Before the Open (Nov 30)

Posted on by Jason Leavitt

Good morning. Happy Wednesday.
The Asian/Pacific markets closed mixed. China dropped 3%; Hong Kong and Taiwan dropped more than 1%. Malaysia rallied almost 2%. Europe is currently posting solid, across-the-board gains. Germany, France and Stockholm are up more than 3%. Belgium, Norway and London are up more than 2%. Futures here in the States are up big.
The dollar is down. Oil and copper are up. Gold and silver are up.
China cut its banks’ reserve requirements. This is the first cut in 3 years. Cutting the requirement means banks can lend a greater percentage of their reserves instead of keeping it in cash. This will help ignite their economy which is super strong overall but weaker than it has been recently.
But the big news revolves around the world’s central banks. They announced they would be working together to provide liquidity to the global financial system. The coordinated effort includes the European Central Bank, U.S. Federal Reserve, the Bank of England and the central banks of Canada, Japan and Switzerland. So instead of the US just sitting tight and watching things unravel in Europe, we’re getting involved. This headline is solely responsible for the futures surging (the S&P is up 35 an hour before the open and will be 80 off its Friday low as of today’s open).
I’ve been playing it safe the last couple weeks. Last week I started feeling a little anxious; I thought I had missed a good short entry because I wasn’t aggressive enough or bearish enough. Now I don’t feel so bad. All of last week’s gains will be recaptured by today’s open.
The October rally was was in hopes Greece’s problems would be contained. Last week’s sell-off was in reaction to the financial stability of Spain, Italy and France deteriorating. Now we’re getting a rally this week on news the central banks around the world will be working together to prevent a global financial meltdown. I hate when the market is almost entirely controlled by unpredictable news. I haven’t made any money the last week, but I also slept well and didn’t lose any. Hopefully today’s news (not that I agree with it) can start a steady move into the end of the year. More after the open.
headlines at Yahoo Finance
today’s upgrades/downgrades
this week’s Earnings
this week’s Economic Numbers

0 thoughts on “Before the Open (Nov 30)”

  1. well the fed did it again,but is this desperation
    should i go to sleep or watch
    a good opportunity for the instos to dump their end month junk
    ill watch my inds to see what happens to this spike

  2. It’s frustrating watching opening upside gaps like MON & today and not participating on the long side except for a relatively small gain on a long postion yesterday. But, at least I wasn’t short overnight!
    I mentioned late yesterday, from an EW perspective, that there was a potentially very bullish interpretation of the SPX chart pattern, i.e. a “running correction” if minor wave 2 held above 1192-1194. That may be the case here, as the gap up this morning could be a minor wave 3 in progress of a potential bullish 5 wave sequence sequence. If so, we should see better volume and stronger momentum then MON’s volume & momentum. We’re already through SPX 1215, so the most bearish EW interpretation is questionable and my preferred larger 3 wave (ABC) count has more credibility at this point, in my opinion.
    It’s too late buy in here, at least until we see what any pullback looks like along with volume/momentum. I mentioned 1236 as my target if 1215 was broken. We’ll see if 1215 now becomes support on any pullback.

  3. “Short overnight”… Hey! I’m a gambler. Anyway, today’s gap up gives credence as to why yesterday’s action felt bullish. Can you say “Insider knowledge”?
    At the moment it looks like a little more up then it’ll test the 1220.

  4. Well, SPX wasted no time testing SPX 1236 (an EW measurement projection). The .618 retracement of the down move from 1292 to 1158 is 1241 and from the MAY high it’s 1258ish. So, beyond 1236 there should be a shelf of reisistance between 1241-1257.
    IMO, there could be 2 possible EW scenarios, from a near term perspective, i.e. (1) a minor 4th wave consolidation between 1215-1241 and a 5th wave rally into 1241-1257 or (2), we complete a minor 3 wave (abc) corrective rally from MON’s low at the 1236-1241 area and that’s it. A 5 wave sequence would imply an eventual test of 1277-1292, at minimum, and I wouldn’t rule out a move above 1300 before Santa arrives. Incredible, isn’t it?

    1. PeteM, is there anyway you can translate EW into actual points on a chart? I have no idea what you’re saying and I agree with Aus, you seem to be right more than you’re wrong.

  7. well u have been right so far ,Pete
    but with no open possitions just looking at world index charts since the may 2 top
    —IF that was the end of large 2,——then i see no EW patterns
    all i see is a impulsive drop down into aug low–then a lot of meaningless sideways ABC’s
    that are not a trend that is anything but sideways daytradeable
    this sideways chop –many interpritation EW,causes me to loose faith in anything EW
    That is why i feel safer daytrading,but even that has its pit falls in this NO TREND

  10. RichE – In answer to your request to translate my EW interpretation: To begin, I always refer to SPX (cash) & not ESZ1 that you trade. Please look at stockcharts.com (WEEKLY chart)and check off the box that says “price labels”. Now, set the chart to view the past 3 years and I’ll begin from the MAR’09 low (666.79) to the MAY’11 high (1370.58). I interpret that as an ABC corrective rally within a “secular” bear markket that I believe began in calendar year 2000.
    SINCE the MAY HIGH, IMO there are 2 EW interpretations: FIRST interpretation – w1 (MAY hi to JUN lo), w2 (JUN lo to JUL hi), w3 (JUL hi to AUG lo), w4 (AUG lo to AUG hi), w5 (AUG hi to OCT lo) – this would complete a LARGER W1. SINCE the OCT LO, a Larger W2 is either in progress or was completed at SPX 1292. I think today’s action negates W2 being slready completed and therfore may still be in progress with a potential to exceed 1292. SECOND interpretation (my preferred) – MAY hi to AUG lo is an abc (3 waves) for a larger wave A; AUG lo to OCT hi is an “irregular” abc (3 waves) for larger B wave completed at 1292 and we are now in larger wave C (projected down to 1000+/- from 1292). If 1292 is exceeded, the wave count from AUG lo would be a more complicated 3 wave structure but the MAY high would not be exceeded. That’s the big picture. I’ll post my near term count separately.

  11. RichE – before I continue (and I know this EW stuff can get really confusing), within an ABC (3 waves) structure you can have 5 smaller waves for wave A, 3 smaller waves for wave B and 5 smaller waves for wave C (5-3-5) OR you can have a 3-3-3 ABC wave structure. So, near term from the SPX 1158 lo, so far I count 5 smaller waves up to yesterday’s 1st hour hi around SPX 1200 followed by a sideways small wave 2 into yesterday’s close. Today we appear to have a 3rd smaller wave completed (again in the first hour)to around 1236ish and (like yesterday) we are going sideways in what may be a small wave 4. Only if we get below yesterday’s wave 1 hi around 1200 is this count negated. Now, not to totally confuse you, suppose we explode from here and go straight through the projected resistance area of 1241-1257. That could mean we’re still in wave 3 from yesterday’s close and today’s consolidation since the 1st half hour isn’t a wave 4, but rather today is an even smaller w1 & w2 of larger W3. That’s why I look at Fibo support & resistance from various highs & lows as a way to guide me.
    Have you noticed how many times a .618 retracement from an intraday, daily or weekly high or low seems to cause a reversal? It seems to define these swings we’re seeing intraday, daily & weekly and tells me we’re swinging in 3 wave movements and not impulsively in the larger time frames.
    So, right now I’m seeing smaller 5 wave counts (bullish) and 3 wave corrective moves down since 1158 which means we should continue higher and test 1241-1257 and perhaps 1277-1292 and maybe higher until the the 5 up, 3 down stuff stops. Hope these last 2 posts were more helpful than confusing.

    1. Thanks. Yes, it is confusing, wave within wave within wave. It seems there’s a wave for every possibility, but you have been right more times than wrong and I’ve profited. Thank you.
      Fib%: Yes, they have a high probability of being a reversal. Even if it doesn’t reverse it seems to stall giving me enough time to get out with small loss.

  12. ESZ1: I’m a dollar fifty in the green on my short. Missed the entry and had to chase it. I know, I must have been a dog in a previous life, chasing cars. I wonder what dogs chased before cars.

  13. EW aside, take a look at an hourly chart of SPX since 1158. If that’s a “flag” or “pennant” formation we’re seeing today, we could be setting up for another upside explosion later today or (not again!) on the opening tomorrow (a bullish ISM report?). If it happens, it could be a “3rd of a 3rd” (wave) I mentioned in my last post. I’ll shut up!

  14. Hi Pete,
    i can see both of those 2 counts—-todays spike has cancelled this as a sub 4 of a small 5 down since nov high
    Q—all indexs are the same but many have different counts and they stall each other out
    or spike each other up—the counting business just gets to complex
    —its just me –im p…ed off got stoped out premarket on the china ann

  16. Ok! I’ll throw something else out to think on. The hourly SPX chart showed a nice head & shoulders bottom formation. The neckline was broken yesterday and then held the retest during the last few hours of trading yesterday. Interestingly, the H&S pattern projected a rise to today’s levels around the day’s high. There’s also a downtrend line from 1292 that shows resistance just above today’s high & coincides with the Fibo .618 retrace from 1292 to 1158, which is 1141ish.
    Now, if I place on top of that an EW analysis, so far wave 1 (or wave “a”?) equals wave 3 (or wave “c”?)at a place of important Fibo & trendline resistance. Normally, wave 3 is the longest and most powerful in a 5 wave sequence, but so far (unless it evolves into a “3rd of 3rd”)that’s not what we’ve seen. So this an interesting juncture – just before the close of trading! We need to watch the last 1/2 hour and tomorrow’s opening closely, IMO.

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