friday update

SHORT TERM: rebound friday, DOW +168

Overnight the Asian markets lost 0.8%. Europe opened lower but rebounded to lose only 0.1%. US index futures were higher overnight, dropped after monthly Payrolls were reported: +204k v +148K, then turned back up. Also at 8:30 Personal income (+0.5% v +0.4%) / spending (+0.2% v +0.3%) was reported higher, as was PCE prices: +0.1% v +0.2%. The market opened three points above yesterday’s SPX 1747 close and hit 1754 in the first few minutes. Then after a pullback to SPX 1748 by 10AM the market headed higher. Also at 10AM Consumer sentiment was reported lower: 72.0 v 73.2. A 1:30 the SPX hit 1766, pulled back to 1762 by 3:00, then rallied into 1771 close.

For the day the SPX/DOW were +1.20%, and the NDX/NAZ were +1.50%. Bonds lost 34 ticks, Crude slipped 15 cents, Gold dropped $18, and the USD was higher. Medium term support remains at the 1699 and 1680 pivots, with resistance at the 1779 pivot. Last night the FED reported a rise in the M1 multiplier: 0.736 v 0.718. Today the WLEI was reported slightly higher: 51.8% v 51.7%.

The market opened higher today, pulled back to nearly retest yesterday’s close, then ramped up for the rest of the day with small pullbacks along the way. It was quite a turnaround after yesterday’s selloff. When the SPX passed 1760 we posted a green Int. iv label at yesterday’s 1746 low. With wave iv ending above wave i it no longer looks like a potential diagonal Major wave 5, and those a-b-c labels will be removed. This certainly is quite a resilient bull market.

Short term support is now at SPX 1746 and SPX 1730, with resistance at the 1779 pivot. Short term momentum rose from extremely oversold to quite overbought. The short term OEW charts swung positive again with the reversal level still SPX 1762. Lots to review this weekend, best to yours !

MEDIUM TERM: uptrend

LONG TERM: bull market


About tony caldaro

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39 Responses to friday update

  1. 777daimon says:

    Continuous Kudos Tony for 100% correct call$ !
    Sold my shorts for a loss due to Friday’s move, back to my previous view and position!
    You already know it, from previous comments, won’t repeat it here.
    All I’m watching carefully now is this time window 11-22 nov 2013. If nothing special happens during this period we’re ok already in the Christmas rally heading to my 2050+ SPX 500 target.

  2. Thu $SPX -23 MOC 0.25 bil to sell
    Fri $SPX +22 MOC 1.0/1.8 bil to buy

    Big Money/Real Money is selling small at the low, and buying in-size at the high. Is money flow an indication if we’re going higher or lower?

    On yesterday’s ugly close, I said ‘Last week, they stick-saved a failed new all-time high into a green weekly candle on the back of the mutual fund inflows. What if they used a jobs number to do the same this week?’ The reference for a green week was 1763.

    In the futures, they sold a +5 future and turned it -5 on the jobs number. These are ‘the traders.’ At the open, Real Money gapped it higher +4 and then ripped it all day, hesistating during the lunch hour at yesterday’s neckline (SPX 1759/63). A final burst of Real Money in the final two hours placed the SPX at 1770 and less than 0.3% from an all-time high.

    Not only did the SPX close the week green, the DOW closed green for the fifth week in a row, and at a new all-time high. All-time is a long-time.

    In recent weeks, pundits have been pointing to frightening losses in the high-flying stocks, a loss of momentum, and resultant divergences. I have been pointing to rotation as keeping the year-end rally alive: we saw the same thing during the ‘too far too fast’ Feb-May advance. Under-performing funds are taking profits in today’s winners and buying yesterday’s losers for alpha. In simple terms, the high-flyers in the RUT and NDX have been down, while laggards in the DOW are up.

    • mjtplayer says:

      Looks and sounds like year-end performance chasing and holding the market up till year-end.

      Question: if everyone is “all-in” (PM’s, hedge funds, etc.) on the year-end rally, plus leverage/margin, who’s left to buy come Jan?

      • I believe that your general concept is correct. However, one needs to be aware of two technical timing factors. One: bonus pools are determined on year-end performance that ends in November for some and Dec 15th for others. Two: the US has a thirty-day wash rule, and so names will be sold by the end of Nov for repurchase in time for window dressing at the end of Dec.

        So, in answer to your question, not everyone will be ‘all-in’. Far from it, they’ll sell the names they want to hold long term, and rotate into laggards and high beta names, and then rotate back into the names they want to hold.

    • torehund says:

      Market is light and has been so for quite a while, and the market action as you said is also ugly( thats a feel I get when looking at the movements of individual shares). And also the ugly breath is up (buy the ones that have declined a lot, but individual shares that gain arent holding them for long (no buyers). When shoals of buys from funds etc enter, they leave quickly.

      • I beg to differ. The ugly stick has lit up laggards and they’ve been holding since August. Basic Materials (aluminum- AA, coal- BTU, steel-X) and energy (integrateds- XOM and explorers/services- XOP). I think that you are familiar with the ugliest of them all, the dry-bulk shippers. Heck, even the PIIGs: National Bank of Greece and Spain’s Banco Santander have exploded upwards.

    • fbender7 says:

      RS – indeed a prophetic statement yesterday. I noticed that. Good call.

  3. tuamotu says:

    For tkuz and everybody: correlation between jan 1928 to april 1930 and may 2012 to today …
    Would like to know what you think Tony and others.

    • Nice Chart. It seems in 1928 things were booming ” the roaring twenties”. Today the only thing USA makes is babies, more welfare recipients and money out of thin air. Sorry not trying to be rude just calling it as I see it. I often ponder is Ben Bernake the savior of America or the destructor of America.

      I Have a question for Tony or any experienced Traders? Was the crash of 1928 or 1987 or the huge drops in 2000 or 2008 in the charts ahead of time? Were people comfortable holding at all time highs? In the years above did people think the market would never go down? In the years above how long after the drop did they realize the market was never coming back? When the market did start to pull back did they buy all they way down until they ran out of money? Thanks.

      • tony caldaro says:

        Was not around for 1929, but have witnessed all the others.
        Predicted the 1987 and 2000 tops a couple of months ahead of time.
        Missed the 2007 top by three months. They were euphoric periods, like now.
        All three bear markets that followed were different.
        2007 only lasted four months, 2000 less than three years, 2007 only 17 months.
        Just about nobody was bullish at the lows.

      • onthemoneyuk says:

        imanewbie – Hussman’s composite ‘overvalued, overbought, overbullish’ chart includes sentiment readings at the biggest tops of the last century and may answer your question. Here’s a link:

    • The pattern is three peaks and a domed house. Can’t deny the similarity up to three peaks. Now, let’s see if we get a domed house.

  4. DJI monthly log


  5. Thanks, Tony. As always, the OEW coffee club awaits your weekend update. Thanks for all the work you do.

  6. pooch77 says:

    not quite sure ever seen turn arounds like today,healthy market or not?Not sure black swan event in cards,looks like 1900 after all eoy

    • Nice to see I am not the only one who has thought the same thing … actually many times the past couple of months. Had to laugh this morning when read a headline that retail investors were cashing out at this market high. I just posted to Tony’s web yesterday that is what I did for son’s accounts, too. I think they read Tony’s site! 😉 Oh, well, never feel bad about taking great profits.

  7. waddaguess says:

    1% and 1 day is all the market gives these days???

  8. budfox9450 says:

    It would appear – my early declaration
    of the demise of P3, was incorrect…Bud

  9. torehund says:

    That swing from oversold to overbought on the RSI spx daily looks squeezy, if thats all the bears have to endure ofadversity then its ok….In my single indicatorstocks there arent any volume, however bios had enormous breath, if it continues, yes then who knows. But tend to think its rebound exhaustion breath.

    • jparkins10 says:

      McClellan hardly moved today, shocking really, don’t quite understand it…still at -100

      • RDC says:

        NYMO moved from outside lower BB to inside BB (-43 to -32). The upper BB is at +81 so I think market will continue to move higher next week going into options expiration.

  10. thanks for the update Tony. I have been bed bound all morning -sick- not able to make a trade… just peaking in now and then on some charts.

    Anyway, quick Fun-with-Fibs: 1746 is the 1.382x extension of M1 measured from M2… and the 0.764x extension of int. med. i of Major 5, measured from int. med. iv low (1746) is right at the 1.618x extension of Major 1 measured from Major 2, and right at the 1.077x extension of P-I, measured from P-II. This is at 1825 + /- 5.

    in math:
    int. med level: 1746 + 0.764x (1729-1627) = 1746 + 0.764x 102 = 1824
    major level: 1266 + 1.618x (1422-1074) = 1266 + 1.382x 348 = 1829
    primary level: 1074 + 1.077x (1370-666) = 1074 + 1.077x 704 = 1832

    If the SPX trades above the 1780 level, it would also fulfill the 80/20 rule. P-III will then also be > P-I.

  11. Vox Zeit says:

    Tony et al, if the DOW makes new all-time-highs, does that mean the DOW is re-adjusted to the following count ?: Major5 => Intermediate5 => Minor3/MinorC

  12. tuamotu says:

    Thanks Tony.
    Buying the dip seems to work again.
    Effectively with all the QE and maybe increasing them, I don’t know
    when we will have a pullback for P4. It seems that only an event like a black swan will do it.

    • tkuz says:

      Tuamotu, your comparison chart from 1929 showing the dow in close correlation didn’t have a pull back to the end … would love to see updates on that chart from time to time

  13. Mr. CL- EE says:

    Thanks Tony

  14. Caldaro great work this week. I admire your patience and dillegence. I think I have grown to old I have throw my counts out the window. Maybe I will follow yours instead.

  15. Pingback: Risk-Reward Market Report – 2013.45 | The Risk-Reward Report

  16. liborval says:

    Hi Tony, a resilient bull market? with QE running there will be no big corrections, in June and October we had two small ones so now it will go up a couple of months at least 2-3 and then maybe 5 % down and back up. it is easy money. what about rising your targets for this bull like SPX 2000 or so?

  17. RDC says:

    Thanks Tony.

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