thursday update

SHORT TERM: gap up open = new highs again, DOW +122

Overnight the Asian markets that were opened finished mixed. None of the major European markets were open. US index futures were higher overnight, and at 8:30 weekly Jobless claims were reported lower: 338k v 379k. The market gapped up at the open to SPX 1838 and continued to rally. The SPX had closed at 1833 on Tuesday. The rally continued throughout the day as the market worked its way higher with only two point pullbacks along the way. Nearing the close the SPX hit 1843 and closed at 1842.

For the day the SPX/DOW were +0.60%, and the NDX/NAZ were +0.30%. Bonds lost 3 ticks, Crude added 40 cents, Gold rose $6, and the USD was flat. Medium term support now rises to the 1841 and 1828 pivots, with resistance at the 1869 and 1884 pivots. Tomorrow the economic agenda is clear.

The market gapped up at the open today for the second time this week. Monday’s gap up took the market to new highs, and today’s did the same. The current advance from the recent FED SPX 1768 low is still three waves. But the third wave is now nearly equal to the first: 1811-1801-1843. The negative divergence that was forming on Tuesday was cleared today as short term momentum reached extreme levels. A pullback, of some degree, can now occur at any time.

Short term support is now at the 1841 and 1828 pivots, with resistance at the 1869 and 1884 pivots. Short term momentum hit extremely overbought, and finished there. The short term OEW charts remain positive with the reversal level now SPX 1824. Best to your Friday trading!

MEDIUM TERM: uptrend new highs

LONG TERM: bull market


About tony caldaro

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71 Responses to thursday update

  1. torehund says:

    I think the most interesting development for the last week has been the continued surge of real economy stocks like shipping and commodity producing companies. Just how far it may go we dont know for certain, but I project that there will be more upside to come….and whats in line with the former is the fact that the dollar looks terribly weak, and is pressured by the liquidity infusion going to infinity or at least being prolonged until money gets expensive by itself, and for that to happen folks all over the world needs to un-caution themselves a bit more than what we see today. I played with the dollar making that final large C leg down WS the Norwegian Crown which would take it down to about 3,8 crowns to the dollar, its currently 6 crowns to the dollar. A depreciation between 30 to 40 percent is therefore possible and would scare whatever funds that is currently residing in US banks straight into gold and stocks. IF IF this is what we can expect there are good reasons to find a small cap play in the commodity sphere, and avoid the blue chips. Sitting in the latter you may preserve buying power, but experience no net gains if the dollar tanks.

  2. CB says:

    Tony, when you have a few minutes, what are your thoughts on natgas, please ? -5 waves completed already..where do you see support for the ST correction? Thanks.

  3. CygnetNoir says:

    For anyone interested, the Big Up from 12/13 looks like it may have run outta gas. A “little Big Down” is setting up that if triggered on Monday would target a test of the SPX 1801 – 1792. Higher prices Monday would keep the 12/13 Big Up intact.

  4. torehund says:

    Looking at some shippers that hasn’t been running too much and the box segment seems attractive, some have rallied 20 percent but they have been so oversold for so long and doesn’t seem to be giving back any. But don’t forget whats inside these vessels, lots of commodities.….I go for the most hated of them all, coal.

    • Per Hansen says:

      any particular stock Tore? I need some quick bucks. My bank made a mistake last week so I couldn´t trade the ticker FREE overseas stock and it doubled since, so need something instead to celebrate the newyear with

      • torehund says:

        Oxford rescources is cheap (28 mill mcap), there are of course issues attached to it, but Free isn’t in the good mans league either. Its however a risky stock as they all are more or less…Don’t go in full throttle. Combi-matrix, Rosg and Ecte, Mela are potential multi baggers in pharma (all at the magic 30 mill mcap) but they can all still shed up to 50 percent of current value before that ever happens. Maybe a bit safer still is TAU, box ship, here one may wait it out a bit but, it just doesn’t have to shed a lot if China doesn’t smoulder.
        I don’t mention individual nor risky stocks normally on Tonys blog, but due to a direct request I hope Tony don’t think its not too out of place to give Per some info about what I am thinking. But in stocks there are always lots of wrong footing(and bottoms are saturated with reverse splits and secondary offerings) so any advice to make a quick and easy buck just can’t be done. Its about breakouts and confidence in what you do and when to sell, its never fruitful to run these small caps 20 percent as such wins will never counteract your losses.
        One also has to know how to sell a spike when it makes a lower high, and count the waves for exit if its a longer motive move.
        Well, small cap investing is an art of its own and it takes years to reduce losses and reap the multi baggers. I could go on for a long time attempting to explain the intricacies, and also how not to loose confidence after a bankruptcy or two, lol. So there is a huge warning signs playing these stocks, but extremely gratifying if one after some time succeeds. For any wanting to get involved; do your charting, play small and build on your skills gradually.

  5. scorp100 says:

    Namaste Tony. Greece index jumped more than 4.75%.

  6. Namaste Tony sir,

    How these pivots are calculated for S&P like 1861 & 1841?

  7. manunidhi21 says:

    Namaste Tony !

    We had 1630-70 as top of bull market from mid 2010 under OEW.
    Do we consider fundamental analysis part of OEW ? If no, then isnt this 200 points 1650-1850 a bubble.

    Infact what is considered as bubble ?

  8. elmer510 says:

    A real good day for stocks here in Europe – markets have been closed a longer time than in the US during Christmas, so they try to pick up with the US leading this bullmarket into new highs.
    Like BobHopium said, shipping is really in the mood now showing big gains in few days.

    Picture is quite bullish. Tony wrote in his weekend update: “Since Intermediate wave one was quite long in the SPX, three months and 187 points ..”
    IM wave 3 should raise the same at least the same, so we take 1768 and add 187 and get a level of 1955 as the end of IM wave 3.
    There’s no guarantee of course, but Tony has often pointed to the fact that wave no 3 usually is the strongest.

  9. mcmasoniam says:

    blackjack, reference your post about mkt action on 1/6. Think if stocks start to move down, might see lots of short covering that pumps to Ted A.’s & Tony’s higher pivot level, (1870’s+) then, later dumps, to who knows where. Think Q4 earnings will really be important this time around. Hoping for opinion / discussion. GL All. Off for now. M

    • mcmasoniam says:

      Ah, I’m not feeling secure enough to be trying the Futures today; but I’m just a weenie beginner, so except for a small option I’ve had for a while, it’s vacate time for me. My idea of a real deal is finding a 1st class ticket to Honolulu for $80!

      GL to All! Have a great weekend. Look forward to Tony’s WEUpdate. Thanks ahead of time, Tony.


  10. 3rd wave S&P Grinder 1.618 Target [CHART]

  11. bobhopium says:

    Hi all.
    Here are my thoughts/views for my own trading/investment purposes….which maybe of use to others.
    The Gap up and go momentum has started a little earlier than I thought but I believe a parabolic mania phase has now started.It is my contention that when markets make a large move they try to take as few with it as possible and I believe that current participation is low, and traders/investors are perhaps waiting for a correction that will not come. Overboughtness and neg/div will be completely useless during this phase imo.
    I have also studied charts of UK, Japan and Europe, which are also very bullish and I envisage a kind of global 24 hour positive feedback loop to sustain momentum, and seven or eight gap up and go days in a row before exhaustion would not surprise me.
    This is all Imho, but I am going with this until Markets show me otherwise.
    Good luck and good health to us all.

    • mcmasoniam says:

      Short-covering involved anywhere? M

    • torehund says:

      agree..lets go..

    • hi,if dow busts that trendline (log) of tops 2000/07,it will not have any visual resistance ahead,unless the psychological 20k ,by patterns targets we have ~17400 of the hourly flag and by fibonacci ~16850

    • Bob,
      Thank´s for sharing your thoughts about this. You are probably right.
      Best wishes Sverker

    • rc1269 says:

      i have heard that ‘participation is low’ for the last 1120 s&p points. other than hearing other people say it, and hearing from your buddy/mom who isn’t in the mkt, do you see any data that supports this view? that’s a legit question, not trying to be smart or anything
      the only proxy i have is the investor and dealer community of credit traders, and they all could not be longer credit risk right now. it’s an all-in, no-fear environment. fwiw

      • uncle10 says:

        Participation is low— compared to the last bubble when everyone who had a dollar was in the market. But if you look at margin debt and money flows participation is high. Lots of scary facts about the market at this levels, but who knows…..

      • rc1269 says:

        uncle – just to clarify – you present two pieces of data that suggest participation may not be low. and then add your subjective opinion that participation is indeed low.
        which i think supports my view that data says participation is not low, but everyone thinks it is low. curious

      • uncle10 says:

        I do not think participation is low! It may be somewhat low—- ONLY if you/they are comparing it to the late 90’s tech bubble when EVERYONE was participating.

      • uncle10 says:

        RC, when I started trading I in 1996, the shop I was in had 3 traders. It grew every year until 2000 when we topped out around 50 or so. There were 6 or 7 day trading shops that opened up around us during the late 90’s. My mother in law who didn’t know a thing about stocks was making a killing trading ( mindspring, aol, brcm,qcom,netbank), and so on. All my friends and their friends were all in and making plans to retire. I kept telling them that this all is going to end badly and no one listened….. 2003 there were 2 traders left and all the shops had closed up. I doubt I ever see another time like that when everyone was all in. I am sure it will happen again ( my guess is +/- 60 years from now). I am in the camp that 2009 was the bottom and the next upcoming bear market will take us back to the low 1000’s on SPX, at which point most everyone will have totally given up on investing in the stock market and will set the stage for the next secular bull. Just a wild guess on my part….

      • mcmasoniam says:

        uncle says, “…I am in the camp that 2009 was the bottom and the next upcoming bear market will take us back to the low 1000′s on SPX, at which point most everyone will have totally given up on investing in the stock market and will set the stage for the next secular bull. Just a wild guess on my part….”

        Wow, uncle! I’m in a similar camp, and looking for ~SPX 1000 would not be a surprise. Good to know that it’s truly a Secular Bear about to take another dive in the next few years. Got the shopping list ready to survey for the best survivors, and the bucks to buy them. Then, off to Hanapepe! Aloha, baby… M

    • fbender7 says:

      bob – one thing for sure is that we are having a classic Santa Claus rally, which, at least according to one definition, is when the market moves up over the course of the last 5 trading days of the old year and the first 2 trading days of the new year. Wondering if this corresponds to some degree with your ” seven or eight gap up and go days in a row before exhaustion.” I personally am expecting a nice pop up on the first of the year. Have a happy new year!

  12. bobhopium says:

    Many thanks to Tore,Tony and others who “Banged on” about BDI and shipping stocks.
    Happy with my small stakes in Drys and Diana shipping.

  13. budfox9450 says:

    Tony – What is your chart guidence
    on JCP ? W2 low in place,
    or not confirmed yet?…..Bud

    • perversionofthemean says:

      I’m curious too. I’ve got 2 separate insane targets reached at the recent low, so I’m not surprised by the huge rally this month. Just sad I didn’t compute them until this week! The trials of having a day job… (sad I’m not in drys either)

    • tony caldaro says:

      nothing confirmed yet Bud

  14. mike7x says:

    Thanks Tony! According to the latest Investors Intelligence Report Bulls=59.6%, Bears=14.1% (lowest since 13.6% in March 1987!). The Bull/Bear spread is now at 45.5% (much higher than the 42.4% in Oct. 2007). Me thinks by mid-January we shall see the effects of these numbers.😉

    • tony caldaro says:

      Odd. Is that to suggest during the entire 13 year 1987-2000 bull market, and even dotcom blow off, the numbers were not higher than 1987?
      Have to question them then.

      • perversionofthemean says:

        I. I. numbers are usually market-moving at stretched levels: very actionable. Now?

        Even the high ISE call-put ratio is being ignored. Then again, RUT momentum pushed to break above upper channel, and failed to hold it. Would expect a decline to re-test the uptrend line (guiding the parabola), and if that goes, we’re in correction mode.

  15. mcmasoniam says:

    Thanks Tony! What a market! M

  16. hucky2 says:

    So the SPX has gained about 60 points in 6 days – what is the likelihood we will now lose 20 points in 2 days?

  17. llerias7 says:

    If this is a third wave the overbought condition may persist. And if we are in the road to 1900´s, probably this 3rd. will finish at 1869 pivot…my guess…

  18. Thanks Tony. Shipping stocks (EGLE and DRYS) exploded today. DRYS cleared IHS with huge volume. If EGLE clears 30 week MA this week, it is also a great buy.
    In emerging markets a great long or short opportunity coming very soon. GL all.

    • Hi Peter George, classic Adam and Eve bottom in EGLE. Would normally love the pattern but the company is at risk of declaring bankruptcy at any time and could be vulnerable to a news shock. Just saying keep an eye out is all. Might not be any opportunity to grab a chair when the music stops. I like the DRYS chart. Best wishes!

      • 7dayyss says:

        Your right twoside. EGLE and GNK both had that news a couple of weeks ago from a large block holder dumping there shares. GNK took most of the brunt and recovering some now, EGLE came back a lot quicker. I got bit on the GNK, not to bad though. Had some shares left I didn’t sell from it’s first big run. Have a few of the other shippers also.

    • CygnetNoir says:

      For me, EGLE was a “Big Up” buy on 12/10, and this morning it was time to take some (though not all) off the table.

      “And Tony, I found your BDI update quite timely as I am looking at EGLE Eagle Bulk Shipping and I like the current price action. I do not own it yet but I will likely own some by the end of the day. I think I’ll take another week or two off from the rigors of marathon market watching, but I’ll be back in the saddle in January.”

      • 7dayyss says:

        With all your timely calls CN, I knew you were clairvoyant!

      • mcmasoniam says:

        Yeah 7day, maybe more than you know.
        Tony, think what you will, but I say your first guess just might be your best guess. M

      • mcmasoniam says:

        Tony, okay, “a calculated probability”. Give it until the end of Feb.


      • CygnetNoir says:

        I’m by no means a clairvoyant, 7dayyss. I trade like I drive – I keep my eyes on the road ahead, and I steer, brake, and accelerate according to what appears in front of me🙂

        Happy New Year to you!

      • 7dayyss says:

        Great analogy CN! Happy New Year to you and the family also.
        Happy New Year Tony and to all the regulars and new comers alike.
        Newbie, I was just “funning” with you, if there is such a word! Don’t let me keep you from posting!

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