friday update

SHORT TERM: disappointing Payrolls report, DOW +68

Last night FED governor Powell gave a speech: Overnight the Asian markets lost 0.2%. European markets opened lower and lost 0.1%. US index futures were quite volatile overnight. At 8:30 monthly Payrolls were reported lower: +142k v +209k, but the Unemployment rate ticked down: 6.1% v 6.2%. The market opened unchanged from yesterday at SPX 1998. It immediately pulled back to SPX 1991 in the opening minutes, then rallied back to 1998 by 10am. Another pullback took it to SPX 1990 by 10:30, and then the market started to rally. The rally carried into the afternoon with only small pullbacks, and the SPX closed at the high of the day 2008.

For the day the SPX/DOW were +0.45%, and the NDX/NAZ were +0.50%. Bonds gained 3 ticks, Crude lost $1, Gold rose $6, and the USD was lower. Medium term support remains at the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots. Last night the FED reported a decrease in the Monetary base: $4.084tn v $4.125tn. Today the WLEI was reported lower again: 51.8% v 52.3%.

After the disappointing Payrolls report the market opened flat, then dropped to SPX 1990 in the first hour of trading. The pullback from yesterday’s all time high at SPX 2011 to 1990 nearly equalled the largest of this entire uptrend, (1964-1942). As noted yesterday, we can count five waves up from SPX 1905 to 2011. Today’s low, and subsequent rally, is probably the early stages of an even larger pullback. Some suggest a 38.2% retracement to the 1973 pivot, and others a 50.0% retracement to the 1956 pivot. As long as the market holds one of these levels we can expect an extension of the current uptrend to follow. Should the market break below and hit SPX 1905, Primary III probably ended and Primary IV is underway.

Short term support is now at SPX 1990 and the 1973 pivot, with resistance at SPX 2011 and the 2019 pivot. Short term momentum was quite oversold this morning then ended the day overbought. The short term OEW charts turned positive with the reversal level now SPX 2002. Best to your weekend!

MEDIUM TERM: uptrend

LONG TERM: bull market


About tony caldaro

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46 Responses to friday update

  1. filemissile says:

    Blog fantastic
    Thank you
    Good luck

  2. Walter Crane says:

    Massively short, put the tvix trade back to 2.50, didn’t take a very big profit. This is the short of the century right here. Wayyyyyy too bullish. Its over imo. The top is in.

  3. 56rambler says:

    Thanks, Mr Caldaro. Looking forward to the weekend update! Have a good weekend!

  4. Gary Lewis says:

    Power of the trend: Reviewing weekly data on SPY, I find that over the last 109 weeks, the 20 week moving average declined only once, and that was a mere 0.04. On average over those 109 weeks, the 20 week moving average rose 0.54 a week. This week, it advanced 0.74.

    On average over this same period, the average size of the 20 week standard deviation (a measure of volatility) was 4.36 (the Bollinger bands would be 8.72 points from the moving average). This week it was 4.4, right on average. And the average number of standard deviations away from the 20 week average has been 1.18 (on average price is 5.15 pts above the moving average) . This week it is at 1.53 (6.74 from the average).

    With a trend this powerful, I think it’s going to take an awfully long time to turn it around. In the near future, I will look at the numbers around 2007 and 1999 to see if the numbers showed the same strength. It may be telling how much effect the QE has had.

    Theoretically, if you buy at or below the trendline, currently at 194.38. The trade should be profitable. Even if the price runs down sharply, regression to the mean should get you back to the trend line (that should continue rising for awhile). Got a feeling that this trend line is going to roll over about as fast as a glacier.

    While this has nothing to do with EW, I’m starting to think that P4 is a myth.

  5. rabbittrader1 says:

    I feel I should leave this comment. My friend, Louis Moore Bacon (Moore Capital, (Ave. of the Americas, NYC.) back in the 1970’s, , , or early 80’s when I knew him we talked about commodity trading. In the late 80’s Louis went to Saudi Arabia and raised $400 million . The next year he was mentioned as the highest paid commodity trader on Wall Street(except I think he was in France) He made $40million in commissions that year ,and did the same the next. Louis tells me now (6 months ago) that the whole commodity market and the securities markets are highly politicized.. That is to say , the Federal Reserve and the Treasury enter the markets ,through government pension funds, and buy the S&P index or individual stocks to affect what they want the market to do. Now Elliot wave and CYCLES will ALWAYS return to their proper position; But ,they can be stretched (or shrunk) temporarily. .Remember this, my friends.

    • pcskier says:

      After all a Russian stoled Goldman code a few years ago. Remember Goldman told the judge their code had the power to cause havoc in the world markets.

  6. attitude928 says:

    So when the market goes into P4, what goes up besides for short ETFs? Long term bonds, precious metals, some emerging market? Many institutionally held pension plans don’t offer short ETFs.

  7. Thanks Tony, looking forward to your weekend update as always … if the events of the past month or two can’t take the market down it’s hard to see what will.

  8. Question for the group: Do dark pools have anything to do with the low volume we are seeing? I don’t believe StockCharts, or any other service, has the capability to show trades in dark pools. Some estimate 40% of stock volume is accounted for by dark pools. After reading Flash Boys I wonder if the volume displayed on these charts is misleading, or worse, is intentionally misleading.

    • torehund says:

      Dont know about the dark pools, however volume is manipulated by the boots selling to eachother pushing the Price to a certain Price and it costs nothing, thats my experience in individual smallcaps. They can drive PPS as it suits them. But at a certain point this activity becomes counterproductive and the trend reverses. Sincé March 2014, and even before that time longs have been hammered by ugly news, almost surreal in content and duration. There are very few weak hands left and buyers shun the market due to its ill behaviur. Its a violent truce or a vacuum between 3 forces, Boots sellers and buyers .
      Lets see what madness the politicians may invent for the coming weeks, wether its the Ukraine or the Caliphate. How are they going to justify using resources, and how will any soldier think this time it will a be different outcome, after so many missed attempts in the middle east. Quite frankly thats what could end the efforts, the last war succer hopefully threw in the White towel years ago.

  9. Roxie97 says:

    I have SPX topping at 2029 then move down to 1750-1800. If 1750 doesn’t hold we should get a violent rally up to 50-61% of the move down (like 1840ish) – then the real bear starts – the break below 1750 would confirm via my system – this was a big ABC rally (and not a 5 wave bull) and we should head to new lows around SPX 400-450 sometime 2017-2018

  10. blackjak100 says:

    Thx tony! Internals were weak again supported by a small rise in NYMO for a 10pt rise. Sure looks and feels like a wave 2, albeit deep. We shall know mon.

  11. alexh110 says:

    Isn’t an extension of the uptrend rather unlikely Tony, with QE3 being withdrawn next month?

  12. Thanks, Tony! Have a great weekend to you and all.

  13. mike7x says:

    Thanks Tony! There are two levels to watch and a long way to go to confirm a potential P3 top. Maybe the next FOMC meeting on Sep. 16-17 will lead to an answer on the markets direction.

  14. 16golfer says:

    Thanks Tony and have a great weekend!

  15. pimacanyon says:

    Thanks, Tony. Good weekend to you and all your followers!

  16. rc1269 says:

    thanks Tony!

    i think i almost fell asleep at one point today… what a snoozefest. enjoy the weekend hombre

    • Ryan Parker says:

      What about the second half of August RC? Nasdaq Comp. normally trades 1 billion shares by noon CST. In August there were several times it didn’t reach 1 billion shares until an hour before the close. Have a great weekend everyone. Next week promises to be quite interesting.

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