friday update

SHORT TERM: gap down opening and choppy day, DOW -150

Overnight the Asian markets lost 0.3%. Europe opened lower and lost 0.5%. US index futures were sharply lower overnight. At 8:30 Personal income (0.0% v +0.2%)/spending (+0.4% v +0.5%) were reported neutral to higher, and PCE prices were reported higher: +0.1% v +0.1%. The market gapped down at the open to SPX 1778, hit 1772 in the first few minutes, and then started to rebound. The SPX had closed at 1794 yesterday. At 9:45 the Chicago PMI was reported higher: 59.6 v 59.1. Then near 10am Consumer sentiment was reported higher: 81.2 v 80.4. The rebound hit SPX 1779 just past 10am. Then after a pullback to SPX 1774 by 10:30, the market moved higher again. Around noon the SPX hit 1789, dipped to 1784 by 1:30, then hit 1794 by 3pm. After that the market pulled back to SPX 1781 just before the close, then ticked up to end the week at 1783. Wild day!

For the day the SPX/DOW were -0.80%, and the NDX/NAZ were -0.40%. Bonds gained 13 ticks, Crude slid 80 cents, Gold added $2, and the USD was higher. Medium term support remains at the 1779 and 1699 pivots, with resistance at the 1828 and 1841 pivots. Last night the FED reported a record high in the Monetary base: $3.819tn v $3.666tn, plus a record low in the M1-mutiplier: 0.699 v 0.718. Today the economically sensitive WLEI was reported higher: 54.3% v 54.2%.

A big gap down opening took the market down over 20 points in the first few minutes of trading. After that there appeared to be some bargain hunting as the market chopped its way higher, closing the opening gap by 3pm. Then the market slid again into the close. While this market was doing its gyrations we spent the afternoon working on the weekend update. It is already quite extensive, and not done yet.

Shot term support remains at the 1779 pivot and SPX 1768, with resistance at SPX 1800 and SPX 1814. Short term momentum hit oversold early, then bounced to neutral, ending below neutral. The short term OEW charts remained negative with the reversal level now SPX 1792. Best to your weekend!

MEDIUM TERM: downtrend

LONG TERM: bull market


About tony caldaro

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22 Responses to friday update

  1. 777daimon says:

    expecting a deep black Monday …just wondering if only 1700-1710 or directly to 1600’s..

  2. lunker1 says:

    QQQ NAZ IWM MDY all have similar severe downsloping H&S-esque patterns and the RS are complete. Naz target 3860. Perhaps the RS is already formed on SPX and targets 1690. or is SPX going to form a lower neckline?

    “Head-and-shoulders tops are the best performing bearish chart pattern in a bull market.”

  3. The NYSE New Highs – New Lows index, even after all the downside action of the last 2 weeks, has only made a horizontal line in the area of it’s highs. The A-D line was only -774 Friday, Jan. 31 despite the DJIA being down 150. The DJIA/SPX relative strength line shows the DJIA much weaker than the SPX. The DJIA is usually the last index to top out since the majority of stocks usually decline ahead of the largest caps prior to or during a major correction or a bear market. If the DJIA cannot pull the rest of the market down, the breadth of the market will eventually pull the DJIA upward and the bull market will resume, probably more quickly than it otherwise would. The DJ Transports did not penetrate their Dec. 12, 2013 lows while the DJ Industrials did violate their corresponding Dec. 12, 2013 nadir. So we have a Dow Theory non-confirmation on a short-term basis.
    My theory is that because the Dow 30 are multinationals, they are being more affected by economic and financial problems in the rest of the world than the smaller (or less huge) companies, which do a greater proportion of their business in the USA. The 10 year T-note yield was down to 2.67% today despite the announcement on Jan. 29 of another $10B monthly decrease in Fed bond purchases. We will need to see if the 10-year T- yields can continue their downtrend the next time stocks have a sustained rally so we can determine if there are deeper factors at work than just the “safe haven” effect which strengthens the prices and lowers the yield of T-notes and T-bonds.

    • robnaardin says:

      GS I agree with you 100%.
      But all that matters is the trend and the momo of a trend. The momo of this uptrend smells like it did in 2010 and 2011. ie It stinks like major correction.

  4. Jennifer says:

    Have a great weekend everyone!

    U.S. stocks drop on fourth-quarter earnings

  5. blackjak100 says:

    Thanks tony!

    If this is a fifth wave down which we need to confirm an int trend change at the least and lower low below 1770, it can only be an impulse or ED. If it’s an ED, wave 3 should find support 1765ish on mon. We may be looking for the Entire decline to bottom 1755ish now.

    If it’s an impulse, the third wave will be five micro waves down from today’s high and probably blow by 1765. Monday will be revealing in determining structure. Cheers!

  6. bhtrade says:

    ES has ending diagonal shape going last 5 days, those patterns typically re-visit the apex ie 1801. Sure seems like all the guys who wanted to sell the 50d after it broke now want to sell SPX1800. Does nobody view this as a buying opportunity in an uptrend?

  7. Thanks Tony. Extensive update!? Yesss!! I’ll need to make some extra morning joe than! IMHO, this whole chop-city mess of the past week will count much better with one more wave down. Probably to the 1750s area. Then ZOOM to the low 1800s, and then BOOM down to 1630s. (Just had to add those sound effects to add emphasis!)

  8. Only chart you need… 13 34 cross… its bearish. Note how weak the “bounce” rally is, largely sideways… a few stocks holding this thing up….$SPX&p=D&yr=0&mn=9&dy=0&id=p52391876801

    We would be buyers of GOLD and we are and sellers of the market…. raising cash

  9. JK1987 says:

    Intermediate b of Major wave a should be done because DOW made 90 points new low.
    Let’s see what you say in the weekend update.

    Took 11 points profit right before the close.
    70 SPX profits for the week is good enuf!
    Not going to worry gap up or down next week, has been a very good week.

    • JK1987 says:

      edit: 90 SPX profits for the week.

      • At 11:44 AM Central time on Jan 31 you posted that you had made 80 SPX points. At 3:23 PM Central time on Jan 31 you said you had taken 90 SPX points for the week (“Took 11 points profit right before the close.”) So that means that between 11:44 AM CST and closing time (3 PM CST) Friday you made another 11 points to bring the weekly total to 91? That means you must have shorted the SPX at 3 PM EST or 2 PM CST (1 hour before the close) when Tony has told us the SPX was at 1794. Since the SPX closed at 1783, that was the only way you could have made 11 points in one short sale.

      • JK1987 says:

        70 was a typo, 90 is the number.

        JK1987 says:
        January 30, 2014 at 5:14 pm
        Intermediate b of Major wave a done at 1799?
        Re-take short positions near the close at 1794+, looking for 1768- tomorrow.
        I am on fire.🙂 This is my lucky week, going for the 4th 20 points gain.
        Medium down alert!

        JK1987 says:
        January 31, 2014 at 11:44 am
        Took another 20 points profits, 80 SPX points for the week.
        Did not take long this time.
        Waiting to re-short the same old 1793 – 1794.
        Just surfing the waves.🙂

        tony caldaro says:
        January 31, 2014 at 12:10 pm
        80 points on the week and the market is about unchanged week to week: 1790 – now.

        JK1987 says:
        January 31, 2014 at 1:52 pm
        SPY gap filled, shorted 1794-
        Looking for 5th 20 points gain.
        Medium down alert!

        JK1987 says:
        January 31, 2014 at 3:22 pm
        Took 11 points profit right before the close.

      • January 31, 2014 at 1:52 pm
        SPY gap filled, shorted 1794-
        Looking for 5th 20 points gain.
        Medium down alert!

        Your last short sale took place within 8 minutes of where I estimated it must have been. What vehicle have you been using to make the trades? Have all your gains been on the short side?

    • Hi JK!
      I think the time aspect favours a short term upthrust. 2 days is a far to short timespan for the development of an intermediate b wave.
      With the market standing “oversold” at the ascending trendline from nov 2012 low, I would like to see an intermediate b wave work itself up to the SPX 1800-1810 area before the fall continues.
      Best wishes Sverker

  10. Very weak wave 2 bounce off the 1771 lows so far folks, other than some early february 401k money coming in…. market is a ticking time bomb for 1713 initial wave 4 (Major 4) pivots… Gold ready to make a substantial move in February along with Silver…

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