thursday update

SHORT TERM: GDP stronger than expected, DOW -68

Overnight the Asian markets lost 0.1%. Europe opened lower and lost 0.7%. US index futures were modestly higher overnight until 8:30. It was then that Q3 GDP was reported higher: +3.6% v +2.8%, and weekly Jobless claims fell to their lowest level in six years: 298k v 316k. The market opened four points below yesterday’s SPX 1793 close. Then it dipped to SPX 1786 before bouncing to 1792 just past 10am. At 10am Factory orders were reported lower: -0.9% v +1.7%. By 11am the market had pulled back to SPX 1785. Then after a bounce to SPX 1991 the market started to pullback again. Heading into the close the SPX hit 1783 at 3pm, bounced to 1788 by 3:30, then closed at 1785.

For the day the SPX/DOW were -0.40%, and the NDX/NAZ were  -0.15%. Bonds lost 9 ticks, Crude gained 15 cents, Gold dropped $16, and the USD was lower. Medium term support remains at the 1779 and 1699 pivots, with resistance at the 1828 and 1841 pivots. Tomorrow: monthly Payrolls at 8:30, along with Personal income/spending and the PCE. Then at 10am Consumer sentiment, followed by Consumer credit 3pm.

The market nearly gapped down again this AM but opened one point short of an official gap opening. A few minutes after the open the market found a low at SPX 1786, and then attempted to rally. Like it has for the past five trading days. The high for the day occurred shortly thereafter at SPX 1792. Then the recent customary pullback began. Today, however, the pullback found support around ES S1 instead of dropping down to S2. Despite the jovial spirit of the holiday season, the DOW is displaying every indication that it is in a downtrend. This would suggest its recent high was the end of Major 5/Primary III, or just Int. one of Major 5. Should the Trifurcation finally get resolved the SPX/NDX/NAZ should follow shortly.

Short term support remains at the 1779 pivot and SPX 1746, with resistance at SPX 1810, SPX 1818 and the 1828 pivot. Short term momentum remained just below neutral for most of the day. The short term OEW charts remain negative with the reversal level now SPX 1794. Best to your Friday trading!

MEDIUM TERM: uptrend weakening

LONG TERM: bull market


About tony caldaro

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144 Responses to thursday update

  1. torehund says:

    It never ends, its more academic to be a bear, its more prudent, its more right to be a bear, and its non sense to be a bear, thats how it goes.

    • It’s non sense to be a bear? Really? I guess that’s what makes a market. Those who believe in fairy tales and those who believe in realty. You choose who is who. If the sp 500 was at 1200 I would be a buyer, if it went to 1000 I would buy more. The inverse is the same. If we go to 1850, I will short more. And so on and so on. I have seen the movie before and read the book. I guess what may be the biggest difference between a lot of us is the fact some are long term investors and some are short term investors. But the exuberance is unreal. Gold was 1850 earlier this year, we’re is it today. Silver was at 50 , we’re is it today. You can always count on someone or something to screw things up and a bear is always around the corner.

    • bobhopium says:


  2. Caldaro just come out and tell us there is just NO more bear case. If taper does not do it we are done.

  3. mjtplayer says:

    Bulls and bears both nervous? Bears worried we break to new highs, bulls worries we don’t and put-in a “lower high” at 1,806.

    The next 24 – 36 trading hours are critical.

    • bobhopium says:

      I am a Bull and would only be nervous if mkt retraced more than 50% of today’s advance.
      Apart from that all is cool imo.

  4. Thomas Crown says:

    It takes 5 days to drop 1.8% and a few hours to retrace !
    And it has done that what 10, 20 times in the last few months. How can we the bears stay bearish is beyond me !

  5. llerias7 says:

    I am not a convicted bull but right now, and until FOMC meeting, the bearish talk is nonsense!
    Next week we will see SPX geting through 1813 like in butter…in its way to OEW1849 on Dec18th.

    • mcmasoniam says:

      I’ll take the opposite side of that theory and say that next week will be a sell and rebalancing week ahead of FOMC, which is the week after that. No taper will be announced, IMO, and it’s a rocket w/~100 spx pts to the upside before correction in 2014. That my story for today and I’m sticking to it. M

      • torehund says:

        M-in Norway the promise low rates until 2015, they want to create a bubble, but then as it pops folks are OK as it mostly doubles from here, then declines to trend.

  6. iamwhoiis says:

    First comment here. Thanks for all the great information you provide.

    This is what I am currently seeing with this correction…SPY…
    b of a of A retraced 74.9% of a of A with c of A = 238.2% ext. of a of a of A.
    b of A retraced 50% of a of A with c of A bottoming @ 123.6% ext. of a of A.
    c of b was 150% ext. of a of b.
    B of A has retraced ±74.9% of A so far (assuming A bottomed at 178.35 on SPY)
    and c of B is currently at the 150% ext. of a of B.
    Therefore, if we start C down right here…I would expect a target for C of ±173.88 on SPY
    We are back testing the lower TL right now. Everything appears to be lining up.
    If this thing is going to go…now is the time (for C…of some degree : )!
    However, I’m kind of like Lee…I have to keep both hands on the wheel when I’m doing this stuff.

  7. waddaguess says:

    Sure feels like it will never drop more than 1.5% again. GL all.

  8. mjtplayer says:

    H&S set-up on the S&P over the past 4 weeks, forming the right shoulder now. Head at 1,813 with the neckline at 1,777 & 1,779 (so 1,778); projecting 35 points down or 1,743 and a test of int iv

  9. I think we are setting up for a vicious drop

    • buddyglove says:

      Yeah…..That hasn’t been working out too great lately.

      • I guess this is what passes for a major correction these days. The Who’s are singing in Whoville today. Who boy the dip buyers were all over this. Looks like Hussman’s prediction is playing out.

    • dr1rick says:

      Today’s uptrend (so far) looks like a 0.62 corrective wave, and if the SPX doesn’t push through 1803, we should see more downward pressure.

    • mcmasoniam says:

      The “Santa Claus Rally”, technically speaking is only one week long, the week between Christmas and NY. You know the Big Boys will take profits before that time, most likely next week; could be all week, ending Int. c of C of wave 2, Major 5 ~1740ish. Then, here comes Mr. Regular Guy, who sees a chance to buy into stocks at a slightly reduced price, but hey, it’s a break right? FOMC does NOT announce taper, thus stocks, oil and others lift in what could be wave 3 of Major 5, which extends into Jan. 2014 to about 1850-75. This is one view. The other view is P4 right in the middle of the hottest season for stock buying, which is possible, but unlikely. Next week will be the determiner. JMO. M

  10. radrian6 says:

    At its current level of 1134, RUT has retraced more than 61.8% of the small corrective move from 1147 which, from my perspective, means that it has reversed to positive. The potential H&S top is still in play on SPX so I will monitor that possibility. If the SPX H&S pattern plays out, it would target 1750-55. If the indexes continue higher, the SPX topping pattern should be invalidated and RUT would then have a good chance at retesting 1147 and likely consolidating near that level before the next move. In a best-case scenario, SPX could reach 1850-60 by December expiration — that’s a speculative target based on charts, not a market call.

  11. So let me get this straight. Chances of Taper we go rocket up and chances of NO taper we rocket up?

  12. manunidhi21 says:

    Namaste Tony !
    I find all levels get breached when its a bull or bear run.This time its QE run.
    Remember we went very bullish with Gold some $ 3200 and then changed as long term count changed.
    Looks SPX has changed its mind this time.

  13. pcskier says:

    1802.49 Spx is it, the bull is dead, get ready for the bear

  14. Futures…… I was hoping for a neutral opening, a lill dip, and then a ramp up. not an open at 1800+… oh well. long it is. Arnie indicator is giving a buy signal again on the daily…

    so IMHO either 1813 was 1 of v or it was simply int. med. iii, and 1779 int. med iv and now in v.

  15. RDC says:

    Too early to short here. The markets will continue to move higher next week until Friday the 13th (Dec 13). Yes this will be the final Year-End rally and Friday the 13th will be the sell off day.

  16. Anyone see wave 1 at 1779 wave 2 somewhere a tad above 1800 and then boom drop in to a 3 to 1760 area?

  17. mjtplayer says:

    Anyone else taking a shot at the short side here?

    I went short at 1,800 – low risk trade IMO, stop out at a new high 1,813+, about a 1.5% stop-loss on a 2x short SDS.

  18. bobhopium says:

    Nasdaq also responding well on a backtest of its own Diamond reversal structure imho.

  19. bobhopium says:

    Nice Bull flag building on the S&P fut 1-5 min…worth watching imho.(Failure will be obvious soon) Other tech observations are positive. Measured move to 1814. GL to us all.

    • bobhopium says:

      Pattern working out so far, alot of short-stops around current levels, so could hit the target today imho.

  20. mjtplayer says:

    10am – 11am POMO holding up the DOW & S&P, but the NAZ is bleeding lower; today’s close is important, especially if we roll over and close flat or down.

  21. jmoptions says:

    Per Tonys wave count, possible Int. B top in today. Watch for a fade of the price to the close today, that would be telling.

    • budfox9450 says:

      Bull Trap at 1802-1803.
      agreed. JM.

      • bud if you do not mind me asking sir what is bearish on your indicators? I am a bear but even I cannot find anything bearish. I would think today proves it. Monster day up and no fear. Maybe there is a reason for no fear…

      • budfox9450 says:

        I think, you can decide for yourself.
        Look at a $NYA50R, and $NYA200R charts.
        Is the NYSE Number of New Daily Price highs
        still rising? As for the BoYu – the signal
        remains Bearish, for 2 reasons. (1) The
        BoYu is lower than it was weeks ago at the 1812-13
        highs. (2) The ciritical slow moving average has not
        turned up, which would confirm a reversal. encid…

    • jparkins10 says:

      Due to the size of the moves off the 1814 top, I’m becoming more convinced this is int ii of Major v.
      Should still be a 5-8% move down though.

  22. mjtplayer says:

    FYI: heavy POMO today and Monday, beware the BOTS from 10am to 11am!!

  23. gary61b says:

    spx 1802 and 1805 are definitely rejection areas

  24. 777daimon says:

    double bottom (1780’s area) activated at 1800 in cash – target: 1820’s

  25. gtoptions says:

    Thanks Tony
    SPY ~ Pre-Market gap near 76.4% Fib @ 180.95.
    Weekly PP @ 181.04

  26. blackjak100 says:

    Mcmason good to see you back more. You asked about the SPX count I’m working with. I still haven’t ruled out the cycle B wave yet. I’m thinking we are starting a third of a fifth wave today with target near 1821-1826 for major top. However if I’m wrong, we still should see a correction. It’s the depth of correction which should reveal what’s happening. The uptrend is clearly weakening and should reverse at 1821-1826 either way. Cheers!

    • mcmasoniam says:

      Hi BJ, good to see you also & thanks for the opinion. Been a busy night in Cape Town. I’m increasingly viewing this current wave position as ‘c’ of Int B of wave 2, Major 5. Think next week will be the real tell regarding P4. MUST get some sleep now before I fall over. Thanks again, bj. M

  27. pcskier says:

    If we had a poor jobs number today futures would be doing exactly what they are doing now. Lets see what happens when we back test indu 16025 and Spx 1804 . It’s always in the back test that smart people trade with their real money.

  28. Lee says:

    Hey Tony
    Enjoy ur winter wonderland and the markets today !
    Gold and ZN threw a slow pitch for us hacks this morning
    Enjoy the expiration in those SPU’s guys and try not to loose an eye.

  29. Tony’s wall of worry – “MEDIUM TERM: uptrend weakening”.

    What more can I say?

  30. rc1269 says:

    so refreshing to see we can make a seamless transition from bad news is good news to good news is good news. as long as whatever happens is good news, then all is right in the world

    • tommyboys says:

      This is why its tough not to be long. The Fed has needed and continues to need markets higher for confidence sake. They know what’s at risk should the alternative manifest. Continued mild pullbacks for now is likely all we’ll see. Larger correction in route few months henceforth…GLTA

      • rc1269 says:

        hard to be short, yes. but it’s very easy for me to not be long right here.
        i will never harbor resentment for the brave souls who like to stay on the coaster to the top of the hill. good for you if you can make it work for ya!
        for most people, getting out 5% before the top feels like a regrettable loss. while getting out 5% down from the top feels like a well timed victory. but i’m pretty sure the p&ls aren’t that different. i just like to be in the former camp.

      • tommyboys says:

        Depends if you believe we’re at the “top of the hill” or not. You know my thought.

      • rc1269 says:

        in the last two cycles the spx has only been farther above it’s 200 day MA three times, and they all occurred in 1998, 1999 and 2000. the first two times were followed by corrections of 22% and 12%. the third and last time was in March of 2000 and was followed by a 50% bear market. and, we are 40% further above the mean now than we were at the 2007 bull market high.
        yes, i believe in long term mean reversions. and after a +170% 5 year period i especially believe in them.
        in terms of time and price, this bull market, relative to the last, will reach 100% in time and 150% in price at 2/27/14 and 1877 (only +3.5%). We are already at the 138.2% extension of 1783.
        that’s just what i’m looking at. hey if you’re right and we go to 2000+, then great – drinks are on you! so really a win win for me either way. 🙂

      • rc1269 says:

        sorry meant to say “200 WEEKLY MA” just to clarify

      • uncle10 says:

        No worries RC, the Fed has our backs. Its all going to be different this time around…..

      • tommyboys says:

        170% higher the past 5 years. 10% higher the past 6…just getting started.

      • tommyboys says:

        It’s all in the framing…FWIW

      • uncle10 says:

        TB, curious on what you think the odds are that sometime in the next year or two or three we hit SPX 1300 or lower?

      • bobhopium says:

        Tommy..Yes we are singing the same song, its all relative. Since 2000, we have had 13 years under performance and the bull is just getting started.

    • tommyboys says:

      Uncle I don’t know if that’s a serious question or not but SP 1300 is almost 30% lower than right here. I don’t see it in the next 1, 2 or 3 years. I could see a 30% haircut at some point over the coming 36 months but from higher levels. You’re talking bear market and we’ve already had a couple of those over the past 5 and 10 years. What’s over due is a big bull not another bear. Once everyone stops fearing the next bear we’ll be getting close to the next…no where near us right now. I still know folks that have stayed away from markets since ’08. Once they get interested again I’ll be on the watch out. JMHO…

      • tommyboys says:

        Mr. Hope, yes we’ve returned a net total of 40% over the past 13 years. Breaking that down its less than a cumulative 2%/year – far below the 5.6% average. It seems we’ve only now come back to the “mean”. We may have lots of gains to make up for – especially at the current risk free rate!

      • uncle10 says:

        Not sure who or what data you are looking at when you say everyone is fearing a bear market??? Its not the VIX, or put/call, or Investment advisors, or the investors who just poured the biggest amount they ever have into the market. Almost everything you look at says there is no fear of a down market at all!!

      • uncle10 says:

        So your answer is 0% chance?

      • uncle10 says:

        BTW, Tommy boy, I am just a short term hack trader so I hope you are right in this bull market is just getting started. I certainly wouldn’t bet on that though…. cheers

    • tommyboys says:

      Way over my limit – sorry Tony. See y’all next week.

  31. mcmasoniam says:

    To: David Charris (sp)?

    Forgive me if I spelled your last name incorrectly… I wanted to say hello and find out how you’re feeling, as I know you’ve had some health issues of late. Are you feeling better? Please let us know how you’re doing. My best wishes for your health and your family. GL! Mason

    Last post for today. GL All!

  32. mcmasoniam says:

    Thanks for the Update, Tony. Needless to say, it’s been a busy night, and somewhat busier day here. Think we’re only doing 1/2 day today. Lots of emotion, and political speculation.

    Tony, is this next up-leg (started Thurs near close) perhaps wave c of Int. B? Just a thought.

    GL All!

  33. bobhopium says:

    Good Morning/Afternoon All.
    My trading thoughts/observations which may of use to others :-
    Bullish Diamond reversal pattern (Can be continuation, watch breakout) within bullish falling megaphone structure Measured up-move appx 1812 down-move appx 1766, but prone to false breaks. GL to us all
    S&P fut hourly :-

  34. thanks for every thing you do here, you don’t get enough credit.

  35. $SPX $FB $TSLA $NUGT $UVXY $AAPL $FAS $SPXL, market update for thur., trades for friday (within remark’s sect.):

  36. torehund says:

    The commodity, and especially the oil producing countries are in a bubble, however that bubble may just expand as growth seems to pick up, and after the US I think Europe will follow. It hasn’t done crude any good yet but thats a sign that there is more growth to come before the flame is quenched. Many stocks are still at all time lows, I think it could be the right time to pick them up and ride them for a while. As GDP could climb and not result in any meaningful inflation I don’t think gold will perform well. If this is a bull that will extend, cheap commodities will have an effect on extending it, lets see.

  37. pcskier says:

    I have no idea what the jobs number will be tomorrow. But I do think the $usd looks oversold and is getting ready for a tear your face off rally. I will buy UUP if jobs data meets consensus. Last week, I recommended here, shorting Japan by buying EWV, and shorting ORLY, CMG and BA. I think the overall market is due for a bounce than it will continue selling off. But really who knows??? We may crater staring tomorrow, or rally to fresh highs(I doubt it but I am in the minority). Bulls love to say PEs are cheap. I however, do not believe them. I don’t believe gross margins are as high as reported. I do believe revenue numbers are flat. As a business operator I always want more market share and I will gladly give up gross margin % to grow the top line and put a hurt on my competitors by taking their revenue. So many public companies are reporting record high gross margins but their top lines are flattish. Why would their competitors allow such high margins and earning growth??? I think it’s all a “Mirage”. When the E in PE fell so much in 2008, it’s because it was not real in 2007. They just used the recession in 2008 to take the earnings hit on their books. Arthur Anderson was chump change to what is going on now.

  38. radrian6 says:

    Hello all,
    For the RUT, the longstanding rising wedge is still in tact — the downward stab to 1112 tested support and the bulls responded. The bullish response has not been strong so far, however, and the door is still open for another test of support and a possible break. The area to watch is 1112 to 1109 — if that area breaks, I would assume wave C is underway with a calculated target of 1090. The bears need to strike quickly while the setup exists and while the mood remains somewhat negative. The 60-minute Bollinger Bands are squeezing so I would expect a directional move soon.

    • mike7x says:

      Nice work radrian, keep on top of the RUT for us! (Or the bottom, when it occurs.)

      • radrian6 says:

        Thanks, Mike. The RUT has bounced sharply higher in all previous tests of wedge support but the current bounce is weak and sloppy — there may be more downside to come.

    • pooch77 says:

      One more swift move down than a nice month move up,unless we have a huge gap up on the jobs numbers

  39. blackjak100 says:

    Based on the very short term EW counts I’m working with on S&P and gold, I believe the jobs # tomorrow may take dec taper off the table. Looking for a quick spike in gold tomorrow and the S&P to head higher towards 1826 before large correction. Invalidation pt of 1775.22. I’m long both for a quick trade so hope I’m not wrong!

  40. waddaguess says:

    Some numbers….

    Major 4 of pri I was .41 of major 2 (7% corection vs. 17%)
    Major 4 of pri III was .43 of major 2 (5% corection vs. 11%)

    If this concept is applied to Pri III ending @ 1813….

    Pri II was 22%, so Pri IV comes in @ 9.5%, 9.5% from 1813 yields 1640.

    1640 is 23% fib retrace of all of pri III and also lower end channel support.

    Time will tell what the bots decide.

    Thanks TC.

  41. mjtplayer says:


    On the 5 minute chart, it looks like a clean 5 waves down on the S&P to 1,779 – minor A? Minor B up to 1,798 yesterday, minor C down now? Or we’re still in minor B…

  42. Byron Wein who has been very bearish has now turned bullish.

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