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thursday update
Nov 13, 2008

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Tony

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SHORT TERM: market breaks to new lows then rallies, DOW +553

Overnight the Asian markets were mostly lower. Europe opened lower but closed mixed. US index futures traded mostly higher overnight, and at 8:30 the weekly Jobs claims topped 500K for the first time since 2001. Also the Trade deficit was reported less than last month: 56.5b v. 59.1b. The market gapped up at the open to 865, but quickly sold off to SPX 847 by 10:00, taking out yesterday's low. Another rally attempt followed, and by 10:30 the SPX hit 867, but negative divergences appeared and the market began to sell off. By 12:30 the SPX was hovering around the 840 bear market lows, and then broke through. By 1:00 the SPX hit 819, a new bear market low, but the DOW failed to confirm. The market then took off to the upside, and by 3:00 had rallied 60 points to SPX 880. A quick pullback followed to 860, and then the market rallied even higher into the close. At 2:00 the October Budget deficit was reported to be four times higher than any one monthin history: $237.2b. At the close the SPX/DOW were +6.80%, and the NDX/NAZ were +6.50%. Nothing wilder than a 10% rally off the lows in just three hours. Bonds lost 20 ticks, Crude gained $3.50, Gold rallied $17.00, and the Euro was higher. Support for the SPX oddly enough remains at 848 and then 789, with resistance at 912 and then 935. Short term momentum was oversold at today's lows, and is now getting overbought. Tomorrow Retail sales and the import Price index at 8:30, then Inventories and Consumer sentiment at 10:00.
Certainly a wild day today. When the market broke through the SPX 840 low, and then started to rally off the lows. It certainly looked like it could retrace back to 840 before heading lower. But this market caught some bidders on the break to new lows, and short covering took care of the rest of the day. From the SPX 1008 high more than a week ago, into todays lows, there appears to be only three waves down. And todays reversal could be the 4th wave. It's been a difficult market to count short term, but that's what we have at the moment. Commodities rallied nicely today. Suggest watching this sector closely. Best to your trading!
MEDIUM TERM: new downtrend low at SPX 819
LONG TERM: bear market


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