thursday update

SHORT TERM: market rallies again, DOW +78

Overnight the Asian markets gained 0.7%. Europe opened lower but gained 1.1%. US index futures were higher overnight, and at 8:30 weekly Jobless claims were reported lower: 334K vs 360K. The market opened three points above yesterday’s SPX 1681 close and continued to rally. At 10:00 Leading indicators were reported flat: 0.0% vs +0.1%, and the Philly FED was reported higher: 19.8 vs 12.5. The rally continued until 11:00 when the SPX hit a new all time high at 1693. Then it started to pullback. At 1:00 the SPX hit 1687, bounced to 1692 by 2:30, dipped to 1688 by 3:30, and then rose to close at 1689.

For the day the SPX/DOW were +0.50%, and the NDX/NAZ were mixed. Bonds lost 12 ticks, Crude rose $1.50, Gold rallied $7, and the USD was higher. Medium term support remains at the 1680 and 1628 pivots, with resistance at the 1699 and 1779 pivots. Tomorrow is Options expiration Friday.

The market opened higher today, rallied past SPX 1685 eliminating the ongoing Minor wave 4 scenario, and rallied into the OEW 1699 pivot range. Our minimum uptrend targets for Minor 3 (1680 pivot), and Minor 5 (1699 pivot), have been met. Right now, just as we expected when this uptrend began, the market either tops in July at the 1699 pivot. Or, extends into August and possibly reaching the 1779 pivot. The next several days should be the determining factor.

Currently we can count five waves up from SPX 1560: 1627-1605-1685-1672-1693 so far. This count would satisfy the five Minor wave uptrend to complete Int. wave v and Major wave 3. We are going to carry this count on the SPX charts. We can also count two Minor waves completed from SPX 1560 and a Minor wave 3 still ongoing: 1627-1605, then 1627-1615-1693 so far. This count would suggest the uptrend will extend into August, and will be carried on the DOW charts. Our immediate concerns are the negative divergences on every timeframe at the current highs, and the weakness of most fifth waves during this bull market. With this in mind we give the two potential scenarios a 50-50 probability.

Short term support remains at the 1680 pivot and SPX 1658-1667, with resistance at the 1699 and 1779 pivots. Short term momentum is displaying a negative divergence. The short term OEW charts remain positive with the reversal level now SPX 1670. Best to your trading on OPEX day.

MEDIUM TERM: uptrend

LONG TERM: bull market


About tony caldaro

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349 Responses to thursday update

  1. ladad says:

    Another question about the VIX — does anyone here thinks it serves a “greater good”? Is the world actually better off because there are people trading the VIX? Does it increase economic value and productivity? Or is it merely a “rent seeker” that siphons money off more productive uses? Can anyone make a serious argument that the VIX makes the economy better and not worse?

    • jackkendo1987 says:

      uvxy down 5% in one day at 42.7
      SPX only up 8% from 1560.

    • mkmason2013 says:

      Can’t speak for economy, but has increased my acct substantially. M

      • ladad says:

        MK, I think you just answered my question.😉

      • cicelyalaska says:

        TVIX versus UVXY. which is better?

      • mkmason2013 says:

        cicely, STAY COMPLETELY AWAY FROM TVIX!!! Be sure spx is pulling back, or you could get a very unwelcome surprise. M

      • cicelyalaska says:

        Both have nasty decay, can you explain why TVIX is worse? Thanks!🙂

      • mkmason2013 says:

        cicely, TVIX has all sorts of lawsuits pending because last year, they didn’t notify shareholders in proper way that they decided to go from closed-ended to open-ended fund, therefore current shareholders lost a bundle when price plummeted. Thankfully, I wasn’t a part of that! Also, Tvix is based on 90 days Vix futures, whereas Uvxy on 60-days futures.

        You should know that fionamargaret and I were talking a couple days ago and agree that uvxy could go as low as $40 before turning back up. You might want to wait until Major 4 gets started good, then, jump on. FWIW. M

  2. rc1269 says:

    Tony – 322 comments
    if i was as popular as you my junior high days would have been a lot more enjoyable!

  3. lunker1 says:

    Never short the….um yep. Think we see 17xx

  4. pbnj123 says:

    Be careful here – correct?

  5. oneandonlyuniverse says:

    for your viewing
    In regards to oil/spx

  6. jackkendo1987 says:

    300% long.
    I am going for wave nine.
    wave nine for 1706 (1699 pivot), 17 points.
    Buy the dull market.

  7. pio27 says:

    VIX is a big topic. Bernanke curbed the VIX. I will be shocked if the VIX hits 20 bucks anytime this year.

    • H D says:

      what does the vix do exactly?

      • tony caldaro says:

        It is supposed to measure daily volatility
        But people trade it like a stock =)

      • tommyboys says:

        Its used as a measure of volatility in the markets based on put/call premiums so at a minimum its hardly perfectly correlated. It generally moves in opposition to the market. The VXN is actually a more accurate measure of this volatility for the nasdaq yet rarely referenced.

      • H D says:

        thx Tony, Watched it on several occasions out of curiosity and haven’t seen any correlation to SPX, front month options maybe….

        • tony caldaro says:

          A reading of 15 implies 1% daily VOL, and 30 implies 2%.
          Naturally when markets enter correction mode VOL increases and the VIX reading does to.
          It bounces around a lot during a bull market.
          But really makes a run higher during the end of bull market and during bear markets.

      • rc1269 says:

        >>what does the vix do exactly?
        confuses a lot of people

      • rc1269 says:

        gave a little real world example down below. filed under: what matters more the absolute change or % change

    • 7dayyss says:

      So you don’t think it can hit that in Primary IV?

    • joseph3000 says:

      Anyone buying VIX? +div on the charts. Looks like a good buy?

  8. llerias7 says:

    Tony, you have said: “This count would suggest the uptrend will extend into August, and will be carried on the DOW charts.” It means the DOW will be the best performer on this final stage?


  9. pio27 says:

    Lets see. UPS guides lower, GOOG , MSFT miss bad, Everybody lowering GDP guidance. VIX at lowes. Detroit files bankruptcy. Market at highs?

    • pio27 says:

      I dont think of TA or EW or fundamentals even matter. the market just goes up.

      • tommyboys says:

        Don’t complain

      • Ryan Parker says:

        The technicals support a higher market. Haven’t seen anything to get bearish about (from a technical perspective) yet in 2013. Don’t get me wrong, I’m with you 100%. This doesn’t seem logical at all. No earnings growth in the S&P 500 for the past year. Just multiple expansion. Earning expectations keep coming down. Companies guiding down future expectations. I think it comes down to the fact that there really isn’t anywhere else to put capital aside from US equities and real estate. Don’t want to own Japanese equities unless hedged in Yen and I wouldn’t want to own European stocks unless I was hedged against the Euro. Commodities aside from oil stink, bonds stink, and emerging markets have been horrible. Only place for $$ to go is US equities. People keep talking about the Fed tapering QE. As weak as the economy is I don’t see it happening. Heck, they may even bump it up even more to keep interest rates on govt. paper low. A 2% increase in rates across the board would add $300 billion+ to the deficit. This sets up a double edged sword for the Fed. As the stock market goes up investors are going to take money out of Treasuries which would mean higher interest rates. Maybe the market finally tops out when investors realize that the Fed can’t fix the real economy no matter how much money they print? The breadth readings I follow suggest that Tony’s Dow count is correct and that there is still more upside into August. Even some bad earnings and outlooks are being rewarded. Look at YHOO. It was down $1 after hours the other day and was up $2 the next day.

      • budfox9450 says:

        wow – that is an interesting view…

      • H D says:

        Lot’s of people talking bout the vix again…. interesting. As far as EW mattering well Minor 3 of Int. v of Major 3 is kinda as you say “the market just goes up”

      • blackjak100 says:

        I’ll admit I didn’t expect a VIX retrace this deep this late into the bull market. I was expecting low 13’s, but not anything below 13. I have no idea what this translates to.

      • mkmason2013 says:

        bj, about the lower vix, google standard deviation(s) to start. Gotta go.

  10. jparkins10 says:

    I posted this in another forum:
    It’s going to be 10 days in a row with unusually small intra-day range.
    Last time like this was March, I mentioned the other day how March was similar to this month.
    The 10 day period also ended with the end of March expiration, with the high of the cycle on the Thursday of expiration….sound familiar?
    From end of March expiration to end of month, there was downside pressure, but it was contained, and the month ended just 0.5% below end of expiration (but no high above the high during expiration, low was 2% below that high).
    The beginning of April was a different story, with significant downside starting from April 1 and cumulating in a low during April expiration, almost 6% below the March close (the first 3 days accounted for a big chunk of that downside move).
    Looks to me like we’ll be seeing a similar story from now to mid-August.

    • fionamargaret says:

    • bhtrade says:

      There have been several important highs put in during July opex week in recent memory. The most dramatic being 2011 and 2007. This time does appear to be slightly different in that July opex resulted in new highs. The 2007 and 2011 occurrences were both lower highs.

    • jparkins10 says:

      Here’s the post it was referencing:

      I’ve mentioned my IWM database a few times in here, it’s since IWM began in early 2000.

      One of the pieces of data I capture is the hi/lo from the open, and the percentage move up/down. If it doesn’t go up/down by more than 0.25% I record that as a “miss”.

      In the 158 months of data, there have been 2 months where the number of days with downside misses were in double digits, both were this year: February with 12 & May with 10. So far this month, we have 6 “misses” in 13 trading days as well!

      This year is a complete outlier in the lack of downside movement, it’s very perplexing, but hopefully will mean revert as the year completes!

  11. jobjas says:

    Spx likely to top around 1690

  12. waddaguess says:


    I’m stumped. So if we get one more high from here to 1697 per say, would that then satisfy 9 waves from minor 2 low to complete minor 3? I ask in response to your comment from earlier that a lower low from here would have to be minute 4 not Minor 4. I am a bit confused with the 9 wave statement.

  13. As I said a few days back, majority talks bullish and that gets reflected in surveys but few have the guts to buy. Then bears quote those fuzzy figures to rationalize shorting. This is one bull market where every one finds it easier to short then get long. Love the market for the way it plays games.

  14. davidmlamos says:

    I love this place!!!!

  15. I am worried about selling too soon in this bull market. Corrections are the least of my worries.

    • rc1269 says:

      regarding the VIX crashing – what do you define as a VIX crash? it’s 2 points away from the cycle low. and for structural reasons it very rarely will drop below 10 and usually only for a brief period of time.

    • rc1269 says:

      so it has already crashed and you think it’s still going to crash
      and by that definition the VIX crashes at least once a month…?
      VIX is already a percentage; i think a point move is more meaningful than a % move

      • tommyboys says:

        Don’t misunderstand Trades. It is the % move the VIX makes that is important not the level measured in points. Don’t understand all the ‘crash’ talk – it hasn’t crashed – we’d FEEL a crash…although maybe just semantics. As a pure value it was lower in early May. I agree with Trades it’s likely to move sideways to maybe up a bit over the coming month but doubt a huge % move.

      • tommyboys says:

        In other words as far as the market is concerned it would feel the same whether the VIX went from 40-30 or 12-9 (same % regardless of actual value).

      • mkmason2013 says:

        tboys, who said Vix ‘crash’? M

      • 7dayyss says:

        From the iii of iii to int iv you had about an 80% move, it’s only reasonable to assume your going to have that or more for major 4. No?

      • mkmason2013 says:

        Excuse me, 7days, you talking to me, or someone else? M

      • 7dayyss says:

        Tradesmart and tommy.

      • tommyboys says:

        Not a zero sum game…at all.

      • rc1269 says:

        i’m not misunderstanding him at all. i’m saying i disagree about reading VIX
        it’s not the % move in VIX that means anything. VIX is already stated as a %. stating the % change of a % is fairly meaningless. VIX of ’13’ is the wgtd average implied vol (a %) of in and out of the money 1st and 2nd month puts and calls. what does a 2% change in 13% implied vol mean? nothing.
        In March of 2011 the VIX doubled, going from about 15 to 30. That’s 15 points and 100%. The S&P declined by 7%. From mid-Sept ’11 to the low in early oct ’11, the VIX increased from 30 to 47, which is 17 points but only 55%. The S&P declined by 12.7% during that time. focusing on the % change would give an inaccurate account of what the market was doing.
        it’s the actual point change in VIX that is important, as VIX is already a % term

      • 7dayyss says:

        I agree with your point moves, the percentage I’m referencing is of the move in points. During Primary II you had a 22% correction on spx and on vix charts you had sub 20 going to over 40, not a 55% move. That point move represented over 100% on a 22% correction.

    • TM, rather sell too soon then too late… It’s Buffet’s mantra, and he got pretty rich last time I checked…

  16. blackjak100 says:

    With all the divergences and the VIX near 13, I think starting to buy puts here makes complete sense IMO.

  17. rc1269 says:

    there’s been a lot of talk here today about the VIX. for avoidance of doubt: the VIX collapse today is a stronger indication that we are at or near an interim high than it is an indicator of the rally continuing. seems like there might be some confusion about that

  18. gary61b says:

    Tony, possible 1684 was A and B is in progress with C to come of
    minor iv?

  19. 7dayyss says:

    Hmm, spx hourly doesn’t even want to kiss the trendline!

  20. blackjak100 says:

    Vix trying for sub-13…something I didn’t see coming

  21. joseph3000 says:

    I rather wait for all this int 5 topping game. Let me know when Major 4 is dropping hard. I’ll be ready to buy at the low : )

    • joseph3000 says:

      Can anyone find the difference of an int. 5 vs a Major 4 wave? Which one is easier?

      • Chung Wang says:

        Int. 5 could be terminated anywhere. You need to know where to short Major 4. You have to be skillful to trade well on both. That’s why we need our master. :–)

      • joseph3000 says:

        I’m not shorting Major 4 either. I’m buying the bottom of Major 4 that’s for sure.

  22. waddaguess says:

    Looks like minor 4 here. Would like to see some support at 1673ish to confirm.

  23. oneandonlyuniverse says:

    option market = complacency……that was not the case in may and the most recent rally.

  24. blackjak100 says:

    An article suggesting int v ended or will end today. Take it for what it’s worth.

  25. tony caldaro says:

    If the SPX rallies above 1693 we are probably still in Minor 3

  26. Bear raid on VIX. Minor 3 is extending. GOOG back from the dead, only in a bull market.

      • rc1269 says:

        that’s good for you. only speaking for myself but i don’t get much value out of reading other’s investment cheerleading.

      • mkmason2013 says:

        rc, I have no control over what you read or don’t read. Just move on past my posts, because I will keep posting. M

      • rc1269 says:

        i think what makes Tony’s blog so great is the quality and informative nature of the posts. it’s disappointing that you wouldn’t care to strive toward that aim, instead feeling satisfied to just use it as an outlet for your mental dialogue regarding your positions.
        if you have something useful to read, i’d love to be able to read it. but since that doesn’t seem to be your primary goal here, per your request i’ll just wholesale ignore your posts going fwd. cheers

      • mkmason2013 says:

        rc, okay w/me.

        And I will also continue to encourage others to get into OEW Tutoring as quickly as possible before losing all their money! M

      • tony caldaro says:

        Okay, guys and gals,
        Enough with the character assaults and back to the markets.
        We are already dealing with 200-300 comments a day, and do not need the noise.
        thank you

      • mkmason2013 says:

        Thanks Tony. I’ll do my part and ease up on my posts and will NOT state any more buy/sell positions here. Hope others encourage newbies to enroll in OEW Tutoring. GL to All. M

    • mkmason2013 says:

      Vix almost down to 13! YES! Now, if it will just collapse under 13, would be great. M

    • rc1269 says:

      expiry. wouldn’t get all that excited by it

      • mkmason2013 says:

        I know, but would love to see it continue down. If stocks rise, it might keep downtrend. Is one of those things I look for before a hard pullback/correction occurs. M

  27. kjb0 says:

    The Bear Market will commence in the August timeframe. If I am wrong, I will take my football and go home.
    Bye Bye Detroit. And that goes for just about every city in California and most in the country. The unions and liberals have managed to decimate just about everything they ever touched. When will we learn?

    kjb0 says:
    May 24, 2013 at 8:11 am

    Usually not agreeing with Tony can be hazardous to your trading account, but I believe the high of this Bull market will be the end of May, beginning of June area, with a possible retest in August. I agree with Tony that the Bear will rule until 2016. At least I won’t have long to wait to see if I could be correct. Remember the FED has never had a valid exit strategy, so everybody in the world is selling at the first hint of a FED pullback. Makes you think.

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