Thursday update

SHORT TERM: another gap up opening, DOW +369

Overnight the Asian markets gained 2.2%. Europe opened higher and gained 3.4%. US index futures were higher overnight. At 8:30 Q2 GDP was reported higher: +3.7% v +2.3%, and weekly Jobless claims were lower: 271k v 277k. The market gapped up at the open to SPX 1963 and rose to 1972 in the opening minutes. After a pullback to SPX 1960 by 10am the market moved higher again. At 10am Pending home sales were reported higher: +0.5% v -1.8%. The rally continued until 1pm when the SPX hit 1990, then the market started to pullback. The pullback ended at SPX 1948 by 3pm, then the market rallied into at 1988 close.

For the day the SPX/DOW were +2.35%, and the NDX/NAZ were +2.45%. Bonds lost 4 ticks, Crude rallied $4.15, Gold was flat, and the USD was higher. Medium term support rises to the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots. Tomorrow: Personal income/spending and PCE prices at 8:30, then Consumer sentiment at 10am.

The market gapped up at the open for the third day in a row today. Opened 20 points above yesterday’s close, rallied another 30 points closing Monday’s gap down opening, dropped 40 points in the afternoon, and then got most of that back before the close. So far this week the market has dropped 100 points, rallied 90 points, gave back that 90, and then rallied 120 points. This market is still quite volatile and potentially vulnerable. So far it looks like the market has done nearly five waves up from Tuesday’s SPX 1867 low: 1915-1880-1990-1948-1988, but we can only quantify three waves. Nothing convincing either way yet. Count remains unchanged. Short term support is at the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots. Short term momentum was quite overbought today, dipped to neutral, then closed overbought. Best to your trading!

MEDIUM TERM: downtrend may have bottomed

LONG TERM: bull market

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

About tony caldaro

Investor
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200 Responses to Thursday update

  1. XIV retraced nearly .618 of it’s move from 4.88 to 50.10….. weekly chart… looking to buy…..http://tos.mx/dms/configShare/itemData/r/m/rmKkOJ.png

  2. purplember says:

    is the paint dry yet ? ho hum day……..

  3. radrian6 says:

    I have found that the longer an index travels sideways at a high level, the more likely it is engaged in distribution. By “high level”, I mean after a decent rally. The current behavior of the SPY is not too different than the behavior of August 17 and 18 — take a look at a five minute chart. I’m not suggesting that we will see a breakdown of the same magnitude, but I have my doubts that we are in P5.

    • ariez5 says:

      Completely agree about distribution. No one should be lulled by the range-bound day.

      • radrian6 says:

        Hello ariez,
        My feeling is that if SPY breaks to a new rally high from here then P5 may be on. However, a correction to 195 or lower before any kind of a bounce suggests to me that P4 may be ongoing and the volatility will remain high. We won’t have an answer until Monday.

        • kvilia says:

          Still room to go up – 200MA nicely coincides with the upper channel trendline (connect 7/20 with 8/17) – that’s where I think SPX is headed. The big questions is whether SPX can get back over 200MA and rallliy or fails to do that. Not sure what wave count would represent this but that’s what I’m gearing up for before having any other thoughts. Of course if on Monday we tank, this would reinstate the downtrend.

          • radrian6 says:

            Hello J,
            I’ve been spending a lot of time programming indicators to help me cope with this market. Right at the moment, the indicators are positive — they all moved to positive when the SPY jumped up in the last half-hour of trading. However, the past couple of days has lead to a number of whipsaws for the lower time-frame indicators. Right now, it appears that SPY is attempting another leg higher and if successful, will keep the P5 theory in tact.

          • radrian6 says:

            Sorry kvilia, WordPress problems are creating some difficulties for me. The comment below was meant for Jparkins.

            I see the trendline you describe and that does leave a lot of room for the SPY to advance, however, there are a number of pivots between current price and that trend line. There is also lower channel line parallel to your trend line (connect July 27 and August 12). My comment about the possibility of distribution applies mostly to the rangebound market we experienced prior to the large drop. Today’s late rally broke out of the SPY 198 pivot range, the next pivot is 201.60 and beyond that is 204.50.

        • jparkins10 says:

          Great to see you back Rad, where have you been?

          • radrian6 says:

            Hello J,
            I’ve been spending a lot of time programming indicators to help me cope with this market. Right at the moment, the indicators are positive — they all moved to positive when the SPY jumped up in the last half-hour of trading. However, the past couple of days has lead to a number of whipsaws for the lower time-frame indicators. Right now, it appears that SPY is attempting another leg higher and if successful, will keep the P5 theory in tact.

        • I agree with your observations that “high-level” consolidations” usually turn out to be distribution, but I would say it is valid on longer time frames–like the last 6 months of this year. Over a shorter time frame, like a week to 3 weeks, I think these “flat-top” consolidations are more likely to be accumulation.

  4. To me the market will hopefully give a clue by Monday…a close below 16450 will tell me September is a sell.Pretty clear cut.If they keep it levitated probably we move up to 17100.Good luck all…I m off to my local gym.

  5. RC, Are you still here?

  6. john b says:

    looking more like a pb, consolidation before higher again

  7. llerias7 says:

    Mr Caldaro what do you see in Crude oil? The bottom is in at 38…

  8. GYN LAB says:

    Potential H&S in 5mins chart – will need to tag 1989 and break below 1979 to complete

    • perversionofthemean says:

      That’s how I’m leaning. Noticed earlier that the NDX was weaker than SPX, as SPX made a higher high but NDX didn’t. Have held off shorting NQ, due to some overhead gaps that I thought might be filled, but they remain open…
      We’ll see.

      • perversionofthemean says:

        Ugh. Rallied to fill the two aforementioned gaps, and collapsed without getting short. Headed to neckline now. Doubt that it fails without at least a bounce, first.

        • perversionofthemean says:

          Uh, no. Right through the neckline.

          • perversionofthemean says:

            Market doesn’t really care about man’s neckline’s apparently. The low was at the 38.2% retrace of yesterday’s late day rally up to today’s high, and it was off to the races. I’m learning that I need to keep those retracement levels on my screens, but they didn’t help with the early morning lows. So, how does one pick and choose the times to honor a fib level? I know….when it coincides with one of TC’s pivots!

          • perversionofthemean says:

            At the low, A = C. It all happened too fast for my pea-brain. 😉
            Neither short nor long, just there.

          • perversionofthemean says:

            And, a late day re-test of TC’s pivot again proves to be profitable, if bought. I pick up NQ for a trade. I just didn’t hold it to the day’s close. Pretty concerned during the downtrend, as VXX was roocketing more than ES/NQ were declining. What a collapse in VXX after the pivot was reached!

    • Done.Where to from there?

    • GYN LAB says:

      H&S complete, couldn’t get in at 1989 but managed a short at 1980 (1 above the 1979 neckline) with limit order at 1965 – hopefully it hits today for a stress-free weekend!

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