tuesday update

SHORT TERM: rally continues, DOW +65

Overnight the Asian markets lost 0.3%. Europe opened higher and gained 1.4%. US index futures were flat to higher overnight, and at 9am the FHFA index was reported higher: +0.6% v +0.5%. The market opened three points above yesterday’s SPX 1872 close and continued to move higher. At 10am Existing home sales were reported lower: 4.59m v 4.60m. The opening rally continued throughout the day as the SPX rose with only two point pullbacks. By 2pm the market had hit SPX 1885, then it began to pullback. Heading into the close the SPX hit 1880 and closed there.

For the day the SPX/DOW were +0.40%, and the NDX/NAZ were +0.90%. Bonds lost 2 ticks, Crude dropped $2.00, Gold slid $5, and the USD was lower. Medium term support remains at the 1869 and 1841 pivots, with resistance at the 1901 and 1929 pivots. Tomorrow: New home sales at 10am.

The market opened higher today, rallied to SPX 1885 with only 2 point pullbacks, then pulled back into the close. This has been one of the strongest rallies we have seen in a long time: a seventy-one point advance without a notable pullback. Both the SPX and DOW are getting close to confirming new uptrends. With the NDX/NAZ still about 4% below their bull market highs. This would suggest the SPX/DOW are likely tracking the count posted on the DOW charts, and not the diagonal on the SPX charts.

Short term support remains at the 1869 and 1841 pivots, with resistance at the 1901 and 1929 pivots. Short term momentum blew right through yesterday’s negative divergence, hit extremely overbought today, then declined. The short term OEW carts remain positive with the reversal level now SPX 1865. Best to your trading!

MEDIUM TERM: uptrend probable

LONG TERM: bull market

CHARTS: http://stockcharts.com/public/1269446/tenpp

About tony caldaro

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64 Responses to tuesday update

  1. ariez5 says:

    Anyone else have an opinion about gold here? I am very bullish. Today’s candle in GDX and overbought hourly RSI seem to confirm the 3-wave correction from March 14 is done, although GLD and SLV are lagging.

    • mjtplayer says:

      My 4th post, so I appologize.

      Gold is heading lower IMO. I’ve made several posts on gold and the weak/declining open interest on rallies, lousy volume on rallies, consistant “lower highs” and the underperformance of silver – which leads gold. Here’s more evidence of a weak gold market – the gold VIX:


      June gold VIX trading 17 – which is low, i.e. no fear. Also, large contango between the 2 front months = no fear. To trigger a low in gold, or any other market, yo need some level of fear i.e. capitulation. “Buy ’em when they’re cryin'”, with low/no fear, there’s nobody cryin’. You need to see a couple things in the gold VIX, first a rally in the front month to display some type of fear, not maybe fear in 3 or 5 months, fear now! That rally would ideally take the front month VIX above the 2nd month contract – moving the structure into backwardation. This would signal fear – now!

      Last spring, gold VIX spiked to 28 when gold first hit the $1,180 area – fear! The 2nd trip down in Dec the VIX rose to 23-ish, fear but not as much. Today, after dropping $100 from the recent rally high, gold VIX is just 17? No fear, need lower prices to strike more fear. 20+ in the gold VIX will be a good start, 23+ would be better.

      Secondly, you need to see open interest expand on rallies, and more volume on rallies. The rally we saw off the June low last year came with a 28 in gold VIX – fear! The greater the fear and capitulation, the greater the rally. Dec $1,180 re-test came on less fear, 23 in the gold VIX, thus less of a bounceback rally. Both rallies however had the same underlying problems: declining open interest (investors using the rallies to sell) and light volume, a hallmark of a short covering/oversold bounce, but not lasting long-term large buying positons.

      No fear here, need to see more:

  2. magnus1234 says:

    Boring, boring, boring. Not much of an analysis but boring means consolidation and the pull backs are still limitied. There must be one “bigger” one (say 15-20 handles) before I commit more money. Totaly flat at the moment.

  3. 777daimon says:

    from 1884 in continuous SPX (ES+margin = cash) we have A=C at C=1873/1874 area.
    I think that for the moment all we are seeing is just a waiting game before the important earnings afterhours.
    from the TA point of view a touch of upper daily BB is not something impossible in the 1897-1901 area the next 24-48 hours. I think that’s also Tony’s pivot there.
    the results afterhours might do the trick in spite of geo-political problems.
    true, news are already embedded in the price.
    sorry for 4th post today.

  4. lunker1 says:

    minor 1 added on Tony’s 60min INDU chart

  5. H D says:

    note the 10 handle hit from 84, 74(A). In theory 10 from 79 (B ) is the 69 pivot (C).

  6. simpleiam says:

    A bit of a smack for New Home Sales (Contracts) for March. Even in areas of TX that are considered strong for Jobs, etc., Housing contracts falling off because prices now rising quite a bit faster than wages. Where have we seen this before? Also found interesting a piece of news on CNN this past weekend; wish I could find a link. CNN reported that 88% of U.S. auto owners can not afford the vehicle they own; monthly payment, insurance, fuel, all combined. Me thinks prices must come down across the board to boost sales of all big ticket items. Deflation coming round to resolve this conundrum, anyone?

    GL trading to All! Simplify!

    • tony caldaro says:

      Think we will see the last round of deflation this decade.
      But it is not likely to effect prices of things we need, only things we want.

      • H D says:

        so your saying there’s a chance! cuz I ‘want’ an X30 mastercraft. There’s about 92,450 reasons why I can’t yet though. Bring on the deflation!

      • simpleiam says:

        Tony, I agree. Darned shame that the population won’t feel the effects that would benefit them the most. However, if the house or auto won’t sell, the easiest way to remedy that is to lower the price. I still maintain it’s all connected to higher wage jobs.


    • mjtplayer says:

      Housing is topping. During this recovery, almost 40% of buyers were investors of one type or another (individual, private equity, hedge funds, etc.). As prices have risen, the investment appeal has lost it’s luster, thus investors make up less than 25% of purchaes now and that trend is excellerating lower. If investors stop buying altogether, or worse begin selling, then the housing market is in a lot of trouble over the next few years.

      Yes, individuals are struggling to cope with higher prices, higher interest rates, no wage growth, higher taxes and continued uncertainty regarding their future stability.

      The “buy” in real estate was 2008 & 2009. Right now, real estate is a sell.

      • simpleiam says:

        mjt, what you’ve written is all true for the most part. Not only that, but here in Houston-Galveston area, Builders are repeating the mistake they made in the 1980’s – Overbuilding.

      • mjtplayer says:

        The Fed is also making the same mistake, rates too low for too long. This is what began the 00’s housing bubble, although there were many other factors that contributed, the Fed’s artificially low interest rate policy and slow reaction to raising rates was the spark. 10yrs later, same story…

        The good news this time around is that we don’t have the leverage – banking and individuals. So, a crash in prices? No. A drop in prices of 10% over the next few years? Yes.

      • Ryan Parker says:

        I have lived in Houston all but 3 years of my life and the building boom I am seeing right now is astounding. Never seen anything like it although I was too young to remember the early-mid 1980’s. Old apartments are being torn down and replaced with high rises or commercial real estate. Seems to me as though everything is selling provided you are in the right areas. I’m near the energy corridor in west Houston and houses are selling the first few days of being on the market. If you don’t come in with an offer over the asking price, you aren’t getting it. In addition I have no idea how many people are moving here from around the US for the lower cost of living, jobs, and no state income tax but the traffic here over the past 3 years is beginning to remind me of my trips to Los Angeles. Have had several friends move from California to Houston or Austin in the past 3 years and are elated by their choice. They all pretty much said the same thing, “I sold my house in CA and bought a house here that is twice the size for 1/2 as much, and I don’t have to pay state income tax”. The cost of living here in Houston and Texas in general is still quite reasonable compared to the rest of the country. What does make me a bit wary is that I don’t seem to know anyone that thinks the price of oil is ever going back below $80.

      • simpleiam says:

        mjt, although I basically agree, Jobs are still at the front and center of this dilemma, regardless of Fed policy. The Fed is finding out now that they can’t ‘make’ jobs and therefore, a rise in rates would be devastating to an economy that can’t even produce 200K jobs monthly on a regular basis. Even if Fed raises rates, they’d have to lower them again, as middle-class can’t afford the homes, cars, etc. as is. While the Fed helped create some of this mess, I think much of it is the natural cycle Tony refers to in which deflation is the start of the cycle once again. Question is, how long this will last?


      • simpleiam says:

        Hi Ryan,

        What you describe about Houston & TX is exactly how the overbuild occurred in the 1980’s; I remember it well. I assume you’re out I-10 W, which is another ‘energy corridor’. I-45N, where XOM is building their new offices is also a ‘new corridor’, and the building is happening rapidly, a good half of it shoddy, and definitely overpriced. Most who’ve wanted to buy in this area have bought already. Most of the personnel XOM has in Fairfax, VA do not want to come to TX and most are retiring or moving on. Even those in Pearland, Sugar Land, etc. are retiring and staying south.

        In the 1980’s, along with the well-tooled folk who came in and got the good jobs that only they could get because of their degree of education, the high school grad and lesser educated came into town at the same time, and in larger numbers, and were stuck here in the same situation they left behind. It seems rather obvious to me that no lessons have been learned. Will just have to wait and see.


      • H D says:

        it’s funny M, this is the least simple view of the economy, quite complex actually.

        That’s my limit, bagged out for the day.

      • simpleiam says:

        Just history, HD. It is what it is. Helps that I work for competitor, and watching retirees from XOM come to work as contractors for us, rather than their former employer.

        Have a good day, All! Simplify!

      • tommyboys says:

        55% of all houses purchased today are bought with cash. Huge difference from earlier this decade. Prices will decay a bit regionally but not nationally anytime soon. Home sales off due to a lack of inventory as many still underwater refusing to sell down there. With so many cash purchases there is no systemic risk at this point…

  7. mjtplayer says:

    It seems the S&P is failing at the top of the prior trading range in the 1,883/84 area. Support is at the bottom of the prior trading range surrounding the 1,841 pivot.

    If 1,841 pivot holds, then we’ll take another shot at the top of the range. If 1,841 fails, the “E” wave of the ED is in and has truncated.

  8. 777daimon says:

    and my last message for today with the most uber-bullish link of all.
    Russia’s minister Lavrov would apply now the same scenario in Ukraine, as in Georgia in 2008.
    Buy all of course! :))))))))))) …. [ crazy people! …]

    • magicianme says:

      You keep posting about Ukraine, but I think the whole Ukraine issue is overblown. The lack of a market drop at this point isn’t because Ukraine isn’t priced into the equation, it’s despite Ukraine being priced in.

      In any case, Russia and NATO both have a great deal to lose … so expect nothing major to happen except for a lot of hot air from all parties. It ain’t fun for people on the ground there, but if European markets aren’t reacting much to events why do you think the S&P should?

      If something of note happens then the markets will react like they did on March 3rd. Till then …. relax about the Ukraine, about the (fictional) Jewish census, about the number of tanks/planes/comedians in the area, about every comment from every vested political interest. 😉

      • tommyboys says:

        Agree 100%…Russia posturing will not affect our markets especially as they are not affecting Europe. There are always plenty of things to worry about – just another brick in the wall. Both sides can point to numerous supports for their case. It’s the investor’s job to assess what may affect markets from just noise. Don’t become paralyzed from news. Take positions based on your best analysis. All EWs know news doesn’t drive markets – markets drive news.

    • bobhopium says:

      Trying to make sense of financial mkts by reading the news is the road to ruin.

  9. 777daimon says:

    even more bullish than yesterday, buy all :)))))))))
    …. hope that you can appreciate my sarcastic approach.
    Considering also the bad Chinese PMI reported overnight! :))
    I am actually long this market.
    Because it’s a certainty that it’s 100% rigged and centralized.
    Yesterday’s and today’s action in light of this news when an European country is on the verge of being invaded and after the borders post WW II were modified, but the markets are near all time highs…..how do you call that? :)) ?
    I call that totally rigged markets.
    Some bone-heads here rant on Tony that he changes the counts frequently. It’s not his fault he’s a top-tier technician! It’s the fault of those that continuously “transform” and “adapt” the markets to avoid some deflationary ghost (according to Bernanke’s view – the one that implemented the system and convinced other central bankers – BOJ, BOE – to implement it).

  10. Jedi and Tony have been making the point that the R2k usually tops out before the $SPX etc and of course that is true. I would add the A-D line to that category as well. That is the very reason I have been focusing on the $RUT in the first place (as well as the fact that I have a large long position in a small cap mutual fund). But where Radrian brought us to in his analysis of the R2k was a discussion of how the index behaved at various potential resistance areas to determine whether the $RUT had indeed topped out for the duration or not. It certainly is entitled to top out at any time, given it’s long run as a leading index.
    I have been closely observing it’s behavior at the various resistance levels pointed out by Radrian, as I discussed in my earlier post. Doing the follow up that I promised in that post, the McMillan Oscillator closed today at 37.30 and that produced a nice-sized upside gap (distance between points) on the Summation Index, which has clearly started an uptrend which has a look similar to what the early stage a of strong breadth impulse might display. Whether the SI can continue to produce large upside gaps is dependent on the McOs’s source indicator, the A-D line having large positive daily pluralities. If all that happens, the R2k should not have much trouble sailing through overhead resistance. And if the $RUT develops a strong uptrend, it is almost inconceivable that the large-cap indexes will not make new highs.
    This entire bull market has essentially moved up on unimpressive volume and that is actually an indication that this market is still in the control of high-powered smart money and may not be as far along in it’s time progression as is generally believed. I will leave it to the EW and OEW experts to parse out the wave structures if my bullish scenario continues to develop as I hope it will.

  11. lunker1 says:

    lunker1 said:
    April 18, 2014 at 3:27 pm
    seems like were in four of three or perhaps four, but either way I don’t think we’ll lose the 1869 pivot by much. Divergence is small and also wave two had extreme retraces so not expecting much here. Then divergence will build with wave five but that could be 20-30 points higher from now. And then the larger wave 2 retrace might again be held by the 1869 pivot.

    lunker1 said:
    April 18, 2014 at 3:29 pm
    Strike that. I really don’t think were in 4. Still looks like wave3 is unfolding.

    lunker1 says:
    April 22, 2014 at 9:55 pm
    looks like 1863 was 4 of 3 and 3 completed at 1885.
    or maybe one more push higher to form the 60min Neg D
    targets for 4
    23.6% of 3 = 1869
    previous 4 = 1863
    38.2% of 3 = 1859
    then looking for wave 5 to target the 1901 pivot
    then larger wave 2 to retrace back to the 1869 pivot

  12. Well as far as this rally goes, if it looks like a wave 3, and quacks like a wave three then it just might be a….

  13. bhupal777 says:

    Tony, Definitely rally looks really strong and could be very well we are following DOW count. But the stocks that I follow warning me so I am in the the camp of SPX ED count. Thank You.

    As per this count Face book (FB) should be going lower after earnings tomorrow.


  14. Thanks, Tony! Gee, it is nice to have you back. Interesting juncture here (chart below).


    Is Russell (as a leading indicator) signaling the start of a turn?

    • tony caldaro says:

      Yes, back at SPX 1884 resistance.
      The R2K usually tops before the SPX/DOW during significant waves.

    • valunvstr says:

      Plus, GSX has a beautiful IHS and TLT has a terrific looking backtest of it’s prior consolidation. It’s laughable that all the technicians have thrown in the towel when you have the Russell and Comp forming a HS on pitiful volume and TLT and DSX forming great bottoms and backtests of breakouts. The starts could not be aligning any better. Anyone going long here is a total sucker. And I’ve been link for 5 years.

      • uncle10 says:

        Hey Valun, I don’t see anyone on this blog throwing in the towel? You talking about CNBC or tweeter? From my view it seems the longs are quite confident, a few people short and some more that are cash/waiting. I was stopped yesterday on a short trade but surely have not thrown in the towel on anything. I agree being long ( without a somewhat reasonably close protective stop) at these levels seems very risky but you never know….. The one thing we do know is that the market will continue to have big swings up and down. gl

  15. valunvstr says:

    Almost there, maybe a week. QQQ, COMP and IWM are first just getting back to their 50 day sma on pathetic volume. The 50 day smas also represent almost a perfect Right Shoulder. Technicians are all throwing in the towel They are wrong. The market is very close to rolling over again.

    • You are so right about the volume, Valuvstr.

    • I’m looking for a pullback to 1845-1855 will see what happens then. A break lower means were headed towards 1814 a break below that then 1850-1870 below that febs low 1737 ish below that look out, it’s anybody’s guess. Any one have anything else there looking at as far as targets

    • chrisk44342 says:

      I understand your view but volume has been a lousy predictor in this market, no?

      • magicianme says:

        On the contrary I think volume has been brilliant. It’s about how it’s interpreted. I posted on the 9th of March about the two day low volume ramp being a pump and dump. That played out on the 10th. Since Thursday last week we have seen a similar low volume ramp leading to weakness today (which is not over yet, IMO).

        Wycoff’s works and those of Tom Williams are worth a read. Volume is also useful for confirming other patterns people watch – from H&S patterns to EDs.

  16. blackjak100 says:

    Tony I actually think the SPX is tracking the ED really well, IF we get a 27-44 pt pullback from here. It must subdivide as a 3 and it looks like we just completed a 5 which i would label ‘a’. If the target is going to be 1920ish (the 1-3 trendline first week in May), a pullback of 35 pts labeled ‘b’ would set up an a=c scenario around 1920ish.

  17. purplember says:

    Tony, assuming Dow chart count, any projections how high dow/S&P would go ?

  18. bouraq says:

    Last bears falling:

  19. ocaj2000 says:


  20. radrian6 says:

    The rally continues for the RUT and the bull case strengthened with the break through 1147 resistance. With the RVX approaching support near 18 and the VIX approaching support near 12, caution is advised. There are still a lot of long-term negative indications and SPX is approaching the weekly upper Bollinger Band — the upper BB has been strong resistance this year. It certainly looks like SPX will test 1897 but with the weekly upper BB near 1896, upside progress will be difficult.

  21. We got the excellent day with the A-D line up 1402 and the Russell 2k up 1.15% that I said we needed in yesterday’s post (reply to Radrian near bottom of page). It looks like the larger caps were the ones that faded out near the close today. R2k Rel Strength line has made a u-shaped bottom and turned up. I didn’t see any choppiness in R2k today so the 1147-1165 resistance area hasn’t been tough so far. I will discuss the McOs and Sum Index when those numbers are calculated by Decision Point, but you can refer back to my post of yesterday to see the basis of my argument.

  22. Ryan Parker says:

    Welcome back Tony!

  23. Ryan Parker says:

    Has anyone noted the sentimentrader.com article from 4/16 showing IPO’s that aren’t even profitable account for 83% of the total IPO market? The only other time it was higher than 70% was 1999-2000. Peak in March of 2000 was 84%.

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