tuesday update

SHORT TERM: consolidation day, DOW +20

Overnight the Asian markets gained 1.3%. Europe opened higher and gained 0.8%. US index futures were higher overnight. At 8:30 Retail sales were reported marginally higher: +0.1% v +1.1%, Export prices were lower: -1.0% v +0.5%, and Import prices were lower: -0.4% v +0.3%. The market opened one point above yesterday’s SPX 1897 close. Then drifted higher to SPX 1902 by 10:30. At 10am Business inventories were reported higher: +0.4% v +0.4%. The market pulled back to SPX 1896 by noon, bounced to 1899 by 1pm, then went into that trading range for the rest of the day and closed at 1897.

For the day the SPX/DOW were +0.10%, and the NDX/NAZ were -0.20%. Bonds gained 12 ticks, Crude rallied $1.30, Gold slipped $4, and the USD was higher. Medium term support remains at the 1869 and 1841 pivots, with resistance at the 1901 and 1929 pivots. Tomorrow: the CPI at 8:30.

The market opened slightly higher today, hit a new all time high while extremely overbought, then went into consolidation mode for the rest of the day. Thus far, this uptrend continues to look impulsive, with a series of nested first and second waves from the downtrend low at SPX 1814/1816. However, to remain objective we can only take this series of nested waves so far, before they turn into another choppy uptrend like February to April. To continue the uptrend in an impulsive fashion, the current pullback needs to hold above or equal to the SPX 1889 level. Anything below this level would suggest to us another choppy uptrend is underway. And, this would theoretically limit its upside potential.

Short term support remains at SPX 1889/1891 and the 1869 pivot, with resistance at the 1901 and 1929 pivots. Short term momentum hit extremely overbought this morning and declined. The short term OEW charts remain positive with the reversal level now SPX 1895. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: bull market

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

About tony caldaro

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90 Responses to tuesday update

  1. blackjak100 says:

    So far decline stopped just below 38.2% retrace of wave 3. Still need a fifth wave up.

    Tony, have you given up on the 3rd of a 3rd count yet?

  2. sloop says:

    goodly risk reward for a long id say

  3. RDC says:

    Bulls, lock in your profits. Lots of chopping ahead.

  4. sloop says:

    86 should be it ,wont like it below,thats cash on investing,com chart

  5. rc1269 says:

    i guess that means we’re in for more chop

  6. torehund says:

    Squeeze in RUT would fit the bill. We just need something to trigger it.

  7. uncle10 says:

    Vix at 12. Got to admit I am tempted to buy some UVXY. No just kidding. Though sometime during the next bear market I am going to buy it for one day and make money so I can say I made money buying the worst performing ETF of all time. I see on stockcharts about 3 years of data with of course the first day being the high with a price of $100,000 trading now at $45. ouch!

  8. blackjak100 says:

    I think this is nothing more than a 4th wave correction. However, it means we are days away from a powerful correction to begin. ChrisK doesn’t seem to understand EW as he thinks 1923 would eliminate the cycle B wave scenario even after I’ve repeatedly stated it eliminates nothing per eW B wave rules. I’m less a cycle B wave believer than I was months ago.

    The number we don’t want to see the SP500 top is 1921 according to Gann. This is exactly nine rungs up from 666 low. All major tops are price square outs according to Gann.

  9. oneandonlyuniverse says:

    This piece may offer a bit of perspective. It has only happened 35 out of 35 , but this time is a little delayed. This time could be different, but I see the 1779 pivot in play .

  10. gtoptions says:

    Thanks Tony
    DJI is testing the diagonal triangle breakout.
    The silence is telling.

  11. rc1269 says:

    bonds and gold not exactly screaming bullishness for stocks today

    • tony caldaro says:

      neither is the DOW

      • rc1269 says:

        what are the chances that the indices re-sync, but with the dow and spx coming down to meet the ndx, rather than vice-versa?
        naaaaahhhhhhhh. not this market!

      • tony caldaro says:

        think a rotation out of cyclicals into growth would make more sense

      • Kevin M says:

        The rotation is into Bonds and out of stocks period. Growth/cyclical, what have you, they are untouchable until this trend reverses. The Ten year Bond is telling this NOT me. Just look at it. The markets are on schedule now for the fall into the end of June/early July. The writing is on the wall folks.

        Think then trade not trade then think….

    • magicianme says:

      Kevin, I too keep an eye on bond prices for the same reasons you do, but … bond prices have been rising since Jan. The ZN (10 yr) has risen to a high we’ve not seen for almost a year. During that time the S&P should have corrected. But the S&P rose to a new high too.

      Blame it on QE, blame it on unusual times, but a correlation is a correlation till the correlation breaks down.

      Today I took a couple of shorts but had to get out with just very small profits as price wasn’t moving as fast as I expected it to. Today’s hesitation in the S&P and lack of direction should have been happening at a lower price given several bullish days and a new ATH. My indicators suggests we’ve a good chance of breaking today’s low, but unless that happens decisively it’s nothing more than a minor pullback despite the time being ripe for a major correction.

      • Kevin M says:

        Magicianme-My answer to that is seasonality. Stocks do ok from the end of Jan until Early May. As for bonds, they usually do well from April until July/August however this year it has been from the beginning of the year. That is the unusual price action this year, not stocks.

        Take care…

      • magicianme says:

        Thanks for your reply, Kevin. I’m still watching bonds as well as risk-off assets, the carry trade pair etc. despite correlations breaking down.

        As stated earlier my expectation was for a break of today’s low so I took another short when cyclical resistance lined up in multiple time frames at about 1894. But given the watching-paint-dry action of today I’m closing that short now that we’ve hit the target. The price may go further south, but it’s an odd sort of day and I’m not hanging around any more.

  12. tommyboys says:

    Someone was recently posting Armstrong stuff. Here’s some good conspiracy stuff from his site for fun…discuss!

    “The youngest son of U.S. Vice President Joe Biden, Hunter Biden, has taken a position as head of legal affairs at Ukraine’s largest private gas producer Burisma Holdings. They announced on their website that Hunter Biden would join its board of directors and head the company’s legal unit.”

    • tommyboys says:

      Saw it in the WSJ now so I guess its fact – seems like a conflict although could also be a positive for us.

      • budfox9450 says:

        a conflict, yes. but, there has so many.
        36,000 illegal criminals released, to freedom.
        The list of whats wrong with this country is
        amazing. Yes, am looking for a new home,
        but none exceeds the USA, as yet I have found.

      • tommyboys says:

        No argument here Bud!

  13. torehund says:

    Bulk update: severely oversold, and the spread is widening, illiquid maket almost. Bulls think it resolves to the upside and then it will be explosive 🙂
    Free-shipping on all orders over 50 shares 🙂

  14. ewmarkets says:

    In July 2011, gold traded at 1923 while SPX traded at 1293 in the same month. In May 2014, gold trades at 1293. We’ll probably see SPX at 1923. It’s only fitting.

  15. lunker1 says:

    1900 reached so you know they’re gonna push it to 2000 before the fat lady sings.

    • budfox9450 says:

      2000? that would be a stretch. Just
      looking for 1919, or 1941. However,
      I can see 2000 in late 2015, or early 2016.

      • chrisk44342 says:

        Would like to see 1923 taken out in convincing manner in order to eliminate the mega bearish count of cycle B. I don’t put a lot of faith in that count but would like to see it removed.

  16. simpleiam says:

    Great Update, Tony! Thank you!

    Don’t know if anyone saw CBS Evening News, but the lead story was The Rally in The Stock Market. People hurting because of those low int. rates and slowly coming into stocks (again). Anthony Mason reported, “Most analysts think this rally has more room to run”. That puts me on-guard, but still bullish.

    I do expect the indices to play Scardee Cat with us to a degree. Last week, when JK asked you if the jig was up because SPX broke down by 1 or 2 points, then bounced back up. It wouldn’t surprise me to see some of that going forward; maybe even a lot of it. Just something I’m keeping in mind…

  17. Thanks, Tony! I would also like to specially thank you for responding to my chart today with the XLK chart. That was one more thing I learned from you that I should have known — to correlate the index with the sector ETF.. Thanks, Master! ::-)

  18. hi tony
    nifty / sensex made a new high… nifty high 7172
    is it still in a complex bear market rally?
    16th may government election results…. most target 7500+ for nifty
    can you please ellaborate your views…

  19. pooch77 says:

    Thanks Rad.

  20. bouraq says:

    Last bears falling:

    • 7dayyss says:

      Bouraq, since you mentioned the “European Crooks”, can I get your opinion on Farage? I like the way he lambaste’s the politicians in the EU assembly. Just curious what the British populace think of there politician!

      • bouraq says:

        I like “listening” to Farage but he and his party are dangerous and very non-British. They keep saying they are not racist and he rejects all the racist comments that other party members are constantly making but deep down they are terribly racist. He has very good points on Europe but that’s all. Europe has become this elitist monster who tries to control everything from the definition of “chocolate” to what sort of tractors should be manufactured in Europe. That needs to be corrected but the way proposed by Farage is not the right way I reckon.
        The sad thing is; we all now these sort of nationalist parties gain popularity in the crises. UK is so-called out of the woods, not in recession and the stocks are at 2007 top. But we are having these discussions. I can’t imagine what would happen if we have a deep recession again. I don’t think EU can handle another such crisis.

      • magicianme says:

        I’m Asian and very-pro some of the things the EU does for us, but I shall be voting UKIP on May 22nd despite there being a few racists in the party.

        My reasoning: Despite the EU doing a great deal for peace on the continent, for protecting privacy of individuals (unlike in the US), for standing firm against GM crops and for opening borders (which not everybody is keen on), it’s a monstrous institution that wastes too much money, is not democratic, has federalist ambitions and is now out of control. I think we need out like Norway and Switzerland.

        Farage appeals to many because he’s not a career politician. Whether you vote Labour or Conservative you’re getting essentially the same thing – there’s very little difference between the parties now with all catering to the “centre” and promoting policies decided by focus group (based on the votes the policy is likely to gain or lose). With a few exceptions the MPs of both parties are from a “political class” widely despised by the British public. UKIP looks different and many may vote UKIP just because of that! Personally, I like UKIP’s policies on, for example, education (more grammar schools etc), crime, business and social security.

        Hope that gives you a good overview, 7dayyss.

      • 7dayyss says:

        Thanks for the enlightenment bouraq, magicianme.

    • blackjak100 says:

      Thanks Bouraq, but why are there candlesticks higher in the SP500 that are above today’s all time high?

    • winslow80 says:

      Coffee retraced 78% on the monthly chart prior to exploding higher. Sugar also retraced 78%, and your analysis appears rock solid.

      Insofar as shorting the stock market is concerned, doing so successfully on the daily chart has required precision. The enticing position trade short set-ups have turned out to be siren songs, in large part because the Fed has been explicitly active in levitating stock prices. The singular success of the Federal Reserve is making the stock market rise. By every other metric, Fed policy has been counterproductive (if not malignant) and the governors are most reluctant to surrender their one tangible achievement.

      And so, just when it appears that the market is ready to begin a substantial decline, we observe the magical night session rally which saves the day. It would seem to be tin-foil-hat-conspiratorial, except that they brag about “open market operations” aka redistributing wealth upwards via equity manipulation.

      At some point a killer short will present itself in stocks, but currently the compelling technical evidence is lacking ~ at least the bears have yet to reveal the overpowering technical evidence which will reverse the trend. Their primary argument seems to be that the market is estranged from reality. I know that many share the Zero Hedge craving to see this market pummeled back into the real world, but craving is not analysis.

      Your Dow short may very well work, depending on how you define “work”. Yet if the market collapses from here, it will do so sharing little technical commonality with the major tops of 1987 and 2000 and 2007.

      • simpleiam says:

        Nice post, winslow, as we await the killer short, not evident… yet.
        Last blog 4 tonight. GL Wednesday to All!

      • bouraq says:

        Winslow, may be we should all give up calling the tops and just go with the flow. You are right. The market has defied every setup on the book since 5 years and it looks like it’s going to the moon no matter what. They do “whatever it takes” to just pump it up. You should write your own blog. Real good style.
        I’m long sugar big time. You?

  21. radrian6 says:

    After two days of strong gains, RUT retraced 12+ points today and is close to the 38% Fib retracement level of 1120. The 50% Fib is 1114; the 61.8% Fib is 1109. If RUT can manage to find support near one of the levels mentioned above and continue the rally, resistance remains above 1135 and there is plenty more gathering near 1150-55.

    Monday’s gap opening was a breakaway gap and, theoretically, that gap should remain open until the breakaway move is complete. The bottom of the gap is 1107.38 (Friday’s close) and the top of the gap is 1111.69 (Monday’s open and low) — keep an eye on those levels.

    This is expiration week so we may see some price flattening as traders “pin” the RUT to a round-number price level. With resistance established above 1135 and theoretical support above 1110, we may see the RUT settle between 1115-30 — just my speculation.

  22. JK1987 says:

    Tony Thanks
    DOW closed above the top diagonal line with record high.
    Still need to keep the “deadly” DOW diagonal option?
    Is that the option of Primary III top?

  23. lunker1 says:

    Newbie, did you see the mid-day fireworks? they were huge! 😉

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