thursday update

SHORT TERM: inflection range breakout, DOW -21

Overnight the Asian markets gained 0.3%. European markets opened lower and lost 0.1%. US index futures were lower overnight. At 8:15 the ADP was reported higher: 215K vs 118K, and at 8:30 weekly Jobless claims were reported higher: 372K vs 350K. The market opened one point below yesterday’s SPX 1462 close, and dipped down to 1458 in the first few minutes. After that the market started to work its way higher. Just past 11:00 the SPX broke out of the 1434-1462 inflection range, and we raised the bullish scenario to a 75% probability. At 2:00 the SPX hit 1465 and then began to pullback after the FOMC minutes: At 3:30 the SPX hit 1456, and then bounced into a 1459 close.

For the day the SPX/DOW were -0.20%, and the NDX/NAZ were -0.45%. Bonds lost 19 ticks, Crude slipped 45 cents, Gold dropped $20, and the USD was higher. Medium term support remains at the 1440 and 1386 pivots, with resistance at the 1499 and 1523 pivots. Tomorrow: monthly Payrolls at 8:30, then Factory orders and ISM services at 10:00. There is also a speech tomorrow, from FED vice chair Yellen at 3:30.

The market opened slightly lower, touched SPX 1458, then broke through the historical bull/bear inflection range (1434-1462). This suggests the bull market remains intact for 2013, and the waves should continue to unfold as expected. As a result we lowered the bear market scenario to a 25% probability, pending a breakout by the DOW of its similar range.

After hitting SPX 1465, right before the FOMC minutes were released, the market then pulled by for the rest of the afternoon. Thus far, the largest pullback since monday’s SPX 1398 low has been 9 SPX points. As long as this pattern continues this rally should continue. Once a 10 points range is hit, then a larger, (20+ points), pullback is possible.

Short term support remains at the 1440 pivot and SPX 1422/27, with resistance at SPX 1462/64 and 1471/75. Short term momentum declined after a negative divergence appeared near the highs. The short term OEW charts remain positive with the swing level now around SPX 1435. Best to your trading this bull market!

MEDIUM TERM: uptrend makes new high

LONG TERM: inflection range cleared, bull market resumes


About tony caldaro

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77 Responses to thursday update

  1. LX says:

    Thanks Tony
    Next week should be interesting

  2. rc1269 says:

    extended market is starting to look like a decent short term sell. we got our 10pt selloff yesterday. i think the next is 20

  3. mjtplayer says:

    A couple points on gold:

    1) Divergence – the gold contract made a new recent low overnight at $1,625, undercutting the Dec low around $1,635; but the GLD has not. Gold should close above the $1,635 low of Dec and on lighter volume, that’s a failed breakdown.

    2) Volume – the GLD is trading about 14m shares today with an hour to go, the doji low in Dec had 25m shares. Even if you get a volume surge at day’s end, you’ll be 30% – 35% lighter volume.

    3) Oversold – daily and weekly RSI should close under 30 today, weekly under 30 has been the buy trigger for gold every time going back 12 years.

    4) Reversal – anyone notice the GDXJ has reversed and gone positive for the day?

  4. pbnj123 says:

    Good afternoon Tony
    Does the -DIV WRT RSI(5) on the 60 minute chart vs. SPX price mean anything today?
    Thank you

  5. mokiepon says:

    Spx does not like that 1464-65 area at all. Backs down every time. Although, I think the real test will be next week, maybe push thru at closing today.


  6. vorfahrt says:

    Tony: when you first came out with the post for “end of gold bull market” I couldn’t believe it. But you were right after all. It does look like a repeat of the the 1978-1980 scenario with the US$ basing out and commodities topping and then topped out. The correlation to stocks & bonds turned around completely. Awesome idea again, Mr. Tony.

  7. mokiepon says:

    Vix below 14! might pick up a tad just for protection, while it’s cheap. No, I don’t expect a crash. I’m just a cheap kind of girl.


  8. torehund says:

    Mother of all KEY- reversals in Dry- Bulk !

  9. ronini3 says:

    long ZW @ 750.5. 749.5 stop.
    this could be a quick loser

  10. robslob64 says:

    Shaking AAPL’s longs out of the trees today I see….

    Tony…thoughts on AAPL reaching 591 before going down to revisit her lows?

  11. torehund says:

    RUT certainly not in a ROT !

    • mokiepon says:

      Hi torehund,

      Yes rut is working up nicely! Switching to tna yesterday was a good move for me. TTY later after close & Friday update. Thanks for all your blogs and info. I appreciate the experienced bloggers helping a newbie like me learn all this. It can be overwhelming (and is).


    • tommyboys says:

      New all time highs yesterday…speaks volumes.

  12. mokiepon says:

    Sure would like to see spx push through 1464 area again today and close there. IMO, Fed Govs are pretty careful what they say in FOMC and could be Fed doves using this to their advantage to push investors out of bonds into stocks and urging people to buy homes, autos, etc., threatening them w/increased int. rates. Short version: Spend your money!

    Holding tna here.


  13. rc1269 says:

    i just measured the fibs of the yield change on the 10yr UST from 12/06 low to this am’s high – perfectly symmetrical A-B-C, with C=A down to the basis point

  14. alexh110 says:

    I like Gold here: weekly MACD has hit the support level I marked in my Tweet of 18th December:

    I’m scaling back into longs.

  15. rc1269 says:

    guess the outlier-
    gold: -2%
    nat gas: -1.4%
    crude: -1%
    copper: -1.1%
    ES: +0.01%

    • tony caldaro says:

      Bonds down too.
      Risk on/off broken?
      Now, higher rates and lower commodity prices help stocks, for a while?

      • rc1269 says:

        the 10yr yield rose about 15bp from mid-day 12/31 to just before FOMC minutes. the more hawkish than expected comments from the Fed has drubbed it for another 8-10bp (at this am’s highs).
        traditional risk on/off seems at a potential inflection. for starters, Japan’s new regime and BOJ commitment for reflation has thrown the JPY/USD in a tailspin. combined with less dovish Fed, that could create a relatively pricier USD going forward, which might be at the root of the continued commodity slide.
        I think you might be right; lower commidities seem good on the surface for stocks, but the root causes are not.

      • rc1269 says:

        now treasuries rally and stocks go… even higher. wonky market.

      • tony caldaro says:

        Politicans pay a lot of attention to the markets.
        While lower bond prices should push players into equities.
        Eventually higher yields will force the government to decrease its deficits.
        Looks like the Bond market is now at the helm of the economic cruise liner =)

      • tommyboys says:

        Higher rates bullish for stocks from these levels. Once we cross maybe the 6-7% will be a different story. Getting back to more normal markets where higher rates support a stronger dollar, stronger economy and a strong stock market. This relationship is more the historical ‘norm’ imho and will continue until that 6-7 – maybe 8% – threshold. Should get fun again for a while after all these years.

      • rc1269 says:

        Tommy – low rates have been bullish for stocks. How are they going to also be bullish for stocks going higher?
        I don’t think most people understand the Fed’s asset reallocation function. The crowd investors out of the bond market by lowering expected returns. That money has gone into equities. When expected returns in bonds creep higher again then more and more of that unwilling and generally risk averse equity money will come back into bonds.
        It’s like the argument that I keep that somehow QE is good for stocks and also good for stocks when it goes away. Can’t have it both ways. QE pushed bond money into equities. Less QE and higher rates will push equity money into bonds. that’s just how it works.
        I think you’re confusing the normal historical relationship between rates and equities with the current one, which is not the same. The current rate environment is due to bond market manipulation and not purely due to investor supply and demand, as is normally the case (for all rates except Fed Funds).

      • mokiepon says:

        People currently in bonds will be creamed if int. rates go up in a substantive way. Notice how Fed isn’t trying to console markets as Ben’s done in the past. Ben really wants everyone out of bonds and spending money, IMO.


  16. blubrd67 says:

    Tony, what is the key level you are looking on DOW?

  17. We should get a pullback first, then we will see. Quite frankly, this looks a bit bearish to me. Either way, price has over-extended itself and needs to go sideways at least, if not retrace.

    latest trade and strategy, see comments section.

  19. Rob Naardin says:

    XLF, XLB, DAX and NYAD cumulative all looking 52 week(or close to) highs.
    Dax leads the way along with NYAD cumulative.

    Wave count since the 2011 low is really confusing me, but if I draw a trend line from the 2009 low to the 2011 low and extend it to today… I ain’t afraid of no bear market. Yet. lol

    Happy New Years Day Tony.

  20. torehund says:

    Feels like spring already !

  21. mjtplayer says:


    Your thoughts on today’s Fed language? If the Fed were to stop buying long-dated Treasuries, the long-dated Treasury market is toast; nobody could possibly fill that void.

    • tony caldaro says:

      Agree, but unlikely unless Ben leaves.

      • mjtplayer says:

        If Bernanke leaves, Yellen is next in line – perhaps the only Fed governor more dovish than Ben…

      • tony caldaro says:

        True, but BHO has to nominate her.
        Probably owes a few election favors elsewhere.
        How about Steve Liesman, or Ron Paul =)

      • magnus1234 says:

        Just a thought: If the market decides top of 10s and Bonds reached then an Uber short position in futures will build up with the same complications as in 2005/2006 the fear delivery faults (which actually occurred then). That will put a “floor” under 10s and Bonds which means FED will get support from Market.

  22. CB says:

    thanks Tony. NASA is predicting a peak in solar flare activity in 2013 – should make things “interesting.”

  23. rc1269 says:

    thanks Tony – exciting times indeed!
    curious… is there a possible bullish count that could exist where this is still an A-B-C (topping around here), then decline to maybe 1320 in the next month, then continue back into the rally mode?

  24. mokiepon says:

    Great Update as usual. Thanks Tony.
    Holding TNA.

  25. timing101 says:

    Thanks Tony. Looking good.

    Lee, Grains are a buy this week. Beans under 1378, Wheat under 750. GL

  26. mike7x says:

    Tony, Thanks. Now. Let’s have a rare 2nd WROC roll’around! Then. I’ll be happy. 😉

  27. M1 says:

    Thanks, Tony.
    Back to Dow 20,000 target.

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