Thursday update

SHORT TERM: gap up opening faded, DOW -28

Overnight the Asian markets gained 0.3%. Europe opened higher but lost 0.5%. US index futures were higher overnight. At 8:30 monthly Payrolls were reported lower: 213k v 280k, the Unemployment rate was reported lower: 5.3% v 5.5%, and weekly Jobless claims were higher: 281k v 271k. The market gapped up at the open to SPX 2084, ticked up to 2085, then started to pullback. The SPX had closed at 2077 yesterday. At 10am Factory orders were reported lower: -1.0% v -0.4%. The market continued to decline into the afternoon, with only 2-3 point bounces along the way. Around 2pm the SPX hit 2071, and then tried to rally. The rally carried to SPX 2079 in the closing minutes, just before a 2077 close.

For the day the SPX/DOW were -0.10%, and the NDX/NAZ were mixed. Bonds gained 14 ticked, Crude slipped 45 cents, Gold dipped $2, and the USD was lower. Medium term support remains at the 2070 and 2019 pivots, with resistance at the 2085 and 2131 pivots. Tomorrow is a national holiday.

The market gapped up at the open for the third day in a row today. And just like the previous two gap up openings, the market was immediately sold off after the first few minutes to half hour of trading. At the open the SPX hit a slightly higher high for the rally from Tuesday’s SPX 2056 low at 2085. Now we have five overlapping waves up from that low suggesting, as we have thought, this is a B wave rally. As noted yesterday, this rally could bounce around a bit before resuming the downtrend. Quiet day. Short term support remains at the 2070 pivot and SPX 2056, with resistance at the 2085 and 2131 pivots. Short term momentum hit overbought this morning before heading lower. Best to your three day holiday!

MEDIUM TERM: downtrend

LONG TERM: bull market


About tony caldaro

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42 Responses to Thursday update

  1. happy 4th july good people!

    Those clowns kept going on about gold at the start of the year. Now look what the GOLD PRICES have been doing. OUCH!

    What does look to be in trouble is the GOLD CHART here. ==> UH OH!!!

    And to think I listened to those dummies from CNBC who keep saying that GREECE will crash the market, but they keep going on and on and every time they say something, its pure BS. If you do the complete opposite of them, you would probably make some money. Fancy that!

    I doubt the GREECE vote will matter, they are already trying to crash the system.

    This is the practise run for when the US collapses. yes, they are trialing things out in GREECE first. You heard it here first!!!!

    And so far, you can see that the OLD greek playwrites from teh 1800’s would not be able to come up with better shit, and melodrama that we have had over teh last few days. wow.

  2. torehund says:

    Major trend changes occur when no matter what option one chooses the result will be the same, speaking of the Euro here. IF Merkel chooses the totalitarian solution and overthrows the government, the loss of confidence tanks the Euro. IF the Greeks are permitted to be BK and is permitted to leave the dominos start moving with country default after default. This will be coined “Hyperinflation” (but its just stagflation) and exactly what Merket was intended to avoid.
    This is the eternal drift towards opposites, if you work hard enough to prevent something it happens….

    • torehund says:

      Its ultimately a choice between totalitarianism ( Stalin, Hitler etc ) or freedom of thought, the two opposites.

      • tomasso60 says:

        freedom of thought and the democratic right to govern your country in the best interest of country and countrymen.
        loss of freedom in all its form is slowly moving around the globe and most folks are unaware or don’t seem to see what is coming.
        Brussels, IMF, Germany hammers hitting the nail heads

  3. budfox9450 says:

    From Bud – in that OEW, appears not to stress the Long
    Term – SP500 Pattern. I shall make comments on the
    Monthly SP500 index….The BoYu indicator, for the monthly SP500 is
    on a Monthly Sell signal. From May 20th, 2015. As to the larger
    market pattern – that is a more complicated question. With that
    said. The SP500 is either now in the early stages of a Bear market,
    or an OEW Primary W4 decline. In closing, these comments
    represent my views, for the long term investor, or the Primary
    Wave investor. I tend to be the later…..Bud 7/3

    • Bud, Thank you. I generally have the same investment horizon as you. I’ve been worried about the negative divergences on the monthly and weekly charts for several indices.

      I’m very cautious right now, and am underweight my normal asset allocation in my long term and intermediate term portfolios.

      But there are several indicators, like the Fed Model and low interest rates, that keep me somewhat bullish.

      • budfox9450 says:

        Hello, nice to greet you. I understand, with regards to the FED.
        They are the king of market indicators, from the 1982 low through
        today. Nevertheless. the SP500 Monthly BoYu pattern is Bearish.
        Interestingly, as is PUG, Nate, Daneric, all EW market timers. Yes,
        it is a conflict of indicators. As to the FED. It is my view, that the
        FED is more likely to raise interest rates, if and when they deem the
        Economy is expanding. Which by all accounts is, just not in a dynamic
        way, as we are used to. Now, I also agree with Warren Buffett that
        the SP500 value, can be called very rich, or highly priced. Therefore,
        a raise in rates, at these lofty valuations, is expected to be a market
        negative…In my view, I would not be heavily invested in stocks
        at this time. I own shares in SDS. Hope my view, helps a little.
        Bud 7/3…Have a great 4th.

  4. mjtplayer says:

    S&P futures down over 4pts today from Thursday’s close, looks like last minute cold feet in anticipation of Sunday’s Greek vote. Will be interesting to see what happens, might not get a result till Monday morning though.

    Latest poll by Bloomberg out today (Friday) has 43% “No” and 43% “Yes” – a virtual tie. The Greek gov’t is pushing hard for the “No” vote and they’re also the ones counting the votes, remember that.

  5. jeffbalin says:

    Tony, with USO, it looks like we’re in a wave 2 correction of a new uptrend is what I’m thinking…. does that seem right? Thank you

  6. Interesting to see European markets down 3/4% in advance of the big vote.From past price actions in similar situations you would think a bullish outcome(a yes vote) would be getting priced in today.It s either a tossup or a no vote is being priced in.Plus, the market is usually correct in its “predictive” powers, so quite unexpected to see a down day.Good luck all.

  7. fishonhook says:

    Tony- looks like you may be right on the $SSEC after all. I was wrong to call your count into question.
    I know you have stated the e wave should terminate above 2245 so as not to overlap 1 – have you got any idea based on the top as to where you think it will end ?

  8. manunidhi21 says:

    Namaste Tony!
    Happy Birth Day

  9. Mr C, do you think Shanghai is broken now? Not too far from a round trip…Have a fun and relaxing 4th.

    • stmro says:

      I’ve been following the Shanghai exchange. In the long term it would make a good buy, but i think margin calls are only just beginning to take effect.

      Most (up to 85%) of the equity in this market comes from Chinese retail investors with shallow pockets and no prior trading experience. With the Chinese government recently banning short selling on a number of stocks, there is definitely some panic in the air, though i can’t remember the last time a ban on shorts actually halted a decline.

      Probably not a good idea to catch the knife right now. Maybe after a few more high volume down days we’ll start to see exhaustion – thinking around 3000-2800.

      • Unless China puts in QE….Then watch it go up 2000 points in one session…lol (not really joking)

      • torehund says:

        Interesting; banning short-sales is what what made the extreme bust in Japan at the top too. But on the other hand I would not put any credibility to the rumors that to too many weak hands are fleeing (I think are the few). Normally when a stock and index has flatlined for years and then goes parabolic, extremely few are vigilant enough to enter early. So I would guess there are a vast majority of extremely stubborn holders still, sure the latecomers are always shaken out and in a dramatic fashion as hands are weak.
        At any rate the real Chinese economy hasn’t moved yet, just look at the commodities. When the latter reaction eventually happens, the bad Greek shipping nation in EUROPE will be the first one to be dragged along. EU will then feel the pain of stagflation.

        The western economical supremacy is on relative decline and has been for long, therefore India and China (Asia) are the only ultra-longterm bets towards 2060.
        Armstrongs histogram says it all, Europe topped just around 1913, and has since that time been in decline. But why act childishly, kicking the rock you stumble upon (like we did from 1913 until 1945) ? An economic downturn is no different from a hail storm, its just the way nature behaves during its unavoidable cycles, and nobodies fault.

        “Split and rule” is a common play by the inherently weak and cowardly inclined political elite in order to remain in power. Privileged pensioners opposing their own engine (youth in Greece) fractures their nation and preserves the deadlock that Merkel needs to remain in control. But buying oneself time without a cure in sight is seldom a viable longterm strategy. Is she hoping for that “lucky shipping punch”🙂

        • India, yes. China probably not. Too many issues, not the least of which is demographics.

          • torehund says:

            Sure there are issues, but if they weren’t present there would be no upside left, its when everything is fixed you normally sell. The demographic crisis, I agree its all over the western world too, however westerners are already starting to migrate to the new land of opportunities (in their most productive age). Given optimal condition this can escalate faster than anyone think is possible.
            An example is how socialism smoothes out the business cycle and never gives the population a “high”. A high is needed to ignite our reproductive capacity cyclically, and a bust to impose selective pressure one the “too many” through hunger and wars, so that the survivors later on becomes even stronger. Thats why socialism, although comfy for a while actually weakens the population at large, until the consequences are so great that society succumbs on its own (bureaucratic) weight.

        • Best of luck to you investing in China, Torehund. IIMHO, they’e the next Japan but, with a “command economy”. Better opportunities elsewhere.

          • torehund says:

            Agree, it is a command economy just now, but I think its headed in the right direction like Russia. I am not advising anyone to dive into the SSEC market, just pointing to a “possible” long range multi decade uptrend in favor of Asia.

  10. bolderbob says:

    Tony, while the world seems fixated on Greece, China seems to be swinging from a huge rally to a huge decline. It has been several years since you reviewed this key market. The Chart is one of the weirdest looking charts in the list with a/b everywhere. Could you give a new update and what you expect there? If there is a fly in the ointment it could be China. Thank you Tony!

  11. fionamargaret says:

    Good weekend all – if you need a fix tomorrow, there is always the TSX – open all day.x

  12. Remember ERX a few months back? $48 to $69 in a month or so. This could be a similar trade right here…

    But using this…

    Just say’n…

    • Pay very close attention to this article…

      Put options have been many times the very thing that has prevented all out selling in the major markets over the years. Most large institutional investors buy quarterly puts as hedges. As long as they can weather large drawdowns within those quarterly timeframes and then somewhat time the rebound, they can usually get out of the hedges with a profit and then compound those gains into their major positions as it rides back up. The Fed has created this environment. Now, that’s not happening because the market isn’t going up or down. Not down because of the security of the puts in place preventing all out liquidation needs. However, as the market meanders over a longer period of time, it’s a lose-lose because those puts are decaying. The more puts you buy over and over again that actually lose, those losses start to eat into your paper gains. That story above references oil drillers heavily margined that lose their hedges in Oct. Don’t think for a min the same thing to some degree isn’t setting up in the SPX.

      Selling could become a requirement.

    • joecthetruthteller says:
  13. locanbbs says:

    Hello Tony and Crew!
    I’m back again after about a year of intensive (stock market) study! I’ve been studying the indicators for all time frames including day trading and have come up, I think, with the (almost) 100% solution.
    First trade I mentioned here yesterday was SPX short (see Wednesday comments, July 2, 10:19). I left the trade at 1:48 p.m. at SPX 2064 with a good profit (entry was at 11:36 a.m. at 2070; actual short signal was at 2077 at 9:40, which I unfortunately missed out of unattentiveness – full automatic trading is still an unfulfilled dream!).
    The direction is still down, but choppy. Why unsettle your nerves by taking the roller-coaster?!
    Be back soon with more signals!
    All the best to all, and special thanks to Tony, who gives us all the general guidelines!

  14. pooch77 says:

    Institutional buying and selling chart from stocktiming shows more distribution than accumulation. However the accumulation is rising with the distribution which means that institutions are buying the dip which should be the 1st sign toward a bottom.

  15. ABchart says:

    Thanks Tony!

    Happy Independence Day all! in France it is celebrated on July 14th. Parade on the Champs Elysées + fireworks in all cities.

  16. gtoptions says:

    Thanks Tony
    Happy 4th!

  17. budfox9450 says:

    FishOnHook….email me and we may discuss this further….Bud

  18. fotis2 says:

    Thanks Tony!Still long waiting for 2100. 2nd daily close CCI above -200.GL enjoy the holiday and lets see what GreekWeek brings.

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