friday update

SHORT TERM: another gap up opening sold, DOW +59

Last night FED governor Tarullo gave a speech in NY:  Overnight the Asian markets gained 0.7%. European markets opened higher and gained 0.8%. US index futures were higher overnight as well. At 8:30 Personal income (+0.3% v +0.3%)/spending (+0.3% v +0.4%) and PCE prices (+0.1% v +0.1%) were all reported higher. The market gapped up at the open to SPX 1855 and continued to rally. The SPX had closed at 1849 yesterday. At 10am Consumer sentiment was reported higher: 80.0 v 79.9. The market rallied to SPX 1867 by 11am, then began to pullback. The pullback lasted until 2:30 when the SPX hit 1853, then it bounced into a 1858 close.

For the day the SPX/DOW were +0.40%, and the NDX/NAZ were +0.15%. Bonds lost 12 ticks, Crude added 35 cents, Gold was flat, and the USD was flat. Medium term support remains at the 1841 and 1828 pivots, with resistance at the 1869 and 1901 pivots. Last night the FED reported a decline in the M1-multiplier: 0.698 v 0.709. Today the WLEI was reported higher: 52.9% v 52.3%.

The market gapped up at the opening today for the third time this week. The opening rally continued for 1.5 hours this time before the growth indices started to pullback. Heading into the afternoon the NDX/NAZ turned negative, closing their opening gap. The SPX/DOW, however, held their gap opening throughout the day. That has basically been the theme of this market this week, this month: higher openings then sell growth stocks. The SPX/DOW have held up quite well considering, as there appears to have been a rotation out of growth into cyclicals.

Short term support remains at the 1841 sand 1828 pivots, with resistance at the 1869 pivot and SPX 1884. Short term momentum rose from quite oversold yesterday to overbought before declining to neutral. The short term OEW charts continued their vacillation ending the day negative, with the reversal level now SPX 1860. Best to your weekend!

MEDIUM TERM: uptrend weakening

LONG TERM: bull market


About tony caldaro

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36 Responses to friday update

  1. budfox9450 says:

    Tony – ref. DSX, any updated thoughts?
    S/R ? Is $17-18 a huge resistance, or not
    a problem? Bud

  2. Thanks Tony!
    One thing concerns me with this minor 2 wave looking like a flat correction.
    I can Count a 3-3-3 structure in the wave, but flat corrections should be 3-3-5.
    It is impossible to find 5 subwaves in the C-wave, and this fact, makes me worried. It might indicate further downward movement into an expanded flat.
    Do you have a comment on this?

    Best wishes Sverker

  3. budfox9450 says:

    I like and plan to buy DHI – for a Buy Monday.
    I have BoYu Buy signals on DHI and the ^HGX index.

  4. Philstockworld: has raised logical question.

    After all, why is NFLX trading at $360 this morning when AMZN just announced they will provide a similar service FOR FREE – not just to their prime customers, but to anyone (ad supported). If you think people won’t want to watch TV shows with ads instead of subscribing to NFLX, I’ll remind you that 80% of the US population still doesn’t subscribe to NFLX. Earnings are after April options expiration so the May $300 puts at $7.50 should hold their value fairly well, even if NFLX doesn’t fall on this news. If they go back over $365, the premise is blown and we can take a small loss – that’s how you make a news trade!

    Makes perfect sense… GL

  5. thanks for the update tony and thanks for the newly adjusted count on the SPX. Hopefully I get some time later this weekend to read the weekend update, ’cause the moving truck will be here 8am tomorrow sharp… yawn… But, I got (faster) internet installed at my new home today, which I am writing from, so finally back on a lap top at least instead of iphony… yessss. 🙂

    Yesterday I wrote some thoughts, on my lill blog, which mostly came to fruit imho:

    1) the SPX hit the lower Bollinger band at ~1842 and reversed. May suggest a move to upper BB now at 1886. [so far so good]. The BB are rather tight so expect a convincing move in either direction soon.

    2) The daily SSTOs are pointing down, as are the weekly but, the daily SSTO 5,1 is now flat [on the SPX]. A decent up day tomorrow could actually give a buy signal on the daily. If that’s the case I expect new ATHs rather soon. In fact by going sideways for a month the SPX and DOW have burned off a lot of OB… [Buy-signal on the NYA today, almost buy-signal on the SPX (will give a buy when monday is green too). No signal on INDU (neither sell not buy).]

    3) Compared to the December high, when the SSTOs were OB and the Bollinger bands also very tight, the SSTOs are now moving towards OS… especially the 5,1; suggesting an opposite move!? [ so far so good ;-)]

    4) the techies are getting seriously OS on especially the daily and getting close on even the weekly. When this sales pressures ease and turns to buying, [i] expect the SPX and DOW to follow suit; in line with the previous observations based on the technicals.

    5) hourly RSI(5) now shows + div.[at 1842, and we did get a upside reaction off it]

    6) bull flag still valid especially with today’s bounce of 1842.

    7) NYMO got close to -40 again yesterday [wednesday] which has been where most lows occur, but it has failed to become + [which I’d like to see for a good solid uptrend confirmation]

    8) bottom line: 1834 and 1884 are still the bear and bull lines in the sand!
    With the new OEW count on the SPX, which I mentioned a day or so ago, this means we may have seen an irregular (failed) flat; it has nice symmetry in time (wave-a 3.5 days, wave-b 4.5 days and wave-c -if finished- 3.5 days), price (44-44-42) and is so far a perfect 3-3-3 correction. Nothing uncommon. The SPX and INDU have hold very well considering how bad tech has been the last 2 weeks, which is IMHO bullish. If c is not finished it may target ~1825ish tops.

    Bull-flag still in play: break above 1884 suggests 1940s, we’ll have to see what happens then and there…

    Question is: Did we just have the first 1-2s for minor 3?

    GL y’all!!!

  6. bhupal777 says:

    Thanks Tony. Good action in SPX today. On hourly chart I see H&S top for SPX. But contrary to that on DOW, I see H&S bottom. Interesting to see how this gets resoled next week. For the past one week China (FXI) is outperforming most of the other world markets. As posted last week I entered YINN calls and they are deep in the money now and sold some out of the money contracts. GDXJ/JNUG showed good strength today and sold half the position. Booked some profits in shorts (CELG, DG, WFM). So overall had a great week. Waiting for your week end update.

  7. mjtplayer says:

    Thank you Tony!

    “rotation out of growth into cyclicals” Hmm, I don;t know. Semi’s are strong, but industrials and chemicals are not, they’ve begun rolling over these past couple weeks.

    Looks more like a rotation from growth into energy/oil stocks. WTI pushing up to $102. Take a look at CVX and XOM, both heavy weights in the DOW and S&P, they both had a good week and have traded well over the past month or so. But, pull the charts back and both are coming into resistance: XOM at $98 has resistance at $100; CVX at $118.50 is weaker, resistance st $120.

    Look forward to the weekend update!


    • tony caldaro says:

      We observed the following relatively strong DOW stocks:

      • mjtplayer says:

        Thanks Tony.

        FYI: I just shorted CAT this morning, stop at a close above $102 🙂

        Metals are weak, iron ore is weak; CAT at $100?

      • tommyboys says:

        Concur Tony seeing the beginnings of rotation into Semis and Energy out of growth and speculative issues. Once a new leader emerges the next leg up will begin.

  8. Kevin M says:

    lol everybody is a bear…..what does that mean children?

  9. esvxm says:

    Thanks for the analysis Tony. Look forward to your weekend update. Have a great weekend!

    Strangely in Europe German DAX is pretty strong and today pretty strong close. UK’s FTSE100 lags, maybe due to the concentration of miners. Lets see how the indices shall fare next week, end of the month a new quarter.
    S&P update:

    Maintain a bullish view on crude. Better market to trade than indices atm IMO.
    Crude WTI:

  10. Today was 21 trading from crucial pivot day. Monday, should be down day. Same as last month, 21 trading past. Sentiment at 54.70 as of Thursday data, climatic volume at 21 reading. Looking like another serious test of support levels 1850 coming, next week.

    Tonys weekend analysis should be interesting…

    Great and safe weekend!

    Current positions: short Citigroup Inc. Target $38.50 to $40

  11. Thanks,Tony, for your daily commentary. 🙂 May you have a totally awesome weekend. I look forward to your weekly update. I feel bad saying that because it means you must work to put it together. It is truly appreciated by myself and many, many others who look forward to it.

  12. uas2014 says:

    Tks Tony, have a great weekend…

  13. gtoptions says:

    Thanks Tony
    Enjoy the weekend all.

  14. radrian6 says:

    RUT held support but could not advance — it is still contained in its negative channel. RUT has six consecutive lower closes and the weekly candle is ugly. I agree with Tony on the rotation out of growth stocks into cyclicals — NDX, COMP, RUT will be struggling for a while.

    The target for the double top and the Fib 61.8% retracement level are both near 1132 so when this consolidation ends, there may be one more move lower before RUT can sustain a rally.

  15. magnus1234 says:

    Lower highs and lower lows…1840/30 in the cards for next week.

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