Tuesday update

SHORT TERM: turnaround Tuesday gap down, DOW -190

Overnight the Asian markets gained 0.2%. Europe opened higher but lost 1.2%. US index futures were lower overnight. At 8:30 Durable goods were reported lower: -0.6% v +4.6%, then at 9am Case-Shiller was reported flat: +5.0% v +5.0%, but FHFA prices were reported higher: +0.3% v +0.7%. The market gapped down at the open to SPX 2120 and continued to decline. At 10am New home sales were reported higher: 517k v 481k, and Consumer confidence was reported higher: 95.4 v 95.2. The market then traded down to SPX 2103 just after 11am, bounced to 2109 by 11:30, then headed lower again. At 12:30 FED vice chair Fischer’s speech was released: http://www.federalreserve.gov/newsevents/speech/fischer20150526a.htm. At 3pm the SPX hit 2099 and then bounced to end the day at 2104.

For the day the SPX/DOW were -1.00%, and the NDX/NAZ were -1.15%. Bonds gained 21 ticks, Crude dropped $1.45, Gold slid $17, and the USD rallied. Medium term support remains at the 2085 and 2070 pivots, with resistance at the 2131 and 2198 pivots.

The market opened lower today, took out last week’s low in the first few minutes, and continued to decline throughout the day. Another holiday turning point. The potential choppy impulse uptrend labeling on the hourly ran into trouble immediately when the SPX dropped below 2118. This created an overlap between the two five wave rallies from SPX 2068. When this occurred we posted a tentative green Intermediate wave i on the daily chart. The diagonal triangle uptrend continues to be the most probable scenario. From the SPX 2135 high we can count three waves down thus far: 2123-2134-2099. Should the market be in a downtrend it should take out the 2085 and 2070 pivots next, on its way to the SPX 2040’s or the 2019 pivot. Short term support is at SPX 2096/2099 and the 2085 pivot, with resistance at SPX 2109/2110 and SPX 2118. Short term momentum hit extremely oversold today, then turned higher. Best to your trading!

MEDIUM TERM: uptrend under pressure

LONG TERM: bull market

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

About tony caldaro

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89 Responses to Tuesday update

  1. JeffMilano says:

    Thank you Tony! Great blog, great people! The right ingredients to make money.

  2. The Elliot wave lives on.

    Just not people that use it 🙂

  3. bears lose again. naz will close up 100 points on short covering and buy into the close. 2180 on SP giddy up.

  4. fishonhook says:

    I am wondering what has changed between yesterday ..AAPL down 2% to today, AAPL up the same amount. Nothing really. It is just free money gaming the system.

  5. Gary Lewis says:

    In the old days, this sell signal worked nearly every time. the failed three month test of the high. February’s S&P close was 2104.50 and Dow’s was 18.132. If we don’t close above those at the end of this month, that would be a sell signal. Unfortunately, not too many sell signals have worked over the past few years. I’ll bet lightly 🙂 if this plays out on Monday

    • zepfan123 says:

      QE on steroids.. both above the table and below the table has had a profound way of making sell signals that would have worked most of the time in years past become pretty much obsolete.

  6. GYN LAB says:

    Bears don’t give up yet, S&P hovering around the .618 at 2122, if rolling over this would be the spot… down to c=a at 2085 pivot area!

  7. JeffMilano says:

    Tomorrow S&P 2130’s or ATH. A breakdown – not yet, it will happen only when the mkt is ready. Not now.

  8. zepfan123 says:

    Good Lord..the way this thing is acting right now..I wouldn’t be willing to bet much money the DJIA couldn’t close up well over 200 points today. SPX,COMP,Trannies,BKX,SOX and RUT,among other indexes all keep getting stronger and making new HOD’s.-

  9. stmro says:

    Well, yesterday’s close wasn’t that great for the bears and we’re getting follow-through today. If we close around here, we’ve essentially tested and successfully held the 50d MA at 2098 and next stop will be back to the top of the channel (2135-2140).

    Bears need a close below 2109 today to maintain momentum.

    Interesting that the Greece 10yr is off by 80 bps even after eurozone officials denied that a Greece deal was close. Maybe markets smelling a deal? Wish this Greece nonsense was over already, irrespective of outcome.

  10. uncle10 says:

    Thanks Tony. Hope everyone had a great holiday weekend.

  11. gtoptions says:

    Thanks Tony
    SPY ~ Tuesday tested gap support, now backtesting failed breakout level!
    GL All


  12. On the way down it blew right by resistance, On the way up blew right by 2010-2115 lets see if 2018 holds otherwise back to new highs.

  13. ABchart says:

    SPX target 2123/25 may be

  14. mjtplayer says:

    Markets up today on rumors of a potential Greece deal to unlock the last 7.2b Euro tranche of bailout money. if they receive this last tranche, that basically provides them with enough funds to make the debt payments due in June and most of July – then what? What happens in Aug or Sept, when the bailout fund is empty, the emergency credit line at the IMF has already been used and they’re out of cash again?? Answer: default.

    Politicians don’t want a summertime default, they want to enjoy their vacation time and nice weather; let the carnage happen in the fall.

    There’s no more political will to create another bailout fund, Greece just burned through 240b Euros in 3+ years, the Troika must know that Greece cannot pay them back, that money will be lost. It was insane to even lend them 240b, they should’ve just let them go in 2011. You’d have to be out of your mind to lend them more and continue throwing good money after bad, just let them go and be done with it.

    • H D says:

      Greece has basically the same GDP as Louisiana…People have been talking about it for 500+ SPX points like it’s controlling US markets, I don’t get it.

      • learnedmylesson25 says:

        Because if Greece exits…that sets the stage for England, Spain, Portugal to leave ….domino effect.
        Anyways the headline was “Reports of Rumors of Tentative Deal”.Thats like our Fed crooning no rate increases at various corrective times in equities.Just a way to keep Dax from going below support for the day–they ll worry about tomorrow later.

      • mjtplayer says:

        If LA defaults, the only ones effected are LA municipal debt holders (mostly individuals) – i.e. no contagion. The banks aren’t holding LA muni debt. When Puerto Rico defaults, it won’t be a big deal, just like it wasn’t a big deal to markets when Detroit defaulted, nor will it be a big deal when Chicago and Baltimore default.

        If Greece defaults, the European banks holding their debt must write-off the losses, thus shrinking their capital and contracting their collateral, requiring selling other assets in a de facto margin call. Also, if Greece defaults and wipes away the debt, it opens the door for others to follow, like Spain (contagion), in an “easy way out” instead of imposing austerity on their people. Also, Greek banks become insolvent overnight, without liquidity from the EU.

        It’s a big deal, this is why the Trioka has thrown hundreds of billions of Euros at Greece to try and help prevent this, but it will fail.

      • H D says:

        and that will affect how AMZN or AAPL, for examples, do business?

      • uncle10 says:

        They need to state some reason for market moves. When there is nothing to blame, Greece is the default. We will be talking about Greece 5 years from today.

    • mjtplayer says:

      On this news today, Greek stocks up 6%, but Greek bonds are unch. Greek 2yr note still trading at 25%, no change, the bond market knows whether they get this tranche of money or not, it won’t matter. Greece is insolvent now, set to default in June if they don’t get this tranche of money. If they do get it, we’re right back to where we are now in a couple months, but with an empty bailout fund.

      The Greek 2yr note trading at 25% should tell you all you need to know about how much confidence the debt markets have in Greece surviving.

    • Guess what? Greece is not the only country with a debt problem. I hate to be pessimistic, but IMHO its only a matter of time. 2008-9 World Debt Crisis Part 1, get ready for Part 2. Also, how healthy is it for countries to spend most of there income on interest payments, while spending heavily on everything else? Its a recipe for trouble.

  15. llerias7 says:

    SPX – really ?…1% up since December!

  16. Morgan Stanley upgraded Frontier Communications (FTR) to Overweight and target $6


    • reddragonleo says:

      Too funny! Gangsters telling us sheep to dump it so they can buy it up. It’s very oversold and I certainly wouldn’t be short it here. The daily chart is buried on the MACD’s and Stochastic’s. My guess is “they” are buying it up here and you’ll see a nice rally from it in the coming days.

  17. learnedmylesson25 says:

    Dax goes from up 10 to up 130 in 5 minutes.Short covering again.Doesn t change whats going on technically in our market.Russell dragging.Looking for a slow giveback rest of the day.

    • zepfan123 says:

      Hope you’re right about a slow giveback the rest of the day.If we somehow closed in the red today we’d probably have a high percentage short trade down to at least SPX 2070 and maybe even SPX 2040. Looks 50/50 with so many key indexes like the COMP,Trannies and BKX still in the green..not to mention the S&P still up over 10 points.

      • learnedmylesson25 says:

        Rumor of Greek early draft deal…buy first, see if it s true later.Small caps not impressed but NAZ sure was.If it s not true….giveback time.

  18. arthurk says:

    Given the strength of this AM as SPX nudged 2118 less .1, I am leaning towards my alt scenario of new ATH to tag TCs 2138 at 2140-42 by early next week before 4-5% decline.

  19. fotis2 says:

    Well looks like that’s that for the downside

  20. john b says:

    building for ath again,think the mild correction is done

  21. Sold my SPY puts this afternoon, bought some calls.

    • learnedmylesson25 says:

      Thanks for reminding us it s all about the 125d.Seems like it s ready to go this time unless a) the dollar reverses b) Greece settles without defaulting c) Transports recapture 8500 in a hurry. Trifecta needed quickly.Good luck all…I m still at 85% cash looking for a much better level to reinvest.

  22. rounder1944 says:

    Here is mine: SPY low tomorrow at 209.65, subsequent high at SPX 2118, or higher before the decline to SPX 1795, or thereabouts over the next 3 months.

  23. Page says:

    Thanks Tony.

    Selling continues tomorrow, SPX 2040 will do it for next leg higher.

  24. JeffMilano says:

    Want to say hello to BUDDYGLOVE!

  25. arthurk says:

    From 2pm. Closed SPY June 210 puts at 3.06 from 1.70 up 75% from Fri pm. Target l/t was 3.5 but to quote the bard “discretion is the better part of valor”. Expect gap down Wed to SPX 2085 or gap up to 2110 then fade. Either way should bounce to 2118 by Fri for good short.

    Update. Based on futures we already hit SPX equiv to 2110, so tommorow should be interesting. Not much support for bulls in p/c ratios: SPX and SPY ATM p/c declined, but SPY OTM soared, supporting no big decline.

  26. M1 says:

    At this point a pullback was not a surprise as I mentioned on friday.
    NAZ first wave from mid january lows was 211 points. This first wave from this month lows has been 215 points, (but lasted more than two weeks)
    Just be aware that the pullback (wave 2) was 194 points in january.

  27. fotis2 says:

    Thanks Tony always interesting to note similar view by different posters.

  28. Lee X says:

    Good call Tony
    Hey Lunk !
    My shanty Irish crib is in Colee…Collier 😀
    Are you guys slowly moving your way to Ohio ? 😉

    • lunker1 says:

      LOL Lee she’d move there in a heartbeat Go Bucks! but these days I’m only a Northern vacationer 😉 Had enough New England winters for a few lifetimes but it’s pretty to visit :D. This weekend St A was 83-85 instead of 94-95 back at RSW. Summers too long for me here. Reverse cabin A/C fever. Atlanta was a too cool and dormant thru the winter so I’m trying midway. Collier? Are you the guy in those Grey Oaks commercials? 😀

      Happy Holiday reversal.

    • JeffMilano says:

      AB, tomrrow is a key day to find out where the market is going. However I have a cycle high in about 14 trading days then moving down for about 10 days, to make a low. So in this 14 days the mkt should hit a high. But cannot tell how Tomorrow will go. I think up and it starting reversing from about 2PM today.

      • ABchart says:

        Good evening Jeff,

        The “Tape” gives a target to +/- 2085 tomorrow after a rebound in the 2112/15 area. These 2085 are an important support. The break of this level, and especially 2070 = sell-off.
        SPX should not break 2085 tomorrow but Thursday and a big drop on Friday.

        The novelty in recent sessions is that European indices do not follow (up) the decline of the euro. Volumes were also down significantly. However, the algos are wicked and cause violent rebounds (distribution?)
        As you can see, I have a high on June 9. I remain flexible over 2085.

        Thanks for your comment.

      • ABchart says:

        Trin @2.20
        CPCI @0.74

  29. nardobeme says:

    Thanks Tony… KISS says: gap down am, then a leg up. Her gap was filled today as I predicted… GL all.

  30. John Bell says:

    for stockcharts members – TA chart showing possible supports if more down to come.
    monthly main pivot is still at 2087 as key support for now and aligns with the bottom support line for the wedge.

  31. Thanks Tony
    DAX – it looks to me as if wave A completed at 11,166, B wave retraced approx 61.8% today and we are now in C. If C = A we get to around your 10,600 target, what do you think?

  32. stmro says:

    Not the close that bears were looking for tbh, and already ramping in AH, but we’ll see tomorrow!

  33. kvilia says:

    Thank you, Tony. Taking small steps to the big victory.

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