Thursday update

SHORT TERM: gap down opening again, DOW -117

Overnight the Asian markets gained 0.2%. European markets opened lower bit gained 0.1%. US index futures were lower overnight, and at 8:30 weekly Jobless claims were reported higher: 291k v 289k. The market gapped down at the opened for the third day in a row. It opened at SPX 2094, dipped to 2090, and then tried to rally. The SPX had closed at 2100 yesterday. At 10am the Philly FED was reported lower: 5.0 v 5.2, Leading indicators were reported higher: +0.2% v +0.2%, and FED governor Tarullo’s senate testimony: By 10:30 the market had hit SPX 2097, and then started to pullback again. At 1pm the SPX hit 2086, and then tried to rally. The rally lasted to 3pm and hit SPX 2093, then the market pulled back to close at 2089.

For the day the SPX/DOW were -0.55%, and the NDX/NAZ were +0.15%. Bonds lost 11 ticks, Crude slid $1.05, Gold dipped a $1, and the USD was higher. Medium term support remains at the 2085 and 2070 pivots, with resistance at the 2131 and 2198 pivots. Tomorrow is Options expiration Friday.

The market had its sixth straight gap opening today, four of them down, after yesterday afternoon’s spike up rally. In fact, since February 17th the SPX has not had two successive up days in a row. Day traders market. After yesterday’s SPX 2107 high the market has now pulled back a larger than expected 21 points. This pullback, thus far, looks similar to the last pullback (2081-2061) and the one before that (2066-2041). However, if the pullback continues lower, and drops below SPX 2081, the entire rally from 2040 will start to look choppy. This would then suggest it could have all been a B wave of an ongoing correction from SPX 2120. For now the Minor wave 3 impulsive structure remains. Short term support is at the 2085 and 2070 pivots, with resistance at SPX 2107 and SPX 2120. Short term momentum dropped to neutral during today’s pullback then turned higher. Best to your Opex trading!

MEDIUM TERM: uptrend

LONG TERM: bull market


About tony caldaro

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163 Responses to Thursday update

  1. ashram says:

    So buddyglove gets bullish gold, and suddenly everything begins to fall into place.
    Or conspiracy?

  2. fishonhook says:

    Paging Shirhas, paging Shirhas.
    Looks like your model needs to go into the garberator.

    • Just logged in here. I am not going anywhere. read what I was saying carefully. SPX 2110, I did say, I also said, DAX 12030, I also said FTSE watch out for.

      Finally I also said Lufthansa strike. But not problem, Ryanair is there, 7 standing are allowed, i was sixth.

  3. Page says:

    Gold miners will give up most of the gains by end of day.

  4. GLD or NUGT (if you have a high risk tolerance) confirmed my buy signals this morning. Sitting in GLD and QQQ right now

  5. lunker1 says:

    Ever notice on this blog or on Twitter when someone goes quiet for a few days or a week it means the trade they were jumping up and down about was wrong? LOL

  6. GYN LAB says:

    I was reading the comments about SPX monthly.. but I guess for many of us here more short-term charts interest more, taking a look at SPX daily the MACD is at a ‘Golden Cross’ with much higher price in the nearer future first then what the monthly tells you. Probably this could be a clue that we are in 5th wave of some sort, but for the time being I will keep buying the dips until proven otherwise.

  7. mjtplayer says:

    The ETF to short the VIX (ticker: XIV) is very close to the downtrend channels’ upper TL resistance at $36

    • Lee X says:

      This was brought up a while ago and certainly it hasn’t been put in effect yet but just thought I’d share it…the talking points are pretty entertaining…ok back to the markets

      • tony caldaro says:

        If they would use it to lower Real Estate tax and fix the roads I’m all for it.

      • mjtplayer says:

        They should re-name it the “please don’t do financial transactions in IL tax” b/c that’s what will happen over time. Will these brain dead politicians ever learn: when you tax something, you get less of it

        Here’s an idea – how about you cut gov’t spending, deeply and across the board, and simultaneously cut tax rates. Let workers keep more of their hard earned money and keep politicians from wasting it, then you will see an increase in velocity, thus an increase in economic activity – duh

        • CB says:

          So true.
          “I am in favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it’s possible.” – M.Friedman

    • gtoptions says:

      (11) OK, how could we use the money raised by the LST?

      First we pay the Lobbyist, then whatever is left goes to filling pot holes.😉

  8. for what its worth I would expect a nasty reversal today.

  9. mjtplayer says:

    VIX getting smashed, traders getting extremely complacent. Spot VIX trading out at 12.65 – that’s below the 13.07 support and also below the 12.87 from 3/2 (the prior low). Next downside support is around 12.40

    Front month futures (April) trading at 16.05 That’s a HUGE contango from the spot – over 340bps! You’ll want to see the front month contract drop below 16 into the mid-high 15’s before going long, but that would still be over 300bps from the spot.

    This is extreme complacency, the exact opposite phenomenon that occurs when you see spot VIX trading 200, 300 or 400bps above the front month contract during times of extreme fear – like in Oct ’14 when spot VIX topped-out at 32 but the front month contract never made it above 28 (extreme fear).

    • kvilia says:

      So another couple of days before getting into volatility play? Would this coincide with the market top of some sort? VIX gambling has to be very precise, low risk/reward.

      • mjtplayer says:

        I just took a half position in the VXX, sold 30 of the 3/27 26 strike puts for $1.35.

        Received $4k+ in premium and I’m expecting to get “put” the stock next Friday. Will add the other half if we push down to the low $24’s in the VXX, otherwise I’ll stick to what I have. I want to be long the VIX into April, but will hedge by selling calls…

    • lunker1 says:

      Agree. I think the tell for today’s move was that yesterday the VIX was only slightly up on a down 10 day

  10. torehund says:

    Waking up to a rainy day the first one experienced so far EVER here in Peru. I have heard horror stories of flodding With El Nino at previous occations…is it on the GO once more ? Well bulk is up…Have too look futher into the matter in the coming days.

  11. ABchart says:

    Hello Tony and all!
    Thanks all those who have expressed their willingness to subscribe to my blog. Having received many visitors lately, especially people from France who confuse analysis and trading, I decided to suspend the blog temporarily while waiting to put a disclaimer .
    I’ll be back soon!
    Thank you for sharing your work and your interest to mine.

  12. Hi Tony,
    The MACD on the monthly SPX chart looks like its going to turn down. Also the momentum indicator on the MACD has been declining since the beginning of 2014. It does appear as though we are topping. Another observation from your SPX monthly chart, is it possible that SC1 ended with SPX 2119 and that we have been in a 5th wave since March 2009? Somehow this scenario seems to be very consistent with the unprecedented last ditch effort of the FED to save the economy from decline. Just thinking out loud. Thank you again for your excellent blog.

    • tony caldaro says:

      Agree there is some weakness in the MACD.
      Sideways markets have that effect.
      Negative RSI divergences have been underway since 2013 too.
      Still se this market grinding higher though

      • If the market dropped 500 S&P points we could say in retrospect that it was obvious by looking at the monthly chart we were warned well in advance.As I ve stated though, these MACDs can cross over back and forth with no lasting problem.A 10% correction from here would probably be an indicator of a change in the bull to a bear market.Is that even possible with the world swimming in QE and 0% or below intetest rates? Probably not.Remember all charts before 2009 were without QE and Fed manipulation and can t (in my opinion) be read the same as now.QE distorts every system that used to work before and makes it a toothless tiger, a shadow of its former self.The MACD that sits at 142 is extremely overbought —as overbought as it was oversold in March 2009.But monetary policy is powerful and overwhelming…though the chart is something to watch for sure.I m a cautious bull ready to sell in a moments notice.

  13. stormchaser80 says:

    For the record got buy signal for 401k, 100% in for a trade (small and mid caps).

    • tommyboys says:

      401k signal – there’s a new one🙂

      • kvilia says:

        +1🙂 I am in for a few days now, ranging from 3% to 8% profit as of yesterday on different 401K funds but getting nervous now. I’m looking at 1130 to close my long positions, don’t care if I miss 1200.

    • purplember says:

      Fed gov’t has added $7 trillion dollars of debt in last 6 years. that’s ~$2 million of debt per MINUTE every day for 6 years. let that sink in for a minute – ha ! had the gov’t balanced the budget, they could of written a check to EVERY house & apartment in America for $67,000. would the economy be booming more had consumers spent money vs gov’t ??

      • fotis2 says:

        I read the Swiss are planning to do just that instead of the money going thru the usual channels they propose to give it directly to the people in the tune of $2.800 per month/household I’m not a pro in economics but logically that would have a direct positive benefit to the economy with immediate effect just my opinion.

        • fishonhook says:

          No I think it is better to give to Wall Street Investment banks so they can pay huge bonuses. Eventually some of it will trickle down to the plebs.

      • buddyglove says:

        Above…its easy to snort and snipe at Fed actions, and its not ideal, but the alternatives would have been a disaster of epic proportions. Check out your history books.

    • stormchaser80 says:

      Clearly we are in a huge bull market, nothing can go wrong here.

    • tommyboys says:


  14. torehund says:

    on Quarterly 2 x abc Down Complete. Shipping could become red hot.

    • The charts of Frontline do show some potential for initiating a bullish move. Do you have an opinion on the business cycle in Europe, other than what you might infer from those charts?

      • torehund says:

        George, With shipping its Charts only as I cannot claim any fundamental understanding of issues Beyond whats presented in the media. With Pharmas its a different issue, thats where I have my relative strength.

  15. torehund says:

    Fed is between a rock and a hard place, only way to halt the dollar is to lower rates, and if the dollar doesnt rise for a period the market goes up. This induces (forced inflatioary pressure) in Europe as their currency weakes, and if it had not been for the constant decline in commodity prices Europe would have seen significant rising COSTs. GM closed Down its Russian car factory, and these US companies Will face problems With exports too. If the domestic market doesnt fully compensate. Ford looks ready for a plunge it has been flatlining in the ceiling for quite some time.

  16. gtoptions says:

    Thanks Tony
    SPY/SPX ~ Daily & Weekly Technicals similar to mid April through mid May 2014.
    Potential (dreaming) for a nice Chop Fest for the day traders while creeping up the short term (green) TL and hitting the long term upper TL displayed on the chart below.
    Breaks support at 204.40 and all bets are off.😉
    GL All

  17. rabbittrader1 says:

    STRONG CLOSE FRIDAY , imvho. , Followed by another UP WEEK . Listening to some old music from 1936 ” What would you give in exchange for your soul” If anyone is interested I will give you the Lyrics. Yours truly , Rabbit. Oh. Page the minutte wave 2 on gold should now end at about 1182 , then it is a SHORT to near $1000. R.

  18. bhupal777 says:

    Thanks Tony.
    We did not get a follow through day today, that is not a good sign. After going through the charts of my portfolio stocks I can tell that tomorrow morning we are going to start in red. If 2080 doesn’t hold then we are talking something bigger. If it comes down to 2050 I don’t think support at 2050 will hold this time.

    Though most of my stocks had a good day today they actually went up to touch major resistances. Example: FB, TWTR. We need good market action to overcome those resistances. I am glad I have some hedges that I initiated this week (Short KRE and EEM). Look at EEM, both 50 and 100 day SMAs have acted as resistances and price got rejected. If major downtrend is brewing then EEM should fall to 35 in 1 or 2 weeks. Same case with KRE straight down to 36. So 2080 on SPX is very important to hold tomorrow.

    Today entered a small position in JNUG with a stop of 15 for a short term play. If it starts going up tomorrow then it should reach 25 in coming week and that is my exit point. Good luck all.

  19. Market that is able to rally 40 points in one streak, no matter the reason why, is a Market that doesn’t like shorts. It does like to collect a bunch of bears anyway, to use them to squeeze and to lit the fuse for one more run. Consider, to get down 30 points take forever and to rally 50 only a quarter of an hour. After yesterday, wouldn’t have been sane any up day. A down day was a certainty. But will see… maybe need to shake up more to have inn more bears. Option max pain around 2070.

    • mjtplayer says:

      I’ve been discussing this pattern for 3 weeks and it’s looking better by the day

    • blackjak100 says:

      I’ve been discussing it for over a month with a target of 2150-2200 in 1-3 weeks so it overshoots the upper trendline as an ED typically does. Anyway, still need this last c wave to finish and that requires 2081 to hold.

  20. DAX on sell as of close, but will give buy on break above 12030.
    SPX and INDU should generate sell tomorrow. In fact, all American indices are looking weak.
    FTSE is looking strong and unlikely to generate sell at least till Tuesday, be aware, FTSE is currency game and like DAX it may go up vertically (only to fall back later), so watch cable.

    • bhupal777 says:

      You can say any thing you want with no supporting facts. My observation is many risk assets got a very good bid today. FB, TWTR, BIDU and many Biotech stocks. In fact even Financials recovered from early morning selling by the market close. If market starts falling tomorrow then so it be and stops get hit. But I would not want you to come here and take credit because you are just throwing darts. If you don’t agree then show us the supporting facts like technicals or waves, point and figure charts or something. Good Luck.

      • jhjoyner says:

        I saw the same bids on FB, twtr and bidu today. The correction may begin the 4th to last trading day of month or the 3rd to last trading of the month. QTR end rebalancing of portfolios-not unusual. Then the market can head to the 2200 level in April.

    • fishonhook says:

      Are you going to share this magic formula with us or are we to just have faith?

      • Fish…, Please keep faith, I will get you there. trust no one, except me. In the morning, always, ask yourself a question, “What I am saying”. Market likely collapse circuit level in a day, president may use executive order to not sell stocks. It can get that worse.
        bhupal…, if you think I am throwing DART, then I am throwing DART.

    • jhjoyner says:

      SPX seems like it want to decline to the 2000-20019 area one more time. Internals are weak and 2102 looks like a b wave. Expect correction to start very soon.

      • arthurk says:

        Second post, new account. Agree completely. Looking over closing stats – Dow and Spx down .5% w/ no change in volatility combined with big drop in put/call points to lack of short sellers. Time for switch from Fed-driven to economy-driven market, but I still expect one more high by May before P4 into Fall. Next low will probably be currency driven, I’m looking for Euro at par w/ USD.

      • blackjak100 says:

        Why do you think the internals are weak? NYAD is not too far from all time high and acting normally. Need to hold above 2081 though.

        • Blackjack: I agree that NYSE internals look strong enough. Both daily and weekly New Highs- New Lows are at all time highs. Richard Russell”s PTI, however, has been languishing around it’s 89-day MA and has not made new highs for a while.

  21. kvilia says:

    Thank you, Tony. No worries, basketball was a distraction today:

  22. fotis2 says:

    Thanks Tony starting to get a bit intricate this index 3rd inside day in a row since 2040 can’t remember that in the past strange looking daily chart anyway lets see tmrw. GL to all.

    • tommyboys says:

      Doesn’t look intricate here – just really bullish. Long green candles with inside consolidation days in between each. Basically “Three White Soldiers” with consolidations between each one – almost a kickoff move. Time will tell.

      • fotis2 says:

        Thanks tb yes you right a bullish pattern so long for now inside day kicked off looks like it may take out ATH today and from there on up up up!

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