Thursday update

SHORT TERM: gap up opening again, DOW +323

Overnight the Asian markets gained 1.3%. Europe opened higher and soared 3.1%. US index futures were much higher overnight, and at 8:30 weekly Jobless claims were reported lower: 294k v 298k. The market gapped up to SPX 2041 at the open and continued to rally. The SPX had closed at 2026 yesterday. Around 11am the SPX hit 2061, its highest level this week. After a pullback to SPX 2055 by 12:30, a bounce to 2062 by 1:30, and a pullback to 2057 by 2pm, the market moved higher. At 2:30 the SPX hit 2064, pulled back to 2059 by 3:30, then bounced to close at 2062.

For the day the SPX/DOW were +1.80%, and the NDX/NAZ were +1.90%. Bonds lost 11 ticks, Crude rose 30 cents, Gold slipped $4, and the USD was higher yet again. Medium term support remains at the 2019 and 1973 pivots, with resistance at the 2070 and 2085 pivots. Today long term investor sentiment was reported higher: 58.5% v 57.2%. Tomorrow: Payrolls at 8:30 (est. +243k), then Wholesale inventories at 10am.

The market gapped up at the open for the second day in a row. Unlike yesterday, however, it was not immediately sold after the first half hour of trading. Today the market rallied until 11am before some pullback activity occurred. Also, while yesterday’s action created several very short term waves: 2025-2012-2030-2020. Today displayed only a higher continuation off yesterday’s SPX 2020 low to 2064. With the market gapping over yesterday’s SPX 2030 high at the open, we updated the hourly/daily charts to display a Minute wave two at Tuesday’s 1992 low. It certainly looks like the market is now in Minute wave three. However, the market should not drop below SPX 2030, on any pullback, unless this entire rally is some sort of B wave. Short term support is now at SPX 2030 and the 2019 pivot, with resistance at the 2070 and 2085 pivots. Short term momentum hit extremely overbought today, and ended there. Best to your Payrolls trading tomorrow.

MEDIUM TERM: uptrend

LONG TERM: bull market


About tony caldaro

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203 Responses to Thursday update

  1. rabbittrader1 says:

    John Bell , I understand and am sympatico with your post. Regarding WELI, it is already built into the STOCK CYCLE which has peaked, and built into the ELLIOT WAVE (Which is in a C wave down to early 2017 at 535 SPX (or lower). R.

  2. rabbittrader1 says:

    WHAT? simpleiam, you are not yet a member of the WABBIT CLUB? Maybe next week . Need some DOE’s to come into my hutch. R.

  3. rabbittrader1 says:

    Re: Crude Oil Although I have personally been nibbling at Crude Oil UCO April 15 options at $48 per barrel, it is probable to see a further drop of $3 per barrel to about $45 next week . THAT should be the final low of this . wave until a move up into March 15 to March 30 to $77.50 or possibly $80 per barrel I will be buying April 2015 call options on UCO at $12 strike price in quantity then ,at probably under 70 cents. Potential is for TEN TIMES reward. Risk is Minimal . ( IMHO). R.

  4. simpleiam says:

    Still crusin’ for some long bargains here.

  5. Page says:

    Thanks Tony and have nice weekend all.

  6. torehund says:

    ..happy weekend to all on board and to Our captain Tony.

  7. gtoptions says:

    SPX Daily 13/34 CCI still below zero, consistent with a ‘b’ wave. Being cautious here, until they break above zero. A move above todays high would probably do it, or gap up Monday. GL & Good Weekend all.

  8. Dex T says:

    The market typically drops in the second half of January into mid February.

  9. llerias7 says:

    Tony, the orange (1) is the micro 1 of minute 3 wave? If so today is probably the micro 2 of minute 3, right?

  10. rc1269 says:

    The VIX is commonly mentioned here. I thought I’d offer some updated thoughts on the subject.
    First, just a reminder to those who like to view it as a trading tool for short term insights – please don’t. It’s coincident on the short run and won’t tell you anything you won’t get by just looking at the SPX chart. Now that we have that disclaimer out of the way…

    The most valuable observations on the VIX are over longer periods. When average volatility begins to trend higher, and more specifically diverges from the general trend of the underlying, then it is time to take notice. We are getting this type of signal now.

    Charting the weekly VIX and its MACD we notice a few things. First, with respect to VIX level itself, it has now experience three spikes above 20 within three months. This, after roughly three years of generally declining levels. Second, the 50 week MA just crossed above the 100 week MA and spending a significant amount of time below. The last two times that happened were the 2007 top/decline and the 2011 top/decline. The 100 week MA has also started to trend upward. Lastly, if the VIX remains above 14.45 for all of January, it will also be the firs time since 2011 that we spent an entire month above the 12-month MA. The prior time that happened was July, 2007.

    In summary, the VIX is exhibiting traditional signs of major trend change. A sustained and elevating trend of volatility occurring at major asset price highs should also be taken seriously.

    Take this in conjunction with what I’ve previously mentioned regarding changes in inflation expectations and asset prices and we should be concerned. (For those who don’t recall, there have been zero occurrances in history when inflation expectations have declined this rapidly/this much and equities did not also decline by > 10%). Of course, ‘this time could be different’.

    • rc1269 says:

      “50 week MA just crossed above the 100 week MA *after* spending a significant time below”
      ” A sustained and elevating trend of volatility occurring at major asset price highs should *always* be taken seriously.”

      apologies for the typos. going too fast

    • uncle10 says:

      good stuff RC. looks like we are going to get plenty of vol =. good 4 trading!🙂

  11. Page says:

    The pullback I was expecting today is over, next week markets will be much higher.

  12. H D says:

    3 of 3 of 3 up, 55 from ATH, Half the range there. Guess without an alt count we say cheap long

  13. INDU, SPX and FTSE are still BUY as per my model. I have covered small short on SPX, lost about 1.6 handles.

  14. rabbittrader1 says:

    BEHIND THE SCENE: You should know that in Eastern countries i.e China and some European countries, there is now great reluctance to continue buying US debt for virtually no interest rate and continuing to bail out the U.S. government ( who cant get its act together to cut its spending ways and reduce it,s debt.) The treasury and others know they must act to defend the dollar and preserve the dollar as the international currency of choice . The Chinese have other plans. Therefore there will be a 1/4 point rise in APRIL If not oil will eventually no longer be priced in dollars. ! This would have deep implications for the U.S. R.

    • tommyboys says:

      Nonsense. Countries buying our debt need us more than we need them. The bulk of our debt has been purchased and continues to be purchased by our own government (QE?) – so really we are our own largest creditor. Further oil will continue to be priced in dollars. Everything was gonna be priced in Euros a couple years ago due to fear of a collapsing dollar – imagine had that happened?!. Now that the dollar has entered a secular bull the fear is it’s too strong? Ridiculous sensationalizing.

      • scottycj1 says:

        Wrong….The debt is being purcased by the federal reserve. That is a private entity owned by private bankers. It is not a Govt agency. They just print money and buy debt..
        Funny money to purchase funny money debt

    • uncle10 says:

      I like defending the dollar. yes it needs defending against the JPY? or EUR?, or CAD or AUD, or gold, or oil, or…. the last thing the dollar needs is defending.

  15. fotis2 says:

    So far i dare say this move on the 5min looks impulsive any thoughts?i think a break above pivot and 2056 will be the line in the sand

  16. LOD was test of yesterday’s lows, and looks like three waves down from the high of the rally. Still keeping the bull case alive.

  17. rabbittrader1 says:

    Now in “micro 3 of wave 1 ,down of MAJOR C wave :headed to below 2030 ,IMHO. As I said last October “You cant push on a string”. But if , , you wet it you might get it to move a little further as the FED. did; but soon even that doesn’t work . “You can fool some of the people all of the time, and All of the people Some of the time; but you cannot fool all of the people ALL of the TIME”

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