Tuesday update

SHORT TERM: market drifts lower, DOW -34

Overnight the Asian markets lost 0.6%. Europe opened lower and lost 0.3%. US index futures were lower overnight. At 8:30 Building permits were reported lower: 1119k v 1343k, and Housing starts higher: 1206k v 1174k. The market opened four points below yesterday’s SPX 2102 close, dipped down to 2097, then rose to yesterday’s 2103 high by 11am. After that the market started to pullback. At 3pm the SPX hit 2094, then bounced into a 2097 close.

For the day the SPX/DOW were -0.20%, and the NDX/NAZ were -0.60%. Bonds lost 11 ticks, Crude added 45 cents, Gold was flat, and the USD was higher. Medium term support remains at the 2085 and 2070 pivots, with resistance at the 2131 and 2198 pivots. Tomorrow: the CPI at 8:30, then the FOMC minutes at 2pm.

The market opened slightly lower today, bounced to yesterday’s high, then made the low for the day around SPX 2094. A nine point trading range for the entire day. We still see three choppy waves up from the recent SPX 2052 low: 2093-2079-2103. Short term overhead resistance remains at: 2105-2113-2114. With the FOMC minutes tomorrow the market is likely to experience some rate related volatility. Short term support remains at the 2085 and 2070 pivots, with resistance at SPX 2114 and the 2131 pivot. Short term momentum traded around neutral today and ended there. Best to your trading!

MEDIUM TERM: choppy uptrend continues

LONG TERM: bull market

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

About tony caldaro

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127 Responses to Tuesday update

  1. Is there a flag setup setting up on TLT targeting to close the gap from 02/2015@ 135?

    Anyone has an opinion on bonds? I know there is some stress in corporate bonds so US notes might be preferred for safety but an EW count would be more enlightening and objective, IMO.
    Thank you.

  2. mike7x says:

    Whiplash yet? This market is still stuck in a trading range between narrow pivots. If SPX closes in low 2070’s (or lower) than IMO it will be looking for 2040’s sooner than later. Above 2095 is bullish. Otherwise SPX is still range-bound. Rest of week should be interesting, to say the least.

  3. mjtplayer says:

    SPX 2,078 now, which is the .618 retrace from the a.m. low of 2,070 to the post-Fed ramp at 2,095 and yet another meeting with the 200-day MA. I have 2,095 as “a” of minute c, this pullback as “b” with c higher into Friday/Monday to complete minute c and thus minor B.

    c = a @ 2,103
    c = 1.618 of a @ 2,118

  4. manunidhi21 says:

    Algo’s at full throttle today..
    Closing below what lvl will be weak ..2070 and what level indicates downtrend ?

  5. Gary Lewis says:

    Bot a small position in CVX. Practicing my “Falling Knife Catching” act. 🙂

  6. GYN LAB says:

    Good day all!
    Looks like a classic FED-day double whipsaw.. 26pt bear trap to close the gap followed by a possible bull trap, already dropped 10pts from the high of 2096 back to the 2085 pivot. That 2.5hr rally seems like a b/2 wave of some sorts, before resuming the journey down to 2040s while building some room for positive divergence.

  7. Whew, now that’s what I’m talking about. Bull/Bear daytraders being whipped all over the place; nice. 😉 Oil, USD, SPX, PMs, etc… Makes me grateful to hold a steady (hedged) position and just watch and wait as TC’s waves unfold. Thank you TC!

    Rate cut? Go ahead, I double dog dare ya! And I don’t mean some pittance either. Here’s looking at you Janet! We’re inching up on systemic risk now. 😀

    Bull above/Bear below 2108.89/2074.40 EOD
    Chop chop in between.

    • Dex T says:

      Rate cut? Rates are already at 0%. I hope the Fed doesn’t seriously entertain the idea of Negative rates!

      There’s no way to fight it. Sooner or later the bull will have to rest.

  8. frommi2 says:

    Based on my experience on FED days this is a bull trap that will reverse now. They just closed the gap.

  9. ABchart says:

    From what i read, the Fed is pessimistic, says the economy continued to Deteriorate.

    With the Chinese slowdown, things will not work out. One can even expect a QE4 in 2016 for PV

    • fionamargaret says:

      Thanks AB – I was hearing quite a few months ago European hedgies and economists speculating on QE4 – only the recognized News outlets were suggesting interest rate rises. TLT was of course suggesting the same.

  10. Gary Lewis says:

    P IV comes to an end? Sure does look like new highs are in the cards.

  11. I think the Fed knows that starting the tightening process is risky for US equities.A lower dollar means more selling in Asia tonight I assume.The Fed is in a tough spot trying to tightrope walk through it all.See how it goes in China and Japan tonight.

  12. fishonhook says:

    What caused this jump up? Was there a sudden news release from the fed or…what?

    • Jim Guthery says:

      the rumor mill has no rate hike in Spet

      • fishonhook says:

        Does 0.25% really make that much difference? Are we in that bad a shape and so addicted to free money that giving savers an extra 0.25% will destroy the world?

        • You know the Fed is screwed now either way.Raise rates…the dollar takes off-stocks hate that.
          Keep rates at zero…dollar drops…Asian markets roll over hitting the US equities indirectly like dominos.
          Seems like they can t do anything right at this point.

          • Dex T says:

            They will just have to accept the fact that you can’t achieve continuous growth. The Chinese trick of continuing to build cities for non existing inhabitants wasn’t going to keep the world going forever since their population is decreasing. Without QE and rock bottom interest rates the Fed are going to have to accept a recession.

            The collapse of oil has been a huge a tipoff and sooner or later U.S. equities will finally break down.

            Debt levels are beyond extreme and it’s time to raise some cash to pay down what’s been owed for a long time.

        • Dex T says:

          Unfortunately yes. The worldwide economy is not great and the US is hanging on by a thread – the only source of light. The lightest breeze could extinguish it.

          As the Fed report earlier today stated QE did not have as much of an impact as originally thought so there is nothing left to jumpstart it.

        • rc1269 says:

          no, 25bp won’t make a bit of difference to the real economy
          the Fed is just gutless and scared that the S&P might decline by more than 2%. i wish that were hyperbole but i’m afraid that’s the truth

          • Agree with Dex T and rc…, but the sweet spot with currencies is getting smaller and smaller.Once we re out of that safe area…we ll have equity selloffs around the globe I believe.Fed is trying to keep it together by jawboning but it s starting to give way.

    • mjtplayer says:

      Fed minutes released :15min early by mistake.

      Neutral statement, but the market is taking it as dovish. OPEX Friday helping to pull us higher, as expected, the market just needed a reason to rally and is using the Fed statement to do so

  13. EL MATADOR says:

    up we go 2120ish is the zone to watch IMO

  14. Jim Guthery says:

    Going back short at 2092

  15. stephenk1980 says:

    IMHO close above 2093 on the hourly is pivotal to which way we go. Failure to close above is very bearish.

  16. mharrison60 says:

    Hi Tony
    Wild market today. We seem to have an overlap on the ii on the FTSE chart so maybe current count is off a little.


  17. EL MATADOR says:

    Fed says FOMC minutes embargo was broken

  18. jeffbalin says:

    3rd perfect bounce off of Tonys 2070 pivot in like the last month and has bounced off it a handful of times in the last 4 months. Tony, maybe if you remove that pivot line from your charts, it will go right down to 2019. Not blaming you totally but that line you’ve drawn seems to be interfering with further downside action.

  19. fotis2 says:

    Gold daily looks like CH nice example should get some interest from bulls a close above 1126.

    • ABchart says:

      May be 1040/50 then 1000$

    • And the Fed seems to have backed off Sept….dollar down.Maybe room for gold to run? Interesting equities haven t moved much.Europe never came back…my theory is no one believes Shanghai s bounceback from -5% to up 1%.Maybe it s all technicals now…good luck all.I ll probably add some GdX today.

      • fotis2 says:

        Interesting on the techs although the daily CCI quite high the weekly closed above -100 last week after a bounce from CCI -288 that is the lowest level it has bounced from since the downtrend from 08/2011.

  20. manunidhi21 says:

    Namaste Tony!

    what you expect from Fed today ?
    hawkish, dovish or no comment strategy ?

  21. Dex T says:

    Oil hits new lows again and still has room to fall. I’m not going to pick a bottom. That’s been a losing game for over a year.

    “U.S. stocks sold off Wednesday as crude-oil prices plunged to new lows, weighing on the energy sector.

    The U.S. oil benchmark CLU5, -4.27% fell more than 3% to $41.83 a barrel after the U.S. Energy Information Administration on Wednesday reported an increase in weekly crude supplies.”


  22. Just throwing out an idea here for a short term trade. If anyone is looking at a 10 min chart of the spx. From yesterday’s high it looks like we have a small leading diagonal 1, a 3 wave flat 2 and today’s plunge which could be 3 -4-5 to complete a small impulse.The fib ranges for a bounce are from 2083 to 2091 which overlay with Tony’s 2085 pivot very nicely. If the fed news doesen’t totally distort things, this might be a good short entry.
    Just noodling

  23. H D says:

    Nice pivots Tony.

  24. I say at 2PM eastern time SP is down by less then 10 points. Dovish, we go higher 2115-2125, hawkish here comes 2020

  25. EL MATADOR says:

    If the uber-bearish B-wave ascending triangle in NYA ( plays out, IMO, We in PIV!!!!
    Just saying

  26. blackjak100 says:

    Looks like 2040ish cannot be reached before a 15+ bounce somewhere. I like going long in the 2060’s for a trade.

  27. zepfan123 says:

    Just saw an oil analyst on Bloomberg who is very confident oil is going to $15 a barrel. Wow.Who knows.
    Anyway..as far as predicting the near term on the SPX…of course it looks good for the downside today..but I’ll have to see some closes below at least SPX 2070 this week to get confident about a real downtrend starting for the rest of Aug. But with the damage in the other key indexes like the COMP,TRAN,RUT,etc..the odds for it look a lot better than this thing getting back to..and over that ATH of SPX 2132.82. Especially watching to see if the COMP loses below 5000 and the RUT below 1200 today.

    • zepfan123 says:

      Well the COMP is below 5000 and the RUT is below 1200,so thats another brick out of the broad market foundation for the moment. The banks are all pretty weak too..which isn’t going to help the market rebound here either.Still looking for a decisive break below SPX 2070..but with the VIX up 10% at almost 16…the odds are with the shorts here for sure at the moment.

    • zepfan123 says:

      Wow…SPX tagged 2070 exactly..and bonces a bit. – COMP back over 5000 and RUT back over 1200. For the moment anyway.- i’ll stick with those numbers as lines in the sand on whether we get a possible downtrend into the end of Aug.- But for now..the market just got another ‘stay of execution’ right at support for at least the 50th time in the last 4 months. What a battle. I still say a true “breakout”..whenever it finally happens will be to the downside getting us closing below SPX 2040 finally. it will take a lot more than a move back up to SPX 2101(ish) to change my mind.- At least 2 back to back closes over SPX 2130.82 might do it.

  28. mjtplayer says:

    Today’s low thus far is SPX 2,078 – less than 1pt from the 200-day MA. Like Monday, I would expect to see the 200-day hold and we get a bounce from here.

    This is the 7th time over the past 2 months we’ve been within 2pts or have tagged the 200-day MA. Each time we get down to this area, we bounce, but the bounces are getting smaller each time do bounce. It feels like we’re chipping away, little by little, but we don’t yet have the conviction during these light volume summer trading days.

    FYI: We tested the 200-day only once (Oct ’14) over the prior 3 years.

  29. Gary Lewis says:

    What? No dancing Bears? What’s wrong Newbie? Did you go long?

    • Jim Guthery says:

      Question is what time do we hit bottom today and end up green after fed minutes? I think no rate increase and other thoughts?

      • Gary Lewis says:

        doesn’t hurt much to buy a couple of calls here, just in case. It snaps back EVERY TIME! If for once it doesn’t, I’ll be surprised. But my guess is that the Fed will sound hawkish. They must continue the charade.

      • Agree, just covered my short from 2098 to take a sure profit rather than risk the whipsaw from fed minutes.

  30. ABchart says:

    FTSE: on his 2011 TL. Queen Elizabeth will call Carney to save the long terme uptrend🙂

  31. lbhkinqa says:

    Hi Tony,

    I see you do individual emerging markets but have you ever looked at charting MSCI Emerging Markets or the iShares ETF EEM as a whole? Just curious. Thanks.

  32. ABchart says:


    Tony, European indices are close to an imminent rebound of around 10/12% (CAC 5500 and DAX 12000/200) before falling sharply (CAC 4200 and DAX 9500/700). What bothers me is that the SPX has not declined to 2040. Do you have a possibility that the SPX has already done its consolidation at 2052 (instead of 2040), goes directly to +/- 2215 before correcting?

  33. RC: This was an excellent response to the post in which I downplayed the significance of current credit spreads:

    rc1269 says:
    August 18, 2015 at 1:39 pm

    “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.”

    I must agree that the strategy that I proposed is almost “akin to betting that you will be both ‘right’ and ‘wrong’ at the same time.”. However, I would answer that that is OK, One of the main tools of risk management is hedging. Buying puts to offset long positions has been used and is being used on a large scale to mitigate risk. In the financial world it is a very famous technique. Buying T-notes and bonds is a much less aggressive form of hedging, if indeed it is radical enough to be called hedging at all. But there is little doubt that big money is buying government bonds on a huge scale, both in the US, and in Europe and Japan.
    There is a vast amount of capital in the world seeking a return, in fact, to an excess probably not seen since the Great Depression. Inflation is relatively low so there is little inflation premium built into the bond yields of governments of the countries of major Western economies (including Japan). Neither is there is a depression destroying all business opportunities and hence demand for credit. What has happened is that institutions and rich individuals have satisfied their desire to take risks to make a profit with their money on stocks and corporate bonds, and are looking for safe parking places for the rest. In Western Europe they were even paying government treasuries to hold their money for them (negative interest rates). That behavior probably explains why the stock market has been range-bound for so long. A good question to ask is where all this excess capital came from. Are the various QE’s the whole answer? That may or may not be the case.

    • rc1269 says:

      sure thing bud. just offering my 2 cents, when i can. cheers

    • rc1269 says:

      the one follow up i’d add in regards to the concept of hedging, is that firms don’t typically hedge via asset allocation. overweighting UST and equities would be an allocation call. usually you’re going to hedge on a smaller scale and in a manner in which you can be more nimble. like adding a CDS position against a credit book. quick on and quick off. but if you’re ‘hedging’ your equities by owning UST in, say, a $30bn portfolio, it’ll take you some time to unwind that ‘hedge’ if and when you’d want to. as you said, if they wanted to hedge their equity allocation then maybe they buy some SPY puts, etc… but they prob don’t buy a swath of TSY. too much capital is tied up and it’s an imperfect and inefficient hedge. just my opinion

  34. ABchart says:

    I wonder if the Chinese authorities are losing control of their indices (-5% !!). SSE just below a key support (4640). The devaluation caused no bounce and is already part of the past. Worrying situation.

  35. cellulitedoc says:

    Expeditors International of Washington Takes off

  36. torehund says:

    Tony, the hunt for progress is what keeps us all going. I have myself learned new things at an haphazardly rapid phase the last couple of years. I feel rich having the opportunity to grow further and further in stock trading. Yes it still feels much harder than I envisioned, but if I keep working on it, someday it may feel much, much easier. Thanks also to all on the forum that pound me with views from all conceivable angles.
    Being beaten up, struggle galore, dragged around; not only have I learned a bit of how market functions, an added benefit is that the adversity makes us mentally stronger as well, better handling normal and difficult life situations, and knowing yourself; as a byproduct we develops compassion for the fellow being.

    • tony caldaro says:

      Namaste Tore
      It’s a big money game, where the sharks hunt down the fish.
      Just don’t be lured by their bait and you will be fine.

    • hkloon says:

      Yes tore, i learned a lot from u on looking at the mid to longer term in macd…. thx

      • torehund says:

        Thanks folks, wondering if the words above could apply to now, and if it hold water. maybe we will get a monster lift.
        Long flat BTK correction coming to an end, and as we know the Rut is heavily influenced by the latter. And yes, Hkloon, longer range macd is the firm hand, we see this dominance so perfectly illustrated by Crude-oil and the Euro nowadays. Longer range MACD is like these Russian dolls, that all have to comply to the biggest one to park…

        • hkloon says:

          Before i know you i have never flipped onto a weekly macd or monthly macd, when i do i do see that they are trying to tell a trend…

        • Personally I hate adversity.I try to avoid it as much as possible-too much stress…and I hate stress more than adversity.Be cool and remember-never put your head on a guillotine…there s a chance it might achieve what it was invented to do.Good luck.

  37. NEWBIE says:

    What the………….. LOL. Guys we are so close to this Ponzi coming to an end.


  38. fishonhook says:

    Wonder what happened to Joe, he was here counting every squiggle and then disappeared.

  39. fotis2 says:

    Thanks Tony lets see tmrw always tightens the range a bit before a decent break or should I say most of the time nothing but nothing set in stone in this game.

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