Monday update

SHORT TERM: gap down opening reversed, DOW +68

Overnight the Asian markets lost 0.2%. Europe opened higher and gained 0.1%. US index futures were lower overnight, and at 8:30 the NY FED was reported sharply lower: -14.9 v +3.9. The market gapped down at the open to SPX 2081, then slipped further to 2079 in the opening minutes. The SPX had closed at 2092 on Friday. After hitting that low the market then started to rally. The rally continued throughout the day nearly to the close. Just before the close the SPX hit 2103, then closed at 2102.

For the day the SPX/DOW were +0.45%, and the NDX/NAZ were +0.80%. Bonds gained 8 ticks, Crude lost 60 cents, Gold added $3, and the USD was higher. Medium term support remains at the 2085 and 2070 pivots, with resistance at the 2131 and 2198 pivots. Tomorrow: Housing starts and Building permits at 8:30.

The market gapped down at the open today, hit the lower level of the 2085 pivot range, then rallied to close the gap and reach SPX 2100 yet again. We now have, from the recent SPX 2052 low: three waves up to 2093, three down to 2079, and now another rally. Another choppy rising pattern with three short term levels just above it: 2105, 2113, 2114. The market hit SPX 2103 just before the close today. No change on the short term count. Short term support is at the 2085 and 2070 pivots, with resistance at SPX 2114 and the 2131 pivot. Short term momentum ended the day overbought. Best to your trading!

MEDIUM TERM: choppy uptrend reaches 2100 again

LONG TERM: bull market


About tony caldaro

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109 Responses to Monday update

  1. Looking at year 1991-1994 overlaid on year 2013 to date. Current price has been following it quite well. A test of Dec, Jan , Feb lows and defending lows. Could give an upside bias where price could grind up into all time highs, November-December 2016.

  2. manunidhi21 says:

    Seems everybody is short.

    • NEWBIE says:

      Seems most are long into opex expecting correction next month

    • tony caldaro says:

      or looking for volatility to increase

      • manunidhi21 says:

        Hi Newbie..
        nice pics..

        just on LIGHTER side..
        Once thr was a guy who you used to threaten villagers by shouting”tiger is here , tiger is here, save me” . Villagers used to sincerely jump in and out to help him but found he was always lying.
        Once, actually a Tiger came and the guy screamed but no one came to help.

        Moral: So you please make sure you ride the wave you suggest from years if it comes and keep throwing cute pics.

  3. mjtplayer says:

    Thanks FO.

    Next weeks’ Bradley date is a long-term date (months). The “turn” can come many days before or after the Bradley date, as these long-term dates are significant turning points for many months to come. Next Thursday’s turn date is strong, 100/100 power. The last 2 times we saw a 100/100 power long-term Bradley turn dates were:

    – Feb 7th, 2014 (just a few days after the Feb 3rd low and 6% pullback), which lead to a 7 month rally into Sept. This turn signaled a continued uptrend.

    – Dec 8th, 2014 (just 1 trading day after Friday Dec 5th, when most indices topped). This turn date signaled an end to the uptrend and a new sideways trend. Since Dec 5th, 2014 the SPX is up less then 1% and the DOW is down over 2%.

    We’ll be in the turn date window as early as this Friday, but it could also come as late as middle of the following week. This is not a short-term trading turn, rather a trend for several/many months ahead. Since we’ve been in a sideways trend, we’ll either kick-off an uptrend or downtrend lasting many months.

    I think lower, as we could rally into OPEX and early next week, perhaps even hold-up into the following week (holiday shortened week); but I would have that labeled as minor B of int c, with “c of C” down to come to complete major A. But it could be higher too, we could tank back down to SPX 2,040 over the week or so and then take-off in Tony’s int iii scenario. We’ll have to wait and see…

    • EL MATADOR says:

      The BB is forming a “pinch clamp” (aka squeeze) that appears to be favoring a sling shot to the down side although I don’t think it will be as strong as the one we saw back in mid-September but who knows

    • Agree with it all. The one from last week was an extreme though (5 weeks) and those have all worked to do a few things for the past three years. The reaction has never come in less than 5 days, so from last Wednesday’s low I’m thinking we are due a high from tomorrow to next Friday, and odds are (like 85%) that it wouldn’t be until next week. That’s just based on the reaction to last week’s move below 2064 to 2052.

      But if the market capitulates for a few days from a high tomorrow afternoon (Fed minutes) into the Bradley next week, that would be consistent with the studies too. That would be super interesting I think.

      I’m flat at the moment again, but stalking any sort of extreme I see in the next window, whether its high or low. Would be really interesting to see 2115 or 2040 next Wednesday, as I’d be doing the exact opposite.

      • mjtplayer says:

        I’d love to see SPX 2,115 next week, as a bear in the P4 camp I would have that labeled minor B of int C – then downtown in “c of C”. The bulls have the ball too: OPEX, corporate buybacks and the last 2 weeks of summer trading all point to a possible higher market into next week and the Bradley date window on Aug 27th.

  4. frommi2 says:

    Biotech/Smallcaps crash coming? 🙂

  5. Dex T says:

    Let’s see how their predictions turn out!

    Oil Markets Coming To Grips With Prices Remaining “Lower for Longer”

    “A survey by the Wall Street Journal of investment banks found a growing consensus that oil prices not only won’t rebound soon, but could remain at today’s low levels through much of next year. The average of the 10 oil price forecasts surveyed by WSJ predicted that oil prices would not rise above $70 per barrel until late next year, with WTI averaging just $63.40 for 2016.”

  6. tommyboys says:

    Starting to see some bullish action in a few of my little guys. Might be a fluke but if continues it’ll drive the next leg higher imho…

  7. My last post…positive news (lol) Atlanta Fed raises 3rd qtr GDP est to 1.3% from 0,7% due to car inventories.Good luck all.

  8. mjtplayer says:

    Another low volume August trading day, expect more of the same over the next 2 1/2 weeks as a lot of people are on vacation and we head into Labor Day weekend. Look for business, and volatility, to pick-up in Sept, but a sideways market till then.

    Bulls have the advantage, so they need to capitalize. 2 more weeks of thin summer trading, heading into another 3-day holiday weekend and the corporate buyback blackout period has expired for most companies, so buybacks are in full effect. If the bulls can’t get this market going to the upside over the next couple weeks, then the bears will have the advantage in the typical volatile months of Sept & Oct. We have the Fed meeting in mid-Sept, Martin Armstrong’s “Big Bang” on Oct 1st, the Federal Gov’t budget deadline of Sept 30th and the debt ceiling looming in Oct too. Also, don’t be surprised if the Greece negotiations fall apart since the IMF has walked away and German politicians are not supporting any further bailout without the IMF.

    Enjoy the quiet markets and low volatility, it won’t last 🙂

    • IMF walked? I thought I read yesterday Merkle said they were in (CNBC)

      • mjtplayer says:

        Merkel is “optimistic” the IMF is in. That’s code for she’s praying they will come back to the table. Why? She knows getting anything through German Parliament without the IMF will be very tough indeed.

    • ABchart says:

      Thanks MJT!
      “Federal Gov’t budget deadline of Sept 30th” If I remember correctly, we had the same problem in the summer of 2011 (PII). European indices lost 37%

    • NEWBIE says:

      One of the top 10 biggest market drops in one day was in August 1932, never count August out :-0

      • zepfan123 says:

        If the market gets into a’ll go down in December right thru Christmas. It’s happened a number of times in the last 120 years.
        But that said..we’ve got to get some back to back closes below 2070 to get me to believe a downtrend really started here this morning. And if we really do get back down to that 2040 to 2045 area that is talked about so much…then things might get interesting going into Sept. – But at SPX 2095/96 NOW..the door is still wide open to either direction IMO.

      • time has changed newbie and conditions of the game too. Now if a krach suddently occurs all markets are cut and shortcircuited si that we can limit damage

    • I love reading what you have since some of it like the Bradley stuff is similar to what I’m looking at. 2 and 1/2 weeks though? Next week if we are somehow over 2114 (assuming we aren’t there this week), you have the Bradley thing and that would be a 5 week high. Middle or end of next week if there’s anything above that 2114 for a five week high, or below 2052 (for a five week low), I’d be expecting the big reaction in the other direction.

      Right now I have us reacting from the move below 2064 last week, and the minimum time to set a reaction extreme is 5 days, so I’m expecting the reaction high anytime between tomorrow and next Friday for what I look at.

  9. 85 new highs 140 lows..don t think we get below 0 on mcclellan unless we have more deterioration than we have now.Still…another almost Hindenburg Omen.Good luck all.

  10. took the dippers longer then usual today, they usually have it wrapped up by 7:15. But they managed. couldn’t push it higher. time for it to roll over. 2040-2100-2020

  11. manunidhi21 says:

    Looks like yesterday’s pattern playing out

  12. berniebaruch says:

    BB on the SPX has a 50 handle range and shrinking.
    Looks like a coin flip.

  13. Any reason silver is down .54 at at 14.70? Dollar isn t up THAT much.They sure beat down those PMs.

    • NEWBIE says:

      Never in the history of the commodities markets has the amount of futures outstanding for any commodity been this extraordinarily disconnected from the amount of the physical supply produced and available for delivery.

      • Silver will go below $5; at least. Unless hyperinflation; and even then it has less use compared to other items. Good luck.

      • buddyglove says:

        Newb. agree, but we know mkts move from extreme to extreme across all time frames, and where there is an “extreme” there is opportunity.

      • The manipulation in PMs goes hand in hand with equity market distortion by CBs.By all rights,with economies so crappy(and verified by oil and bond yields), stocks should not be up at 2100.Company after company report lower earnings (Walmart today).GDP never gets better anywhere,yet is always forecast to go up NEXT quarter (but it doesn t).No doubt that silver got close to a breakout level near 15.50 and got smoked. down.CBs do not want PMs to get bullish or investors may switch from stocks to something different.I firmly believe that a levitating stock market is the only thing separating us from what would normally be called an unsuccessful economy.A stock market at 12,000 would give a different viewpoint of how well things are going…and for reasons economic AND political CBs will try everything to keep that from happening(including manipulation)

        • I often wonder where the various Indices (US & Global) would be today without QE propping them up – and what those “true” levels would do to the psyche of the various audiences.

          • If they could ve done that in the 1930s, the history books would never have called it the Great Depression.70% of what they refer to back then as a bad economy were how low stock prices were…..the rest unemployment.Now we have a different situation.Fulltime jobs replaced by part time jobs or low wage jobs.Still deflationary.

        • I think the problem with the precious metal sector is simply that the bottom has yet to arrive. That’s what the charts appear to say to me. That means the bear market is still in play and whilst that’s the case you can’t expect bull market action in the sector, only short covering. As far as PM equities are concerned this bear is historical in every sense of the word. It’s already equalled the worst decline since WWII in percentage terms and it’s probably going to be the outright worst decline before this bear ends. I have some interesting data on all those declines and the bulls that followed which I will post in the near term but no time for that today. Gold equities are a contrarian’s dream after such large declines but the current annihilation phase looks to be still in progress. For new arrivals in the sector scaling in at these levels is a reasonable approach, but gently please. My guess the bottom is 2 to 4 months away.

  14. zepfan123 says:

    @ BuddyGlove,

    Actually I was responding to the mike7x’s comment below from last evening :

    mike7x says:
    August 17, 2015 at 6:25 pm
    Should know soon enough. At least we should get outta this @%$#&*! trading range!

    That is what I was referring to having said myself 2 months ago.

    And as for my text after that, I certainly wasn’t inferring that you or anyone else here had a subscription market advice site for paying customers. That was strictly me saying I’m really glad I don’t have one myself..especially right now with this multi-month indecisive sideways market .-Thats all it was. Obviously these responses on the same thread by multiple posters can be confusing as it doesn’t identify specifically who one is responding to if we don’t identify directly by name who we are responding to…as you did with me by starting off your comment to me with “Zep”. Good idea.

  15. manunidhi21 says:

    Namaste Tony!
    Is NDX daily chart count fine ?

  16. rc1269 says:

    morning Toney, et al

    i’ve been seeing more and more research being produced lately highlighting the growing disconnect between credit spreads and equities. for those of you that believe there is a link (and those that don’t should review their corp fin class), this should be something to keep in mind as this long-in-the-tooth bull mkt meanders on.

    some tidbits: investment grade credit spreads are the widest relative to VIX since early 2008. some may recall that was when credit spreads started widening well before the equity market top. in that regard, credit spreads have been widening since Jun, 2014, so tuck that in the back of your mind. if you’re a student of the Merton model, you’ll recognize that there is a clear structural tie between credit risk (probability of default) and equity volatility. they don’t usually spend too much time giving differing signals.

    other research i’ve seen is less related to the structural linkage between credit and equity and more just statistical relationships. from a historical standpoint, the dislocation between the move in credit spreads and the [lack of] move in equities is approaching 3-sigmas

    as we all know, markets can stay dislocated/irrational/whatever you want to call it, for a long time. so it’s been about 13 months and counting for this particular dislocation. that’s all i’ve got for this am. cheers

    • tony caldaro says:

      that’s surprising RC
      have corp. bond risk at two years highs, and much lower than even 2011

      • rc1269 says:

        spreads are lower now than they were *during* P2 in 2011. however, keep in mind, that we have not sold off 10%+ in equities at this point. a better comparison for today would be what did spreads look like *just before* the P2 plummet. in late July, 2011, before the equity selloff, the Barclays Agg credit index had a spread of about +153. it widened to a high of about +250 by early Oct, 2011.
        fast forward to today and equities are barely off of all time highs, and credit spreads have widened back out to +160, wider than they were just before P2. so not only are spreads a little wider now, but given that equities are up roughly 50% since July 2011, that means that credit metrics/risk must be even that much worse than before to fully offset what should otherwise have been a substantial growth in the equity cushion of corporate capital structures. in other words, we’re saying that – simultaneously – companies are worth 50% more, and also have a higher probability of going to zero. curious, no?

    • buddyglove says:

      RC, Thnx for highlighting the credit spread/equity anomaly. Perplexing indeed, and a little alarming to think how this huge divergence may resolve itself, let us hope it is done “slowly”.

    • Some of the credit spread has to do with the exceptionally low rates of the T-note market rather than high rates paid on corporate bonds. I realize the credit spread is supposed to take that into account, but a large amount of big money wants risk free, highly liquid returns on it’s funds to balance out their relatively high equity positions.

      • rc1269 says:

        i must respectfully disagree

        any fund that is large enough to have allocations to treasuries, credit and equities – as my firm does, for instance – does not generally make the calculus as you have presented it. typically one would not sell credit to buy treasuries looking for liquidity if they are also simultaneously bullish on equities. doing so gives up a substantially carry advantage. overweighting treasuries is a decidedly ‘risk-off’ trade, and will guarantee that in most environments when equities do well you will also underperform your fixed income benchmark. it’s akin to betting that you will be both ‘right’ and ‘wrong’ at the same time

        you do make a valid point, however, about spreads vs. all-in-yields. which is to say, that spreads can “go higher” merely due to treasury yields declining while corporate yields stay the same (the spread being equal to corp yield – tsy yield). however, while it is indeed a slightly different animal than when yields and spreads both go up together, it’s also irrelevant as a risk assessment.

        treasury yields decline for various reasons. they also typically decline when we’re heading toward periods of economic weakness. that mean that, in fact, during periods of growing bearishness, you will almost always see corporate yields go up more slowly because treasury yields are rapidly declining to somewhat offset the rise in corporate spreads. just look at July 2007 to March 2008. all-in corp yields barely went higher, even though credit spreads lept from 98bp to 298bp. of course that’s because tsy yield declined by a similar amount. would you say that that would have been a decent time to pare back equity exposure? i did, and that worked out fairly well.

        ignoring a similar move today is tantamount to ignoring it then. spreads are still spreads and still say the same thing about credit risk, regardless of what UST is doing. by the time spreads move so rapidly as to far exceed the offsetting decline in treasury yields, well then it’s no longer a leading indicator. when that happens it will have been too late. all in yields didn’t really start to take off in corporates until Sept 08, and by then the SPX was down over 20% from the highs.

  17. ABchart says:

    WalMart Q2 EPS $1.08 vs $1.12. Lowered guidance from 4.70/5.05 to 4.40/4.7

  18. The mid-cap growth fund in which I have the largest position( PEMGX) made an ATH today. My other mid-cap growth fund (PRDMX) was up .95% today but is still 1.09% below it’s ATH. The NYSE daily A-D line is trying to clear resistance at 106.6K. If it decisively does so on this rally, I think that would have implications for the OEW count.

    • The stock futures at this time are moving lower, making it unlikely that the NYSE A-D line will break out above next resistance levels. Tony’s count is exerting it’s downward pull now.

  19. Greg Polites says:

    Dear Tony; greatly enjoyed your outstanding weekend update. My indicators are starting to suggest the SP2052 was the end of wave 2 and possibly the range bound action since Feb. Both the DOW and the SP500 have several of the indicators I follow generating buy signals with more turning to the positive and on the cusp of new signals. Expecting the unexpected here……wave 2 finished? But at what level on the SP500 before you’d accept a new uptrend wave3?
    Details at:

  20. NEWBIE says:

    “It’s easier to fool people than to convince them that they have been fooled.”

    ~ Twain

  21. torehund says:

    Euro retraced in an abc up so let the waterfall decline in a W-3 down, isn’t it time ?
    Also to note is the weak oil on the Euro retrace, it looks awfully weak right here.

  22. blackjak100 says:

    If mccllean turns out to be right with top in the next week, he’ll deserve major credit as he’s been calling this top for at least 4-6 months.

  23. buddyglove says:

    Thanks Tony and greetings all.
    Exceptionally Bullish looking charts on multiple time-frames globally imo, including Usa,Japan, Hong Kong and Europe, and expect to see new highs soon in S&P, possibly this week. No change of opinion from the beginning of the year, and still expect commodities to join equity in the next leg higher, which will be sharp and catch most off-guard.
    I still expect a rate hike in Sept (well overdue) which will be bullish, jeez lets get the first one out the way and everyone can stop twitching about it, it’s really not a big deal.
    I am not seeing “rounding tops” or any other kind of “top” for that matter, and still believe the early July low 2043/2044 is important, and will not be seen again for 18-24 mths.
    Aimho, and Good luck/health to all.

    • mike7x says:

      Nice recap, very bullish. Tend to agree, but think a retest of around SPX 2045 may come by Sep/Oct time-frame.

      • pooch77 says:

        My .02 FWIW,we have a Bradley turn on the 27th,that one is the most powerful one of the year.Looking for a high before PIV kicks in.McClellan is also looking for a top Aug 20-26

        • mike7x says:

          Should know soon enough. At least we should get outta this @%$#&*! trading range!

          • zepfan123 says:

            I said that 2 months ago. It feels like this tiny sideways trading range could last a while longer to me though now. Every blog amateur out there and even a lot of so-called TV experts are trying to anticipate the next big breakout daily…be it to the upside or downside. Hope I’m wrong and we bust up through SPX 2130 or crash below SPX 2070 and 2040 later this week. I’d prefer the downside scenario happens first…but as of really does look about 50/50 to me still. Glad I’m not writing a subscription site for paying customers with that kind …”brilliance:.

          • buddyglove says:

            Zep, I think you made an inference that I had a subs site for paying customers. Just to be clear, I do not, but this has been requested many times. gl.

    • Gary Lewis says:

      But Buddy, don’t you see the massive head and shoulders top building on the S&P? Doesn’t that 2045 neckline seem to be crying out, “breach me, breach me!!”

    • hkloon says:

      welcome back 🙂

    • torehund says:

      Buddy, you are bringing the blog a whiff of warm summer days…

    • tommyboys says:

      BG 👍

    • rc1269 says:

      thanks BG. i do agree about the rate hike. long overdue, and pretty inconsequential. if we can’t handle a 25bp cost of fed funds we’re in worse shape than most think!

      • tommyboys says:

        We’ve actually already had a couple increases through the QE wind down. The first increase will essentially be the fifth – so far so good.

  24. Because McClellan oscillator is positive, we avoided a HO today with 93 new highs and 148 new lows.Something to watch.Good luck all.

  25. gtoptions says:

    Thanks Tony
    Ok, I’ll ask. What probability do you give Int ii low was in last week?

  26. torehund says:

    Lets say you have robbed the bakery (Donald) with the help of the clerk (for ages), and you then all of a sudden get cold feet, calls the bakey owner ( the public) and tells him you are the MAN to terminate this theft. The clerk ( modern day bribed politicians ), are somewhat thankful as this is a chance to get out of the job unscratched. ITS A WIN, WIN for all parts involved to get away with it, as long as Donald is elected, and if he isn’t its a sign the theft will continue… Thats how malpractice of government self corrects…

    Thanks for update Tony.

  27. kvilia says:

    Thank you, Tony. Long positions are sold – morning shopping card is abailable for short items. Hope we can finally get flushed down and quit dancing around.

  28. mjtplayer says:

    SPX came within 2pts of the 200-day MA this a.m., then the bots kick-in and bought at that level.

    The DOW put-in a “death cross” last week, the SPX 50-day MA (2,094) is just 17pts above the 200-day (2,077).

  29. fotis2 says:

    Thanks Mr.T can’t fight the Market one just has to go with the flow.

  30. mike7x says:

    Thanks Tony. SPX is 2 points lower than last Monday now. Doubt that’s a downtrend conf yet.

  31. camper1888 says:

    Thanks, tonyC.. I think the market goes higher tmorrow..

  32. blackjak100 says:

    Newbie, yes I’m joining the bear camp right now provided we head lower tomorrow. gL & cheers!

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