Thursday update

SHORT TERM: ES much lower overnight but market rebounds, DOW -7

Overnight the Asian markets finished mixed. Europe opened lower and lost 1.0%. US index futures were lower overnight. At 8:30 weekly Jobless claims were reported higher: 294k v 282k, and Housing starts were higher: 926k v 908k. The market opened three points below yesterday’s SPX 2107 close, ticked up to 2105, then pulled back to 2100 by 10am. At 10am the Philly FED was reported higher: 7.5 v 5.0. The market bounced, retested SPX 2100 by 10:30, and then started to rally. By 2pm the market had reached SPX 2111, and then started to pullback. Heading into the close the SPX hit 2104 and closed at 2105.

For the day the SPX/DOW were -0.05%, and the NDX/NAZ were -0.10%. Bonds gained 5 ticks, Crude added 20 cents, Gold slipped $4, and the USD fell. Medium term support remains at the 2085 and 2070 pivots, with resistance at the 2131 and 2198 pivots. Tomorrow, Option expiration day: the CPI at 8:30, then Consumer sentiment and Leading indicators at 10am.

The market was about 10 points lower during futures trading, but recovered heading into the open. Then after a double bottom at SPX 2100 in the first hour of trading the market rallied to 2111. A point below yesterday’s high. Thus far the market has not responded with much downside pressure after the three-pronged topping pattern noted yesterday. With today’s relatively quiet session, options expiration tomorrow could be a wild one. No change on the short term count. Short term support remains at the 2085 and 2070 pivots, with resistance at SPX 2115 and SPX 2120. Short term momentum only dipped to neutral after yesterday’s slight negative divergence. Setting up what could be a larger negative divergence if the market can hit SPX 2112 again. Best to your Opex trading!

MEDIUM TERM: still an uptrend

LONG TERM: bull market


About tony caldaro

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152 Responses to Thursday update

  1. nardobeme says:

    Expecting a LL Monday, and reverse to new highs next week (possibly?). GL all…

  2. lunker1 says:

    5 down from 2112?
    1. 2100 12
    2. 2111
    3. 2079 = 2.62×1
    4. 2085

  3. Nobody messin with me today? Is it because I’m wearing my cape or because the market is down 300?

  4. Through out this April rally I repeatedly warn that April is historically a whiplash month and not the jolly month that WS want you to believe. Even yesterday I comment that;

    EL MATADOR (@LoLo_MATADOR) says:
    April 16, 2015 at 10:20 am
    Loving the wave structure, Now give me one more push into OPEX so the next whiplash can unfold

    While some don’t believe in the April whiplash, I know I got this kids attention for sure now;

  5. tommyboys says:

    Seeing some intraday (15 min) pos divs developing…SP, RUT etc…

    • tommyboys says:

      May just bust them down today we’ll see…

      • Lee X says:

        So you’re saying maybe we go up maybe we go down…thx

        • tommyboys says:

          Structure looks uncanny to March 25-26 FWIW. If so its higher now and a lower low on Monday to complete. Lee if you can predict the future do tell – that’d be valuable There is lots of value in repeatedly guessing and being consistently wrong…

    • llerias7 says:

      Begin to think of a general “stocks-exit” in the next rebound…unless is mid-October all over again…

  6. mike7x says:

    Greece is the word, is the word…again…
    “Greece will need to tap all the remaining cash reserves across its public sector — a total of 2 billion euros ($2.16 billion) — to pay civil service wages and pensions at the end of the month, according to finance ministry officials. Barring a last-ditch deal with its creditors, that is likely to leave no money to repay the International Monetary Fund almost 1 billion euros due in the first half of May, although Greece has said it wants to honor its debt obligations.”

    • mjtplayer says:

      The game of debt chicken continues. The Greek politicians will be hunted down and shot if they miss wages/salary and pension payouts in lieu of making debt payments.

      This puts the pressure on the ECB and IMF, make a deal to loan Greece more money, so that they can make payments that are coming due May 1st and May 14th to the IMF, or Greece folds. Greece holds the cards here, the “Troika” will have to come up with something if they don’t want Greece to blow-up.

    • lbhkinqa says:

      “Greece has said it wants to honor its debt obligations” lol I want to be a billionaire! lol

      Both Greece and I have to accept the reality that neither of these things are currently possible 🙂

      • I compare this to Visa or Mastercard paying me money to make my monthly credit card payment.Wouldn t it be nice?The only way Greece makes its loan payments is by getting another loan.And on it goes…until it doesn t.

  7. We should be “extremely extensively oversold”for Monday Mr.C?

    • kvilia says:

      SPX targets: 2065; 2040, 1980 – +- 7 points. After that we know there is something wrong here. Watch BBs on hourly UVXY and XIV, this should give you a very clear idea on what is going to happen Monday.

  8. llerias7 says:

    Is this a “mid-October 2014” crash like event?

  9. Page says:

    This won’t be just pullback, this will be a min 5, max 10% correction.

  10. Lee X says:

    Pivot smivots

  11. kvilia says:

    If UVXY is setting up a bull flag on hourly, it may visit 12 at the close, then drop down to the lower line of the channel at around 10 or a bit lower. I am still thinking that another leg up can be considered for markets and this is just a bear trap. Could be wrong but will be holding my longs over the weekend. Cheers,

  12. Tony,
    So far great call! You really nailed it.

  13. Tony, do you mind sharing your downside target for spx on this pullback/correction? Thanks.

  14. berniebaruch says:

    125 day MA and lower BB for SPX are at 2050. Maybe next week with a follow through but not on an expiration Friday (or any Friday in recent years). Any update on the repo market this afternoon. any sniff of illiquidity or deflation makes my ears perk up.

  15. Once again FO Bella and Waldo a week ago mentioned a possible 80+ possible S&P selloff beginning as late as 4/17.It looks like it might be dead on.I mentioned it Monday as my favorite observation on here.Also the Dax may be our new Japan as it gave notice of all this earlier.Years ago the Nikkeii would have a correction that would swing around to us after a couple weeks.As rc said something more may be behind this that QE can t contain…the Dax is what I m watching for a bottom and “V” reversal that WE are so accustomed to.Good luck all.

  16. Walter Crane says:

    You will know the market is headed way down for sure when the Bot and paid media starts releasing all the Ebola epidemics data that they have been ordered to suppress while the market is in bull mode.

  17. fishonhook says:

    Well bears we are only a few % from all time highs , os too early to read too much into it. And as we know all it takes is a few words from bubbe Yellin to get the fire going again.

    • zepfan123 says:

      That ain’t gonna work forever ya know.

      • fishonhook says:

        Well 6 years is a long time. I am a bear. So would like to see a good correction. But the hedges are selling the VXX even as the market drifted down. No worries here . If things bad ws can always get another bailout

        • zepfan123 says:

          Exactly,6 years is a long time. I’m just glad I bought all my long term hold stuff several years back…and now have some wiggle room profit if we slide back for a while…which big picture not a big deal and not a bearish view. But I think the ATH’s we’ve seen recently may hold for a while here in 2015. We got a whole lot of rally out of all that QE..but that can’t just go on and on without some resetting.

  18. I’ve seen multiple posters looking for new highs? why? is there a wave count you see? is it because you are use to every dip being bought and new highs following? Is it because you are slightly underwater and would like another chance to sell at higher price? I don’t see new highs at all, My bear count says we straight below 2050 not new highs, at least not anytime soon. Market has either topped or primary III has topped, in my opinion we are going hundreds of points down from here in quick fashion.

    • 7dayyss says:

      Didn’t you read any of BJ’s research he posted over the last couple of days for a reason?!

      • blackjak100 says:

        Would prefer a close over 2085 today. The one time it didn’t pan out since 1950 was July 2007 or the start of P4. I actually prefer 2120 to be the P3 high from a time and price perspective so maybe this is the second time out of 10 or start of P4.

    • stephenk1980 says:

      For me it’s in the fractals. My own pattern analysis which tells me it needs to challenge the highs more convincingly before we drop. If my pattern is right, it’ll be less than a week now.

      Also, it’s a bit too easy with the wedge breakout and retest by S&P for this to be the real drop. Do you really think it’s that easy? Perfect for bears like you to believe this is ‘it’ and then be smashed on the last way up. Perfect to trap bulls who buy when they see the price come back into the wedge, thus ending the breakout and think everything is now fine.

      Of course I could be wrong, but I’ve just got in long now, so I guess we’ll see!

    • Wow! Bold Call – we’re exactly 2.1% off the ATH in the S&P and another fresh round of calls for a massive sell off (i.e. hundreds of points down in quick fashion). These events are great in the context of a very long-term uptrend, especially after several weeks of sideways choppiness that was biased to the upside. Gives a guy like me (waiting for UPRO to touch high $140s) something to do while I wait. Made a quick 10% in TVIX today to take some of the sting out of the air coming out of my UPRO balloon. Watch for a snapback rally to new ATHs if we get down to 2,040.

  19. mike7x says:

    Think we’re headed for a test of the SPX 2040 area. From Tony’s Wed. Update:

    Also of note, the SPX closed over 2100, the DOW closed over 18,000 and the NAZ closed over 5,000 again. The only two times this type of event occurred was the beginning of March, which led to the SPX 2040 low, and the middle of March, which lead to the SPX 2046 low. Inflection point?

  20. kvilia says:

    I’m for now stuck with my longs, primarily because these are 401Ks, not too flexible there. Got read of XIV a couple of days ago, this was good. Trying to understand where is that line that separates the bear trap, which I think it is, and something more significant. Timing is my worse skill but I would guess if 2070-2080 does not provide a good support, this could be quite painful. Again, I am looking for some sort of new highs before we get into a meaningful correction. Let’s see.

    • Down the road in 1 single streak, is a short living correction. Monitor retrace, if can get to 50% and reacts, is dangerous for long

      • The danger for long will start (if) the reaction will have follow trough. Anyhow if it is a wave or a wave 1 to the downside, will retrace or by a b or by a 2… keep calm and eye open

        • For now, only 3 waves down. If 5 could be a wave 1 of whatever, of 3 or 1 or some impulse. If stop here without a new low is a correction, so either the a of C or the 1 of a of C. But has to retrace. Could also be a wave 2 of the famous 1 of 3 of 5. And for now we could see a clear abc sharp, if stops here. So you could save, anyhow some

  21. buddyglove says:

    Kudos to Tony and all shorts who nailed this. i was out of my longs but not short.

    • “Don’t be the patsy at the card table”
      So u are bullish on every index in the world and now your flat ?
      u sold , russia , “sunny side of europe”, brazil , and all the commodities ?

      • buddyglove says:

        Dark..I am not used to having to explain myself to anyone but since you find it “funny”, here goes. I closed my S&P longs (trail stopped out) for 1 x 41pts, 1 x 19pts and 1 x 12 pts a few days ago with brief explanation on this blog.
        My investments in Europe (Italy spain,france),Hong Kong,Japan,Brazil,Russia are still very much in profit as their entry was timely.
        Commods.. Still Long NG,Gold and a quality mixed Energy fund.
        T-bond short stopped for a loss.
        Currently watching soft commods especially Cotton
        Thank you for your interest in my investment/trading positions, GL.

  22. filipozze says:

    in my opinion ending diagonal still a valide option. if you don’t recognize impulsive pattern is beacuse ending diagonal is formed by a-b-c structure. this could be the “B” of fifht wave

  23. fishonhook says:

    Kudos to Tony for sticking to C and not going for an ‘alternate’ count, also to Pminvestor and others who called it.
    Great posts today, esp rc. Keep up with the bond news please

  24. zepfan123 says:

    Well maybe us short term shorts can finally get something going here into next week. A close below SPX 2080 today would be nice. A close below SPX 2070 would be really,really nice.

    • GYN LAB says:

      I need this to touch 2101 for my short entry! Hope we get that before your close below 2080 🙂

      • GYN LAB says:

        adjusted to 2099 for that last few pt drop… it is hard lesson trying to be patient and disciplined, doing nothing rash! If this is start of C down, .618 retracement into 2100 the ideal entry!

      • zepfan123 says:

        I really don’t want to see 2101 for a little while myself..but thats just me. 🙂 I see we tagged my 2080 while I was I guess we’ll find out soon.- I’m hanging on to my SPX puts for sure now…with very loose stop/limit orders in case we rally back up into the close today…which of course I’m hoping we don’t.

  25. scottycj1 says:

    The bond bubble is the largest of all time… will make the real estate bubble of 2005—2008 look like a walk in the park. The 30 + year bond market is near the end. Seems we couldn’t take out the 2112 level I mentioned on Wednesday. Wave C or 3 is upon us.

  26. mjtplayer says:

    Wedge/diagonal pattern from 2,040 has been breached, down we go…

    VIX at 12.50 yesterday set-up a double bottom, expect a rally to the top of the BB around 16 in the days ahead

  27. manunidhi21 says:

    Namaste Tony!
    Point to be noted Mylord..
    Inverted yield curve

    • tony caldaro says:

      can we have a negative yield curve when rates are zero?

    • rc1269 says:

      the repo market over there is breaking. and much like Bernanke’s historic “the subprime crisis is contained” comment, Draghi’s belief that concerns about bond liquidity over there are “very premature” is completely false. he might wish that it was premature, since that would allow them to continue their QE unabated. however, that is untrue and he’s either dangerously out of touch or dangerously careless. either way i bet you can guess the common theme there..
      happy Friday!

      • tony caldaro says:

        What exactly does the repo market breaking mean?

        • rc1269 says:

          i short, it means that Euro QE is causing a shortage of high quality collateral. repo markets are a huge contributor to global liquidity. when a dealer needs liquidity, or an investor needs a bond, then the repo market is often used for overnight lending. in normal operations a dealer looking for liquidity will put up a treasury, or in this case, say, a german bund, as collateral for short term borrowing. they pay a small interest rate on that borrowing. when a bond is in short supply it’s on ‘special’, meaning they can borrow at an even lower rate when they put those up for collateral because everybody wants those bonds. right now repo rates over there are negative for many bonds, meaning the collateral is in such short supply that dealers who put them up for collateral actually *get paid* to borrow money, rather than pay themselves.
          on the surface it might just seem like ‘just another negative interest rate.’ but given that market’s critical importance in short term liquidity provision i think it signifies a much more worrying condition. what it ultimately comes down to is i just don’t think their sov markets are deep enough to handle QE like the US treasury market.

      • buddyglove says:

        rc1269..Thnx, always useful to get a view from someone who works at the sharp end of the debt mkts.

      • Lee X says:

        Thanks and Happy Friday to you R C !

      • RC: Thanks for the insight into the bond and short term borrowing markets!

  28. ES R 2099 Below S @ 2083……2079/2063/2053…bottom of blue channel tgt 2026. Channel goes back to end of Feb…

  29. blackjak100 says:

    I think the R/R is very high to take a trade on the long side if S&P reaches 2085ish where 20 & 50 dma lie. Not to forget the 2085 pivot. Based on this rare rangebound trading near 52 wk high, I will take the 8/9 times the S&P goes on to make new highs. The one time it did not in 2007, it was the start of P4 so there’s a chance I will be wrong. GL and Cheers!

    • stephenk1980 says:

      I think we could be looking at a low of 2070, but I agree that it is definitely going higher before we drop anywhere near 2040 IMO

    • manunidhi21 says:

      Thnx Bj..ur article suggest that 8/9 times after a rangebound market it corrected a BIT and then made new highs except 1995…if i am reading it right..

      And a BIT of correction is a variable term.Traditionally Bulls always need an entry point in equities whr they arbitage thr hedges in s opex but we r in diffrnt times too..lets c whr it goes

  30. mike7x says:

    IMF’s Lagarde prepares markets for what is increasingly likely: “Grexit”

  31. mike7x says:

    Is VIX at ~12.50 suggesting that pull-back to ~2040 SPX?

  32. fishonhook says:

    The futures are down half a point. C must have started

  33. jeffbalin says:

    Hi Tony,

    I’ve made a casual observation that basically, wave 2 seems to always be shorter or much shorter in time length then wave 1. Same with wave 4 shorter then wave 3, and abc’s shorter then 1-5. It seems to always be true but there might be a few exceptions. I am pretty sure it is true at least 80% of the time and maybe over 90%. In any case I think it is information always worth considering, such as today.

    In the current situation, the primary count has minor 1 from 1981 to 2120 about 3.5 weeks long and minor 2 now at a big 7 weeks with a C wave still coming which could make wave 2, 8-9 weeks long. I feel that based on only time, the odds are small this is a correct count, though it could happen that this time is an exception. So if having wave 2 be much longer then wave 1 is usually wrong, I see 2 choices for labeling. Either minor 3 started at some point maybe the last week of March or, we are in primary 4. Given the sort of lofty macd levels and negative cross on the monthly chart, and this long and rocky possible corrective waves of the last 7 weeks and counting, I think primary 4 would be a definite possibility. So to start, from your records, based on history, would you say the odds of a wave 2 being twice as long in time as wave 1 pretty small or even non existent?
    Thank you!

  34. Tony, is there any possibility of a wave 1 of 3 playing as a diagonal ?? Thank you in advance.

  35. CB says:

    Thanks Tony

  36. rabbittrader1 says:

    i am just wondering. does anybody know how to make money in the stock market in a market like this? I have made some money in short gold (now long) and short sugar (now out), over the past month or so but NOTHING IN STOCKS. That is why one must play commodities if they wish to make a CONSISTENT income in this Money Game. IMVHO Rabbit.

  37. thanks Tony.
    $UVXY, $JNUG, $SPX: most recent mkt update:

  38. teej911 says:

    Thank you Tony!

  39. zepfan123 says:

    And the big tease continues. Both short term bulls and bears very frustrated. I know I am.

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