Tuesday update

SHORT TERM: consolidation day, DOW +24

Overnight the Asian markets gained 1.0%. Europe opened higher and gained 0.7%. US index futures were also higher overnight. At 8:30 Durable goods were reported lower: -1.8% v -1.0%, then at 9am FHFA housing prices were reported higher: +0.3% v +0.3%. The market opened 4 points above yesterday’s SPX 2123 close, then drifted sideways. At 10am the SPX hit 2128 and started to pullback. Also at 10am New home sales were reported higher: 546k 517k. The pullback continued until noon when the SPX hit 2120. Then a rally to SPX 2125 followed by 2:30, before a 2124 close.

For the day the SPX/DOW were +0.10%, and the NDX/NAZ were +0.10%. Bonds lost 13 ticks, Crude gained 70 cents, Gold slid $7, and the USD was higher. Medium term support remains at the 2085 and 2070 pivots, with resistance at the 2131 and 2198 pivots. Tomorrow: Q1 GDP (est. -0.2%).

The market opened higher today, rose to 2 points below yesterday’s SPX 2130 high, then pulled back to 1 point below yesterday’s SPX 2121 low. A consolidation day. After the small five waves up from SPX 2072: 2104-2089-2127-2109-2130, the market has been in a pullback mode with 2120 the low thus far. This is the first five wave rally, of any kind, since the early February downtrend low at SPX 1981. Short term support is at SPX 2109 and the 2085 pivot, with resistance at the 2131 and 2198 pivots. Short term momentum spent most of the day vacillating around neutral. Best to your GDP trading tomorrow!

MEDIUM TERM: uptrend likely underway

LONG TERM: bull market

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

About tony caldaro

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109 Responses to Tuesday update

  1. Bulls gonna get smashed into the close. Maybe if im lucky we will break 2100

  2. zepfan123 says:

    Dow had to rally back up a bit and have at least one more dance with that 18,000 number.- 17,700 by Friday ?

  3. arthurk says:

    Humble Student gives some interesting insight as to how newbie might eventually be right – from a leveraged algo blowup. Biggest risk seems to be from July-Sept, but probably only after SPX 2140-50 is reached.

  4. Thanks for all of thee input on UVXY. When I say short I always mean buying Puts. Was tempted to do so last week att $40’s based on Unc & Nardo’s “inherent decay” posts, dropped to $32 but didn’t make the trade, will consider if it getss a bounce.

    Nardo, nice call on today’s pullback but you said you’re still mostly bullish – any change?

    • It occurs to me that if there is any sort of slippage …. such as beta-slippage, for example ….. the options market-makers are bright enough to build that into the price of the puts.

    • nardobeme says:

      Howdy. Went long w/ UPRO and calls @ 2111. Still holding some puts on $FB, as I expect a slight pullback at these levels. I think tomorrow am, we’ll be yelling OPA! 😉

  5. Just took pfofits on yesterday’s puts, seee my post of 6:42 a.m., last week’s trade now profitable, what a difference a week makes. I just trade my signals and make money almosst every time, I love this game!!

    • P.S. Still holding original bearish position initiated last week, stops in placee to protect profits, more downside expected.

      • reddragonleo says:

        I get the feeling they are going come out with something positive tonight with the Greece deal and spike the market up tomorrow to squeeze out the shorts. When I look at the charts now they are no longer overbought and into oversold area on the 60 minute and shorter charts with the 2 hours and 4 hours in a neutral zone.

        Of course they could continue deeper until they too are oversold with the shorter time frames getting buried into oversold territory. But considering that they have keep the price level up high the last 3 days while they let the charts work off the overbought conditions it just smells of a bear trap to me.

        I won’t rule out another move down tomorrow but instead just sit on the sidelines until I see what happens from this Greece crap tonight. I’d rather miss a move then get caught on the wrong side of one. If no deal then of course we should continue down tomorrow. If there’s a deal I think they are going to squeeze the crap out the bears tomorrows.

        Good luck FRB… you should be rewarded handsomely if no deal. For me I see charts getting into oversold to neutral area now and feel safer on the sidelines.

        • My major signal last week had a fairly rare 1-day overthrow then stopped the rally in its tracks there. Got minor sell signal at almost identical level, creating a nice double top. I’m happy to have made this trade profitable, expecting more downside but will sell remaining puts & SDS calls if market pops and threatens profits then just wait for next signal. GL Red, should be about to breakout one way or the other nicely.

  6. GYN LAB says:

    Getting closer to my target long area 2101-2094 (DAX 11220-11110) a last-minute save on Greece could help to start Minor 3 of Int iii later this week?

  7. Let see if can get a bounce to fill gap at 2118.67


  8. Delayed OPEX giveback…purely mechanical.Nothing else has changed.Good luck all.

  9. stmro says:


    Greece is starting to become unsaved. Only politicians are allowed to yoyo like this on a daily basis. Particularly EU politicians.

  10. mjtplayer says:

    Sounds like Ichan is calling a top, lots of references to 2007. First time I’ve heard him bearish in a long time…


    • well he only says it now because he dump all of his NFLX and i’m sure he is working on dumping aapl and who knows what else he has dump thus far….so yes he wants a correction so he can repurchase later

  11. blackjak100 says:

    No change to my count – think we see 2105ish by end of day to complete expanded flat wave ii/b wave. A monster move up from Greece deal should be on the horizon. If we don’t break 2110, then a b wave running triangle could be in play.

    • Very good bj. My floor runs 2110.66/2114.08
      Reversal comes in at 2101.01
      Minor loss if 2110.66 breaks. And no, I’m not going to double down. lol

    • The most up in any 1st week after a seasonal expiration out of the last 13 was 28 points, so 2138. The most up in any 1st three weeks after a seasonal expiration out of the last 7 was 31 points, so 2141.

      Both of those are coincidentally big Fib (2138) and a smaller more recent Fib (2141.99), so I’m not sure we don’t get em. But if we got over and stayed over, I really think I’d agree with Tony that its a wave 3 up of some sort. I’m going to have to check to see what the minimum change to a three week low was out of the post-seasonal expirations, but I know that in December 2013 we did have a gap up that held for three weeks after the seasonal expiration. Generally, in the past few years, the average down over three weeks out of a seasonal expiration was on the order of 55 points (so 2055 expected as an average).

      • blackjak100 says:

        It wouldn’t provide enough overthrow to make the ED have the right look. Remember ED’s reverse swiftly and sharply so trade to the 2160-2200 zone would only last a couple days. I really think P3 will get close to 1.618*P1 = 2191, but I could be wrong about that. I do think there’s enough evidence an ED of pretty good size (starting from 1821) is unfolding and nearing completion. An overthrow would give it the most typical look which requires trades to a min of 2160 IMO. I would not be shocked to see 5-7 days in a row of green before it reverses.

        • Interesting stuff. I can see what thing in line with what you are saying for sure. We get over 2138 and 2142 on a closing basis, and it would run in my opinion. Getting there should be a battle though.

  12. sibyn says:

    SPX 2108,32 goal now very short term.

  13. nardobeme says:

    Was going to post an animated dancing bear, but cannot figure out how to do it. lol. Anyone buy any puts on $fb? Juicy… Ha! My three pennies on Greece… the proposal will not meet IMF’s needs… and so, global equties will tumble.

    • mjtplayer says:

      That is not what markets are expecting. Markets have priced-in a deal, period. If no deal then markets will certainly tumble and the VIX will spike..

  14. zepfan123 says:

    Well obviously new all time highs for the 4th of July can’t be ruled out with this “hold the fort” stance the market has taken so far this first hour and acting very very resilient.

    • maybe they already know the outcome, market being propped until GREECE=NO DEAL
      Final call for all suckers before they drop her.

      • zepfan123 says:

        Lots of “maybe’s” here Newb.- I’m seriously thinking of trying not to look at the market again until Monday July 6th. – Easier said than done of course. 🙂

  15. Lets get it together BEARS!

  16. mjtplayer says:

    Tony – how do you think the Supreme Court will rule on Obamacare subsidies? I know, gaming the Supreme Court is tough, but just your opinion. Decision expected either tomorrow or Friday. If they rule against, it would create a real mess, so I wonder if they take that into consideration – politics vs. law?

    The question is really Roberts & Kennedy. One would expect the 4 liberal judges to rule in favor and the 3 conservative judges to rule against. Kennedy ruled against Obamacare to begin with, it was Roberts that shocked everyone by ruled for it; how they vote will decide the whole thing.

    • tony caldaro says:

      Does it really matter to the stock market?
      There should be a national health care system.
      Whether this one or another one it doesn’t matter.
      Clinton tried, Bush was too busy playing 5* general to care, and now Obama has one.

      • Prefer the Japanese system. 😉

      • mjtplayer says:

        It will certainly matter to health insurance companies/HMO’s. If subsidies are struck down, insurer stocks will tank, taking down the healthcare sector, which is the leading sector of this bull market.

        Agree, from a market standpoint, the Greece situation is more important. Looks like if there is to be a deal, it won’t come till early next week after the Greek Parliament votes.

  17. buy the dip, going green. Market Yawns at 1.3 percent first half GDP a possible Greece Default and possible rate hike in September. .

  18. Unc & Nardo, if what you say about UVXY is true about inherent erosion (and I have no doubt it is), why wouldn’t everyone just short it, would be easy money.

    • berniebaruch says:

      usually hard to borrow shares.

    • mjtplayer says:

      Good luck finding the shares, short interest is maxed out on all these long VIX ETF’s: VIXY, VXX, UXVY

    • I have never been able to borrow these either. ‘m pretty sure the manufacturers of these products short these shares themselves as well as a few select prop desks and institutionals. You can buy puts on them but have to time it well and also do a little hedging.

      • All ETFs/ETNs product liquidity/volume/float/price etc are hugely directly controlled by the ETF/ETN “Market Maker (MM)”/”Authorized Participant (AP)” see my post below for a snapshot synopsis. The MM/AP typically always wins for playing it’s role

    • uncle10 says:

      Hey FRB, a few thoughts on that. 1. The big boys/insiders are/have been/and will be short it. 2. whenever I wanted to short it, it has not been available to short. 3. just because you know for sure where something is headed doesn’t mean you can make money on it/ things can stay irrational longer than you can stay solvent. I learned this the hard way– back in 1999 when I knew for sure many companies that were trading in the hundreds were headed to low single digits at best. Problem is most of them doubled and then doubled again before they crashed. I know for sure uvxy is headed to 0 save another reverse split. What I don’t know is will it double or triple from here before it does.

  19. Hey Red. Will definitely keep posting, too busy to do every day. FYI, my indicator gave a minor Sell signal at yesterday’s close so we’re on the same page, should be going down here, still holding my original bearish position and increased it yesterday, just need -100 on the Dow to get to even on this trade, expecting more than breakeven. 😉

  20. blackjak100 says:

    Will we see a repeat of 2010 & 2011 with completion of ED?

    • “fell more than 1% only about 60% of the time.” 9 paragraphs w charts for that probability? In my short experience with the market I don’t think I’ve ever seen an obsession with anything quite like the VIX. I’ll do my best to keep it real.

    • chrisk44342 says:

      I’ve posted on the VIX more than a few times here. Like anything else, just looking for one event, like the VIX closing above/below the BB, is not a lot to go on. If you can get the next day to close back inside it, that’s a decent, but not 100%, confirmation (what is?)
      I will say that seeing it close below the BB is a rare event these days given the destruction of volatility in the market. I like combining the VIX close with my own indi-also works on hourly time frames as well.

  21. JeffMilano says:

    According to the way TNA is acting, should break to the upside.

    • reddragonleo says:

      Newbie, you will one day be right… and it could come sooner then everyone expects? You know I’m a bear at heart and my last post explains what I see coming in the next few months (which ain’t pretty for the bulls). Keep up the great gif’s….

    • tony caldaro says:

      Ron Paul wanted to abolish the FED just when they reached their finest hour of averting a depression. Now he’s calling for the biggest USD crash in history. What does him dream about at night? Witches and Goblins and little green men from Orion?

      • TC, I believe the USD has outlived its usefulness as the reserve currency. Once the plug is pulled on that, and it should be obvious that is happening given what is transpiring around the world, the USD will hyperinflate. That doesn’t mean it won’t be in use, just that it will be OUR currency and thus, OUR problem.

        And no, we aren’t returning to a gold standard or anything resembling that (no backing of the USD). The USD will be used as intended, for transactional purposes, but will never again be used as a store of value. THAT is what our Govies fear the most. Try as they might, the real world is at their door step, and they will be found wanting.

        One might ask, why am I playing this game then? Because I don’t know when the above will transpire. I’m hopeful I can catch a whiff of the transition and exit in a timely manner. We shall see…

    • 7dayyss says:

      There used to be a newspaper back in the 70’s called the “The Spotlight”, it was an America First centered paper, promoting going back to the gold standard, etc. I’m sure some people heard of it. Ron Paul was saying things like this and promoting gold, knocking the Fed, etc back then. It may happen, but if you made your investing decisions solely based on that, it seems it would of been detrimental to ones returns. Zerohedge basically does the same thing to it’s readers with the fear factor. Just sayin!

      • tony caldaro says:

        Up until Volcker the problem with the FED was that the government controlled it.
        The right Paul changed all that. The wrong Paul is living in the past.

  22. reddragonleo says:

    Hey FRB, do continue to post. No one gets all calls correct. With massive manipulation from the Fed on the bearish side calling a down move takes a lot of guts. Personally, I think we drop Wednesday… and hard.

    • Appears a Greece bailout is not a sure thing. Monday Dax up what 6 percent. Next 3 days will be interesting. I don’t think there will be a deal this week, if at all. Greece cut as much as they can, creditors want more. Neither side is happy. Low volume stock market could make things interesting.

  23. esvxm says:

    Thanks Tony for the analysis!

    S&P 500 and German DAX key pattern formation: http://marketchartpattern.com/indices/german-dax-and-sp-500-key-levels-23-june-2015/

  24. Gary Lewis says:

    Finally stepped up and bought SPY puts today. First time since October. I don’t know how much longer they can fail the tests of the highs on nearly every time frame without getting some sell off. Someone is not permitting the market to act like a market. Sad to see that capitalism is dying, if not already dead.

  25. zepfan123 says:

    Thanks Mr. Caldaro for your great market data and thoughts and giving us this forum allowing us to post our own thoughts on the market and trade ideas.

  26. mjtplayer says:

    Still sticking to my count until new highs are made in the SPX. Check this out Tony, 4 days in a row of tagging or peeking above the lower TL of the wedge formation, only to fail to close above and back inside. Clearly this TL is important resistance, just as it was important support on the way up. The lower TL of the wedge pattern was just over SPX 2,128 today, mid 2,129’s tomorrow and 2,131 on Thursday.


  27. nardobeme says:

    Thanks Tony. Remain short, although a buy came in at 2121. I’m expecting some weakness to come into play tomorrow, albeit limited imo. I remain bullish for the most at present. I played the put put game w/ $fb again at close. Made 30% earlier in the day and went back for more. Ha! Newbs, that’s the kind of trade you should look into taking. $uvxy sadly is a fast eroding instrument; meant for hedging and short day/swing trades only. GL all.

  28. torehund says:

    Interesting brent vs euro relation today with Brent keeping flat with a rising usd and sinking euro, that spells inflationary pressure day in Europe. Brent has flatlined and one would expect it to rollover, but not yet. I don’t trust either one, and looking on brent it isn’t too long ago since it made a bearish cross on the weekly. It would surprise me if it rallies from here.
    Feels like the US is exporting stagflation to the Euro-zone, here in Norway we suffer alongside Russia from low crude prices. Its therefore a perplexing situation for the politicians to witness and support actions that short term isn’t beneficial to the population.
    Stavanger the Oil capitol is shivering and the “50 percent off, all to be liquidated” signs are starting to emerge, popping a monstrous real estate bubble. Sentiment-wise there is agitation, some sort of haphazardness/bewilderness emerging, alongside a sense of disbelief.
    For us traders we normally expect these signs to be seen pretty early in a downcycle, and as oil traditionally have been trading in the 30 usd a barrel level, (except for the current longstanding bubble), if thats what it is.
    Longstanding oil-induced recession with even lower prices may turn the Society into a new Greece, if not worse. Maybe Greece is the place to go, its hotter there too 🙂 But maybe the Russians will be given priority.

  29. One thing is for sure, There is not a lack of potential counts in the blogosphere. Most of which point to new highs. Some have a pull pack to 2060-2100 first, but believe we see 2150-2180 sooner then latter. this light volume sets up all kinds of flash moves, both to the upside and downside. Fade the next big move is my advise. If we drop buy, if we pop sell

  30. 56rambler says:

    Mr Caldaro,

    Have we gotten confirmation of a new uptrend in spx yet?


  31. mjtplayer says:

    Thanks Tony – boring day on super light volume. Markets appear to be waiting for the final answer on Greece and the Supreme Court decision on Obamacare subsidies, until then we go nowhere with no volume.

    FYI: QQQ & .COMP both closed today with daily “hanging man” candles, for whatever that’s worth. Also, spot VIX (12.20) closed the day at/under the lower BB (12.23), first time since early April and only the second time since early Dec.

  32. Something very strange is going on. I live off TNA and ES. Anyone notice the volume? Or LACK of volume? All of a sudden I can’t short TNA anymore? WTF? Interactive Brokers can’t find shares to borrow they say? On a stock that typically trades 7mill+ a day (now 2ish?) and ranges from 13 to 15% a week (now 3ish?)

    ES trades literally support to resistance and back again on 5 and 1 min charts as if some robot is controlling every single stair step. Humans don’t trade like this.

    I can’t remember a time trading was like this. But I’m really floored by the lack of shorting in TNA. That’s very odd. Of course there’s other ways to do it, but there should be no limit on such a liquid etf.

      • tommyboys says:

        I can draw a lot more support lines on this chart using multiple data points – as opposed to just the two here. Sometimes we draw lines to fit our agenda – just say’in. There may be no wedge here at all.

    • tony caldaro says:

      When you can’t borrow shares it usually means they have all been borrowed:
      everybody’s short, and not for a day trade

      • Tony, that is only partly true. The bigger driver is that only XX% of a stock/etf FLOAT can be shorted and the stock/etf you short must come from either your broker’s own inventory, the margin account of other brokerage firm clients, or another lender. So as float liquidity and/or your brokers inventory pool dries up so does your total number of shares permitted for shorting dry up. e.g. let say your broker and it’s clients/customers closed 50% of their TNA positions, well that mean that your broker has now reduce the short float permitted by 50% as well, even though at it’s competitor brokerages the short float is plentiful.

        • This is why retailers who you powerhouse brokers like Fidelity, TD Ameritrade, etf have far less difficulty shorting just about anything anytime compared to retailers who use smaller brokers like Scottrade.

        • tony caldaro says:

          does the float change?

          • Absolutely Tony. With stocks it’s simply, right, corporates dictate the float with all their fancy buybacks, IPO offers, execs options expirations, etc. But with ETF it’s somewhat the same yet different and more complex but guess who the dictates the float of the ETF, luck guess the “Market Maker” (aka the bank or brokerage firm or let’s just say the ETF originator/inventor) who happen to have a vested interest in ensuring that it’s ETF remain liquid hence stands readily available every second of the trading day with a firm bid and ask price (aka Da Bots). And since the Market Maker is not interested in exposing itself to undue market risk, the Market Maker’s willingness to fill those buy and sell orders at or near the market price is based on their ability to hedge their position or say increase/decrease the float to control undue risk exposure. Oh how about all those splits and reverse splits, yeah they impact float too.

      • Not with that volume it typically has. There’s no way every available share is short.

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