Tuesday update

SHORT TERM: new uptrend high, DOW -13

Overnight the Asian markets were mixed. Europe opened higher but lost 0.3%. US index futures were lower overnight, and at 8:30 Building permits were reported lower: 1103K v 1170K, but Housing starts were higher: 1206K v 1126K. At 9:15 FED governor Powell’s speech: http://www.federalreserve.gov/newsevents/speech/powell20151020a.htm. The market opened three points below yesterday’s SPX 2034 close, dipped to 2028, then rallied to 2039 by 11am. At that time FED chair Yellen’s speech was released: http://www.federalreserve.gov/newsevents/speech/yellen20151020a.htm. The market then pulled back to SPX 2027 by 2pm. After that it worked its way higher to a SPX 2031 close.

For the day the SPX/DOW lost 0.10%, and the NDX/NAZ lost 0.50%. Bonds lost 14 ticks, Crude slipped 20 cents, Gold gained $7, and the USD was lower. Medium term support remains at the 2019 and 1973 pivots, with resistance at the 2070 and 2085 pivots. Tomorrow: no economic reports.

The market opened lower today, dipped, then rallied to a new uptrend high at SPX 2039. Running into the 2040 resistance level the market then dropped to 2027, before rebounding some into the close. With the SPX running into the expected resistance level, with an hourly negative divergence, we just may have observed the high of Minor wave 1 of Int. iii. The largest pullback from SPX 1991 may be next. Support is at the 2019 pivot and SPX 2000, with resistance at SPX 2040 and the 2070 pivot. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: bull market

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

About tony caldaro

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151 Responses to Tuesday update

  1. uncle10 says:

    Thanks Tony.
    Looks to me like a big down set up.

  2. EL MATADOR says:

    Anyone still think we are not in a 2nd distribution trading range? Without QE P5 will truncate so yeah no new ATH. That’s all I got to say.

  3. jeffbalin says:

    The 10 day ma on daily Spx held the downtrend last week. Will it hold it again now?

  4. Dex T says:

    And here is the REAL reason why you are expected to buy buy buy!!!! Unless you want those “poor” Streeters to receive pinkslips instead of checks!

    Wall Street faces smaller bonuses, possible layoffs

    “Big banks and brokerages slashed their bonus pools last quarter after pitiful trading activity led to double-digit revenue declines. Unless things turn around — and soon — Wall Streeters will see shrunken bonuses and possible layoffs, experts said.”

    “Bonuses, like profits, are going to hinge on the fourth quarter,” said Kenneth Bleiwas, deputy comptroller for the state of New York. “If the fourth-quarter is a strong quarter, they will put aside the money. If it’s a weak quarter, bonuses could be flat to down,” said Bleiwas, who tracks the industry because of the taxes it pays to state and city coffers.


  5. GYN LAB says:

    I am still watching for a top soon, if not already this morning, as an alternative to Mr TC’s immediate bullish scenario.

  6. gtoptions says:

    Thanks Tony
    SPY ~ WPP @ 201.83 OEW Pivot 2019
    5/3/5 from todays high nearly complete. IMO

  7. uncle10 says:

    Thanks Tony.
    My advice to anyone who wants to trade is:
    Buy at support and sell at resistance. It’s simple and it works. Ignore and leave all the news and economic data to the herd who always gets slaughtered in the end.
    gl all.

  8. Because the Dow is now past a 61.8% retrace, the Leading Diagonal count to Minor A, of Intermediate (B) of a Primary 4th triangle appears to be working even better. Wave v is shorter than iii, wave iii is shorter than i, wave iv is shorter than ii, and wave iv overlaps wave i. They are all three-wave sequences. Same count works on the SP500.

    DOWI - Intraday - Oct-21 1204 PM (4 hour)

    Cheers and enjoy the chart!

  9. H D says:

    HD says FIT is overvalued, FIT loses $5 overnight. #urwelcome :mrgreen:

    Distribution, sellers above 20(34) 77% odds of trading 2019

  10. No sellers, Everyone waiting for Dragi to announce more QE? to much bad news and to many people short, waiting for short covering rocket fuel to take us to 2100. Maybe we can get to 2019 before blast off, but I doubt it.

    • fotis2 says:

      Think above 2040 today it will pop many shorts there will bail.

    • EL MATADOR says:

      how do you know too many people are short? all those record short that help cause the August crash are long gone. IMO was are witnessing another distribution phase up here. clearly there is a lack of buyers up here. The bears are just waiting to pound this bull to the ground from a higher high (and no, no new ATH). I don’t know where that key price is yet but just wait and see it coming alright.

      • Dow not representative.Nas and Russell weak.Still hoping to see weakness play out.I ll wait for 1950 to put money in–if it s in the next week or so.

      • Well, we shall see. Seasonality, no were else to put your money and world central bankers are on my side. I say 2019 pivot should hold and new highs are coming. As always I could be wrong. Just my humble opinion. Good luck

        • EL MATADOR says:

          Just remember who is really the buyers up here. Hint it’s not Dump Money. It’s the Idiot Money.

          Goldman Buyback Desk Saw Record Volume in Wednesday Rebound
          August 12, 2015 — 5:09 PM CDTUpdated on August 13, 2015 — 6:54 AM CDT

          Who did the buying as U.S. stocks staged the biggest turnaround in three years? The companies that issued them.

          The Goldman Sachs Group Inc. unit that executes share buybacks for clients had its busiest day since 2011 on Wednesday, according to a note from the firm’s corporate agency desk. Based on the value of equities repurchased, volume handled by the bank set a record. The note was confirmed by spokeswoman Tiffany Galvin.

          Corporations have emerged as one of the biggest sources of fresh cash in the stock market, eclipsing even mutual funds with more than half a trillion dollars spent last year, according to data compiled by S&P Dow Jones Indices. They swooped in and bought again on Wednesday as the Standard & Poor’s 500 Index flirted with its largest two-day selloff since January.

    • nsteve24 says:

      more EU QE is going to spike the Dollar, and kill earnings further. maybe a pop at best then a hard drop

  11. mjtplayer says:

    Solid day for TLT now trading at the HOD, 10yr yield at the LOD trading under 2.02% now at 2,0175% Getting very close to 2% again.

    Commodities getting crushed + falling yields = deflation

  12. Dex T says:

    More interesting articles on oil and some key excerpts from them.

    Jim Chanos Nails the Link Between Debt and Energy

    ” U.S. oil production is expected to grow 6 percent in 2015 despite a stunning 59 percent drop in the U.S. rig count over the past year.”

    “According to Chanos, cash flow from operations has not covered capital expenditure since 2010 at some of the most prominent exploration and production companies since 2010, meaning the firms have consistently outspent their income. That trend is present even at the larger “big oil” firms such as Exxon, Chevron and Royal Dutch Shell, Chanos claims, with cash flow following distributions to shareholders also firmly in the red.”


    Oil price falls as oversupply worries deepen

    “Only five non-OPEC countries sent officials to a meeting of with OPEC in Vienna on Wednesday to discuss possible market cooperation. The meeting was unlikely to agree any coordination over supply, an OPEC delegate said.”


    HALLIBURTON CEO: The oil industry’s ‘day of reckoning’ is near

    Dave Lesar, CEO of the oil-services giant Halliburton, believes that a “day of reckoning” for these companies is quickly approaching.

    Fluctuations in production activity continue to create volatility in the oil markets. Lesar, however, thinks it’s only delaying a period of big changes for the business.

    “I think we just got to wait,” he said in Halliburton’s quarterly earnings call Monday. “These redeterminations are going on. And it looks, generally to me, like it’s a sort of kick-the-can-down-a-road approach that’s being taken at this point. But that really just pushes the day of reckoning into sort of the first quarter of next year.”


  13. fotis2 says:

    On small time frame close above days high DB bellow yesterday low DT.

  14. frommi2 says:

    Someone mentioned the analogy to 1998. With the headlines over VRX its possible that the last move down will be caused by liquidating hedgefunds (like LTCM in 1998). Be prepared for a retest of 1867.

  15. fotis2 says:

    DAX had play today strong break down at open followed by slow grind up lets see what SP does out of shorts and sideline for now.

  16. Europe and Dax in particular are leading today.Obviously looking for more QE tomorrow.Oil is being ignored, dollar up near 95.Will Draghi come through or disappoint tomorrow? More QE means a higher dollar.Maybe Yellen is telling him NOT to do it, like everyone told Yellen not to raise .25…lol

    • Totally horrible oil #s…inventory up over 8 million barrels.Clearly the world economy slowing faster than rigs can be cut.WTI dropped below 45 but amazingly bought at that point.How numbers the last two weeks doesn t send oil prices into a crash is puzzling.But most markets are at this point.

  17. mjtplayer says:

    Uptrend line is now clearly busted, cash and futures, falling in int ii – IMO. A break below SPX 2,020 should move us down quickly to the 1,993 – 2,000 area.


    • ariez5 says:

      MJT, Suggest you look at OntheMoneyUK’s Twitter stream. He has been tracking the waves beautifully for months. Possible that the top is in, possible that we have one more high just over 2039.

  18. blackjak100 says:

    Fwiw and it’s only worth something if they match…

    38.2% retrace fib/time price = 2021…11:30-12:00 CDT

  19. mjtplayer says:

    Wow, spot VIX getting smashed, trading now in the 14.40’s. Only thing I can think of is the possible lifting of uncertainty regarding who will be house speaker. With Rep Ryan now in the running, as is well – no fear.

    • rc1269 says:

      must be the fastest move ever from >50 to the 14’s (less than 2 mos).

      • mjtplayer says:

        Yes, I can’t find a faster move from 40+ to below 15.

        – Back in the VIX spike of Aug 2011 it took 7 months for the spot to trade back below 15. – On the VIX spike of May 2010, it took 9 months for spot to trade under 15.
        – From the financial crisis VIX spike in Oct 2008, it took 18 months for the VIX to trade below 15.
        – During the correction in 1998, the VIX spiked and never made it back below 15 until late 2003 – 5 years later!! Same with the VIX spike in 1997, it never made it back below 15.

        This is the single fastest move ever, from 40+ (or even 35+) to back below 15 in the spot VIX; just 2 months. It’s not just the fastest, it’s the fastest by a long-shot, the collapse in the VIX in just 2 months has been of epic proportion. Clearly, this is helped by VIX ETF’s where retail traders can easily short the VIX. But on the flip side, market selloffs will cause the VIX to spike disproportionately higher due to short covering in the same VIX ETF’s – like we just saw in Aug.

  20. rc1269 says:

    From a recent Q&A with GS partner and head of macro credit research Charlie Himmelberg (aka, why you should never listen to economists):

    Q: “Are HY spreads foreshadowing recession?”
    A: While HY credit spreads are at or above levels that foreshadowed past recessions, we do not believe a pricing of a recession is warranted, in our view.

    – so what i’m hearing is, “this time is different.” got it.

    Q: Does credit predict recessions?
    A: Not always. Credit markets are likely no better at predicting recession than any other asset market. The head fake in the Fall of 2011 provides a recent example… Reminiscent of 2011, we suspect HY credit spreads are sending another false signal.

    – 2011 was not a head fake, in fact. The Fed marched in with more stimulus, so it’s revisionist history to suggest it was a false signal. Clearly the Fed didn’t see it as a false signal, otherwise we wouldn’t have gotten more stimulus.

    just another top shelf economist reminding us once again there is little correlation between their income and their intelligence.

  21. fotis2 says:

    Man the short looked good at close yesterday ah well can’t win them all suppose the private jet buy will have to be put on ice for now err the car also oh yeah and lets not forget the bicycle ah well lets go the wole hog and the kayak too…:)

    • GYN LAB says:

      Bounced off the ES2015 support and ripped higher! short from 2037 stopped for minimal profit overnight. Still possible that ED is going on in a slightly bigger scale with this one being in the final wave of ED in both ES and SPX charts. I am watching for 2046 today – fib confluence

    • mjtplayer says:

      SPX futures only up 5-6pts. The rally started last night with Japan, same story as here, lousy economic data and markets rally. Japan exports for Sept were supposed to come in at 3.2%, they missed by a mile, coming in at 0.6% – the Nikkei futures rallied.

      Support today is the lower TL at 2,033; resistance at the upper TL at 2,041. We broke the lower TL overnight, but have rallied back into the wedge now and set to open about 2,036. The wedge is getting very tight, should be resolved today in one direction or the other.


      • rc1269 says:

        everybody is jumping back on the “central banks will save the day” train, yet again, for like what is it now… the 5th time in the last 6 years? eventually the CB’s will not oblige and those who trade monetary policy predictions rather than reality will regret it. IMO

      • nsteve24 says:

        Oil has fallen 10% from recent spike, heading back to 44 handle.
        good portion of market rally from lows was based on Oil’s rally but has been ignored on it’s full retrace.

  22. blackjak100 says:

    With vix closing below 15 on Friday and 8 consecutive closes above 50 day, odds very strongly favor bull market continues and low is in as TC says…


  23. I know the volume on up days has been lousy for 6 years, but THIS year, when SPY volume gets down to the 70-80m range it has preceded a selloff quite a few times this year.The last, two days ago, was 70m and yesterdays minor down day was 77m.Average 90-110m.See if it means anything.

    • EL MATADOR says:

      I guess it only means something for SSEC close down -3%. All these marginal HHs are getting ridiculous….Feels look distribution all over again.

      • Someone just took European equities from 0 to 80 in less than 10 seconds….our futes jumped as well.Guess they want to break 2040 today.

        • pooch77 says:

          Yup ,postpone any down talk another few weeks

        • rc1269 says:

          yes. it’s pretty funny Bloomberg has a top story entitled “Commodities Fall on Trade Concerns while Earnings Bolster Stocks.” the story goes on to talk about European stocks higher. the only mention of earnings in the article was CS, which is down 2%, and clearly not supportive of why stocks are up. but they don’t know why so they just slap a reason on there. haha

  24. The daily pitch….Battle lines…And an additional comment on the clx..


  25. The bad news is the Cubs are down 0-3,
    The good news is… the odds of winning the series is 500-1.
    —-They re toast of course.
    Mets pitching looks tough, but I think KC will win it after just missing last year.
    Are you going to root for the other Missouri team Mr C?

  26. torehund says:


    2 waves up from the 2012 basing pattern, W-3 ahead ? Poor currency.

  27. Tony,
    Ema9 x Ma21 monthly cross since 1985
    that’s all data i have

  28. patterntrading says:

    Hello Tony,

    US Market Chart Update: http://www.patterntrading.in/us-market-chart-update-2/


  29. torehund says:


    Looked into the Canadian Dollar and it sure looks to be close to a collapse…Stochastic going up without doing much price-wise. Only way to rise commodities is by crushing the commodity-producers own currencies. However the Canadians and Emerging-markets may later on get much more of their own currency from selling their natural reserves. US will get cheap fuel and thats a win win…not without the immense pain of stagflation for the EX-US countries.
    Panic cycle scheduled for 2015 and still a couple of months left of the year.

  30. Hi,Tony,in the Dow mothly this is the first time that MA3 cross MA20 since 2009 bottom,i think that is necessary pay attention if there is a refusal to close above MA8 next 2 months,thanks


  31. pooch77 says:

    Niki flying tonight futes up 160

  32. tomasso60 says:

    my first foray into posting a chart – Monthly Gold which a few folks are interested in and which I personally like to trade in.
    my thoughts are a possible 5th wave down into February if all follows form.

    • kevinm76 says:

      Odds are very high Gold is in it’s final wave down. However, timing is always the tricky part. A bottom in February is very unlikely due to seasonality http://signaltradinggroup.com/Seasonal/Seasonalgc/ and lack of tax loss selling from previous year. Since 2015 was all about the commodity crash, China etc. It’s much more likely that from here until the end of the year you’ll get your wave 5 and then the 1st quarter of 2016 represents a reprieve of some sorts. However it’s seems short in duration. Can there be a wave 5 that is only 2.5 months long, in this structure? Well I guess there could be considering 5th waves can be short. Hard call on time. This move up from July is certainly not impulsive and not impressive, thus the likely hood ending diagonal http://www.thepatternsite.com/EWDiagTriangle.html is the correct approach here.

      I’m curious what Tony thinks about this situation concerning Gold. I believe I saw him somewhere say B should start 1st quarter 2016, which would imply wave 5 of the ending diagonal ending by Dec 31st.


      • tomasso60 says:

        thanks Kevin for your information on Gold and time frames. Being relatively new to EW and OEW I am still learning and being a Canadian (tend to like gold – B.C.) follow it for many years. the thing that I was thinking about in the timing is that of symmetry.
        4 bars down – 2 bars up, then 6 bars down – 3 up, could we go 4 bars down again (a,b,c,d,e) for end of 5 – that is how I came up with February, but, as mentioned, I learn from all and appreciate any and all information and feedback as It can only but help me in with my overall trading.

        • kevinm76 says:

          Hey no problem. I hardly claim to be a guru lol. I just learn from my mistakes and from others(i.e Tony).

          Remember waves alternate. This 5th wave down most likely won’t look like anothing from the past.

          PS if you were able to hit the bottom of this ending diagonal, the profits will be explosive, thus the interest I have in it.


  33. tommyboys says:

    20 pts from here or from today’s top?

  34. mjtplayer says:

    tony caldaro says:
    October 20, 2015 at 5:33 pm
    FED is done with QE until the next recession

    Agree Tony, QE is done. But, that doesn’t mean the Fed is done, next up on the list of bad ideas and bad policy from the Fed – NIRP? It’s failing miserably in Europe, but that won’t stop the Fed.

  35. mjtplayer says:

    Thanks Tony!

    Turnaround Tuesday, slightly new rally high on the DOW & SPX, but not the NAZ or NDX. Like you said, the SPX hit the 2,040 resistance area and was stopped in it’s tracks. AA, down another 6pts trading at 2,024 – which is below the TL connecting the jobs report reversal lows of 10/2 and 1,993 from 10/15, which i have labeled as minor 2 and minor 4 respectively. You know my thoughts, this was minor 5 and we’re now dropping in int ii.

    If we open down tomorrow where the futures are pointing tonight, then the uptrend is broken. int ii should last 2-3 weeks, IMO, targeting the first week of Nov, give or take. What a coincidence, that’s the same time the debt ceiling comes due – Nov 3rd.


  36. I have not seen a market where stocks have gone from 25 to 6 in a month in a long time. so many stocks out right crushed. Caldaro lets go mets baby.

  37. EL MATADOR says:

    Time to go down on a gap filling mission to say 1951ish ….do I hear 1956 Pivot. See ya’ll down there .

  38. tomasso60 says:

    thanks TC – Blue Jays having a tough time with Royals, however, one must be behind ones team.
    now – can anyone give me a step by step way in which to post a chart from stockcharts to here.
    much appreciated in advance

  39. kckim04 says:

    Tony, how far down do you think Minor Wave 2 takes us? Thanks.

  40. Lee X says:

    Thanks Tony

    Cubs looked like they were freezing in NY so they should play better tonight haha
    I’d like to drop kick Murphy , guys pretty darn awesome and the Mets are giving the Cubs the business, real hard.
    GO CUBS !

  41. torehund says:

    You are relentless in your efforts Tony. Dont have to A lot to and, the hoocking on the weekly Spx looks sharp and trustworthy, waiting for the big up to come. Sticking to Biotech up, fluffy stuff up, and mania bonanza for all what you Dont really need.

  42. rc1269 says:

    Thanks Tony

    the good news is we got a bunch more names reporting earnings today. the bad news…

    awww shucks, you guessed it again. yes… the earnings suck. still.
    79/500 SPX
    -3.56% sales
    -7.75% earnings

    we’re well on our way to a new bull market high! 🙂

  43. llerias7 says:

    Thanks, Mr.TC.
    What is your ideia about a time frame for this Primary V? Might end with a xmas rally?

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