Thursday update

SHORT TERM: another gap down opening, DOW -358

Overnight the Asian markets lost 1.4%. Europe opened lower and lost 1.7%. US index futures were lower overnight, and at 8:30 weekly Jobless claims were reported higher: 277k v 274k. The market gapped down at the open to SPX 2063. It had closed at 2080 yesterday. In the opening minutes the SPX hit 2060, bounced to 2068, and then headed lower. At 10am Existing home sales were reported higher: 5.59mn v 5.49mn, the Philly FED was reported higher: 8.3 v 5.7, and Leading indicators were reported lower: -0.2% v +0.6%. At 10:30 the SPX hit 2052 and tried to rally. At 11am the rally topped at SPX 2060, then the market traded down to 2047 by 1pm. Then after a bounce to SPX 2054, the market hit 2036 in the last hour of trading and closed there.

For the day the SPX/DOW were -2.10%, and the NDX/NAZ were -2.80%. Bonds gained 8 ticks, Crude slipped 45 cents, Gold rallied $19, and the USD was lower. Medium term support drops to the 2019 and 1973 pivots, with resistance at the 2070 and 2085 pivots. Tomorrow: the volatility of, if it didn’t occur today, Options expiration.

The market gapped down at the open for the third day this week. At the open it took out this week’s low at SPX 2071 and continued lower. Then after bouncing around early it found support at the SPX 2052 level. That support level did not hold, after the bounce ended the market headed even lower. In the last hour of trading the SPX hit the long awaited lower 2040’s, and continued to 2036 where it closed. With lots of support in the SPX 2040’s being breached at the close, it appears the 2019 pivot range is next (2026-2012). This would support the Major wave 4 scenario posted over this past weekend. Should the market head to the 2019 pivot we can drop the Int. i scenario, leaving us with the Major 4 and Primary IV scenario’s at 50/50. Short term support is at the 2019 and 1973 pivots, with resistance at SPX 2052 and the 2070 pivot. Short term momentum is displaying the potential for a positive divergence, but needs a bounce first. Best to your Opex trading!

MEDIUM TERM: downtrend

LONG TERM: bull market


About tony caldaro

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306 Responses to Thursday update

  1. zepfan123 says:

    I”ll have to check..but todays 530 point drop on the Dow may go on the top 10 list for one day drops on a close. – I think down 500+ pts. still gets it.the top 10. .September 29, 2008, when the Dow Jones fell a total of 778 points still holds the record for biggest point loss on a close. But having the Dow drop 900 Dow points in 2 days. is nothing to sneeze at…not to mention a 110 point S&P loss in those same 2 days. Wow !

  2. Jim Guthery says:

    When is the bradley turn date?

  3. Dex T says:

    The market is selling off again! We reached new lows! Seems like most traders don’t want to hold positions over the weekend. 1971 has held on by a thread but it doesn’t look good!

    What an amazing day!!

    Last tiny bit of hope will be 1954 retrace aside from that – 1820 is coming within a few weeks.

  4. rc1269 says:

    we’re down nearly 5% in two days, with not much more than a 10-15pt bounce any given time along the way. and yet, it seems the dip buying/nibbling mentality pervades.


    my 2 cents – take with a grain of salt coming from a non-day trader – at this point wait for a sizeable bounce, then buy the successful retest afterward.

  5. fotis2 says:

    Nibling on longs here can’t possibly go further down can it? (Famous last words) …

  6. Dex T says:

    Another daily low just reached!

    This must be the worst OPEX day in a long time!!!!

    With 20 min left I can’t wait to see the close!!

    Personally I’m in cash -some of the people here seem to be just gambling and trying to pick a bottom rather than following the trend.

  7. zepfan123 says:

    Heck..SPX 1980 may become the new upside resistance soon at this rate.

  8. EL MATADOR says:

    My 2c we are going to see a relieve rally overnight as most have been selling and are now afraid to buy

  9. johnnymagicmoney says:

    last f-ing post

    SPY on 12/16 got to 197.88 we just hit 197.91 and started to bounce. You could see the tickers at that point…………….was abunch of Xmas lights (granted all red lights). But you could see a binge of volume which could have been that final flush. We shall see

  10. Jim Guthery says:

    Went long some more down here at 2077 hope Tony’s 2073 is at least still intact.

  11. John Bell says:

    My closing inter-intra-market thoughts before head out for the weekend.

    1) options day today so obviously this mean more to stocks than many of the other asset classes. So stocks flushed and bonds and PM’s sitting pretty still.

    2) Bonds rather quiet today but long term bonds have been bid up for the last several weeks now and are in a new up trend. Banks, pension funds, and myself have been buying these long term bonds for weeks we we figured they would be safe even if we got a rate increase soon.

    3) Bonds today showed more movement in the shorter duration bonds that were previously scared about a rate increase. Tips also falling off recently or lagging as it appears all the CB efforts have failed and a stronger deflationary pulse is upon us.

    4) previous week and half till mid this week, stocks were only being help up by stock buybacks as that is one of the cycle strong times just as earnings wind down. But now that cycle is done and it appears that executives are selling their stock bonuses from the buybacks because they know their earnings are crap now and going forward. And now stocks funds are finally reacting to the worst earning period since early 2009 and other bad world data. And they are losing faith in the central banks covering their backs all the time. Certainly the ECB QE project is failing almost from the start.

    5) Gold? does not know whether inflation or deflation is good for it now and is it really a safe haven yet with some countries selling their gold now to pay their bills.

    Bottom line:
    1) Stocks still have more flushing to do before any serious rally. So may go down some more and then sideways and then down some more until the Sept Fed meeting. Then up likely as FED will not raise rates. They have been cornered and the bond market knows this already with increasing certainty.

    2) Bonds will likely hold value and try to go a little higher but may wait for any more serious up move till after the FED meeting.

    3) Gold – stuck in massive opposing forces push-pull and really hard to tell where it is going intermediate. Could see a short term safety rally but not much because that will be sold into. Longer term it is probably going much lower – 800?

    differences always welcome as this is only my view and may change as conditions change.

    have a nice weekend and thanks for the nice blog.
    my third and last post to keep with the informal rules except for special times like today.

  12. torehund says:

    Good weekend to all on board.
    Spine of this bull is still intact.

  13. Just loaded up the ole GMC truck with $VIX puts…

  14. Dex T says:

    Wow!!!! We broke 1981 support from back in February!!!! Bulls MUST hold 1970 area or it’s 1820 within a few weeks!!!!!!!!!!

  15. mjtplayer says:

    S&P just tagged 1,980 – not sure if we’ve bottomed or not, but going all cash and waiting to see what happens on Monday’s open. I’m tempted to buy a little XIV before the close, but I don’t want to have to think about it all weekend, I’ll wait till Monday. Cash is pease of mind🙂

  16. zepfan123 says:

    Looks like I may get my SPX 1980 prediction today..instead of next week.- Heck..lets say I did…1981 is good enough. Now..will it hold for a while ? – Not looking all that likely to me right now.

  17. Tony,
    Are you throwing out the ” world famous ” transportation study and back to 50/50.
    I thought this report sealed the deal

    In summary. It appears the SPX will probably not have made a significant top until the TRAN have declined into the 6400’s. Until it does, the SPX is likely to remain within the 1981-2135 range. If the TRAN are not going to decline that much, find support, and then start to move higher. The SPX is likely to find support soon, and then gradually work its way higher as well. As a result of this analysis we feel the Primary III top and Primary IV underway, has a less than 50% chance of occurring. Let’s put it at 60/40 against.

  18. JD C. says:

    Vix sporting some neg divergences and spx positive ones on rsi-5, 15min, 30min, and 60min. I said earlier a bounce this afternoon into Monday, maybe a bit more lower??? Monday futures might provide a bounce. Invest big, trade small, manage risk, build wealth. I’m sure now most of us just expect a bounce.

  19. blackjak100 says:

    If there’s any consolation – extremely large +div on 60 min chart – i think short term bottom is close for real.

  20. llerias7 says:

    Friendly bears

    P4 are welcome…

  21. johnnymagicmoney says:

    no offense but just as Tony thought October was the PIV and was wrong. He kept thinking this wasn’t the PIV ……………….this is the PIV

    this is not getting better

  22. johnnymagicmoney says:

    here is the retest – if we hit a new daily low forget about it

    • Dex T says:

      Well we just hit a new low. The third rally of the day failed and it doesn’t seem like we’ll get much of a bounce with just over an hour of trading.

      Agreed. I saw your post below and though I agree with your points- dip buyers beware.

      Similar to 2011 the market can easily go lower even if various technical tools are indicating a bounce.

      One thing is clear- P3 is definitely over and whether this is P4 or the beginning of a new bear- the ball is in the bear’s court

  23. zepfan123 says:

    Well whatever happens from we’ve been trading back above the headline making high water mark of SPX 2000 for a long time…I certainly don’t find it surprising that there is a little dance going on around 2000 and a fight to hold it, as we’ve dropped back down to it. Considering we came up to it from SPX 666 just a few years ago… rallying to SPX 2000 so quickly was a big deal.

  24. not looking good for a bounce today, but will see. all 10 point rallies get sold off.

  25. mike7x says:

    Partying like it’s 1999…

  26. johnnymagicmoney says:

    No idea if we hit a short bottom here but

    1) there was a ton of support dating back to DEC14/JAN15 in the 1990 to 1994 range
    2) We hit that range went 14 handles undercut it but stayed within that range and have gone 12 handles already
    3) Divergence in the Russel………cant believe its green right now
    4) VIX can only go vertical consecutive days. Due for a fall here

    thats my two cents

    • mjtplayer says:

      Agree, could be time to rally. The question is: just a bounce and LL’s ahead OR a larger rally to back-test the 2,040 prior support/breakdown?

  27. Yesterday I posted that SPX 1990+ was the bottom of the third channel (it traversed this channel in 2 days!). So if it wants to bounce, this would be a good place. I expected a bounce at 2035 but hat did not happen. If it breaks this channel (I hope not) I’ll post the next level.

  28. one more little push and we can finally get a rally

  29. EL MATADOR says:

    The RUT wedge is performing GREAT no crash today from RUT

    • kvilia says:

      I’m almost back there where I bought yesterday. RUT is alway first up or down, no exceptions here. We are in for a decent bounce.

  30. Sorry to post again but just saw a chart that I d seen before…a long term rising wedge from 2009 that had been narrowing and finally looks like it s broken to the downside decisively.According to some…this will trigger a crash or at the least, the end of the bull.Of course we have to wait to see MR C s levels hold for that.Interesting situation.

  31. uncle10 says:

    Thanks Tony. good work as usual…
    Time to cover shorts and go long.
    good weekend all and good luck.

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