friday update

SHORT TERM: uneventful OPEX friday, DOW +85

Overnight the Asian markets gained 1.6%. Europe opened higher and gained 0.3%. US index futures were higher overnight as well. At 8:30 Export (-0.4% v +0.3%)/Import (0.0% v +0.1%) prices were reported lower, and the NY FED was reported lower: -2.2 v +1.5. At 9:15 Industrial production was also reported lower: -0.1% v +0.6%. The market opened two points above yesterday’s SPX 1791 close. Then traded in a narrow two point range until it hit SPX 1795 around 11:30. At 10am Wholesale inventories were reported higher: +0.4% v +0.5%. After a small pullback to SPX 1791 by noon the market moved higher again. Heading into the close the SPX hit 1798 and closed there.

For the day the SPX/DOW were +0.50% and the NDX/NAZ were +0.30. Bonds lost 1 tick, Crude slipped 5 cents, Gold was flat, and the USD was lower. Medium term support remains at the 1779 and 1699 pivots, with resistance at the 1828 pivot. Last night the FED reported the Monetary base increased: $3.682tn v $3.628tn. Today the WLEI rose to 52.2% v 51.8%.

The market opened higher today, dipped back to yesterday’s close, and then proceeded to new all time highs. This has been one relentless bull market lately. The short term count remains the same: Minor 3 of Int. wave v of Major 5 underway. Lots to review this weekend.

Short term support is at the 1779 pivot and SPX 1746, with resistance at SPX 1810 and the 1828 pivot. Short term momentum is displaying a slight negative divergence at today’s close, and quite overbought. The short term OEW charts remain positive with reversal level now SPX 1781. Best to your weekend!

MEDIUM TERM: uptrend

LONG TERM: bull market


About tony caldaro

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33 Responses to friday update

  1. pooch77 says:

    Do we need rsi at around 72-74 on daily , before we top? About SnP1820

    • torehund says:

      Shanghai count Would fit nicely with a major 4, a dollar hike, decline in gold, miners and shipping/commodities. And last about 3-6 months.

  2. In the last 4 years we only closed twice above weekly Bollinger Band. In May 2011 and S&P dropped from 1371 to 1074. In May 2013 we dropped from 1687 to 1560.

  3. jmoptions says:

    The bubble is that everybody believes the QE. They think the market will keep going up as long as QE. Just like hous prices in 2006 and dotcom going to put bricknmortar out of business in 2000.

  4. Who senses the over Bullish sentiment? Euphoria and complacency is alarming at this rate! S&P is being propped up, why? Well I think its to suck more and more in. Nobodys gonna sell if all we do is go higher, why should they? Well the only problem is wallstreet is not a fan of giving you anything for free, so in other words they are baiting and using the masses. Many think QE will not be adjusted or tapered until March so people feel safe riding it out until at least New Years. There are a couple bulls here that are so complacent it makes me wanna vomit Holy COW! We are up 25% on the Year … Margin is at all time highs, America doesn’t make anything but babies! But are stock market is booming, too bad we are not as a country!!! Qe is obviously redistribution of wealth from the fed to the wealthy and only they know when the music stops and many are gonna get burned. Ive realized its greed, greed get us every time. People please read alternative news and not just CNBC or CNN or FOX. I am so concerned for us Americans, and nobody cares it seems.

    • RDC says:

      Smoke coming out of S&P Chimney but no Fire.

    • torehund says:

      …we all know this rally will be abhorred for a time to come…however nothing bad about getting some scratches..there will be a time when nobody cares to short, lets hope we have what it takes to enter on a 3 percent gap down day…
      Like it has been said on the blog its impulsing nicely, some stocks do that too. Some don’t.

    • uncle10 says:

      Its hard to get real change without things getting bad first. It really feels like after this next upcoming bear market, it may be the tipping point we need to get real change in many different areas. I appreciate your concern. It will all work out in the end though.

  5. Response to perversion of the mean Post on Thurs Nov 14:

    Don’t derogate the value of your day job. Our economy needs to have good technical people doing something besides trading or speculating. Otherwise there would be no products developed and therefore no companies to invest in.
    You discussed taking the first derivative of some curve to produce parabolas which serve to reveal market phases and trends. Aside from the fact that I don’t know if you are talking about one derived parabola or a series of them, and in what context, I would like to know how you come up with a function to take the derivative of in the first place.

    • perversionofthemean says:

      I’ll vaguely say it’s a form of rate of change, built into Trade Station, that I customized in a very minor way, as there obviously doesn’t exist an instantaneous RoC in market data. I do the curve-fitting of a parabola, overlaying my version of ROC, after a perceived 3rd wave is completed. Any earlier, and it’s guess work, and as late as the 5th is preferred. The trick is to start at the prior low in the derivative, and find two other points on the developing curve for me to base the quadratic coefficient on. Often, all of wave 1 will provide many points – perhaps a third of the left side of the inverted parabola. Other times, it’s at the vertex where points will get congested, or perhaps wave 5, a, b, and all waves of c might cling to the right side…. Then, there will be symmetry that has tradable relevance.

      There are matrix ops that can be done to find the equation of a parabola given 3 ordered pairs on the curve. I’ve forgotten too much to know how to get the equation! My buddy thought I could minimize the area under the curve and above the derivative, but that sounds too complex. I just eyeball them, instead.

      Can fail if a B wave goes outside the parabola, but that seems to happen when the initial abc just doesn’t recycle the speed low enough in the parabola. I also saw the final wave of C down into the low of ’09 occur outside my fitted parabola, so I recognized that widening the parabola was good at avoiding these situations, but at the expense of buying into one late. Interestingly, wave 1 often peaks near the prior wave 4, so an impulse above those two often means the 3rd is underway.

      Sorry if I’m not more helpful.

      I believe in fruitful day jobs too, and respect all workers from multi-million dollar CEO’s down to janitors cleaning toilets. I say work where you’re happiest and your contributions to the world are maximized. Lots of people can do my job, and I’m not happy, so while I’m gratefully employed, I’d rather do something else.

      • Thanks for the explanation although I did not understand it that completely. The following line is one that is confusing because I don’t know the area under which curve you are talking about, the original one or the parabola constructed from the value of the derivative of the original curve’s equation at various points. You must be referring to the original curve or the the area under the curve couldn’t be above the derivative. If the curve you were talking about were the parabola, then the derivative of the original curve would have to be above itself, which is impossible, since by definition it must lie on the parabola.

        “My buddy thought I could minimize the area under the curve and above the derivative, but that sounds too complex. I just eyeball them, instead.”

        I agree that our work should maximize our contributions to the world, but I have doubts that all the scientists, mathematicians, and engineers who have left their profession to become Wall Street “quants” are contributing anything positive at all. They are not creating new wealth, but simply reallocating existing wealth to their already rich clients. But doing something like what Tony does, which is to help allocate some of the increase in asset values being created by QE3 and employer retrenchment back to the middle class from whence it was taken, is a very virtuous thing. Simply reallocating money to yourself, a working person, regardless of whether you help anyone else is likewise a good deed. That is certainly what I am trying to do.

        I only have a general idea about what you actually do, but it sounds as if you might be a scientific or engineering programmer (software engineer). I rather doubt that the supply of high quality people in that field is very great. We certainly hear all the time that STEM workers are in such short supply that we need to import tens of thousands more of them, mostly from India or China.

        “Lots of people can do my job”.

  6. mike7x says:

    Thanks Tony. Copper prices have been trending lower for nearly three years and are on the verge of a downside breakout below key longer-term support at the $3.00 level. Copper prices dropped sharply this week and could be an early warning signal that construction activity worldwide is flagging. Copper price moves can lead to similar moves in stocks. Another piece of a correction puzzle, or grabbing at straws?

    • torehund says:

      Would fit with the bear cross in gold. George Sorrows is according to News going into the gold miners, thats a bit worrisome for the metal bears.

    • tony caldaro says:

      Good point Mike, housing appears to be on the wane.
      Remember Cash for Clunkers? Got most who wanted to buy … buying
      Same thing happened with the FED’s MBS program.
      Think is the easy money is gone for the builders too

      • This is really good observation. Also oil going down. Everybody saying because US is producing so much oil and Iran is no more an issue there is so much oil supply that is why it is going down. Is it really or there is less consumption because of slow economy?

  7. valunvstr says:

    For all the comments that there are no bears left, everywhere I turn, Yahoo Finance, Marketwatch, CNBC, etc. the article are all about asset bubbles and stock market bubbles. And the articles that don’t reference bubbles they simply say “what do do with your money when the market is at a top?” It’s a joke. This is why the market grinds higher. Everyone is calling it a bubble or a top. That is not when tops happen. The old say “no one rings a bell at the top” Well, no duh. Everyone is ringing bells all over the place right now and have been for the last 10%-15%.

    • Valunvstr, the chart speaks for itself. People would have to be insane not to mention a BUBBLE, why? Because we are in one, the higher we go the bigger the bubble. This market isn’t natural, its fed induced funny money. This wont last and when its over we pop.

      • This market doesn’t feel to me like 2000-type bubble. It just relentlessly grinds higher in the face of overvaluation warnings. Unlike 2000, this market has been supported by great breadth numbers, with sector rotation assuring that no one industry group becomes too overheated. If the recent weakness in the $RUT and A-D line had continued, I would be more worried about the imminence of a market top. Even so, I would like to see some A-D pluralities of +1500, rather than just the 950-1000 we have seen the last 3 days.

      • valunvstr says:

        Thank you. You are further proving my point. There isn’t a single metric that suggests a “bubble”. Not one. Accept the Schiller PE which is so flawed it’s a joke.

        Stay short or stay out of the market as I’m sure you’ve been the entire year. And when a 10% pullback happens, go ahead an gloat despite the fact that the longs will still be far ahead of everyone who is calling this market a bubble.

        This just hit to further the point.

      • buddyglove says:

        Imanewbie….With respect, I have to say that for a “newbietrader” you speak with far too much authority on bubbles….Have you ever traded or been invested in one ?

    • radrian6 says:

      I can’t speak for the other members but I doubt that anyone is looking for a market top — they are almost impossible to identify until long after they occur. I do think the market is due for a significant correction something like the one we had in September-November 2012. It is extremely rare for an index to go over one year without testing it’s weekly lower Bollinger Band — that’s just normal market action so I don’t think such expectations are out of line.

      • valunvstr says:

        Significant is a 9.5% correction? Ok, I hope investors are going short and in an IRA, and catching the entire 9.5% because if you’re up 29% in the market this year, that taxes alone make that trade not worth it. Which is why I just don’t understand all these “traders”. Unless you are trying to miss the “big one” taxes alone are a reason not to trade. If I have to pay roughly 55% to the gov’t (Obamacare tax, Fed and State: yes I live in CA) and the market returns 8%, then I need nearly 16% to make that worthwhile. Not gonna happen. Now, of course, if you pay the taxes along the way then you have a new cost basis vs the buy and hold investor. True enough but 1) you actually have to produce those returns and 2) by the time a buy and hold investors has amassed a large enough sum, it is not like they are retiring and selling the entire amount and paying all those taxes anyway. Let’s face facts, the kids get the money at a stepped up basis. Oh, the mistakes of the average investor, caring about the market moves that in the end lead to terrible after tax results. Buy the index and forget about it. Unless, you can avoid “the big one”, which I believe an investors can. That is what I look for. Have a wonderful weekend!!!

  8. Lot to review this weekend. You are right Tony. Take a look at $XLE and $KRE and lot other regional banks breaking out OR ready to break out of nice bases. One negative divergence is today regional banks didn’t do as good when compared to big banks. I didn’t analyze them yet from EW point of view but from base formation and breakout with volume perspective they do look like a bullish tone to me. Of course the base formations are not 100% reliable like any other TI. Thanks for the update. See you tomorrow.

  9. StemSki says:

    I remember the saying that Bear Markets start when bears have all but given up. I would say that most of them are now hibernating. I cannot see any reason why the stock market will not go to the moon, so a wicked correction to shake people out of their positions must be on the horizon.
    Of course, there is no such thing on the horizon no matter how hard I look. No one is scared any more. I bet the greed side is totally leveraged. Why not??
    We are in the seasonally best part of the stock market cycle. Bernanke’s replacement will print even more money than he did if that’s even possible, and blah blah blah……..

    Funny thing is most of my money is in 401K which means I cannot short, but boy would I like to see the market put in a 10% correction so I can rest a little. A nice Christmas gift

    We are in “NO Man’s Land”

  10. budfox9450 says:

    The Daily/Weekly/Monthly – SP500
    BoYu indicator, are Bullish…Bud

  11. radrian6 says:

    Good weekend to all,
    It looks like RUT completed Minute 1 and 2 and is now in Minute 3 of Minor 3 — the strongest part of the impulse. RUT should therefore reach the momentum high of this uptrend by early next week. Minor 4 should be obvious on the charts. Unless Minor 5 truncates, RUT should easily make it to 1127-30.

    • pooch77 says:

      damn I sold my iwm calls at the close.weekends make me nervous,but I agree the dailiy chart has room to move up as the 5min thru 1 hour are imbedded.

  12. CB says: “This has been one relentless bull market lately.” 🙂 well said Tony! Thanks for sharing all your awesome work!

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