Wednesday update

SHORT TERM: marginal new highs again, DOW -27

Overnight the Asian markets gained 0.4%. Europe opened higher and gained 0.2%. US index futures were higher overnight, and the market opened one point above yesterday’s SPX 2128 close. After the open the market dipped to SPX 2123 by 10am, bounced to 2129 by 10:30, dipped to 2124 by noon, and then started to rise heading into the FOMC minutes: Then the market rallied to a new high at SPX 2135 by 2:30, dropped to 2125 by 3:30, then ticked up to close at 2126.

For the day the SPX/DOW were -0.10%, and the NDX/NAZ were +0.05%. Bonds gained 5 ticks, Crude rebound 75 cents, Gold added $2, and the USD was higher. Medium term support remains at the 2085 and 2070 pivots, with resistance at the 2131 and 2198 pivots. Tomorrow: weekly Jobless claims at 8:30; Existing home sales, the Philly FED and Leading indicators at 10am; then a speech from FED vice chair Fischer at 2pm.

The market opened slightly higher today, had its first notable pullback since SPX 2096, rallied to a new high at 2135, then immediately had another notable pullback. Interesting juncture. Since we now consider the May 6th low at SPX 2068 a key level: either wave D of the leading diagonal, or Minute wave ii of an uptrend that is trying to kick into impulse mode. From that low we can now count three waves up: 2118-2086-2135, and 2086-2135 was a clear five waves. So the advance from SPX 2068 was either an a-b-c E wave, or the 1-2-3 part of an impulse wave. If an E the market should soon drop below 2118, 2086, and then 2068. If part of an impulse wave the market should hold 2118 as support, worse case 2110 or 2096, but certainly not drop to 2086 again. The uptrend inflection point has arrived. Short term support is now at SPX 2118 and 2110, with resistance at the 2131 and 2198 pivots. Short term momentum displayed another negative divergence at today’s high. Best to your trading this potential inflation point.

MEDIUM TERM: still an uptrend

LONG TERM: bull market


About tony caldaro

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98 Responses to Wednesday update

  1. zepfan123 says:

    Been a ton of both SPY weekly 213.50 calls and puts gambled on all day after the first hour. Looks like they’ll make both sides have to hold overnight for a chance of making any ‘real’ profit on those. Since we’re going into a 3 day holiday weekend ,they may keep SPY .25 cents above or below 213.50 all day tomorrow too.

  2. H D says:

    Rumor: Proshares announces change in ticker for UVXY to WLKR #windowlickers

    • mjtplayer says:

      Ticker: WDMR (Widow maker)

      or perhaps CINR (Cash Incinerator)

      If you want to go long volatility, do it very late in the day tomorrow or perhaps late in the day next Friday – but never into a holiday weekend or a Fed/central bank meeting, 2 rules to help keep you solvent

  3. kvilia says:

    A lot of hedging going on, the only questions is when?

  4. blackjak100 says:

    I show the uptrend line from 2068 currently residing around 2125 and 2126ish by end of day. A break with authority could signal end of ED.

  5. I’ve never understood that mentality; only a bear, only a bull. Does not compute…

  6. magnus1234 says:

    Is this the top? /TF not participating and advance decliners not “sky high” (440). DAX 30 at its “local” top…. what more can one whish for?

  7. stmro says:

    Feels like consolidation after the upmove of last week. Same picture with Dax. Maybe definitive new highs early next week.

  8. fotis2 says:

    Really now guys you must stop giving it Red Bull OR is it Fed Bull? geez will it ever reverse..

  9. gtoptions says:

    Thanks Tony
    At this rate the SPX/NDX divergence will be gone by Friday. Maybe.
    Here’s another one for you to ponder. DJI/DJT Divergence or Deviation? 😉
    Weekly DJI 13CCI Divergence Break.

    • It took a year of + divergence in 2012 before it kicked in.So far a short time frame for this – divergence.Interesting, but can t bet money on it yet.Anyways my double January effect system would indicate a miserable year ahead.That is, back to back down Januarys led to 10-20% down years 4 out of 5 times its happened in the second January year (2015).That system was my basis for being less than enthusiastic for this year.We ll see.Good luck all.

    • CB says:

      Nice chart, gto. Thanks. Def. an interesting one to watch in the immediate future..
      If IYT can close abv 157-158 soon, things could get “interesting” ..esp. if “they” want to trigger a short squeeze before the death cross happens…

    • Nice chart GTO.
      DJT did experience a “triple witching opex” volume popper yesterday which is typically indicative of a trend reversal. Nonetheless, it does begger the question, is someone buying (accumulating shares) or selling (distribution shares) and gunning for the hills?

  10. blubrd67 says:

    This market will go forever UP and will never ever correct again!

  11. Thanks TC; a listless market. And I know the rule… But sometimes, what momma don’t know… 😉
    I did jump back in long yesterday at ES 2125.05 (hedged) and would be stopped out per the daily SPX Stop listed below (in this case the Buy Stop). Stop based on volatility or EOD.
    Buy above 2142.15 with Stop 2116.79
    Sell below 2107.11 with Stop 2128.99
    The first long signal given by the system was on May 14th with move above SPX 2116.39. Since then, total of 13 points captured and looking for initial target of 2158.
    Come on bulls, help a brother out! 🙂

  12. arthurk says:

    Everybody keeps harping on the under performance of DJTA, but if you go back 5 years, you will see that this is more of a “catch up” by DJIA. So Dow Theory is not as important. At one time DJTA was up 120%, now at 105%, while DJIA is up 75%. Personally I think at lot of this is due to rail shipment of shale oil from Dakotas.

  13. kvilia says:

    I have not seen this boring market in a long time. What is it, calm before the storm?

  14. Futures down after hours. Stocks up in the regular session. As grommet pile would say. surprise surprise surprise.

    • zepfan123 says:

      We’ve seen a lot of that the last month. 2 weeks ago the S&P futures we’re down 16 pts at 3AM when I got up for minute. When got back up again 3 hours later they were 2 pts in the green and course the market had another “up” day.I was short the S&P then and not a happy camper.Had a nice big profit ripped out of my hands in just a couple of hours.

  15. JD C. says:

    Existing home sales down. CNBC says due to lack of supply. This morning cnbc story about Denver, houses on the market very short time, bidding wars on houses. My brother in-law in South Bend Indiana is having the same problem trying to find a house, on the market less than two days. He shows up to look at a house and it’s already sold. That tells me new home building may pick up if things stay the same.

    • One of the primary causes of the housing crisis that erupted in 2007 was poor lending standards that allowed unqualified people to qualify for loans they should never have had in the first place.

      Six years later, the Federal Reserve might be creating a new housing bubble through its efforts to stimulate the economy and promote recovery. By keeping interest rates artificially low, the Fed might be creating a new housing bubble that is not based on actual wage growth or demand, says Edward Pinto, a resident fellow at the American Enterprise Institute.
      Along with stock market highs and record bond prices,housing prices jumped more than 8 percent over the last year — the biggest annual gain since 2006. The rising housing prices have added $1 trillion to the market value of single-family homes, which theoretically raises consumption because consumers now have more wealth.

      Recent Federal Housing Finance Agency (FHFA) data suggests that the increase in house prices is not due to increased demand, wages and an improved economy, but rather the rising market value of homes is due solely to the Fed’s lower interest rates.

      What seems like a housing recovery is actually the result of the government’s recent efforts to guarantee almost 90 percent of new mortgage debt. The government has financed half of all home mortgages to buyers with zero equity at closing while encouraging the Fed to buy great quantities of new mortgage debt.

      New and existing home buyers purchased 9 percent and 15 percent more, respectively, in February of 2013 than one year previous. Lower interest rates for these buyers mean that the monthly finance cost to purchase a new home remained roughly the same over the last year. Wages have only risen 2 percent over the last year, signifying that federal policies to support the housing industry might be setting the country up for another bursting bubble.

      Interest rates cannot stay low forever and eventually the Federal Reserve will have to raise rates. To sustain an increase to a 6 percent average mortgage rate, incomes would need to increase by 33 percent, house prices would need to decline by 25 percent or lending standards would need to be loosened to keep houses as affordable as today.

    • uncle10 says:

      There is a bidding war on almost every home in the TN area I live in. A know a couple who have been trying to buy a home for the last 4 months. They bid about $10,000 OVER the ask price and have been out bid every time.

  16. rc1269 says:

    some Thursday humor. love this guy. i just can’t not laugh when i hear him laughing
    oh, and funny story too

    • JeffMilano says:

      GREAT! RC. Let newbie see it. He-ll get a kick out of it. Was that spanish or america english. I could not tell the difference.

    • ABchart says:

      Lol thanks!
      This man is the real father of our prime minister, Valls! subtitles were diverted but he really laughed like that. That was on French television a few months ago 🙂

  17. lunker1 says:

    Tony the Cards looked good. if only they could deal w Colon’s speed on the basepaths

  18. pooch77 says:

    Small move in MsQ oscillator, big move in stocks today?

  19. blackjak100 says:

    We continue to see things that have never happened in the market or are rare occurrences. I have posted several over the last couple of months. Just remember it’s a free market. I found this tweet by Bespoke yesterday….

    First time since 1900 that the Dow was this close to a six-month high while the Transports were at a six month low. $DIA $TRAN

  20. blackjak100 says:

    Tony, I’m starting to see the current divergence with the NYAD & S&P being talked about as a possible major top signal (aka 2007). Was the same divergence in place July 2007 when P3 peaked back then? If my memory is good I thought there was none back then.

  21. fotis2 says:

    Ok CCI managed to close just bellow 100 BUT at the same time Price did make a new high so could still have another go 2140 so long it holds 2120 bellow that retest of 2110 and 2100.

  22. torehund says:!/video/112712/sint-bjoern-angrer-naar-han-ser-svenskens-reaksjon

    A video gone viral, this Sweede knows what to do when the bear attacks… 🙂

  23. lunker1 says:

    ugly toppy reversal on the 2 hr candles.
    a 4hr candle close below 2119.5 opens the flood gates.

  24. torehund says:

    Don’t think Draghi likes to see both oil and the USD going up together, and that simultaneously with Euro rates at all time low. Thats like being tied to two trains each of them going in the opposite direction.

  25. Lee X says:

    Thanks Tony
    Holiday turning point on deck ?

  26. The current trading range wave structure of constant rejection of every marginal new ath is constantly reminding me of the 1999-2000 topping trading range wave structure but minus the blow-off top.

    For clarification, in no way am I implying that we are going to crash, only trying to imply that IMO I’m seeing a distribution phase that would likely result in a trend reversal of a significant degree that is likely to be bigger than an Intermediate wave when it’s is complete.

    1999-2000 topping trading ranging wave structure:

  27. 56rambler says:

    Thank you, Mr Caldaro

    Can you please share the probabilities for the two scenarios of the inflection point? Do you think it’s 50-50?


  28. GYN LAB says:

    Thanks Mr T! Certainly an inflection point and the futures already look bloody, down almost 10pts… Maybe a big gap down to kickstart a downtrend?

    • blackjak100 says:

      If big gap down tomorrow then ED ended today. HOWEVER I can’t tell you how many times when futures are down right after market close, they almost always recover. Maybe this time is different (yeah right!)?

      • fionamargaret says:

        …it is quite amazing BJ how red changes to green about 1.45 in the morning, also bonds are inclined to go green if we are going to rally… have to learn to have no sleep..x

  29. $$$NEWBIE$$$ says:

    Futures looking good, hope you bulls didn’t get greedy. Bear in picture showing how feels about market tomorrow.

    • Agree newbie, I’ve been added more shorts yday and today to my short position from last week. Bears have history on their side and IMO it should prove itself once again…..

      Hey newbie I thought it was you who whack the bull just now…lol….

    • zepfan123 says:

      They do look good down about 6 pts as I type..but I remember 2 weeks ago they were down about 16 pts at 3AM and the market still ended up going green the next day. But the market is looking and acting “toppy” here…so we shall see. By next week for sure after the 3 day weekend.

    • sibyn says:

      SPX goal 2030 DAX goal 10160
      Sibyn bear from DAX 11870 and SPX 2132

  30. torehund says:

    If one looks at the sSPX weekly RSI, the chop is very high frequency and tilting strongly upwards, like a coiled spring, release it and up we go 🙂

    • torehund says:

      ..and more importantly the Monthly Rut macd has been looking to hock up for quite some time, sooner rather than later it will happen 🙂

      • hkloon says:

        Tore, miss your post / opinion for quite some time. When you gonna get a new laptop?

        • torehund says:

          hkloon, its good with a pause too and work has mostly been done, ecte is working on what I think is a W-3 now, Rosg is more than ready to run. And the long term charts may just be right around the corner like Rut running for quite some time. I will notice you at trigger points, patience is just whats needed now.

  31. llerias7 says:

    Great div. with DJ Transportation that felt 2%!

  32. blackjak100 says:

    This is why squiggle counting is very hard since I see clear 7 waves from 2086. I was dead serious when I said ED within ED possible with smaller degree ED starting at 2118. In other words, I’m expecting 2 more marginal highs which would give larger degree ED a better look with obvious throw over. A break below 2118 invalidates my count.

    • tradeanimal says:

      BJ…Tend to agree with your count so far. Especially with the large negative divergence between the Industrials and the Transports. The divergence appears to be the widest so far in the past 3 years.

      Tony, do you consider this divergence in any of your analysis?

      • tony caldaro says:

        not normally, but it is quite striking
        similar event occurred in 2012

      • blackjak100 says:

        I’m not great at squiggle counting and my count is probably wrong, BUT if it is right we can calculate a general limit to upside since first wave of smaller ED was 17 points (2118-2135) and wave 3 can’t be the shortest. Since it’s such a small degree contracting ED the limit to upside would be about 2142ish. I will post Nate kautz’s squiggle tonight when it comes out.

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