Monday update

SHORT TERM: choppy pullback to start week, DOW -62

Overnight the Asian markets lost 0.3%. Europe opened higher but lost 0.4%. US index futures were higher overnight, and the market opened two points above Friday’s SPX 1961 close, then immediately began to pullback. In the opening minutes the SPX hit 1949, then tried to rally. By 10:30 the SPX reached 1958, but reversed again and headed lower. At 1pm the market hit SPX 1948. Then after a bounce to SPX 1955 by 2pm the market dipped to close at 1953.

For the day the SPX/DOW were -0.40%, and the NDX/NAZ were -0.35%. Bonds gained 1 tick, Crude lost 55 cents, Gold added $1, and the USD was higher. Medium term support drops to the 1929 and 1901 pivots, with resistance at the 1956 and 1973 pivots. Tomorrow: Retail sales and the NY FED at 8:30, Industrial production (est. -0.4%) at 9:15, then Business inventories at 10am.

The market opened at its high today, dropped to SPX 1949, then toggled the OEW 1956 pivot for the rest of the day. While the market traded lower for nearly the entire day, there was not a whole lot of conviction either way. During the day the declines seemed to be gradual, and the rallies occurred in spurts (short covering ahead of the FED?). Short term support is now at the 1929 and 1901 pivots, with resistance at the 1956 and 1973 pivots. Short term momentum remained around neutral most of the day. Best to your trading!

MEDIUM TERM: downtrend

LONG TERM: bull market


About tony caldaro

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107 Responses to Monday update

  1. tommyboys says:

    SP has broken any symmetrical triangle UP. Now we have to see if it can break the ascending scenario higher…like to see 1995 for this.

  2. Yellen and companies plans for the remainder of 2015.

  3. johnnymagicmoney says:

    Why are Treasuries getting crushed if the FED is not raising??

    • somebody needs cash now?

    • rc1269 says:

      treasuries are getting crushed because they’re not raising rates. it’s a risk repositioning, plain and simple. same reason why stocks are rallying – because they’re not raising rates.

      look at the end of 2014. rates plummeted as they started talking about hiking fed funds. why? because they were talking about raising rates and the market didn’t like it, so rates tumbled. that was positioning for tighter fed policy in the face of a weak economy. it wasn’t until they waffled on their fed funds hike talk that treasuries sold off again in Feb (tsy rates went higher). it’s the same thing all over again.

      we saw rates decline from july through august as the mkt actually believed the fed might raise rates. and since those of us who aren’t deluded realize the economy isn’t great and there are still strong deflationary forces at work, it was viewed negatively, and so people positioned long tsys. (the odds of a Sept rate hike went from 20% in the first week of July to 55% in mid August – go see what the 10yr did during that time)

      the directional link between fed funds moves and moves farther out the curve are dependent on the state of the economy and the market’s view of it. if you hike fed funds when things are good/fine, it can lead to a parallel shifting upward of the yeild curve. that might have happened had they done it 2-3 years ago. if you hike rates when the econ cycle is already turning, then you get longer rates rallying due to fear of tightening at the wrong time.

      • tony caldaro says:

        thx RC
        Citi now has a base case of a global recession in 2016.
        How’s their track record?

        • rc1269 says:

          well, you may recall my mentioning that i think the odds are now >50% that we have completed our bull and started the next bear market. so i personally agree with their call. China helped pull us all out of the last recession; i think they’ll drag us back into the next one. just my view. well, mine and Citi’s apparently. hah

      • Dex T says:

        Stocks have been only recently rallying after weeks of a massive drop and are still stuck in a triangle. Why would a one day occurrence change policy? Many people are simply taking a gamble similar when they were playing the “one more high” game back in mid August.

        A potential rate rise is the “reason” that the media will give for todays rally but it has nothing to do with it.

        • tommyboys says:

          Seems more like a potential “no hike” the media is pushing after today’s weaker reports…probably has nothing to do with rates period as you say. Just over sold and a technical time for rally. Fear still way high and insiders were buying big time again last week…

          • Dex T says:

            Yes correction- my post should say “no rate hike”.

            I don’t know how the markets will react but the policy has been discussed over months. People have had plenty of time to make their bets.

  4. looks like a good short from here.

  5. pbnj123 says:

    No rate increase would mean things are not well and equities would continue lower – no?

    • rc1269 says:

      The predicted outcomes depend on your time horizon. I think the market is going to go whichever direction it’s destined to go over the next 3-6-9 months, regardless of what the Fed does this week. Thurs announcement will merely cause a temp blip or accelerate/delay the timing of the move we would have anyway.

      There are some out there that think if the Fed tightens it will “tell the market that things are better than people might think.” I don’t buy that for one second. That is the epitome of greater fool in action right there. (“i’m going to trade like things are better, because the Fed is signalling things must be better, and i’m hoping that everyone else believes them and thinks things are better, even though i know that 25bp doesn’t actually matter.”)

      My view on stocks, regardless of what the Fed does this week, is we see lower lows before we see new highs. cheers.

  6. teej911 says:

    I believe most here feel the feds will raise the rate and most of what I heard floating around was .25%. Do most feel the feds can accomplish a rate hike and also a market rally by doing .125% instead?

    • rc1269 says:

      i dont know what ‘most here’ think but those who trade rates futures and options think there’s only a 28% chance the Fed does anything this week

      • teej911 says:

        Well I am not a pro like those that trade rate futures but I sure hope that is not the case. Rip off the band-aid and do it already! I can accept a happy median at .125% personally.

      • Dex T says:

        Its’ interesting to see how many people think it won’t happen. I guess it’s the Fed’s fault for waffling and delaying all these extra months. Continuing to delay will achieve nothing.

        They’ve already been promising a rise for over a year and pushed back the targeted June date until September. Their June meeting said a rise would come September and then a second in December.

        I know their mind’s are already made up and cant wait until the end result. Based on how many people think it won’t happen it’s easy to see how the next leg down to new lows will come about.

        • teej911 says:

          I would love to see the feds commit to a healthier policy and raise that rate. If the market is of concern for them then try the 1/8th first. I actually think that the market would react very positive to that and at least get us a rally to 2040ish.

  7. bot some TVIX here (12.02), lottery ticket

  8. madswiss says:

    curly called for the cheese! where’s dat larry at????? oh my….

  9. tommyboys says:

    Happy Shemitah… “that pesky little 7 year cycle”🙂

  10. Our weekend report called for a breakout of the wedge to 2030-2040 as possible, but eventually a move to 1810-1840 seems most likely either way. Cant get much lower due to this chart in our opinion amongst other factors

  11. ya but it’s low volume…. if you BTD yesterday when SPX -10…. Not Friday yet.

    • been fairly quite about the EW, mostly just in total agreement with Tony so why elaborate. We also have other side, by the book, with triangles everywhere so that approach is covered too. There is notable/tradable symmetry though in all 3 recent rallies from 1937.19 SPX. So for OPEX Monday BTD -10, Turn around Tuesday, Whipsaw on deck and will leave some surprise for EOW. There are many ways to trade this market. I have never seen Tony mention a shmetahaz, VIX, volume etc etc.

      Only price pays. See ya next week. JMHO

      • EL MATADOR says:

        Agree only price pays. everything else can be align to fit with price so someone can say, “see “shmetahaz,” vix, etc said it,” but we know the truth was already foretold in price in advance.

  12. EL MATADOR says:

    So far things running almost to script, post the following on Pretzels private forum. I believe I posted something similar here on 9/11. My guts tell me OPEX price/volume action very likely coming pre-Friday say maybe Thursday.

    EL MATADOR says:
    09-11-2015 01:26 PM
    If this Primary correction continues to closely mimic the 2011 Primary correction then we should continue to expect more whiplashing along with a grind higher into Sept Opex. Me thinking a near flat but green day for 9/11 followed by say a down day come Monday then grind up into Opex to complete maybe a triangle, no?

    • fotis2 says:

      This will be THE triangle of the year if it gets completed..On another note I take it Shemitah invalidates here or has already taken place on the 24/08.

      • EL MATADOR says:

        My gut says it is 50/50 either it has taken place and China crash is/was it or it will come later gut tells me in 2016 and bond crash will be it.

      • Dex T says:

        What’s the story with the Shemitah? I’ve seen it mentioned a number of times but how is it supposed to affect the market? Are people expecting a big crash worldwide?

        • fotis2 says:

          Dex not very clued up on it basically the seventh year of a seven year agricultural cycle where one is supposed to do nothing let the land rest however the previous 2 dates to date the Market had a mini crash this year it fell on the 13th of this month one of the guys posted a small table on it on weekend update.

      • Yeah, wondering also if the Chinese market crash already did most of the damage from this Shemitah. That and Gartmann went on last night saying he was short stocks and long bonds, lol… moron

  13. ko68 says:

    Triangle breaking to the upside. C of B in progress to target the 2050 area?

  14. madswiss says:

    overhead ma r zones 197.68 201.2-202.21 204.7-207.92 55 89 144 233 377 all above current price s is the 610 @ 190.18 then 987 @ 170.5 on the daily, qe quad before increase? let’s see if they are pro or reactive….

  15. My best guess kicking into gear.Buy em til Thursday then sell.It s all options mechanics.Two Opexs ago I believe it fell on Monday and rallied the rest of the week til Friday.Anyways it s how the week ends for me,so not much to contribute on a daily basis.Good luck all.

    • Agree. The pattern this year until August was that most OpExs ended towards highs, but that hasn’t always been true for most OpExs, just recent.

      The seasonal expirations though has done that for years. March, June, September, December going back years have tended to close within an average of 20 or less from three week highs. In our case here, the three week highs (so far) are 1989, so that suggests a close above 1969 sorta no matter what else they do this week. Higher if they push the three week highs above 1989 too.

  16. rc1269 says:

    just enough bad data to get the market all excited

  17. pruthvi says:


    What are the tgt about S&P and Dow for downtrend?

  18. johnnymagicmoney says:

    My take …………

    1) Markets looks like it wants to break out of that triangle today and that pennant
    2) This action as of late reminds me so much of the controlled market that bled up for so long during Primary 3…………….controlled, controlled, controlled and every dip bought
    3) The money whore Yellen and her crew are no longer independent. As if they ever were but I think it has reached new heights. They have no balls and listen to much to the market. Did they not say they were trying to create a wealth effect? Well if raising rates is a reverse of that creation why on earth would they raise now after the global stock markets are in turmoil? They are afraid.
    4) The Fed is addicted to being interventionists. Addicts by nature do not think of long term consequences. They are not forward thinking. They are more reactionary and have shown little ability to do long term planning. It is NOW NOW NOW just like the bankers, politicians, and traders that control them.

  19. reddragonleo says:

    Tuesday, September 15th, 2015 ES Futures Morning Update:

  20. mjtplayer says:

    SPX needs to hold 2,043/44 area today

    • perversionofthemean says:

      Classic short squeeze into “the event”. Isn’t necessarily bullish or bearish, but so common.

  21. fotis2 says:

    CH on DAX 30min.

  22. blackjak100 says:

    Total snooze fest – very sad to see the talk/hype about a .25 pt interest hype after 7 years of ZIRP. What does that tell us about the ‘true’ economy?

  23. torehund says:

    What we are seeing is that communism is taking a grip on countries in Africa, Syria and next out maybe Greece…Kind of a more totalitarian twist to socialism, erupting at a time when the latter is crumbling..
    Kim is making friends with African nations pushing huge Bronze statues on them, and recently a memorial park (Syria). As Griffin is pointing to, there aren’t a whole lot of difference between fascism and communism (but the name). But an “Ism” is often chosen when the society collapses.
    If you can’t afford socialism any longer, communism is the cheaper option. Its that simple.

    • fotis2 says:

      Don’t know about Syria and Africa but here in Greece socialism/communism is on its last legs particularly amongst the younger genaration who are turning to nationalism in a big way,a similar shift of preferences can be witnessed all over Europe but given scant attention by the Media.

      • torehund says:

        Nationalism is the precursor,and a sure sign of emergence of the collectivistic spirit. All alongside the faltering of the EU superstructure.
        The solution is always fascism or communism, its about choosing between two unfavorable scenarios. Nationalism is maybe not irreversible yet; Alice give us some wonderland please…reawaken Humanitarianism and the spirit of the INDIVIDUAL.
        Collectivistic ideas is a society on crouches, a regression to a primitive state of non-thinkers and non-believers. Lets fight back….

  24. joecthetruthteller says:

    Goldman Thinks The Fed Will Hike Rates In December, Not September

    Goldman Sachs’ Gregory noted that the VIX, the CBOE’s volatility measure, was at 23.2, three points “above its 1990-present average and 9 points above its 2013-2014 average.” At those elevated levels, the economists ask, “Will the Fed hike with the VIX at 23?” The answer, according to Gregory, is “No.”

    Instead, Gregory said that “low inflation and weaker financial conditions solidify the case for a December lift-off.” Immediately, that means that the VIX will move lower. However, Gregory warned that, “Even if the VIX does calm down we do not expect it to settle back into the low teens like it was from 2013 to mid-August 2015.” The global economy is just too uncertain, Gregory noted.

    Goldman said that the “recent deterioration in financial conditions” is an “added concern” for the Fed as it heads into the meeting. In fact, according to Goldman economist Jari Stehn, it has the impact of “three hikes in the funds rate.” This gives the Fed “one more reason” to stay on hold until December.

  25. mjtplayer says:

    Thanks Tony!

    Very boring day on light volume, as expected; just giving back the Friday fluff. More of the same tomorrow and Wed, light volume drifting…

  26. Here is the continued count on the half-hourly triangle or diagonal triangle. The wave labels for the contracting leading diagonal triangle are shown, although it still must meet certain requirements to properly form the diagonal. First, wave circle-3 ‘must’ make a new high. If it does not we have a failure of an upward wave instead. Second, wave circle-4 must overlap wave circle-1 in a zigzag, lower. And, finally, wave circle-5 must also make another high. The most important feature of the chart, however, is not the small wave labels – it is the way price is being ‘walked up’ the lower trend line. This is not what the extreme bears were hoping for at this point. More text below chart.

    SPX - Intraday - Sep-14 1649 PM (30 min)

    In a previous post, it was noted that if we were in a triangle or diagonal triangle then the price action would be whippy and hard to decipher. And there may even be ‘triangles within triangles’. It is very possible today’s price action represents exactly that – a triangle in a triangle. While, the exact structure may seem unimportant to some, it does provide two key invalidation points. First, today’s triangle would invalidate below that A wave at 1939.18, and the diagonal triangle itself would invalidate below wave circle-2 at 1911.20. That is because in a diagonal triangle waves three and four can not travel below the low of wave two. Hope this helps.

  27. torehund says:

    Don’t think the FED has the guts to rise interest rates as it would crush the Euro, therefore the market may choose to inflate the US stock market. There is no going around the fact that Europe is swarming into weakness, and its impossible to politically correct such a discrepancy. Market always finds a way.

  28. For the SP500, on the COT website, I see that Large Speculators are 86% bullish, and the Small Speculators are only 19% bullish. These seem to be fairly extreme. My questions to anyone:

    First, what does this mean (ie, is it generally bullish)? And second, is it a reliable indicator?

  29. So here is an investing question (not a trading question). Looking out to when p5 ends and we enter a bear market, what is a good strategy for investing? (ie. my core holdings) I’m well aware of the conventional strategy of shifting to bonds and as interest rates go down as they usually do in a bear market, bond values increase. The problem this time is that interest rates are already at historical lows and there isn’t much left on the downside. If anyone has any ideas I would welcome hearing them.

    • Young Tom says:

      Find an ETF that you can live with. Don’t buy the bearish etf,but short the bullish etf.

      • manunidhi21 says:

        Hi Young..
        For how long u can short the bullish etf ?
        Its intraday or till your brokerage keep the holding of that etf..
        Please explain the concept anyone

    • mjtplayer says:

      Cash, spread between several brokerage houses. Not money market mutual funds, but straight cash.

    • tomasso60 says:

      average bear market is roughly 17 months I believe.
      consumers have to purchase food, gas, pay electric bills etc. so, WMT, CON ED, XOM stuff like that (sell puts to acquire or sell calls to pull in more yield).
      defense contractors
      convertible preferred shares.
      and then hold
      lots of cash…. and ready to start the ride again

    • rc1269 says:

      That’s an interesting conundrum regarding bonds, isn’t it. Rates aren’t quite at (our) historical lows, but within shouting distance. However, why do we only look at our own rate history to determine how low they could go? How low are rates in Japan, or even Germany? (Hint: much lower).
      Don’t be caught in the trappings of history. If we have a recession rates will go lower. Especially the long end.
      I would not buy convertibles as another member mentioned. Those are great buys after equities have collapsed, but absolutely not before. I used to trade busted converts for a living and let me tell you you don’t want to own something before it ‘busts’. Cheers

  30. For FRED WILH.> Fred, can’t figure it out the way we are going to leave this station. Up, or Down? 60mmnts or other timing chart to consider ? Thanks,

  31. It looks on the Nasdaq daily chart like a rising wedge toward 4900.

  32. torehund says:

    ..someone needs to oil this market.

  33. johnnymagicmoney says:

    Bear pennant on the 30 min within a daily bear flag on the S&P

    anyone know the last time we saw something like that?

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