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Friday, August 26, 2011

Intra-day: August 26, 2011

UPDATE:  1:00 PM

While I'm searching for the Oreo's, I want to make a small point regarding the timing of the moves over the past two days.  If the 56-pt decline had all taken place yesterday and a 45-pt rally today, most of us would view this as an obvious retracement of an impulse move down.

Also, watch the rising wedge on the 5-minute chart.  It also argues for a reversal here.

UPDATE:  12:35 PM

Having trouble getting past the 20-day moving average at 1180.93.

Look for a possible turn here.  We have a Butterfly pattern turning point at 1176 (the 1.272 extension) and 1187 (at the 1.618.)  Also, check out the RSI channel on the 15-minute chart.

Note today is a scheduled POMO settlement date.  They purchased $439 million in TIPS yesterday, but probably had billions more available to the Plunge Protection Team given how important it was that the market not crack on the no QE news.

You can find the NY Fed schedule here.

UPDATE:  11:25 AM

Little bat or crab setting up on DX.  If a bat, my top choice, it should reverse around 74.05.  A crab at the 1.618 XA extension would target 73.64.

UPDATE:  10:55 AM

Will the right shoulder hold?  This is about as close as you can get...

Meanwhile, the dollar backtested its falling wedge and is attempting to break higher.

UPDATE:  10:30 AM

The market's not thrilled with no new quantitative easing, falling 25 points before snapping back for a backtest of the H&S neckline.  If the neckline (or even the right shoulder) holds, the next stop should be 1121.

Excerpts from Bernanke's speech (full text here) courtesy of CNBC.


Just a reminder, today is a POMO day.

Bottom line on the 2nd GDP revisions -- a mixed bag, in line with expectations, evidence of an economy still stumbling along.  I doubt it gives the Fed enough ammunition for QE.

GDP was revised downward from an annual rate of 1.3% to 1.0%,  in line with expectations and confirming the slowdown underway.  The first quarter real increase in GDP was 0.4%.

The biggest revisions were to exports (lowered from 6% to 3.1% increase) and inventories (lowered from $49.6 billion to $40.6 billion.)  Corporate profits rose 4.1%, increasing $57.3B in Q2 versus $19B in Q1.  Yet, corporate income taxes fell $3B versus a Q1 increase of $17.6 in Q1.

Consumer spending was revised upward from 0.1% to a still marginal 0.4% -- the lowest increase since 4Q/2009.   Inflation, as measured by the personal consumption expenditure index, rose 2.2%.  Real disposable personal income was revised upward from 0.7% in both the 1st and 2nd quarters to 1.2% in the 1st and 1.0% in the 2nd.


And, from the DOC:


  1. Looks like the triangle i mentioned last night is the winner.

    Look for a choppy move back into the 1165ish range............then we begin the decline to about 1060.

  2. Well, the market just faded the first sell off. Now more sell off will come. But today the bulls handily beat the bears.

  3. Agree............My spike to 1205-1220ish is still on the table with a strong close.

    Uh oh!

  4. Wow.........if 1177 does not hold it back then off we go.

  5. Hi Pebble, been following you for a while and appreciate the work; first time posting though. Was just wondering about your thoughts on the 2008 comparison. I've been taking a look at it and seems like we're at Feb 21st where it broke out of a triangle and went up for a week before wave 5 finally started.

  6. Oreo's abound!

    Much stronger than I thought............a strong close and i think it continues.

    A close below 1173 and there is a chance for Monday to be down hard.

  7. 1173 I a very important number for both bulls and bears at the close.

    What a day.

  8. Bulls determined to get 1173 close..............will they do it?

  9. Interesting day............Bulls got their close above 1173 and a good sized reversal and yet all my indicators except for one slow one are still on a sell.

    Oreo's please.

  10. Pebble,

    Is there a scenario that we may retest 1200 before heading, with certainty, back down all the way to 1040?

  11. Thanks, guys, for the great questions. I'm going to sleep on it and take a crack at these in the morning. Working on a few different scenarios, but want to post with a clear head.

  12. Hi all, just put up a new post with my latest thoughts. This market's a head-scratcher for sure, but I think the bearish case is still in play. EWTNEWB, just got your message and will have to look into that.