tuesday update

SHORT TERM: market rebounds, DOW +103

Overnight the Asian markets gained 0.4%. Europe opened higher and gained 0.4% as well. US index futures were higher overnight and the market opened at SPX 2056, three points above yesterday’s close. At 10am Construction spending was reported higher: +1.1% v -0.4%. As the market continued to rise, at 12pm FED governor Brainard’s speech: http://www.federalreserve.gov/newsevents/speech/brainard20141202a.htm. The market continued to work its way higher throughout the day with only three point pullbacks along the way. At 3pm the SPX hit 2069 and then started to pullback. Just before the close the SPX hit 2065, then bounced to close at 2067.

For the day the SPX/DOW were +0.60%, and the NDX/NAZ were +0.50%. Bonds lost 19 ticks, Crude dropped $1.65, Gold slid $14, and the USD was higher, Medium term support remains at the 2910 and 1973 pivots, with resistance at the 2070 and 2085 pivots. Tomorrow: the ADP index at 8:15, ISM services at 10am, and the FED’s beige book at 2pm.

The market opened three points higher at SPX 2056, then rallied until 3pm when it hit 2069. After that it pulled back some into the close. Today’s action suggests a possible subdivision is underway for Minor wave 5. Higher highs would support this scenario. However, a decline to SPX 2060 would be the first caution flag that the uptrend high occurred at 2076. If this is followed by a drop below 2050, and then a drop below 2040 a downtrend is probably underway. Best to your FED beige book trading!

MEDIUM TERM: uptrend

LONG TERM: bull market

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

About tony caldaro

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125 Responses to tuesday update

  1. To all the people thinking they are buying a low in energy names. WAIT or short.
    The second dip buyers are the weakest.
    Just wait..tax loss selling in energy. Here is the key *******The hi yld energy bids will start to evaporate /really pissing off accounts ******. Same old crap
    You know firms won’t want to bid these bonds( they dont want them on their books either into yearend)…only knocking them down further adding to lower equity. Things like $xle have another 10% down ..micro -mid cap names 20-30%. Thing like SLCA , i have been short from 61- to easy to cover . The small names still have much further to go. They are only in the PR stage of thinks are ok.Then you will hear about the margin calls from execs…it’s so easy yet , hard to do because they are down. I guess that would spill over to spx , maybe 1983 –
    Wall st never changes

  2. gasman88 says:

    This slow grinding up must feel like a death by thousand cuts to the shorts (if there are any)
    ‘Never short a dull market’ , so true

    • valunvstr says:

      Never short a market PERIOD unless one can forecast a recession and/or there is at least monetary tightening. Otherwise, enjoy underperforming the market before and after taxes.

  3. torehund says:

    RUTs looking healthy, leading the markets 🙂

    • tommyboys says:

      Yep – nice little IHS on there as well. For all the talk of “overvaluation” and bubbles etc…people need to look at the RUT – or least many of the micros. Many of these small stocks have been in a bear market losing 50-70% over the past year. I am speaking from personal experience with these. Lots of these companies ARE the future in many technologies and have very bright prospects. Some appear to be finally emerging from their bears catching bids. We’ll see but hard to imagine these collapsing any more than they have over the past 12 months. Broader indices do not reflect this “under the hood” activity.

      • If the last 5 years were more painful (lack of QE’s ) I might agree with your line of thinking…..but this whole increase in the market has been driven by Printing money….this has ALWAYS ended badly….just a matter of time

  4. blackjak100 says:

    NYAD fairly strong compared to price today – upwards movement not over.

  5. alexh110 says:

    Hi Tony, just wondered what the thinking was behind your recent change in the long-term count on the FTSE? The previous count seemed a better fit given all the overlapping waves since 2009, and the fact it was running on fumes during the triangle of 2013/14. Certainly looks far less impulsive than the DAX.

    • tony caldaro says:

      The number of diagonal triangles that have appeared worldwide was basically the reason for the shift. They appear to be in lots of indices, including the DOW. Should the ECB come through with some form of QE most of Europe could eventually benefit. Seeing some potential bottoming formations in some of the southern countries as well.

    • CB says:

      Monty python, but the French eat better ..

  6. How I see the count unfolding from 1821 SPX low:

    1869 Minor 1 (48 pts)
    1835 Minor 2 (34 pts)
    2024 Minor 3 (189 pts)
    2001 Minor 4 (23 pts)
    Minor 5 subdividing:
    2041 Minute 1 (40 pts)
    2030 Minute 2 (11 pts)
    2076 Minute 3 (45 pts)
    2050 Minute 4 (26 pts)
    Minute 5 of Minor 5 TBD …..
    ……Target range 1974 (if it truncates Min 5 = 0.618*Min 1) to 2090 ( Min 5 = Min 1)

  7. John Arella,

    You may go down in blog history as an oracle when that charts comes true.

  8. tommyboys says:

    If RUT can take out 1192ish its good to go to 1230+ !

  9. fishonhook says:

    Anyone have a working count that makes sense? I think Tony is lost at the moment as am I.

  10. scottycj1 says:

    The Naz rallied and then sold off. If that happens now to the Dow And SPX…..we might get a little more of a decline…..a lower close today validates 5 or 6 sell signals I have gotten in the last few days.

  11. mjtplayer says:

    Yesterday’s rally closed the open gap from Monday at SPY $207.20 Slightly higher open today, no more gaps to fill on the upside, DOW made a new HH but is the only index. Selloff after the beige book at 2pm? A very quiet market until 2pm, as usual on beige book day

  12. blackjak100 says:

    Here we go again…another HO signal yesterday to confirm the signal on Monday. As you can see, new lows remain elevated. They started to increase before the 9/19 top (albeit more gradually than now) along with new highs decreasing. We are seeing the exact same thing now. I’d like to see one more higher high than 2075 before shorting to give the EW count from 1821 a very nice look.

  13. Tony, there is a bearish cross of 50sma over 200sma on relative comparison of $SPX and $USB.
    Cross overs over the last 15 years have given bigger corrections and bear market signals.
    This gives an indication that wether money is moving into stocks or bonds.
    Check this – $SPX:$USB in symbol area of stock charts.
    If you could post the 15 year chart, that would be great.


  14. bouraq says:

    10 Charts – Enjoy gold while it lasts:
    $SPX $DJIA $GOLD $SILVER $WHEAT $NATGAS $OIL $AUDUSD $EURUSD $COFFEE http://www.tradingchannels.co.uk/2014/12/enjoy-gold-while-it-lasts.html

  15. Walter Crane says:

    Love poeple who question IF there is a “they”. We are still driving around in cars that are over 100 years out of date fuel technology… WIth 30 miles to the gallon. No “they”? Please.

    • jeffbalin says:

      They were making electric cars in the 60’s, many other alternatives over the years, oil companies made them disappear.

  16. michael sim says:

    Hi Guys,

    I know it is somewhat out of topic, but it’s still investment related. What do you think about High Yield funds, or what they say as Junk Bonds, specifically U.S. based notes?

    Has been dropping for 10% from it’s peak and end of QE3 resulting for this. It has reached as low as 2011 level(where Primary II happened), and yield as of now is 8.2% gross of fees with monthly dividend payout, meaning 0.68% gross monthly dividend.(Allianz US High Yield Fund).

    I find it pretty interesting and Yields are now attractive, I think QE3 unloading of bond purchases could be bottoming soon, but want to hear your comments please.

    BBB – 1.43%, BB – 40%, B – 51% (It aint that super junky right?)

    ALLIANZ US FUND – http://postimg.org/image/dr9x1wr2h/
    BLACKROCK US DOLLAR FUND – http://postimg.org/image/oxcfxwr2d/

  17. M1 says:

    Silver: do we have a bottom in place at $14.15 ?

    • chrisk44342 says:

      hi M1,

      As I stated before the open on Monday, GLD looked like it had completed an impulse and a 61.8 % retrace on Friday. If you follow it through, then the selloff today would be minute 2 inside of wave 3 up, with the bottom from Friday being your stop.

    • The daily and weekly OEW charts do not show a black c yet.

    • M1 says:

      If long tern traders start covering their short positions on silver then a huge rally is possible.
      But I see lot of resistance on the way up.

      • chrisk44342 says:

        Yes, I see the dude from Kitco and Bouraq both have the trendline for gold note on their charts. However, we’ve already hit that trendline 3 times. We hit it again and the jury is out on whether it will hold.

  18. M1 says:

    Thanks Tony
    It is too early to say, but it looks to me we have a short term correction unfolding. At least on the NAZ.
    I would like to see a first support at abt 4650, then at 4550. Any lower than that may be suspicious.

    • jeffbalin says:

      Your first chart spx 60 min, the 3 wave, uptrend from 1820 breaks Tonys rules I think. That 3 is the shortest wave.

  19. david soble says:

    The Ruble has lost 10% against the US dollar days in the last two days. The currency is acting more like an a third world country’s currency rather than one belonging to a member of the G20. The yen fell from 118 to 119 in the last two days and has fallen 10% since the Halloween surprise.
    Isn’t there someone out there predicting a currency crisis?

    • CB says:

      Russia could start selling more gold to pay it’s debts, if they wanted to avoid defaulting (?) in which case it would be bad for the price of gold….also, who wants a currency crisis, when we can all have gradual competitive devaluations

  20. torehund says:

    With the high Growth numbers out of the US, one would think that the price of money would increase due to demand and therefore resulting in increased interest rates…thats a natural scenario. It seems to me that keeping rates low propels the dollar…Right now I am expecting another monstre hike for the USD vs just about any currency out there, but foremost the exotic curencies and countries With subpar or negative Growth. If this is what plunges oil even further and gives US even higher buying power, well it could be so..maybe GDP of 10 percent is heading Our way 🙂

    • torehund says:

      …a couple of years With 10 percent GDP Growth and the Debth to GDP shrinks substantially…
      Thanks Tony for keeping us all levelheaded.

  21. Roxie97 says:

    Fed Balance Sheet now leveraged up at 78x capital on their books – Debt leverage was what got us into the original problem in 2008. Just a small increase in Interest Rates will be devastating – Govt will struggle to make Interest payments and have to cut basic entitlements – that’s when the Sh-t hits the fan

    Scary situation if you ask me

    • mjtplayer says:

      That’s ridiculous, with all due respect; the Fed can just print themselves more capital.

      • Roxie97 says:

        Doesn’t matter what they print – market will be the judge and drive interest rates. Some of bond friends telling me China selling higher then normal US Treasuries. Rates up today with market up – that wont go on forever

        Watch out

      • CB says:

        gap-filling both in spx and 30 yr bond today..

      • purplember says:

        mjt, Greece thought they could print and run up debt as much as they want too….. read history books on fall of great nations. debt isn’t a good thing even though some will say it’s doesn’t matter.

      • CB says:

        :)) the usd is a reserve currency, so, yes, the fed can print; The euro hasn’t yet reached that status …OK,.it’s a long story…so Europe has to watch how much it can print. The Fed is very , very lucky, and working every day very hard to stay lucky :)))

      • purplember says:

        so USA is infallible…. that’s the kind of thinking of destruction. romans never thought it would end either lol

      • purplember says:

        we really have to look at who is buying US gov’t debt. mainly FED and Chinese. fed buying us gov’t debt is basically Ponzi scheme and can’t be long term. Chinese will continue buying debt cuz we buy their goods. But we always have to ask the question what would happen if others didn’t want to buy US debt cause they thought there was some risk of not getting money back….. spike in interest rates

      • CB says:

        lol..that’s a good question, mjt, maybe it depends on who is more infallible than the other guy, or who has a bigger/better army.. all kinds of factors..

      • CB says:

        meant purplemember in my last post ..sorry

      • chrisk44342 says:

        roxie, china aready dumped much of their bond holdings. Eventually the bond wedge will break, but there’s no point speculating about it because it’s gone already for 34 years. Once it does, that doesn’t mean the end of the world, either.

  22. No way they lets this market go down into holiday season.

    • afarsid says:

      Who wouldn’t let it? And why not? Would love to hear a real response

      • Under Lady Yellen’s direction the Mega banks are pumping liquidity in the market on a regular weekly basis,,,Q/E has not ended, just transferred to banks from FED.
        Since the low in OCT 37 Billion have been pumped into the markets and we got 200+ point rise in the SnP.
        I believe more pumps will be executed as we get to yearend. These pumps are done after market hours and we can’t see them. Very common practice.
        It would be difficult for the MBanks to allow this market to drop in Dec because LY wants 401k’s to look good at Y/E.
        We may get a small correction in the next few days but it will be a buying opportunity IMHO.
        Also will have lots of money coming into the market from Y/E 401k”s.
        I know nothing!

      • is that a serious question?

      • tommyboys says:

        There is so much paranoia and innuendo on the thread constantly referencing “them” or “they” or Yellen or Ben – it’s ridiculous. Latest round of QE was specifically designed to get banks functioning normally again…little to do with the markets. If all the paranoids actually believed their own rhetoric they’d all have become filthy rich the past five years betting what they “know” to be the case. it. I’d guess its mostly just bitter venting from being chronically on the wrong side – not believing the bull is justified – but that’s just me…

      • Walter Crane says:

        If you don’t feel or “see” a they, no real response would make any sense to you.

  23. chrisk44342 says:

    A bit more rally time for SPX and we will have ourselves a nice VIX setup for a selloff, but we need to see another day or two like today.

  24. it’s a nightmare we never go down

    • It will be a nightmare for beginner investors who blindly participate in what they think is a strong economy and therefore buy stocks. It will be a nightmare for those who are margined to the max holding bullish etfs. Many will say that what stops are for…. which is true but in the event there is a 5-10-20-30 % gap down, your stops not gonna be that helpful. This is a very corrupt & coerced market and anything can happen, I mean anything. At this point in the game I wouldn’t be surprised at any moment some sort of news or event will be used as the rationale to crash this market.

      • to crash or maybe to continue this irrational pumping, good grief

      • uncle10 says:

        thanks for the laughs newbie. 😉

      • pooch77 says:

        We have a Rabitt and now a Bunny

      • jeffbalin says:

        Wow! Possible 30% gap down coming newbie? Whipping straight down, blowing over all stops? Wow! I’m building my underground cave and packing it with water, bandaids and chickens as we speak! The end of the world is coming! Thanks for the warning!

      • For those (jeffbalin) who think Large gap downs do not occur , check History. Go look up when HSI gapped down 25% in one day and then went down 44 % in 30 days.

      • tommyboys says:


      • lunker1 says:

        from Wikipedia…

        “Circuit breakers On the New York Stock Exchange (NYSE), one type of trading curb is referred to as a “circuit breaker.” These limits were put in place after Black Monday in order to reduce market volatility and massive panic sell-offs, giving traders time to reconsider their transactions.

        At the start of each quarter, the NYSE sets three circuit breaker levels at levels of 7% (Level 1), 13% (Level 2), and 20% (Level 3) of the average closing price of the S&P 500 for the month preceding the start of the quarter, rounded to the nearest 50-point interval….Depending on the point drop that happens and the time of day when it happens, different actions occur automatically: Level 1 and Level 2 declines result in a 15-minute trading halt unless they occur after 3:25pm, when no trading halts apply. A Level 3 decline results in trading being suspended for the remainder of the day.”

    • uncle10 says:

      just a few months ago the small and mid caps got taken to the woodshed– many down more than 30 plus percent, and the Sp 500 down 10 percent. you want it to go down every month? its only a nightmare if you try to fight the train coming down the tracks at you. if you instead ride the train it much more like a dream… gl

    • Gary Lewis says:

      Don’t feel badly Tenente. I have been buying puts since August with just one nice move down to show for it. Hey, no risk, no reward. Still looking for 145-170 on SPY for a P4, a move to 220, maybe more now for P5 and then a major correction. I’ll be right eventually, maybe, uh…possibly. But on the bright side, I have a good cash flow stream so while it has been a nightmare, I’m only losing worthless fiat currency 😉

  25. fotis2 says:

    Thanks Tony a bit too close to 2100 for a comfortable short for me but will let the tape do the talking

  26. As per my model. SPX.INDU and FTSE are on Sell as of close. 03 Dec is crucial. If SPX were to break 1959 even for few minutes during normal trading, it is confirmed SELL

    • Gary Lewis says:

      While I doubt that the SPX will drop more than 100 points to confirm your sell any time soon, I also got the three day test of the high fail that is normally a sell signal. But lately, any sell signal I get triggers new highs 😦 Anyway, I sold my calls and added more puts. Time for me to return to Put Buyers Anonymous again.

    • klopharmd says:

      Does 2069 still invalidate your sell?

      • Klopharmd, Model is dynamic and 2069.1 invalidation did not trigger in yesterday’s trading. So, as per new parameters etc.etc., 2059 is crucial for Bears even for few minutes. If it happens, then it is confirmed SELL. Now, confirmed SELL does not mean market starts falling from 2059. Model generates stop loss as well. So, be aware that stop losses also could be hit. But once 2059 is hit today, 2069 will NOT invalidate SELL signal. I will see what figures come out but 2083 will likely come out as invalidation signal

  27. CB says:

    Thanks Tony!

Comments are closed.