Tuesday update

SHORT TERM: marginal new high, DOW +14

Overnight the Asian market gained 0.3%. European markets rallied on the decline in the Euro gaining 1.6%. US index futures were higher overnight. At 8:30 Housing starts were reported higher: 1135k v 926k, and Building permits hit a seven year high as well: 1143k v 1039k. The market opened one point above yesterday’s SPX 2129 record close. After a dip in the opening minutes to SPX 2126, it worked its way to a marginal new high at 2133 by 1:30. Then a pullback to SPX 2125 followed, just past 3pm, before a bounce to close at 2128.

For the day the SPX/DOW were mixed, and the NDX/NAZ were -0.15%. Bonds lost 17 ticks, Crude dropped $2.15, Gold slid $16, and the USD rallied. Medium term support remains at the 2085 and 2070 pivots, with resistance at the 2131 and 2198 pivots. Tomorrow: the FOMC minutes at 2pm.

The market opened slightly higher today, dipped, then made an all time new high at SPX 2133. After that the market pulled back to SPX 2125. When the futures had rallied to 2134 overnight, (SPX 2138), we took a look at the short term patterns in the SPX and DOW. Just in case the market does breakout above the 2131 pivot range (2124-2138). We arrived with a count that fits both the SPX and DOW, and posted it on the DOW hourly chart. It is the only potentially bullish count we could find to describe the past three months of choppy activity. You can view it using the link below. Should the market breakout, we would count the advance from early May as Micro wave 3 of Minor 3. The breakout would have to be fairly strong to justify this count. Until the market clears the OEW 2131 pivot range we still see all this activity as an Intermediate wave i uptrend, leading to an Intermediate wave ii correction soon. Short term support remains at the 2085 and 2070 pivots, with resistance at the 2131 and 2198 pivots. Short term momentum put in a negative divergence at today’s high. Best to your trading the often volatile FOMC minutes!

MEDIUM TERM: still an uptrend

LONG TERM: bull market

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

About tony caldaro

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111 Responses to Tuesday update

  1. Strip out Corp’s billions in buybacks since 2014 and all US indices would have been hammer along side DJT and DJU…..IMO, supply is greater then demand just wait for corps to run out of buyback funds and we will see what happens.

    • tony caldaro says:

      At current rates they will just keep selling bonds and buy stocks.
      It’s the easiest way to raise stock prices for those bonuses.
      Let the next guy worry about all the debt!
      Just ask any activist investor, and they will tell you the same😉

  2. zepfan123 says:

    This day is turning out to be just full of surprises.

  3. gtoptions says:

    Thanks Tony
    SPX big -/div hourly.

  4. berniebaruch says:

    Anybody looking at the transports? Down 125 as of 2.30 EDT. The comparative chart with the DJIA since April 1st is stunning.

  5. berniebaruch says:

    Astro is going “rut row”

  6. rc1269 says:

    Bond futures market has been for weeks pricing in a zero probability for a June lift off. Apparently equities didn’t get the memo until just now

  7. rc1269 says:

    “A strong dollar was one reason other committee members thought recent weakness in economic growth could persist.”

    since that will remain the case as long as ECB QE is going on, we can rest well knowing there will be no liftoff any time soon

  8. berniebaruch says:

    Got to think there are some weak longs up here. But who knows. The man knows.

  9. uncle10 says:

    interesting info about “The cartel” today on CNBC. Sounds very similar to our SkyNet in the stock market. hahaha

  10. ABchart says:

    Hello everybody! and thank you for all your interesting posts.

    CAC Futur: http://hpics.li/96c3ebb

    My idea is that the euro will not fall below 1.1000/1050 and will rise to 1.18+

    It still lacks a little rise in the US indices, but the potential is low (less than 1%)

    GS SPX target for 2015: 2150
    UBS SPX target for 2015: 2140

  11. This is looking like it could very well be a 5-3-5-3-5 diagonal instead of a 3-3-3-3-3 diagonal. This would place us in 4 of e with one more final thrust up to complete.

  12. mjtplayer says:

    tony caldaro says:
    May 20, 2015 at 11:12 am
    are they in backwardation?

    No Tony, the contango (time premium) is the problem in the long VIX ETF’s.

    Look at the term structure, let’s say you roll out of June VIX futures at 14.90 and buy July VIX futures at 15.90. If the VIX 1 month from now is still hanging around the 13 area, you’ll lose 100bps of time decay as the July furtures fall in value to roughly where the June futures are today, or about 7% (which will be 14% in the UVXY).

    The May contracts expire today, which are trading around 13.25. If the VIX 1 month from now is still hanging around the 13 area, then the June contracts of 14.90 will drop to roughly 13.25 where the May contracts are now, or down 11% over the next 4 weeks.

    You only buy these when you think volatility is going to pop, which is not now heading into a 3-day holiday weekend. if you are long for whatever reason, I would absolutely be writing weekly covered calls. Next week should be subdued too, perhaps next Friday late in the day during the typical late-day VIX smash and hold for the first week or 2 of June, but that ‘s it, you don’t want to hold these longer than a week or 2, nor would you want to hold these into the July 4th holiday week/weekend either. By mid or the 3rd week of June, you’ll want to be out.


  13. UVXY reverse split 5-1? And what usually happens after such an event? A slight respite, perhaps, then price continues to decline…

    • $$$NEWBIE$$$ says:

      look AFTER the last split in 2014, it went up almost 50% in a week. You guys crack me up yes UVXY has gone down religiously, mainly because the market has gone straight up for 6 years, what the hell do you expect it to do this instrument was created during a raging bull market? When the market starts to tank uvxy is gonna fly.

      • berniebaruch says:

        If we get a two percent decline or so, sell it or hedge it with calls. You don’t get the real pops until there is a trend change and only then. It is based on the futures of the vix, not the vix.

      • uncle10 says:

        its not mainly because the market went up. In mid march Spx was 2115 its now 2122. UVXY lost more than half its value. u don’t know how it is constructed. Volatility is almost always expected to be higher sometime in the future than it is right now. It buys high and sells low all the time regardless of what the market is doing. Not only that but people know what and when the fund is going to buy and sell ( do you think they front run it to make money) ? in addition it resets everyday. u are counting on it following the vix and or the market and its not going to. hopefully you will get a spike up sometime and you will be able to get out without losing all your money, but you are going to need some luck.

  14. sloop says:

    how is the count going newbie, still dead on?

  15. blackjak100 says:

    Since we have not got a sharp reversal which is typical of ED’s, this has the feeling of extended fifth wave targeting 2150ish. FOMC to cause some buying later????

    • blackjak100 says:

      Trade below 2118 would invalidate extended fifth wave. DJT really sucking wind again so who knows

      • zepfan123 says:

        Yep..another big one day hit on those Trannies for sure. Down 140 pts at LOD as I type..but Dow still green. Tough “read” here. As you say..who knows ?

        • It has a lot to do with BuyBacks, IMO. How many DJT stocks are doing buyback vs DJI stocks…….it’s a monumental difference.

        • Monday I had 8500-8520 as key support with a long drop to 7800 if broken.Very interesting turn of events on DJT.Retest or break? The big question.

          • zepfan123 says:

            Yep..normally over the last several decades the action on the Trannies have been the #1 leading indicator for the broad market. For obvious reasons. But at 8500(ish) NOW,they are still relatively high above the pre 2008 crash high of 5600(ish)..so it’s tough to get cocky confidant about the recent Trannies pullback off the ATH’s just over 9000 forecasting a big market drop yet. That 7800 area was the TRAN lows back in Oct 2014..so would be a key support level. But that said..that was also when the SPX tagged 1820..so the relationship comparatives has changed.- A drop to TRAN 7800 would not coincide with an S&P drop back to 1820 now. Not even close. Might take a drop back to 5600 to get SPX 1820 now.

  16. Thanks TC; for all the effort, seems you would have a team behind you to keep up. If alone, wow.
    After that first hour of power, here is what I’m seeing:
    Buy above 2140.55 with Stop 2118.64
    Sell below 2105.55 with Stop 2127.41
    Party on… Still sidelined but looking to nibble various stocks with short bias. 🙂

  17. mjtplayer says:

    Great article by Martin Armstrong today regarding what lies ahead


    • $$$NEWBIE$$$ says:

      Forget the EURO and the Dollar = new currency (BRICS) backed by gold and silver instead of hot air.

      Why in the world has JP Morgan accumulated more than 55 million ounces of physical silver? Since early 2012.. Coincidence?? JP Morgan’s stockpile has grown from less than 5 million ounces of physical silver to more than 55 million ounces of physical silver. Clearly, someone over at JP Morgan is convinced that physical silver is a great investment.

    • arthurk says:

      Armstrong has been making a big thing about EU govts move to eliminate using cash. Since they only recently included prostitution and drug trafficking in GDP estimates, wouldn’t that cause GDP to drop?

  18. fotis2 says:

    On futures close above 2126.58 next 30min confirms DB.Wouldn’t suprise to see another go at ATH.

  19. JeffMilano says:

    Actualy my computer system is lookingfor a gapdown to then resume the uptrend. Today is a key day to know the direction of the mkt.

  20. bhupal777 says:

    Not to offend any EW practitioners out there but almost all EW analysts are calling that top has already formed or is coming in couple of months. Latest addition is Todd Gordon (search for free video on Twitter or Youtube). In contrast not many Traditional technical analysis analysts or Trend followers or any other analysts are calling for any type of top. At the end market gives what everybody wants. Good Luck.

    • nardobeme says:

      Any good trader will trade $KRE, and to not make any type of predictions whatsoever…

    • fotis2 says:

      Investing.com strong buy signal from 30min to the monthly timeframe SP500 based on Technicals and MA’s.

  21. mjtplayer says:

    Super light volume today, nobody trading. Lightest volume day of 2015 for the QQQ today.

  22. Lee X says:

    Thanks Tony

  23. blackjak100 says:

    It’s completely possible the ED completed today with a small overthrow. However, I’m slightly favoring another spike up tomorrow towards 2140ish after Fed minutes are released. The Wilshire 5000 ED has not touched the upper trendline yet. While it’s not a requirement, it simply would have a better look if it did. In the meantime, could drag the S&P up towards 2140ish giving the ED a better look as well.

  24. joecthetruthteller says:

    KRE had a move out of a range yesterday….

  25. bhupal777 says:

    Thanks Tony.
    $KRE got very good follow through day today. Predicting the market top is still in full force on this blog that means it gets delayed even longer. Good Luck.

  26. arthurk says:

    Very high put/call ratio on VIX today at 1.24 (bettting on drop). I only have 4 months of daily data but the average is .54 and the last time it was at 1.21 was on Feb 26, SPX 2111. Two days later SPX topped at 2117 then dropped to 2040 the next seven trading days (closing prices)

  27. lunker1 says:

    Hey Tony / RC
    what’s the crystal ball say for next 30 days on the 10yr? Higher ST highs on the yield or need to finish ABC from last week? Danke

  28. Page says:

    Thanks Tony.

    My model has confirmed the reversal today. Let’s see how far it takes the SPX down.

  29. zepfan123 says:

    Technically a fugly day…but regardless,that 14 pt gain today at Dow 18,321.39 goes on the books at a new ATH closing high. That said.. sometimes “that” kind of new low quality ATH on the Dow is what an interim market top looks like. That will be a lot clearer after we get this 3 day Memorial Day weekend out of the way.

  30. cwallace90 says:

    Hello Everyone,

    At the beginning of the month I did a blog post, and presented some calculations and a resulting target. Today the market just about hit it.


    My target: 18,353,16

    Today’s high: 18,351.36

    If the calculations are going to work out, the market should stage a big reversal tomorrow.


    • tony caldaro says:

      thx Chris … good work

    • chrisk44342 says:

      Hi Chris. Good name (: Nice work on offering an alternate count in your writing. I agree with your opinion regarding the structural appearance of the market off the 2009 lows relative to conventional EW. Unfortunately, as has been mentioned here and elsewhere, the fact that the proposed B wave has exceeded 1.382 of A suggests that it’s not a B wave. Regardless of how we label it, I agree it’s a good time to be cautious. Just look at the fib cycle from peak to peak on a monthly chart

      • cwallace90 says:

        Hi Chris and Tony.

        Agree, labeling the rally as a b -seems like a stretch, then again what doesn’t these days. I think regardless of how one labels it, the rally is terminal- it’s either a b wave or Primary wave V from 1974. These are truly unprecedented times, and I truly believe this is still a bear market rally that has been extended by liquidity efforts and not based on a solid secular bull market foundations. Not the least of which being the velocity (or lack thereof) of money. This rally is not healthy and will end badly. The secular bear market did not end in 2009 and I fear a collapse below the 2009 lows lies ahead as the bear market resumes. This is all of course JMHO, I have been way early in timing, so we’ll have to see how it plays out.


  31. tony caldaro says:

    where does your triangle start ?

    • JeffMilano says:

      The triangle starts where you star at “a” at 2119 after feb 23. it ends where you have a “d”. After that looks like a biggining of an impulse wave where it is a 1 and 2 and start of 3 wave. Tomorrow it it gaps up and continues with the upswing that could be the count. Thanks Tony.

  32. fotis2 says:

    Thanks Tony really starting to get interesting doji close points to further weakness daily CCI not closed bellow 100 yet so it could technically still have another go upside but nothing set in stone at least that much ive learned till now.

  33. JeffMilano says:

    Thank youTony for the update. I like to have this run by you Tony, If I may. Where you have the D I have the end of the triangle and the beggining of a new wave on the upside. This means that the mkt has done a 1 and 2 and possible going for a one or a 3 minuette, a small degree wave. To me it looks bullish and Tomorrow we will know. I am looking of a gap on the upside and a continue of the upswing. Like to have your comment. Thank you.

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