Tuesday update

SHORT TERM: gap down opening, DOW -291

Overnight the Asian markets gained 0.7%. Europe opened lower and lost 1.1%. US index futures were lower overnight, and headed steeply lower after some weak earnings reports. At 8:30 Durable goods were reported lower: -3.4% v -0.9%, then at 9am Case-Shiller was reported lower: +4.3% v +4.5%. The market gapped down at the open to SPX 2033 and continued to fall. The market had closed at SPX 2057 yesterday. In the opening minutes the SPX hit 2028, bounced to 2036, then headed lower. At 10am Consumer confidence was reported higher: 102.9 v 92.6, and New homes sales were reported higher: 481k v 438k. The market then hit the low for the day at SPX 2020 by 10:30, and started to rebound. After a rally to SPX 2040 by 1:30, the market dipped to 2035, and then headed higher. At 2:30 the SPX hit 2043, then declined to 2030 to end the day.

For the day the SPX/DOW were -1.50%, and the NDX/NAZ were -2.25%. Bonds gained 8 ticks, Crude added 85 cents, Gold rose $14, and the USD was lower. Medium term support remains at the 2019 and 1973 pivots, with resistance at the 2070 and 2085 pivots. Tomorrow: the FED completes its two day FOMC meeting.

The market gapped down at the open for the sixth straight day of gap openings. In the opening minutes the SPX dropped below our 2029 support level on its way to 2020. This opening decline has overlapped the first wave of the three wave structure we noted yesterday: 2029-2004-2065. This suggests the rally from the recent SPX 1988 low was yet another a-b-c advance during this choppy month of January. As a result we switched our preferred count to the one posted on the SPX daily chart, and the hourly chart count is now the alternate. This suggests the market has been in correction mode since the late-December high at SPX 2094. And, it is still in the process of completing an irregular Major wave 4 correction from the early-December high at SPX 2079. Should the 2019 pivot fail to hold support, then the 1973 pivot would be the next support. Short term support is at the 2019 and 1973 pivots, with resistance at the 2070 and 2085 pivots. Short term momentum hit quite oversold during the decline then bounced to just below neutral. Best to your trading the often volatile FOMC day.

MEDIUM TERM: downtrend gains probability

LONG TERM: bull market

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

About tony caldaro

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218 Responses to Tuesday update

  1. Bounce of the BTL of triangle I post overnight looks very promising based on oversold technical

    here is the chart again: http://tos.mx/3sYIoC

  2. blackjak100 says:

    Sustained trade below 2020 not good as I said earlier.

  3. fotis2 says:

    Nice break this time worth some good points now if eveyday could be like this would be real nice 😉

  4. H D says:

    Don’t be mad at 2019, she’s been nice all year….

  5. mjtplayer says:

    There goes the 2,019 pivot range, next stop is 1,973 pivot range

  6. johnnymagicmoney says:

    so Europe is in a recession and is printing deflation, Commodities have been obliterated, Japan is a comic strip and China has hard landing numbers and that’s with fudged data. Oh yeah throw in Greece being a risk again (keep in mind I am failing to mention stagflation in Brazil and a recession in Russia). What is hysterical is anyone with a brain who is willing to pick up a paper sees this clear as day but it took the FED to make a 5 word mention in its statement for people to freak out about the global condition outside of the US. Yeah thank god for the FED…………….I didnt realize it was a shit storm internationally til now. Thank God we have the FED to let us know what we all knew before they put their moron stamp on it.

  7. Draw Fiona’s little demand line on the $INDU and watch to see if it leads us down the rabbit hole.

    • rc1269 says:

      hey apologies for my ‘maybe time to take some profits on the 30r’ comment the other day – clearly early on that one. that’s one long and strong trend fo sho. good thing i hedged myself by saying, “not saying rates can’t continue lower…”. haha
      as Lee would say, “ahh… the internet.”

      • No worries, I sold and bought back a handle lower (all posted in real time to my twitter, btw 😛 ). My dad is an old options market maker, and his favorite saying with respect to the market is “I’d rather be lucky than good.” You helped my luck, so thank you, my friend 🙂

    • Down the rabbit hole … hey, where is that rascally rabbittrader?

  8. cicelyalaska says:

    Everyone is saying bear bear bear especially the media. That may tell us something about what is not going to happen.

    • rc1269 says:

      a lot of people were vocally bearish in ’07. didn’t make them wrong

      at some point everyone will be right

      if we ignore what the bozos on cnbc are saying at look to see that institutional equity allocations are the highest they’ve been since the mid-2000s then i think that will give you a better picture. as far as i can tell most of the people on tv aren’t the ones with the $ moving prices around

    • tommyboys says:

      Nobody can sell anything promoting good times and complacency. Fear sells – and its been sold all the way off the bottom – will never change. We’d all be a lot happier without the daily “news”. Tune it out.

      • spindoc73 says:

        I do not watch the news but a majority on this website seem bullish. Not too many folks saying they are short today. The battle of the pivot continues at any rate – if it holds, that would be bullish. If it fails after all of this work though …

    • simpleiam says:

      I agree cicely. Media is one of my big contrarian indicators!

      • torehund says:

        Media is reflecting the fear that folks rightfully feel at these times.
        Look at Greece, there Will be a dogfight With EU, and if one nation is allowed to go belly up BK, then others would want the same…Europe is starting to fracture.

  9. maxmax12 says:

    Hi Tony, this is such a great site. I hope your long term count is correct because that would mean that my children (and many others) will have the opportunity to live in one of the greatest bull market in history. What sectors would you put your money in for the next 10-20 years after the next Cycle pullback? Thoughts on housing? Thanks.

  10. rc1269 says:

    The Fed acknowledge global risks, saying that it will take into account readings on “international developments” as it decides how long to keep rates low.

    not content to be just the US central bank, we will now take in all possible factors that we can use as excuses to keep rates lower for longer. anybody looking for the Fed sticking to their tune and raising rates might be disappointed

  11. simpleiam says:

    Waiting to see if stocks do the ~90 minute reversals after Fed announcement.
    1st move = trend
    2nd move = counter
    3rd move = back to trend

    Don’t know if it will happen, but should be interesting.

  12. Tony: Thanks for posting the list of top market-cap stocks world-wide. I am embarrassed that I didn’t google the topic before I posted my question. Laziness on my part.

    • tony caldaro says:

      that’s not the top worldwide
      just a few off the top of my head

      • Your point about Apple not being in the Dow is a good one. Perhaps the selection committee will remedy that in the near future. Or maybe they think Apple is too volatile to be a Dow 30 stock. Possibly they want to see if it can make the transition from being a high-growth tech stock to being a true blue-chip, the way IBM did in the 50’s. Personally, I think it must be very close to that transition point.

        • The addition of Microsoft in 1999 to the Dow 30 is a more recent example of a high-growth tech stock getting the Dow Jones “seal of transformation” promoting it to the status of a top blue-chip.

    • saf18hornet says:

      AAPL is and will stay #1 for a while. The next 4 all bouncing around in the 300bn-400bn range are XOM, MSFT, GOOG, and BRK.A.

  13. CN: I have here a couple of snippets from your posts today that I am trying to reconcile:

    “FED cut rates 10/31/2007 and kept cutting – just 14 days after the top. It was a top then, and it is the top for that bull trend now. Central banks love Halloween surprises, but they almost always have the same long term effect – None.
    Just calling it a top, not implying anything about the character of the ensuing decline. In my opinion, the $VIX will neither add nor detract from what is to be. Everything relevant is right on the price chart.”

    If you think we have reached the top for the bull trend since 2009, then you are implying something about the character of the ensuing decline. A correction of this entire 6-year bull market would entail a major bear market.

    • You took two different responses to two different individuals on two different subjects and mashed them together. No wonder you are having difficulties reconciling them 🙂

      I am expecting $SPX 1570 down to 1040’s before we see new ATH’s again. I have no idea what the character of that decline will be (stair step like 2007-2009 or chop & slop like 2000-2002).

      My basic point in both cases was that neither the value of the $VIX or the actions of the FED have anything to do with where the charts say we’re going.

  14. mjtplayer says:

    Disappointing day for the bulls. You have the largest company in the US up over 7% and the averages are barely higher. Take out BA and the DOW would be red, AAPL accounts for virtually all the gains in the NAZ & COMP; take out both AAPL and BA and the SPX would easily be red.

    Very poor action, maybe the Fed will get things going to the upside? If not, there’s really no good news left and one would have to expect we go lower, especially with energy/oil company earnings and guidance on deck over the next 2 weeks.

  15. lunker1 says:

    20pt decline from yesterday hi
    13pt rise from today lo

  16. rc1269 says:

    while the biggest company in the world is up 7.7% the S&P can only muster a 3 point gain. i think that’s about all we need to know about the mkt today

  17. All these wasted attempts to label waves and change them every 3-4 days is pointless.

    I will prove it here

    Just use this chart and when the 34 Week MA line breaks materially, go short… otherwise keep picking stocks


  18. GYN LAB says:

    Good afternoon Mr T and all!
    My preferred count still well in play, yesterday completing Micro 2 and then waves i & ii of Micro 3 complete at 2023 this morning, lets see if the FED could provide the boost that iii of 3 needs!

  19. jrtrader25 says:

    I remember working as a newbie stockbroker back in the year 2000. It feels like we’re at the start of another similar period. I know there is no stock bubble as then, but the debt bubble is tremendously greater. There will be wild high beta swings as the bulls and bears fight it out. At some point the bulls will give in as they did in 2001 and the market will go down for two years with great volatility. I remember that the fed did a surprise interest rate cut on the first trading day of 2001, and my boss would proclaim don’t fight the fed! I foresee the fed coming back in with another round of QE later this year or early next. As in 2001 the market will brush it off and the bear market will continue. It’s a perfect time to raise cash and go fishing:)

    • chrisk44342 says:

      I’m no economist (what am I anyway?) but I think that’s a good assessment. QE with higher rates had value. Would it have value at ZB? I guess we’ll see in the euro zone if it does or not.

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