Friday update

SHORT TERM: gap up and go Friday, DOW +267

Overnight the Asian markets gained 1.1%. Europe opened higher and gained 2.5%. US index futures were higher overnight as well. At 8:30 monthly Payrolls were reported higher: 213k v 129k, and Unemployment rate dropped to 5.4% v 5.5%. The market gapped up at the open to SPX 2106 and continued to rally. At 10am Wholesale inventories were reported higher: +0.1% v +0.3%. Just before noon the SPX hit 2118, and then started to pullback. The pullback was small as the SPX hit 2112 by 2:30, then bounced to close at 2116.

For the day the SPX/DOW were +1.40%, and the NDX/NAZ were +1.25%. Bonds gained 16 ticks, Crude added 55 cents, Gold rose $6, and the USD was lower. Medium term support remains at the 2085 and 2070 pivots, with resistance at the 2131 and 2198 pivots. This week the MMIS was reported lower: 57.9% v 58.6%, and today the WLEI was reported higher: 50.5% v 49.9%.

Index futures were higher overnight, but really took off to the upside after the Payrolls report. The market gapped up 18 points at the open, then added another 12 points on top of that by noon. If this market was not so choppy the past two months this rally might even look bullish. The SPX has now rallied 50 points in just two days. Quite a reversal when considering it was just about to confirm a downtrend. Lots to consider in the weekend review. Best to your weekend!

MEDIUM TERM: bungee uptrend continues

LONG TERM: bull market


About tony caldaro

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53 Responses to Friday update

  1. torehund says:

    Coincidentally I am currently unable to do my charting, however that doesn’t matter that much, as work has mainly been done. A bit like wave surfing, you have paddled out, paddled FOR the wave; whats left is to SURF it. Good weekend to bulls and bears.

  2. sloop says:

    Interestingly since march on the daily chart the sideways chop was fairly contained within the 30/70 area on OEW rsi,and between 60/40 on my favourite rsi 9

  3. hello Mr Caldaro and all
    Is DAX always in downtrend ? thank you

  4. nardobeme says:

    Opted to take another long $SPX position, lacking a sell signal. I reckon the 5-10 pt. pullback will take place late afternoon Monday or Tuesday AM. I believe it’s possible that Europe will “help” further the rally with positive comings from Greece Monday. Time for an IPA. GW all.

  5. fishonhook says:

    In my many years of trading the market I have never seen one like this. It seems like money suddenly appears out of no-where and there is buying that hits the offer, not even waiting to see what is on offer to get a good price just machine gun buying.

    Is it the bots? Is it HFT? Is it shorts covering? I have no idea, but it was frenzied in some issue today. Not investors who are trying to get a good price. But money attacking the market up!

    Look at the INDU chart

    Look at the thursday’s close . Rounding over to drop, a small H and S arguable tested and ready to break, indicators which were pointing down ripped up. Sure feels like the end of a bull buying spree but they can go on for a long time, so not calling the top here though my miserable shorts are still in!

    • John Bell says:

      spoofing, layering, momentum ignition burst trades – very common now but all are illegal and not patrolled. Plus add insider information and early data release to some and you have a very tough market for “outsiders” and non HFT and non privileged insiders.

      legal. all HFT machines regularly run reports to accumulate the the area of hard stops to bust – both shorts and longs stops.

      Because of these effects many EW charts are now a series of ABC 3 wave patterns or even stand alone wave threes. Enjoy. hah….. sad. Market corruption increasing and nobody policing to make it fairer for retailers.

  6. John Bell says:

    a few quick comments and thanks for all the regulars here. enjoy reading. tx TC for this blog.

    bullish forces and some of these do not care about the fundamentals at all.
    1) stock buy backs are at all time highs and way up from last year. Buybacks have a black out window when companies cannot buy their stock. That period is usually 2 weeks before an earnings report to 2 days after reporting. Most companies have now reported and the stock buybacks should start flowing more soon. Today? Many CFO’s of companies wait for a “signal” from others or market technical point to begin the buyback period. The buyback period usually starts after the NFP report every 3 months and lasts for 6 weeks when next earnings reporting gets closer,
    2) SNB Swiss national banks is buying heavliy in US market for a while but especially since start of year.
    3) BOJ Bank of Japan is also buying foreign stocks and in the US.
    4) many foreigners still perceive the US market as the “less worse” economy and safer in general. EU even with EQE may not be safe with Greece flaring up and other economies may follow.

    bearish forces
    1) favorable seasonality is ending.
    2) many fundamentals still weak.
    3) overall earnings reports this time were weakest for many years with both earnings and revenue declining in many of the indexes.
    4) stock valuations are high to very high and will get much worse if market goes up much more from here with flat or declining earnings.

    trading – full disclosure
    I was 100% in cash waiting until near the buyback start window. I am in now in SPY and DIA as I figure those indexes contain the most buyback and foreign awareness stocks. Is my timing good? I do not know. maybe one more dip but not below 2088 monthly main pivot or this bull analysis is not going to win this time.

    Monthly pivots
    —main pivot – 2088 – I expect that to hold if this is the start up more real up. Stops just below that for now.
    –R1 pivot – 2124
    –R2 pivot – 2164 (market seldom goes much above R2 pivot. So if bulls win here I see 2164+ as target for end of May and then this will adjust for June. So 2200 is possible in June before next serious decline.

    chart for pivots if it displays for stockcharts people..

    • John Bell says:

      both SPX and INDU had major AD advance-decline days today for both issues and volume
      INDU AD issues 30/0 – AD volume 349/0
      SPX AD issues 450/42 – AD volume 1758/208

      So no negative down in INDU today in issues or volume.
      And SPX 10:1 issues and about 7.5:1 volume.

    • “The buyback period usually starts after the NFP report every 3 months and lasts for 6 weeks when next earnings reporting gets closer,” Interesting point and it goes with one thing I’m saying below. Post-NFP weeks have been positive out of the past 14 as a pattern every three months (and then last month as an anomaly too). Those every three months are February, May, August, November in the past year. Except for last month (April) all other post-NFP weeks were negative. Your point about the buybacks likely explains all or most of this pattern since buybacks are the only incremental buyer the past few years according to the Fed’s flow of funds reports.

      • John Bell says:

        If you buy into the buyback window theory then your above months Feb,May,Aug,Nov are correct and one would probably want to be long stock for those months starting after the NFP report. This pattern seems to be strengthening in recent year as buyback effect gets stronger and fundamentals weaker causing stock to drop or go sideways outside of the buyback main period.

        So my buying pattern has been and will likely be to be long stocks for the above months and hold until the up run tops and then be mostly cash other times or in bonds if they are working after this bond drop pre-rate hike jitters bottoms.

        If this pattern breaks, then I will have to change. But with no US QE, FED is watching and counting on the buyback boosting effect. If it stays strong, then no need to mention anymore QE.

  7. $$$NEWBIE$$$ says:

    There 318 million Americans, 14% are over 65 yrs old and 23% are under the age of 20. That leave 200 million Americans between the ages of 20 and 64. This morning’s unemployment report came out. The government said there are 92 million working age people without jobs …. but the unemployment rate is 5.4%. My math says the number is closer to 46% than it is to 5%.

    • tony caldaro says:

      if you don’t look you don’t count

    • syedsma says:

      May be a missing decimal? 9.2 vs 92?

    • JeffMilano says:

      Regardless, the MKT went up, because they wanted to go up. That number 5.4% is what everyone sees. Does that mean one has to loose money because of these clowns. NO. But the mkt telegraphed this since WED. Someone knew and kept on buying, leaving the shorts behind.

      • $$$NEWBIE$$$ says:

        Jeff, I like your thoughts and approach. I have not given up on my short, I believe todays high of 2117 could have been the end of wave 2 an 88% retrace and now finally after the masses have all become bullish again and shorts have run for the hills we can finally get this wave 3 down into high gear most likely with a gap down Monday.

    • Misleading, Newbie.

      92 million is for people 16 y/o or older but not for people between 20 and 65 y/o. There are 250 million Americans (civilian noninstitutional population) 16 y/o or older.

      So, it should be 92/250=37%, instead of 92/200=46%.

      • $$$NEWBIE$$$ says:

        Misleading you say.. well I wasn’t trying to mislead anyone. the % I came up with was 46 % the % you came up with is 37%, .. not a big difference the fact is and my point whether it is 10, 20, 30, 40 % its way higher than be reported.

    • robnaardin says:

      Newbie, what percentage of those 318 million Americans know what the definition of a sociopath is? Lmao, probably 0%.

  8. Please, what does MMIS stand for?

  9. fishonhook says:

    Must say I was given a good beating today. Clinging to some shorts by the skin of my teeth. All sorts of falling wedges were reversed in a number of indexes , including FTSE for example.

    I have no clue what Monday brings. Likely more up, based on the rip roaring rally but could just as likely bring an even stronger correction.


  10. So we have h&s forming the right shoulder on small caps.Above 126 is an all clear, below 120 and Newbie pops champagne.

  11. Gary Lewis says:

    Surprise surprise. The markets’ are at highs once again. They’ll never go down until the whole system collapses. I’m surprised that there is still a PUT market. It will be years to go before the system is exposed as a big fraud.

    • $$$NEWBIE$$$ says:

      I agree with you except the system/ bubble can collapse at any moment it doesn’t need to be years away, it could be any day at any moment. Anyone that’s doesn’t realize its rigged and has been propped needs to get their head examined.

      • dwr51 says:

        You don’t have to like it to trade it

      • JeffMilano says:

        I live and remember 1987 october 19. The market did not go down in one shot. It had gone down for a week and it felt not right. Then the drop. Actualy when it started to go down now on wed. it started to get better. Newbie, one must be carefull of the direction. It is not always certain. Money management is key. Most people blow out because even if eventually correct they loose too much to blow out because they cannot stay solvent. We have witness on this board, blaming TA. Actually it is their money management that makes them blow out. The mkt sice wed did not feel correct on the downtrend and as it turn out the mkt has back up leaving behind all shorts. Just the same on the way down when it did not feel the uptrend to be right the mkt left behind all bulls. This game if not played correctly can be very Dangerous. ABChart is a great person in knowing what is going on and respect him much.

  12. JeffMilano says:

    Tx Tony. We have witness that the market can humble even the most intelligent. One must be very carefull out there. There is no free lunch and when it looks safe then it is the most unsafe. Money management is key.

  13. blackjak100 says:

    Thx TC! Looks like 5 waves down in WTI from 62.56. Is crude on it’s way to bottom below $40? I don’t know, but will take a stab short around $61ish if it gets there. I’ll leave everyone with another rare streak currently in the S&P…

  14. Hi Tony and crew. Caught unawares by this today and I really shouldn’t have been. Last month I noted a study on post-NFP weeks, where the study went wrong after a string of 8 straight down post-NFP weeks which fell right before or after a seasonal options expiration (in March, June, September, December). Anyway, in April the post-NFP week was up to break that pattern.

    On the other hand, of the last 14 NFP weeks (15 now), only three have been down weeks. Specifically, March 2015, January 2015 and October 2014. So the odds overall were that this would be an up week on this score.

    The post-NFP week thing is generally bearish, but not so much every three months like this month (the ones that don’t fall immediately before or after the seasonal expiration). The last 4 of these weeks in May 2014, August 2014, November 2014, and February 2015 were all up or flat. In fact, these were the four weeks that weren’t down, and prior to last month all the others were down.

    So maybe the post-NFP week pattern is busted, which would be good news for short. Otherwise though, the pattern would have next week being up, with average max downs for the past four I noted being only 11.25 points.

    Looking forward to the weekend update.

  15. Thanks Tony. Await your weekend! what a curve ball. beyond my expectations.. not complaining though. but now short going into Monday..

  16. Not a bad day at Black Rock (movie reference), but large caps outperformed other size classes by a large margin. Transport sector wilted from it’s earlier respectable gains. NYSE A-D ratio didn’t give back too much from it’s early strong start, ending the day at +1889. Not a perfect Big Up, but I’ll take it.
    Speaking of Big Ups, Ashram, having driven CN off the site has now disappeared himself.

    • CB says:

      George, this sort of guilt-tripping rarely works. If you appreciate Ashram’s work and style, why not simply state that. Just because he has strong critical-thinking skills and has always had the guts to point out things that, in his experienced judgment, may not make sense (in order to help us avoid trading mistakes, btw), it doesn’t make him a villain. On the contrary, he’s spent a lot time recently trying to help folks here with his thoughtful posts
      If you ask nicely, he may (or may not) be interested in helping you & others here. But please understand, he doesn’t owe you a thing, especially if you start guilt-tripping him. That just doesn’t make any sense.
      Isn’t it obvious that everyone here is a free agent, everyone has an equal right to free expression & everyone is welcome here as long as their posts are relevant & courteous. Do you think that, perhaps, if you try being less judgmental & demanding, he might be interested in helping you? Why not try to be nice George? It may work better than being so critical.

    • fotis2 says:

      Ashram never existed CN either failed to see that or got tired of playing idiotic games.

  17. robnaardin says:

    Thanks Tony. My guess is 2119 to 2067 was a corrective wave of the same degree.

  18. Thx Tony, its been a big boys market all year with infinitely charting possibilities. Here is another possibility for INDU, maybe this rally was wave e of triangle wave B

  19. fotis2 says:

    Thanks Tony im not bullish any more dont know what to make of this best sit it out and wait for a firm signal either way a bit concerning it again failed to close 2120.

  20. mike7x says:

    Thanks Tony. I sense some multiple scenarios coming and another inflection point in the near future. At the end of the day it’s still a bull (market) and know one ever said bull riding was easy.

  21. llerias7 says:

    Tony, could this be the E-wave on spx daily chart? Shall see. I hope this time we get somewhere!

  22. Page says:

    Thanks Tony. Have a nice weekend.

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