friday update

SHORT TERM: consolidation day, DOW +32

Overnight the Asian markets gained 1.1%, mostly India. Europe opened lower and lost 0.5%. US index futures were lower overnight and the market opened three points below yesterday’s SPX 1876 close. Within the first few minutes the SPX rose to 1875 then declined to 1867 by 10am. At 10am Wholesale inventories were reported higher: +1.1% v +0.5%, and the FED released: The market then rallied to SPX 1874, before heading back to 1867 by just past 11am. After the double bottom the market rallied. At 1pm the SPX hit 1879, pulled back to 1871 by 2:30, then made a double top at 1879, before closing at 1878.

For the day the SPX/DOW were +0.15%, and the NDX/NAZ were +0.40%. Bonds lost 4 ticks, Crude slipped 15 cents, Gold was flat again, and the USD was higher. Medium term support remains at the 1869 and 1841 pivots, with resistance at the 1901 and 1929 pivots. Last night the FED reported an increase in the M1-multipler: 0.708 v 0.690, and today the WLEI was reported higher: 54.5% v 54.2%.

The market opened lower today and made a new pullback low at SPX 1867. After a rally, then retest of that low, the market moved up to SPX 1879. Then another pullback, this time to SPX 1871, followed by another rally to 1879. A seemingly non-eventful day, in a market that has gone nowhere but sideways for more than two months. After reviewing the charts we found that the Primary I topping process lasted about five months: Feb11 to July11. Even if the expected third wave does not kick in soon, we still have a way to go before the Primary III top.

Short term support is at the 1869 and 1841 pivots, with resistance at SPX 1889/1991 and the 1901 pivot. Short term momentum rose from oversold this morning to above neutral. The short term OEW charts turned marginally positive with the reversal level now SPX 1877. Best to your weekend!

MEDIUM TERM: uptrend probable

LONG TERM: bull market


About tony caldaro

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34 Responses to friday update

  1. The friday high in Dow came in at the lowest trading volume for the whole year. Not a good sign for bulls.

  2. John Arella says:

    Decision time about to happen with new potential channel on the upside 🙂

  3. simpleiam says:

    Thanks Tony! Great Update as usual.

  4. Thanks, Tony, for another day of commentary. As always, I, as others, will be looking forward to your weekend update. Have a very nice weekend to you, Tony, and to your blog fans!

    -OEW Coffee Club Member

  5. torehund says:

    Bulk update, just took a brief look at GNKOQ and the wekly MACD, boy does it look not only good but fantastic…think 12 usd is within reach in a monster push with two enormous pos div triangles to lean on. The other bulkers may be slightly behind, but they are coming too. If we wait for something good, we dont wait in wain. Sure one may get a bit skunked buying in, but the real art is to ride them to exhaustion once they do turn.
    Thanks to Tony for sticking to his buish count, when there is board pressure to alter it into a bearish direction. Good weekend to bears and bulls, and dont let the humpty dumty market switch your inner convictions.

  6. M1 says:

    Thanks, Tony
    NAZ reversing as expected. Not surprised.
    It looks we may have two more choppy weeks

  7. lunker1 says:

    If everyone stuck to the 3 post limit per day I’d guarantee there’ll be a lot less drama.

  8. mike7x says:

    “A seemingly non-eventful day, in a market that has gone nowhere but sideways for more than two months.” Thanks Tony. Let’s just end PIII and move on…

  9. blackjak100 says:

    Thanks tony! Has anyone in the OEW group suggested the b wave triangle? I’m confused why the group thinks a third of a third is coming when the market has gone nowhere in 2 months? This should indicate a bunch of overlapping waves.

    I know triangles aren’t common, but the subdivisions all fit really well and it has the right look. Hoping for gap and go mon to confirm triangle!

  10. makiori says:

    Hi Tony, what are you referring to by posting your observation about the topping process of P1?
    Do you see any similarities?Time or price?
    From the week of 14th of Feb to the week of 2nd of May, price wise, low to high the range was 46 points or 3.5%. From the high in May to the low in the week of 13th of June’ 11 the swing was just over 8%. followed by a bounce that did not take out the previous high (clearly a B wave).
    One slight similarity I can observe is that the week of 14th of feb ’11 looks similar to the one were a low was posted on the week 3rd of February 14.
    However from 1738 to the high at the end of March 14, the market has travelled over 9%, and from the recent high, the max drop has been 4.7 %.
    Do we still have to go higher in price? and if so what is the relationship that you see with the topping of P1?
    Or where you just referring to time and are you, therefore, considering that P3 has already topped at 1900?
    best regards,

    • tony caldaro says:

      Actually I was looking at the NDX/NAZ during that 2011 period, and their triple top into July. The SPX/DOW have had small corrections during this 2014 period. Seems more like rotation out of growth into cyclical now that the economy is doing better.

  11. radrian6 says:

    Today’s low could be significant because of two supporting factors: first, RUT held its gains into a Friday close and second, there was a significant drop in the RVX (RUT volatility index). As always, there are a couple of detractors: first, although RUT was positive for the day, it was negative for the week and second, the drop in the RVX puts it just above rising support.

    Let’s assume temporary support is established at today’s low of 1091.50 and look at the significant resistance components that RUT will contend with. Most immediately, there is some natural chart resistance at 1108-09 then RUT will need to vault back over the 200-day SMA near 1115. If RUT can clear the immediate barriers, the 13-day EMA is waiting near 1119 followed by the daily BB midline near 1125. Beyond that, there is the 34-day EMA at 1136 and more chart resistance at 1139. If things get bullish, there is a cluster of resistive components near 1152-60.

    With regard to Fib retracement levels from the peak of 1212.82 to today’s low of 1091.50, the 23.6% retracement is 1120.13 followed by the 38.2% level at 1137.84; 50% at 1152.39, and 61.8% at 1166.48.

    The 38% Fib level near 1138 and the natural chart resistance near 1139 looks like the first serious barrier; there is also good coincidence with the 50% Fib, the 50-day SMA, and the daily upper BB all in the area of 1152-57.

    Bottom line … RUT may have established support today but the resistance quagmire is waiting and the RVX is quickly closing in on support. If the path is higher from here, it’s not likely to be a smooth ride.

    • Nice analysis, Radrian! 🙂

      • valunvstr says:

        I always find it interesting that a low VIX is bullish as Rad says but a high vix indicating fear can also be bullish (contrarian indicator). Can’t be both but everyone is making the excuse to fit their view.

    • blackjak100 says:

      Didn’t Fiona’s fantastic RUT statistics support a trip back to 1140-1160 before falling towards 1050?

      • radrian6 says:

        Thanks Jedi … have a great weekend. BlackJak, I think Fiona’s data was indeed calling for a move toward the 50-day SMA which is now near 1157, then a serious drop. If the 1083 neckline breaks, I would expect a drop to 990-950 if we are in a primary correction; 1040-1010 may hold in a major correction.

      • I would like to see rut drop to 1050 in the next two weeks and sp drop to its 200 mda then make new highs. But you may be right and we may get a short cover which could create your gap and go on Monday. Definitly a difficult market.

    • 16golfer says:

      Very well written Radrian6 and easy to follow!

  12. wavecounter says:

    Looking at the COMPQ daily chart there could be a triangle forming starting from the 3950 low (labelled in green as IV) – just wondering if you had considered this scenario as that triangle may break downwards?

  13. tony caldaro says:

    good comparison

  14. Thanks Tony,
    Interesting thought regarding the five month duration for the topping action of Primary I.
    Looking at that, the range during that Primary III top was from 1249 low in Feb to 1370 high in April, around 8.9% volatility wrt the high.
    Presently, we’ve traded the range 1738 (Feb low) to 1897 (April high), around 8.4% volatility, since last November, going on 7 months.
    So in that regard, one can argue that we have been topping out in that range for the past 6-7 months.

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