Monday update

SHORT TERM: gap down opening, DOW +15

Overnight Asian markets were -0.1%. Europe opened higher but finished mixed. US index futures were lower overnight, and the market gapped down to SPX 2026 at the open. The market had closed at SPX 2033 on Friday. In the opening minutes the SPX hit 2022, and then started to rally. At 10am the NAHB was reported higher: 64 v 62. Also at 10am: The rally continued to just before noon when the SPX hit last week’s high at 2034. Then it started to pullback again. By 1pm the SPX had hit 2025, then it rallied into the close to end the day at 2034.

For the day the SPX/DOW were +0.05%, and the NDX/NAZ were +0.45%. Bonds lost 3 ticks, Crude dropped $1.25, Gold slipped $5, and the USD was higher. Medium term support remains at the 2019 and 1973 pivots, with resistance at the 2070 and 2085 pivots. Tomorrow: Building permits and Housing starts at 8:30. Then a speech from FED governor Powell at 9:15, and a speech from FED chair Yellen at 11am.

The market gapped down at the open today, traded down to SPX 2022, then rallied to the uptrend high at SPX 2034 to end the day. Despite the gap down it looked like a consolidation day as most of the foreign indices were relatively flat as well. No change in the larger count: still Minor wave 1 of Int. iii underway. Looking for a larger pullback than today’s 12 points to signal a Minor 2. Short term support remains at the 2019 pivot and SPX 2000, with resistance at SPX 2040 and the 2070 pivot. Short term momentum declined to neutral during the day, then drifter up. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: bull market


About tony caldaro

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97 Responses to Monday update

  1. Dex T says:

    Not much higher than it’s currently trading.

    World Bank sees depressed oil, commodity prices through 2016

    “The World Bank’s quarterly commodity sector report cut its forecast for average crude oil prices to $52 (Dh191) a barrel this year from $57 estimated three months ago. For 2016, the average price forecast is $51.”

  2. Tony Jordan says:

    Not a lot of evidence of a correction mild or otherwise at this stage. Major bourses inside and outside the U.S. do not look interested in giving back more than a morsel of their recent gains. This of course could change quickly but BTDs continues to work. Gold pulled back Friday and Monday but it looks as though it took the stairs down compared to the elevator on the way up. With $XAU:GLD at +4% today this would generally be bullish as well for the sector unless today’s rally in the miners is a “2”.

  3. GYN LAB says:

    Mr HD – I think your 2-4 TD just had a retest following a break below around noon. If this kiss&fail holds we could have some downside action from tomorrow (or AH)

  4. blackjak100 says:

    No need to overthink as this aligns with 2019 pivot and he does not use defined pivots like TC

  5. fotis2 says:

    Looks done here going short 2033 lets see stop close above high.

  6. H D says:

    $SPX, markets not really showing it’s hand. turning to unconventional data, 10/21/2015 was the ‘back to the future’ date. That’s what I’m going with now. Clear illuminati signal. They also have the Cubs winning.

  7. H D says:

    are we there yet? 😯 FIT, a co. that makes a bracelet that counts the steps you walk, is worth more than the entire drybulk shipping sector combined. 5 times over!

    • uncle10 says:

      welcome to planet Earth where nothing makes logical sense….

    • rc1269 says:

      sounds like something somebody might have said in 1999-2000…

    • Dex T says:

      It’s facts like this, combined with the declining earnings stats posted by rc1269 that make me laugh when I hear there is no euphoria or everything is priced in.

      I was only partially joking yesterday when I said that the P5 “stimulus” would be driven by Fed officials. I guess the continual hope that they will step in keeps the market afloat.

      But it won’t forever! It’s NOT different this time!

    • torehund says:

      There is also an anti sugar hype in the society today (hopping for my ECTE), and measuring every bodily parameter conceivable is just around the corner. a trend still in its infancy.

      • fotis2 says:

        Best one I read about an Italian Funeral company is introducing a ”Green way” where a tree is planted on top of the grave so basically using the body as compost.

      • torehund says:

        Better than burning creating aweful CO2 😝, and morphing WhaTs dead into new life😀

  8. lunker1 says:

    Hi Tony, in the WE your wrote about 9 waves up. Since there’s been two slightly higher highs. Are these 11 and 13? Is there an ED for 9-13? Thx!

  9. johnnymagicmoney says:

    By the way Apple finally broke out of its wedge today and decisively. I believe that will be significant

  10. johnnymagicmoney says:

    I think this bleeds up to the trendline around 2050 and then in INT 2 sells off to the 2019 pivot, or possibly the 1993 level. Just dont think the pullback will be that much

  11. EL MATADOR says:

    Is Corp America’s Buyback Programs gonna print -div? Keep in mind that corp balance sheets are deteriorating rapidly due to constant higher div payouts and constant borrowing for buybacks
    Y2014 $555 Billion in Buybacks

    So Far in Y2015
    4Q $ 50 Billion so far for October alone. I highly doubt they will be able to triple this by EOQ.
    3Q $ 81 Billion
    2Q $132 Billion
    1Q $144 Billion (let’s not forget that AAPL!!! and GE each announced $50 Billion)

    • mjtplayer says:

      Not sure what’s more amazing, the volume of buybacks YTD or that the market is flat YTD with all this added fuel. In the next downturn, companies will get scalded for large buyback programs. The will have bought their stocks at/near the highs and have nothing but a ton of debt to show for it. IBM is a perfect example, buying their stock for years now, from $200 all the way down with nothing to show for it. FCX is another one, buying back their stock at $40 – $60, now the stock is worth $12 and all they have to show for it is an even larger mountain of debt.

      The reason companies have to issue debt to buyback stock is b/c they have very little US cash, most is held (trapped) overseas. If they bring it home, they get taxed by almost half between Fed & state taxes. AAPL is a perfect example, they would pay about 52% in combined Fed & CA taxes. $100b+ in overseas cash on paper, much of which is in Ireland, but really only worth about $50b if they were to bring it home. As a result, even a cash-rich company like AAPL has to issue debt to feed the buyback programs.

      • EL MATADOR says:

        All of them are. I have a huge list of buyback announcements. Remember what UTX CEO said last week, it’s ok if company ratings are down graded because buybacks are worth it. Fook’n idiot.

      • EL MATADOR says:

        Well that overseas cash is depreciating as the King Dollar continues to rally long-term. This is one big reason, IMO, why corps are borrowing against their foreign reserves cuz later it more worthless.

      • Dex T says:

        They’re hoping that the govt. will bail them out of any future crisis (more QE) by supporting the banks that issued them the loans.

  12. Dex T says:

    Some nice Technical analysis with charts. Short and worth a read. I agree with the points made.

    The Smart Money Is Still Betting Against Crude Oil

    “Commercial crude oil futures hedgers (often considered the “smart money”) have used the rally of the past two months to add to their sizable net-short position, while the large traders (the “dumb money”) have added to their net-long position. The commercial hedgers’ aggressive short position shows that they are still skeptical of any rebound in crude oil prices for the time being, while the large traders’ long position shows that there hasn’t yet been a true capitulation or liquidation that typically signals a genuine market bottom.”

  13. Tony Jordan says:

    Last Friday the market closed pretty much at its high for this rally to that time. This week we’ve witnessed a relatively range bound market with a slight tendency to the upside validated by several higher lows and higher highs. This opens the door to the possibility that this week’s action for the most part has been a running correction which possibly ended at today’s low, particularly on the INDU.

  14. GYN LAB says:

    Good morning all!
    Looks like an overshoot of that ED from 2020 (head fake from 2037 by 2pts) and now back below the upper TL. With -ve div all over the place IMO a good RR for at least a pullback of the monster rally of 167pts. 1956 pivot looks like a good target (+-50% retrace) if this is a temporary top.

  15. phil1247 says:

    TOOK 50% profits at 2038…………looks like 5th wave overlapping slop……… need a pullback

  16. buddyglove says:

    Clearly rallies not being sold and bears in trouble imo. I expect price to eventually push thru current supply/resistance, and make new highs by the end of year. I believe this could/will mark 2015 as the first time ever that US equities climb for 7 yrs straight. Those here who start fussing about “debt ceilings”, “gov shutdowns” and other such nonsense will ultimately be left behind again. aimho and GL. (still leveraged long and overweight equity)

    • tommyboys says:

      Some longer term cycles turning up today and again next week on the 26th…

    • blackjak100 says:

      Agree, but still think we need that 15-20 pt pullback before launching higher preferably to the 8 day MA.

    • mjtplayer says:

      BG – the SPX is up just 1% over the past 7 trading days, and on declining volume and worsening breadth. This is a clear sign that the rally is running out of gas and needs a breather. You may be correct, but I think we get a sizable pullback first, back to the 1,950 – 1,970 area, what I would have labeled as int ii. Also, what was support is now resistance, and that is the SPX 2,040 area right here. Odds favor we don’t break through resistance on the first attempt.

      Things coming to a head here: resistance at 2,039/40, support at 2,023 today.

      • blackjak100 says:

        MJT, you may be right and was my thinking initially. However, I’d be careful as we may only get pullback to 8 day/2019 pivot. I understand why TC labeled it the way he did now. Break of 2019 pivot and most likely you will be correct.

    • rc1269 says:

      agree with MJT here on this one BG. looking at the chart, the spx is up a whopping 19 points in what is going on 8 trading sessions. i’d need to see something strong fast before i’m feelin’ it

    • I’m looking for a new high too, but VIX seems to have found a short term floor and volatility is turning up. I don’t know if it will signal a big pullback, but it’s something.

    • hkloon says:

      +1, observed on the emerging market’s rising stock activity as well… seems like risk off move… until maybe USD pound on us again next year…. 🙂

  17. frommi2 says:

    Minor 5 of wave C of B in the S&P500 just finished as an EDT? 🙂

  18. $SPX bull animal spirits appear to be in control. Minor wave-3
    of intermediate wave-3 of major wave-3 of primary wave-5 could be quite explosive.

  19. NEWBIE says:

    Ron Paul audio interview on the Fed & the market etc. Just listen for a couple minutes from 2:00, interesting stuff.

  20. Re IBM….. If this is a wave 4 retrace of a wave 3 high@ 215.90 then the .5 fib retrace level is 142.78! Next, .618 or lower channel TL support at 120.00 or reverse?

  21. torehund says:

    brent looks progressively ugly, cant Even touch the 50 Mda on the weekly. Furthermore its getting out of breath on the weekly macd below zero. Rejected in a determined fashion at RSI 50 on the weekly. Wave it godbye, 12 usd within reach 💧

  22. patterntrading says:

    Hello Tony,

    US Market Chart Update :


  23. manunidhi21 says:

    Liberal win in Canada..
    Blue jays trying hard

  24. ewmarkets says:

    Closing below 20 month moving average on a monthly chart two months in a row can happen in a bull market too.

    • perversionofthemean says:

      I’d hardly call those bull-markets. The Nasdaq 100 dropped 41% in 1987’s version of a flash-crash, and the average growth fund dropped 32% in summer of 1990. Rebounds back above lost moving averages are easier when an adequate rinse-job has cleansed the system. We’re still below the 200-day, but we did successfully test the 48-month moving average on the Dow 30.

      • ewmarkets says:

        There had been discussions that closing below 20 months MA in two months in a row signals the start of a new bear market and much more downside to come. So here are examples that this is not the case.

        • argento1 says:

          Should see weakness soon enough again on the indexes, but not expecting her to break down this year, next year be sure to see the start of the bear!!Can’t ignore the montly macd atm that spells trouble ahead!


  25. I’m seeing SPX as being in minor 5 of intermediate iii right now. The Oct 13/14th decline would be minor 4. It’s easier to see this in the DOW because the pullback before that was almost nonexistent. Also, the Oct. 6th pullback in SPX never violated the 20 hour SMA, which I would expect it to have done if it was a minor pullback. Also, there is a negative divergence on the 5 day RSI. The top could be in today and Int ii may start tomorrow, but there might be one more brief pop higher tomorrow. I’m looking for 50% pullback, but perhaps it will stop at the 38% retracement level. I see 5 minute waves up in minor 5 currently, with an ending diagonal to top it all off. It could be leading higher if it subdivides, but I’m looking for the move up to end very soon. It’s still hard to rule out the bear market in progress scenario right now as well. I’m not expecting small caps to make another high for a very long time.

  26. What people are NOT looking at is that A spooky stock market signal just went off!! See here =>

    Every kept calling for a crash not 1 week ago, and we are shooting higher. WOW!

    • I took a quick look at the Oct 2007 to May 2008 period. You would have lost about 7-8%.

    • joecthetruthteller says:

      McClellan Oscillator fell from extreme overbought conditions even as market was up – a bulls dream. But it is usually difficult to break out over consolidation when indexes are generally overbought. At current levels the bounce off the August low has reached a FIB 61.8% retracement from the all time high – a key resistance level that this rally has to break through if it has further to go.

      • Similarly, we all heard for weeks back when markets were at 2,100 +/- 10 that strong support existed at 2,040. On the way down to 1,867 the market blew through 2,040 like it wasn’t there. With the enormous numbers of short spec positions right now, I don’t think this pivot will offer any resistance if the market wants to go higher.

  27. NEWBIE says:

    Guys the world is falling apart around us, the fed has done everything in their power to prolong the inevitable. 2008 was the warning signal, qe 1, 2, 3, was the band-aid. Soon we will see the result of our actions.

  28. Now Wall St strategy will be to ignore companies that miss like Morgan Stanley or IBM—“they re outliers”.Not representative of stocks like biotech and Netflux…or is it Nutflix? Meanwhile the 10 yr doesn t budge anymore from 2%.If the dollar moves up from here, that s probably it for the rally in stocks.
    MR C…are you still bullish on the dollar to 120? If so, would you consider that happening as a result of the next bear market–from deflation?

  29. mjtplayer says:

    Thanks Tony!

    Not sure what’s more incredible, the collapse in volatility (spot VIX trading in the high 14’s) or the collapse in volume (SPY just traded 71m shares today – lightest volume day since 8/18). Interesting date, the market then proceeded to drop 10% over the next 4 trading days after 8/18. Not suggesting that’s going to happen now, just a curious observation.

    With summertime volume in the SPY and summertime VIX levels, makes you wonder what the market is waiting for. Feels like the market has run out of gas, it’s been a nice run from 1,871, up 163pts over the past 3 weeks in the SPX (8.7%), time for a larger pullback in int ii.

    As a comparison:
    From the Oct 2014 Ebola low, 3 weeks into the rally, the SPX was up 11%
    From the Oct 2011 low, 3 weeks into that rally, the SPX was up 20%!

    This rally, 3 weeks in, is weaker than the last 2 pullbacks of considerable size on a straight-up percentage basis. Also, each of those “kick-off” rallies experienced retracements of 40% and 50% respectively, over a period of 4 weeks and 3 weeks respectively. Since this rally is weaker, perhaps any 40% – 50% retracement (back to about 1,950 – 1,970 for int ii) will be quicker? Like 2-3 weeks?

  30. int wave 2 was 20 points, why not minor 2 only 12 points ?

  31. rc1269 says:

    Thanks Tony

    SPX earnings update…

    64/500 companies reported.
    sales growth: -4.08%
    earnings growth: -9.23%

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