Thursday update

SHORT TERM: rates stay unchanged, DOW -65

Overnight the Asian markets gained 0.6%. Europe opened higher but lost 0.2%. US index futures were lower overnight. At 8:30 weekly Jobless claims were reported lower: 264k v 275k, Housing starts were reported lower: 1126k v 1206k, and Building permits were reported higher: 1170k v 1119k. The market opened three points below yesterday’s SPX 1995 close, dipped to 1991, then began to rally. At 10am the Philly FED was reported lower: -6.0 v +8.3. The rally continued until 1:30 when the SPX hit 2104. Then the market drifted to SPX 2102 ahead the of the FED’s statement:, and projections: After the announcement the market spiked to SPX 2108, then quickly dropped to 1988 within minutes. After that it started to move higher. Just before 3pm the market hit 2021, then quickly dropped to 1987 just past 3pm. Uncertainly still  major factor in this market. Then after a bounce to SPX 2000, the market dropped to 1987 again before closing at 1990.

For the day the SPX/DOW were -0.30%, and the NDX/NAZ gained 0.05%. Bonds gained 32 ticks, Crude slipped 30 cents, Gold rallied $11, and the USD was lower. Medium term support remains at the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots. Tomorrow: Leading indicators at 10am and it is Options expiration Friday.

The market opened slightly lower today, then rallied to SPX 2104 ahead of the FOMC statement. After the statement was released, and during FED chair Yellen’s press conference, the market became very volatile. A spike up to SPX 2108, down to 1988, up to 2021, then back down to 1987. One to 1.5% moves within minutes. While this market has advanced 150+ points from the SPX 1867 low, the rallies have appeared to be corrective. When we look at point reversals alone we can see three five wave rallies from the low, but they are all overlapping. Unless the market has set up a series of 1-2’s, which is doubtful, this also look corrective. Tomorrow into early next week should be key for this downtrend. Short term support remains at the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots. Short term momentum hit extremely overbought then dropped below neutral. Best to your trading Options expiration Friday!

MEDIUM TERM: downtrend

LONG TERM: bull market


About tony caldaro

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202 Responses to Thursday update

  1. fotis2 says:

    Nicely done to all the Bears good to see the little guy on the win side.And remember don’t count your chickens before they hatch.GL trade safe and have a good weekend.

  2. rc1269 says:

    so, everybody got the memo yesterday. what did you do with it?

  3. thecustomer14 says:

    For those who have been wondering (like myself) where the VIX might be headed in the next couple of months, here’s what I found while taking a look at a monthly VIX chart:

    In the past 25 years the VIX has risen from a level below 20 to a level above 45, within a matter of a couple of months or less, 6 times. This happened in 1998, 2002, 2008, 2010, 2011, and now recently, when the VIX went over 50 in August. The previous 5 times this occurred, here is what happened to the VIX in the months that followed:

    1998: In August, the VIX hits 45.02. September VIX high: 48.06, October VIX high: 49.53.
    2002: In July, the VIX hits 48.46. August high: 45.21, September high: 41.86, October high: 43.44.
    2008: In September, the VIX hits 48.40. For the next 7 months it rises above 45 every month, going above 50 in 6 of those 7 months, and peaks above 80 in October and November.
    2010: In May, the VIX hits 48.20. June high: 37.38, July high: 37.58.
    2011: In August, the VIX hits 48.00. September high: 43.87, October high: 46.88.

    And now 2015: In August, the VIX hits 53.29 after being as low as 10.88 just earlier in the month.

    The previous 5 times this occurred (VIX going from 45 in 2 months or less), the VIX rose to a level above 37 in each of the 2 months that followed 100% of the time. And the previous 4 times when the initial VIX reading above 45 occurred in the second half of the year, as it has this year, the VIX rose to above 40 in each of the following 2 months (or more) 100% of the time.

    Admittedly this is a small sample size, but does anyone want to bet against volatility over the next couple of months?

    • johnnymagicmoney says:

      I have a question. have been following the 30 min falling wedge on the VIX. It was so orderly unlike some other charts and although it broke out to the downside briefly yesterday it closed at the rtop of the wedge and is clearly closing outside the wedge on the upside here. Here is my question when it breaks out of a falling wedge what percentage of the drop is retraced?? What would be the targets for the VIX here? I am guessing it wouldnt eclipse the 54 level unless we were in a bear market.

      • thecustomer14 says:

        Great question Johnny, and my simple answer is I have no idea.🙂 There are others here much more qualified to answer who might be willing to take a stab at it.

        But I would agree with your last assertion – that the odds are against the VIX eclipsing the 54 level unless a new bear market has begun.

    • senrex says:

      Thank you for the labor and sharing the results.

      • rc1269 says:

        i’ll take that to mean you did not de-risk yesterday. that’s unfortunate. hopefully it’s just a temporary state. the good news about the equity market is if you wait long enough, it’ll always be higher eventually.

  4. tony caldaro says:

    found Newbie and friends

  5. kvilia says:

    If LD holds, next stop is 2040. Very tempted to go long but need to wait. Looks like my discipline skills are getting better🙂

    • blackjak100 says:

      NYAD relatively strong and possible triple +div on 60 min if we hit 1956 and it holds. Wave b of iv appears to be an expanded flat correction.

  6. Dex T says:

    About 45 minutes to go and we are going to close red. Next few weeks are historically poor for the market as El Matador has been emphasizing over several days.

    An excellent chart was posted some days ago by ReddragonLeo on average returns by week over the past 10 years. It showed that in the weeks following Sept Opex SPX was down by the following amounts:

    week 1 -1.23 %
    week 2 -1.13%
    week 3-1.05%

  7. I thought we would of been down harder today? So Im lost. this B wave is messing with me. Between trader Joes triangle and and bearish hammer/shooting stars. not a clue where the wheel stops. Look forward to this weekend update. Have a nice weekend all.

    • EL MATADOR says:

      What 3% from yday’s intraday high not big enough for ya, eh?

      • 3 percent is good, just not sure where we go from here that’s all. We pretty much opened down 25ish moved around a lot. With Europe down so big, Just would of thought we may have had some fireworks if this is truly C down. maybe it comes at the close. Im out. not long not short for the weekend.
        I appreciate all your informative post Mat. Have a nice weekend

    • mjtplayer says:

      Trying to draw any triangle right now should prove tough. If it isn’t broken yet, it should be by Monday. Keep things simple – the trend is down.

    • frommi2 says:

      I am pretty sure that Tony will tell you that wave B has finished yesterday afternoon and we are now in wave C with downside target at least 1830 or 1875 in case this is wave C of a triangle. Then next week if it drops below 1830 he will tell you we are in a bear market and wave C downside target is at least 1730.

  8. sibyn says:

    Still applies

  9. GYN LAB says:

    Sorry if I am being a moron… Traderjoe’s LD should it not be an ED to finish off b of C of P4?
    His diagonal assumes that P4 is done at 1867 and this is the start of P5?
    Even if this diagonal is an ED within b of C it ‘could’ make a HH around 2030 right?
    Or c of C has already started and this will make a LH around 2000 as El Mat states.
    Next week will be an interesting week!

  10. torehund says:

    Looks like the mid atlantic ridge is getting irritated. Iceland could incur a quake next.
    Interestingly there was a Quake at 7.0 magnitude in Belem Amazonas at the same time as the 8,3 hit Chile, boots removed it after about 30 minutes. Seems like this is the warmup before the 2-3 decade chills.

  11. uncle10 says:

    Thanks Tony.
    It’s all the feds fault🙂
    good weekend all

  12. lunker1 says:

    A 1963=58
    B 1979
    C=.62A 1943
    C=A 1921
    C=1.62A 1885

  13. frommi2 says:

    Its not game over for the bulls yet, but we are getting close. Now comes the three weakest weeks of the year. Crashtime!! I expect to see a lot lower prices in october. (<1800)
    Only chance i see for the bulls is a triangle as wave IV, but even then we go lower from here and we know it 2-3 weeks from now. The possibility that we are already in PV (if it ever comes) is very low.

  14. madswiss says:

    with 60 being os have to watch the dly, wkly, monthly, all could reverse quickly

Comments are closed.