friday update

SHORT TERM: new highs then pullback, DOW -11

Overnight the Asian markets gained 0.4%. Europe opened lower but finished mixed. US index futures remained higher overnight, and the market opened at SPX 1809 an all time high. At 10:30 the SPX hit 1814, went sideways for a couple of hours, then began to pullback. Heading into the close the SPX hit 1804, then bounced to end the day/week/month at 1806.

For the day the SPX/DOW were -0.05%, and the NDX/NAZ were +0.45%. Bonds lost 7 ticks, Crude gained 85 cents, Gold rose $12, and the USD was lower. Medium term support remains at the 1779 and 1699 pivots, with resistance at the 1828 and 1841 pivots. Today the WLEI was reported higher: 52.7% v 52.4%.

The market opened higher again today, made another all time high, then pulled back into the close. Today’s pullback was the first significant one since a week ago Wednesday. Another subdivision? An uptrend top? We’ll review the charts and see how things look in the weekend report.

Short term support remains at the 1779 pivot and SPX 1746, with resistance still at SPX 1804-1810, SPX 1818 and the 1828 pivot. Short term momentum displayed another negative divergence at today’s high then dropped below neutral. The short term OEW charts might have created support today as the reversal level is now SPX 1804. Best to your holiday weekend!

MEDIUM TERM: uptrend

LONG TERM: bull market


About tony caldaro

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37 Responses to friday update

  1. wolf7219 says:

    1341 Major 3, Primar I = 330
    1371 Major 5, Primar I = 122
    ( Major 3*38.2 =126; 126+1249=1375)
    1710 Major 3, Primar III =443
    (Major 3*38.2=169; 169+1627=1796
    Major 1 *61.8=211; 211+1627=1838)
    if clean 1838, next is 1901 (major 3*61.8)

    • torehund says:

      Wolf if the first part of 3rd of 3rd is mirror image of the last part of 3rd of 3rd with a diamond continuation pattern in-between do you also have a count for 3 of 3 ending in the vicinity of 2050 on SPX ?

  2. torehund says:

    Tony, yes it looks like a 5th wave on the BDI. I count 3 finished waves and 2 to go in a possible double five configuration. 2800 minimum and 3200 max is my guess.
    Amazing strength with a 20 percent gain in just 3 days.
    Good weekend to all on board.

    • torehund says:

      Topping out of the BDI could mark the cycle wave 1 top on six, and wave 2 to follow. In that case the bulkers will have done 2 waves up marking wave 1 retrace lots of the gains and then be ready for a long duration wave 3 that we all in here should not miss…As the 2 first waves(wave 1) then will have lasted for many many months(if it ends 15 jan) a wave major 3 in bulkers should last for 2-3 years once cycle wave 2 is finished.

  3. Thanks for the update tony, i did nibble on some inverse ETFs today; we’ll need to see a rocket launch imho or this market appears to slowly roll over for a well needed break aka correction.

  4. Jennifer says:

    Dow Jones and S&P 500 dropped in thin trade, NASDAQ boosted by tech sector:

  5. pcskier says:

    Back in the day, Japan invaded and occupied French Indochina. As a consequence we(USA) put an oil embargo on Japan which resulted in Pearl Harbor being attacked 12-7-1941 (while we were having negations with Japan over a solution/peace) and the USA joining in WW2. Recently, I thought the timing of the Iranian treaty was suspect. Than China drew a line in the sand with Japan (they are still resentful for pre WW2 stuff) over air space. I would suspect the next time Japan fly’s a military plane in the disputed air space there is high probability China will fire on Japan. In the 1981 we shot down two Libyan fighter planes over the Gulf of Sirte, claimed by Libya as its territorial water, without any serious consequence. My guess is, their will be serious consequence if this happens again. The major world’s investment banks have written off systematic risk as a thing of the past. I am in the camp we topped today and we will get a 1987 event soon! What would happen to $tnx if a conflict occurs with China?? China may be tired of dealing with their hard vs soft landing policy. If things are going to get bad there they may as well have their people get mad at Japan and not their leaders.

  6. 777daimon says:

    At Tony:
    ”No problem, it was not an emotional response … logical [Spock].
    (on bitcoins initial top target of this rising wave is at 1827, and final top at 2250-2300 $)
    Isn’t that your SPX targets too =)”
    Ok, thank you for your responses.
    on SPX 500 my targets are 1920-1965 (time targets : 28 dec.2013 – 9 jan.2014)
    and 2200-2250 (at the end of april 2014 – 20-30 april 2014).
    on bitcoin:
    1825-1827 for this wave III (started after the corrective a-b-c down to below-500 $) and for wave v – 2250-2300$.
    Bitcoin REALLY developed a bubble ‘ Sornette ‘ style (respecting also the no.of points criteria in a determined time unit = parabolic rise).
    SPX is not in a bubble – take a look at bitcoin – that’s a bubble. SPX just developed in years in a beautiful fashion.
    Maybe not natural, maybe QE-induced, but (unfortunately) not in a bubble.
    I consider a bubble a parabolic rise in a short determined period of time (take a look at bitcoin).
    SPX is not in a bubble, it’s in a bull market.
    more or less natural, but a bull market.
    Thank you for your patience, have all a great week-end !!!! 🙂

  7. Thanks, Tony! This OEW coffee club member, as always, looks forward to your weekend update. Your advice to a fellow blogger above to not lose sight of the big picture is very sound. I know I have posted these more than once, but they are things that make you go hmmm… Or, as Clint Eastwood would say, “Are you feeling lucky?”$SPX:$VIX&p=W&yr=15&mn=0&dy=0&id=p73796657589&a=325554048&listNum=7$SPX&p=M&st=1999-01-01&en=(today)&id=p04078160810&a=315140600&listNum=7$VIX&p=D&st=2012-08-02&en=(today)&id=p46200032009&a=312144717&listNum=7

  8. mike7x says:

    Thanks Tony! Please try to sort “everything” out in the Weekend Update. Cuz, there’s lions and tigers and bulls…but no bears. Oh myyyy…

  9. 777daimon says:

    Just lovely to see how everybody is salivating, searching for a top, and thus pushing the top higher and higher :))))) …
    “..are we there yet? ……. are we there yet ?” …. 😀 😀 😀

    • tony caldaro says:

      Who is everybody? Even the bears are long.
      The equity bull market has been driven by the FEDs QE liquidity.
      Hedge funds, banks, pension funds have all been buyers.
      As the stock market continues to rise, risk of ownership rises with it.
      At some point it will eventually reach a tipping point.
      This is when the risk of equity ownership exceeds the yield of much less risky, and less volatile, USG 10YR.
      Then, whatever that yield might be, the unwind from risk-on to risk-off begins.
      Keep an eye on the big picture, and do not get too comfortable being bullish.
      This is not a game of who is right or wrong.
      Everybody should make money in bull markets.
      But not everybody should have to lose money in the bear market that always follows.

      • 777daimon says:

        Don’t get mad on me :).
        Ok, not everybody. But many (over 50%) that post here expect an iminent top.
        and on the internet on other blogs (see – all have almost the same vibe – carefully bearish). I don’t see euphoria, really. I don’t see crazy people betting their house (using loans guarranteed with their homes) on stocks or on bitcoins (on bitcoins initial top target of this rising wave is at 1827, and final top at 2250-2300 $).

        I’m not very comfortable being long now, believe me.
        But the level where I got long is way below the point where now lies 200 daily MA. Being short here would make me waste money.
        I know it’s not a game, I understand that. But on the bigger picture the upper BB on daily/weekly/monthly are ridden to the upside. This is not bearish – at all.
        Sorry if I disturbed you or the others.
        But this videoclip from ‘shreck’ was just too funny …..are we there yet? …. are we there yet? :)? :D!
        Don’t take it too personal, I know that this is not a game of being right/wrong.
        I don’t care if I’m right or wrong – I just wanna make money. I’m not a bull or a bear. I’m neutral.
        But now I’m seeing the market price action and it’s not bearish (riding the upper bollinger band)
        Don’t take it so personal, I like you Tony and your style.
        and the clip from ‘shreck’ is really funny :D!

        • tony caldaro says:

          No problem, it was not an emotional response … logical [Spock].
          (on bitcoins initial top target of this rising wave is at 1827, and final top at 2250-2300 $)
          Isn’t that your SPX targets too =)
          You have to keep in mind people, who never post, read these comments.
          Certainly we are in a bull market, which may end up being a bubble market. TY Helicopter Ben.
          And there is no reason not to make money in a Bull/Bubble.
          Just keep in mind everyone, when the music stops not everyone gets a chair.

      • buddyglove says:

        Good posts above, and very good point from Tony about the “yield gap”. Tony will remember as I do, that just before the 87 crash, the yield gap between safe bonds and risky equities open very wide indeed.

      • pcskier says:

        Well said.

      • radrian6 says:

        Good points, Tony. I’ve seen a number of bull and bear cycles and I’ve observed that when we get near the top of a lengthy uptrend that traders begin to “trust” the markets. The markets are not trustworthy and regardless of how soft the Fed is right now, they are not your friend and they do not have your back.

  10. Caldaro great weekend. Devotion appreciated. For dec fed most likely will be hitting f5 button to run the market up.

  11. radrian6 says:

    This is a re-post from the Thanksgiving update. Have a good weekend everyone.
    Hello all,
    RUT cup-with-handle target is 1167 but I have some other indications that RUT may reach exhaustion near 1158 or lower. Either way, the cycle that has repeatedly played out this year is rally, sideways, and drop to lower Bollinger Band — the only variable has been the time to complete the cycle. RUT completed the last cycle in 21 trading days — if that repeats, we would see a test of support at December expiration. However, slow holiday trading may add time to the cycle.

    My monthly chart shows RUT has reached a level of exhaustion only seen on two other occasions in the past 10 years: January 2004 and April 2010 — prior to those readings, you’d have to go back to September 1997. The April 2010 reading lead to a serious correction starting in May whereas the 2004 and 1997 readings lead to lengthy consolidations prior to new highs. Based on this history and the resulting price action, RUT may be able to add some gains over the next month but should begin consolidating and/or correcting thereafter. With the seasonal bullishness, January 2014 may be more likely for a directional change but we will just have to wait and see.

    • torehund says:

      Radrian, it feels very solid with motivated waves in the stocks I follow. Some make skeptical, rather flattish sinusoidal waves, and others like my Free shipping does a stair pattern (retracement config) with very nice consolidation after each gap up. It tells me market for the downbeaten stocks have much more legs than it had some weeks ago.
      Think seasonal strength is kicking in.

      • radrian6 says:

        My charts tell me a different story.

      • radrian6 says:

        I trade the RUT and can only write about what I see there … I don’t follow individual stocks. RUT appears to be at or near the top of a cycle which has repeated many times this year. If a more serious correction is coming, it will break below key support near 1095.

      • torehund says:

        Yes many small caps will have to be rather stretched up here, I avoid them. So in that sense I can only speak for a small and insignificant subsegment of the stocks on the RUT. What I do see is some sign of life in the beaten down stocks. To go long the RUT index at this point may not be worth the risk, however if market is favorable(holds up) for a month longer it may be immensely profitable to hold some of the forgotten stocks out there as some rotation will benefit them.

      • radrian6 says:

        RUT is exhausted in monthly, daily, and hourly timeframes but has a little more juice in the weekly timeframe — that seems to fit with the target of 1158-1167. After that, the history of the previous two bull markets tells me that RUT will consolidate and correct for a while — should be expected after 12-13 months of uncorrected uptrend.

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