rally 5 during this withdrawal must follow to monetary heights. With support for the 1303 1313 pivots, that she seems to be "make or break ' time for this vague 1 Major increase in seven months. Best for your business!

Medium term: high uptrend @ SPX 1344

LONG term: market bull.

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holiday update

Short term: many assets quickly moving during the night, YM (DOW)-73

During the night, the Asian markets were mixed. Europe has opened low and closed-1,25%. U.S. future index were lower during the night and then in the last two hours of holiday abandoned trading still further. For the session the SPX (ES) a summer-12. 50 and NQ (NDX) a summer-26. 50. For most of the Silver session currently +$ 1.58 and gold + $18.00 were the headlines. Gross began to soar currently + 5.20 m $ in afternoon trading. It is gross has increased over $ 3.00 that the future equity began to fall seriously. Links ending ticks + 7 and the USD was slightly higher, make a quiet performance. Fears of an interruption of oil from the Middle East appear to be some win. Overnight trade should be key for opening tomorrow at the United States.

Support for the SPX remains at 1313, then in 1303, with resistance in 1363, then 1372. Short term momentum declined overbought Friday, neutral and then bounced higher. Tomorrow, Case-Shiller at 9: 00 a.m., then the confidence of consumers at 10: 00. Best for your business!

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