Wednesday update

SHORT TERM: gap up opening fades, DOW -8

Overnight the Asian markets gained 0.5%. Europe opened higher but lost 0.4%. US index futures were higher overnight. At 8:30 Retail sales were reported flat: 0.0% v +0.9%, and Export (-0.7% v +0.2%)/Import (-0.4% v -0.4%) prices were reported lower. The market gapped up at the open to SPX 2105, yesterday’s high, and continued to rally. In the opening minutes the SPX hit 2110 then started to pullback. At 10am Business inventories were reported higher: +0.1% v +0.3%. Around 11am the SPX hit 2097, bounced to 2104 by 1pm, then hit 2096 by 3:30, just before a 2098 close.

For the day the SPX/DOW were -0.05%, and the NDX/NAZ were +0.10%. Bonds lost 3 ticks, Crude dropped 60 cents, Gold rallied $20, and the USD was lower. Medium term support remains at the 2085 and 2070 pivots, with resistance at the 2131 and 2198 pivots. Tomorrow: weekly Jobless claims and the PPI at 8:30.

The market gapped up at the open today, rallied to SPX 2110 in the opening minutes, then pulled back for the rest of the day. During the rally one of our four long term indicators cleared its negative divergence. This suggests the current uptrend, when it concludes, will not end Primary III, only Intermediate wave one of Major wave 5. Primary III remains on target to complete in 2016. Shorter term, the market has now rallied to its third lower high: 2126-2121-2118-2110. A rally above SPX 2118 would probably keep the uptrend going. A drop below 2086 would probably get a downtrend going. Short term support is at the 2085 and 2070 pivots, with resistance at SPX 2118/2121 and the 2131 pivot. Short term momentum rose above neutral during today’s rally, then dropped back below neutral to end the day. Best to your trading!

MEDIUM TERM: still an uptrend

LONG TERM: bull market


About tony caldaro

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108 Responses to Wednesday update

  1. llerias7 says:

    Tony, if SPX surpasses 2131 you will consider that Int.III is on the move?

  2. mjtplayer says:

    For those who don’t follow Martin Armstrong, here’s his view:

    • tony caldaro says:

      Can you ask the author where he got DOW data for that period, when the DOW was not even created until the late 1880’s. In fact, there was no record of stock market activity in the US either daily or weekly until 1885.

  3. tradeanimal says:

    Tony…Thank you for the recent Commodities, Housing and Bond Market updates. A lot of time and effort. Truly appreciate it!

  4. $$$NEWBIE$$$ says:

    The Fed this the Fed that, broken record. Economy on life support for 6 years if it wasn’t we wouldn’t be talking about the fed every time they open their mouth. Denial is not a river in Egypt.

    • tony caldaro says:

      Don’t Fight the Fed!
      Check the reference, then check the date of the article.
      Get the picture?

      • $$$NEWBIE$$$ says:

        Yep I get the picture. I also get they are the cause of this stock market surge and they will be the cause of the dollar loosing its reserve status and the reason for the next market crash and depression.🙂 Go Federal Reserve!

      • mjtplayer says:

        Tony – “Don’t fight the Fed”

        But, the Fed is clearly concerned with inflated asset values, thanks to their own policies. QE is done, now we’re starting to raise rates. Does the Fed now want slightly lower asset prices, in an attempt to try and not get blamed for creating this bubble? If so, then “don’t fight the Fed” – works in both directions🙂

        • H D says:

          34 handle rally this week, don’t fight the BOTs:mrgreen:

        • tony caldaro says:

          The FED has had an accommodative policy for 7 years now. Asset prices were important in the beginning, the so called trickle down effect. But getting back to a somewhat normal monetary policy is more important now. One can not live on monetary opium forever. If it causes a recession, so be it. Beats doing nothing, like in the 1930’s, and having a depression.
          Remember Bernanke was hand picked for that job. Not because he is some sort of genius, or anything like that. Because he had studied the depression, knew what to do to counter it, and did it. Clearly others saw that cycle coming.

          • H D says:

            New politicians will usher in the next crisis I’m certain. That may start with new FED? I am not even a newbie novice in this area but seems like the timing/ cycles (2016) line up.

          • tony caldaro says:

            You may be right.
            Some think they can do better than the FED, and want to take away their powers to control TBTF. Congress did a great job with inflation in the 1970’s, and deflation in the 1930’s. They’ll try to diminish the FED, break up the banks, and then break up the country into colonies again =)

          • fishonhook says:

            You are always too kind on the Fed Tony, they are serial bubble blowers.
            Greenspan and his two stooges never saw the Dotcom bubble, never saw the housing bubble, dont see what a monstrous debt bubble they have built which can cause chaos when unwound.

            It’s like a surgeon cutting into an artery while operating , when everyone around has been screaming to watch out, and then applauding when the stitch up the artery and the bleeding stops (except the artery went to the leg and that will drop off now!!)

          • tony caldaro says:

            Question fish:
            If monetary policy creates bubbles, which has occurred in recent decades, does the FED come right out and say we are in a bubble and create a panic? The FED does not create bubbles. Liquidity that is concentrated into one or two asset classes creates the bubbles. And even so, if there is little leverage involved, there is little impact on the economy. It is only when the concentration of liquidity is leveraged that economies implode.

          • tony caldaro says:

            Did you get that from the Alex Jones site?
            The USD has been the world’s reserve currency since WW II. The reserve currency country has certain privileges, i.e. petro dollar, unlimited debt capabilities, etc. The US government, and especially its politicians, are accustomed to these benefits. If anyone, or any country for that matter, thinks they can change this status by the stroke of a pen, they have a big surprise in store for them. Well, maybe not them, but the people that write this nonsense and think it could happen peacefully. The surprise is the US military.
            Fear sells!

          • trondack says:

            Newbie, could be “tin foil”. But, I believe the IMF wants a new SDR ( Special Drawing Rights Currency ).

          • $$$NEWBIE$$$ says:

            Tony, No not from Alex Jones . Lol.

  5. Page says:

    Markets will continue to move higher until Memorial Day. The next pullback is expected on first week of June. Biotech is the next sector which will take the markets higher.

  6. Dex T says:

    June is coming up and there is high potential for the first rate increase. Hopefully it happens!

    • rc1269 says:

      high potential? says whom?

      Fed Funds futures imply a zero % chance of a June hike. One month ago tht was 5% and 6 months ago it was 20%. Odds for July are only 3.4%, and September 19.9%.

      So unless 1:5 is now considered high odds for something, there is in fact very low probability that we get a rake hike at all anytime this year

  7. Tony,
    Based on earlier comments I am guessing that a break above the A C triangle line (currently near the 2131 Pivot) would be considered a throw over rather than a breakout? (Not sure if diagonals have throw overs).

  8. H D says:

    Just guessing, those 2085 buyers are drinking a cold one and stalking this exhaustion move into 2121 symmetry.

  9. If Gold can break 1225, GDX may hit 22 today with short covering..Was repelled first attempt today…looks like another try imminent.Silver leading.Good luck all.

  10. $$$NEWBIE$$$ says:

    blackjack, what’s your count now?

    • blackjak100 says:

      c’mon man! I’ve been sharing it over the last few days and it’s been spot on and you’re asking me what’s my count now? Thinking this wave should get us to 2126 at a min.

      • $$$NEWBIE$$$ says:

        lol, c’mon man, last I seen you were looking for market to open lower today. I was just wondering what your thoughts were now.

        • zepfan123 says:

          Yea,nobody has really called the market well for a long time..which is understandable considering what it’s done…or hasn’t done. I could throw out that the SPX will go back to 2097 by tomorrow or Monday..and even if it does..I can’t really take any credit for “nailing” that call right now. We need a true breakout,and obviously the ball is in the long’s court here if we don’t sell off here again soon.

        • blackjak100 says:

          Only if ii of c was not finished which was impossible to tell. If it hadn’t, was looking for 2092-2095.

  11. Thanks TC for the other analyses you shared, highly value your perspective.
    Tough, tough market…
    Still neutral as not able to get a comfortable entry.
    Buy above 2118.94 with Stop 2097.22
    Sell below 2084.26 with Stop 2105.93
    Just an observer at this point…

  12. I can see DOW up 300 points today, But My guess is they fade it and close red. .What do I know. tough call.

    • berniebaruch says:

      Close red may be a stretch. They may just keep it between 2110 to 2115 just to piss off everyone and squeeze all of the premium out of the options.

  13. stephenk1980 says:

    Broken my resistance line. Finally up we go (unless this is a false breakout of course).

  14. mjtplayer says:

    Resistance lies at SPX 2,114 – 2,115 area, the downtrend line coming off the highs, connecting the lower highs over the past 2-3 weeks. No change in my count

  15. fotis2 says:

    CCI on 30min looks like about to take a dive short 2111 to 2100

  16. berniebaruch says:

    Time for the bears to stand up and be counted again. Its akin to the Russians defending St. Petersburg in the 1940’s against the Germans. Many casualties but the tide finally turned.

  17. Last night I was looking at a few charts and the Transportation index was on the precipice.No surprise(anymore) that its a gap up morning.Another chart saved from collapse.Amazing to see bad retail sales,deflationary PPI, the dollar down but yields not moving.A few months ago we d have dropped 30 basis points.

    • And Johnnymagicmoney forgot one more scenario….dollar down means profits underestimated–so bid up.

    • rc1269 says:

      traditional indicators, like moves in the DJT, are based on the historical relationship between economic fundamentals and asset prices. those relationships no longer carry much meaning in our central bank pavlovian markets, unfortunately

      • The algos wouldn t like it is my point…so 50 or more points down from yesterdays close would ve been potentially bearish for all equities.You could see the hesitation as the Trannies were down 20, but when they turned positive the Dow took off…

        • zepfan123 says:

          Yea,,the lackluster performance lately of the Trannies,usually being a leading indicator ,have been one of the better arguments in the corner of the shorts for the market going lower. If they have bottomed in that 8500 area today, it’shard to see what the catalyst for getting the overall market a lot lower soon would be. I’ll give the market at least until the week after the 3 day Memorial Day weekend before I completely give up on this market having a chance to get below SPX 2070 and back to at least SPX 2040.- But if we rally right up into the Memorial Day weekend next week(Friday),then we’ll for sure be making some major new ATH’s and going sub SPX 2100 again anytime soon will look very unlikely. Sell in May and go away doesn’t look like it’s going to work this year. So far.

  18. rc1269 says:

    anybody else wonder if we’ll ever be able to make gains again during cash market trading hours

  19. torehund says:

    listen to the lyrics, it could de such a moment approaching in stocks

  20. vivelaamo says:

    I see many n of you expect the market to continue to rise which is normally a good signal to get ready to short.

  21. M1 says:

    Thanks Tony
    Would you expect a new sort of QE within year ? I mention it beacuse I see some indexes moving like in 2012 when the huge QE 3 was announced.

  22. stephenk1980 says:

    Sold my shorts. Tentatively bullish unless we breach 2070. It’s not abundantly clear, but I favour a break to the upside before any big downward push. Flush out the Bears and lure the Bulls.

    Whether that push is PIV or just to 2020/2040 remains to be seen – I think the behaviour of European indices will provide the clue when the time comes.

  23. blackjak100 says:

    Thx TC! I expect ii of c bottomed or will bottom first thing Thurs AM 2092-2095. If it bottoms 2092-2096, wave iii = 1.618*wave i = 2131-2135 which would equal approx top of upper ED trendline and your OEW pivot. wave v would then give us the upper trendline overshoot which is typical of ED’s.

    • Make sense. Is your wave i of c from 2085.57 to 2010.19?

      • blackjak100 says:

        Debatable, but it doesn’t matter in the grand scheme of things because targets only change by a few points. It’s possible it ended 2104 and then an expanded flat for ii of c. Based on futures, looks like iii of c will kick off today.

  24. Tony, I have a curious question; from May to August during the P1 top calling frenzy, did any of your indicators flip flop once or more than once before it was evident that market was in actually in the ugly P2 correction. I’m still of the opinion that a correction of a very significant degree is within striking distance and I don’t think it is an intermediate wave pullback.

    • $$$NEWBIE$$$ says:

      El Matador, that is a great question for Tony. I also agree that a significant down turn is close.

      • Page says:

        It could very well be significantly up. I do not see a significant correction until Sep/Oct.

        • $$$NEWBIE$$$ says:

          History shows the higher the market goes the deeper it falls. When this market does collapse there won’t be time to get out. Institutions will think its the 10%-15% correction but as it keeps extending to the downside there will still be charts showing it is a temporary correction and the masses will be bag holders once again.

          • zepfan123 says:

            A possibility…and after whats happened the last 2 months…if and I stress “IF” we do get real correction…very,very few sorts will be participate in it. Shorts are now scared to hold for even an hour or two,,let alone over night or for a month a or more for a home run swing short trade back to maybe SPX 1820 this year. But all that said..we’ve got to get well below SPX 2070 here on multiple closes to even get a little excited about that.

          • Lee X says:

            Haha ..Well they used too😉
            Hey newbie I’ve been thru 3 &1/2 crashes so far and certainly hope to be around for many more.
            Good health and happiness to all especially BG

          • robnaardin says:

            “History shows the higher the market goes the deeper it falls. When this market does collapse there won’t be time to get out. Institutions will think its the 10%-15% correction but as it keeps extending to the downside there will still be charts showing it is a temporary correction and the masses will be bag holders once again.”

            Newbie, Sometimes I wonder if your so dense light bends around you.
            Don’t make fun of the Chicago C men… …or otherwise Lee will get grumpy.😉

    • tony caldaro says:

      no they never reversed
      it takes time to set up a negative long term divergence

    • jhjoyner says:

      I agree it is an intermediate wave.

    • llerias7 says:

      Tony, 3 months for an intermediate wave? Yeah that points to 2016.
      But still think 2016 will be the end of the P5…counts might change meanwhile…

  25. manunidhi21 says:

    Namaste Tony!

    “During the rally one of our four long term indicators cleared its negative divergence”
    Is it Macd SPX daily or Weekly ?
    or something proprietary ?

  26. mjtplayer says:

    Very light volume today, QQQ had the lightest volume day in 4 weeks. I hope the holiday trading of next week hasn’t already begun b/c today was super boring.

    • fionamargaret says:

      …18th (Monday) is Victoria Day holiday in Canada….TSX closed…which adds to the lack of participants…

  27. fotis2 says:

    Thanks Tony what a tricky market even more so when one reads it wrong its gonna drive us to drink hehehe.But I love it😉

      • torehund says:

        Choppy x-waves as long as the eye can see, like walking on woolen cotton clouds, we better not look down🙂 Its could also be the time of distribution of the high flyers that at some point may get the first taste of the bear, whilst covered by the dullness of index flatness the growth plays are one by one hiked into dignity.. The bad bear enters silently in slippers and abhors flash crashes, we have to remember that.

  28. mike7x says:

    Thanks Tony. Target still ~SPX 2040, then new highs. (?)

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