Monday update

SHORT TERM: volatile day to start week, DOW +103

Overnight the Asian markets lost 0.7%. Europe opened higher but lost 1.6%. US index futures were higher, then lower, overnight and the market opened one point above Friday’s SPX 2012 close. The market rallied to SPX 2020 by 10am, then dropped quickly to 2004 just past 10am. Minutes later the market spiked to SPX 2022, then dropped to a new downtrend low at 1993 by 11:30. After that the market rallied to SPX 2018 by 1pm, pulled back to 2006 by 1:30, then rallied to 2023 just before a 2022 close.

For the day the SPX/DOW gained 0.55%, and the NDX/NAZ gained 0.55%. Bonds dropped 24 ticks, Crude rallied 55 cents, Gold slid $13, and the USD was higher. Medium term support rises to the 2019 and 1973 pivots, with resistance at the 2070 and 2085 pivots. Tomorrow: the CPI and NY FED at 8:30, then the NAHB at 10am.

The market opened about flat today, bounced, pulled back, rallied, sold off, then rallied again. A volatile day swinging between SPX 1994 and 2023. Oddly enough, the index futures had a 28 point range overnight. But today’s cash market increased the daily futures range to 36 points. A volatile day. The low for the day found support at the 50% uptrend retracement level of SPX 1993. A 30 point rally followed that low. While this could be the low of the downtrend, a few technical factors we have been tracking, are still not aligned. Possibly an inside trading day, retest of the low or even lower, tomorrow will set things up. Short term support rises to the 2019 pivot and SPX 1992/1993, with resistance at SPX 2034/2037 and SPX 2050/2056. Short term momentum hit extremely oversold at the low then rebounded to above neutral. Best to your trading!

MEDIUM TERM: downtrend

LONG TERM: bull market


About tony caldaro

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185 Responses to Monday update

  1. quantmaven says:

    FED DAY Trading Plan for S&P 500:

    We count 5 waves since 1993 low. The last wave is extended which usually means the correction that follows more often than not retrace around wave 4 level. I would expect this retracement overnight. Then we could have a rally until 2pm like in October when it was trading at 2077. The initial reaction could be a selloff since we are coming from a high level. This selloff could be expected to last max 15min then the huge rally follows and we have our santa rally. That’s the best case scenario but we will see how it unfolds until noon before adjusting this scenario.

    Chart not on scale for time, I squeezed my scenario but read the timeline:

  2. buddyglove says:

    Simple trendline stuff, but with global mkts getting getting restless, would not be surprised to see over night ramp. aimho.
    SP futz 5 min continuous

  3. ariez5 says:

    1. Thanks to El Mat and MJT for THE CHART.
    2. USD and oil both up. I think oil gives up the ghost tomorrow.
    3. AAPL – no es bueno.

  4. fishonhook says:

    Yellen will probably raise and will says we will take it easy and are even ready with the next QE if needed. We have replaced Ben’s helicopters with F15 , ready to bomb dollars if needed.

    Don’t know how that can help the bears . Maybe if she doesn’t raise.

  5. jeffbalin says:

    Ok, since I’m the dumbest guy here any way and you guys need some fool to take the other side so you can buy your kid new shoes, I’ll be the one who thinks this is a B wave

  6. mjtplayer says:

    5 waves up from yesterday mornings’ low at SPX 1,993. Time for a 20 – 30pt ABC wave 2?

  7. CampFreddie says:

    VIX expires on tomorrows pre-open, so there is a chance here to keep prodding and poking up into the close and make the trapped ES shorts pay up.

  8. rc1269 says:

    This is the kind of market we’re in right now:

    “Leucadia National Corp. rallied the most in almost four years on speculation Jefferies Group, the investment bank it purchased in 2013, will succeed in reducing balance-sheet risk and reversing declines in its bond-trading business.”

    Hahah um, what? ” Yes our results were horrible. We suck. But hey guys, we’re gonna do better! We’re going to reduce balance sheet AND simultaneously increase trading volumes! Yes, I know it’s physically impossible to do that in bond trading, but thankfully you guys don’t seem to understand that.”

    commence buying. impressive

    • manunidhi21 says:

      Hi RC..
      Can you please explain what Lary is saying about junk bonds presently at 2 expected 6 next year delta and market not defaulting. I tried to Google but did not understand. at your pleasure.

      • rc1269 says:

        I’m not sure what your specific question is. But my take on his view is this:

        1. He thinks HY is trading cheaply relative to defaults. Of course, he is referencing current default rates, whereas HY begins to price in defaults ahead of when they materialize. So, by his method HY will always appear “too cheap” heading into a time when it would have turned out they were not too cheap (ie, buying them in late 2007, for instance.)
        2. That said, if you believe as he does that the economy will do just fine next year and that default rates will not jump to 6%, then HY is definitely attractive at current yields

        In my view you need to treat HY just as you would equities in this market – you’re view will be influenced by what you think happens broadly to the economy and risk assets in 2016. If you like stocks here, then yes you probably should be buying HY as well. I do agree with his point on some of the beaten up names, such as an FCX, CLR, CHK, etc… that if your thinking of buying the stock, you can still make a great return with better downside support if you consider the bonds instead.

        But as it pertains to predicting future defaults, the market tends to be pretty good. For example: a year ago I asked a PM at on of my external HY managers (a “big name” shop) if he was concerned about the HY mkt in the coming year as spreads had started to leak out, oil was down, commodities were down… and his response was, “defaults are still low, so we’re not worried. We’re buying here on this weakness.” That’s a response from somebody who actually goes on CNBC and who people listen to. Guess what, defaults picked up and spreads blew out. This is all to say that, if defaults don’t pick up then yields will look attractive. More likely, however, is that yields are correct and that it actually just means defaults will pick up. That’s my personal opinion.

        • manunidhi21 says:

          Thanks RC..
          On lighter side..RC(alias Royal Challenge) a big whisky in India for beginners..

        • Dex T says:

          Until the Titanic hits the iceberg and water appears on the deck, then why actually worry enough to bother trying to steer the ship?

          That sums up the general attitude of Wall Street.

          Look the bear is on the way and 99% of investors are going to ride it down

    • OneAndOnlyUniverse says:

      They own IB in midcap oil space and getting flossed. In recent trade i gave them , 5M, what use to take 5 min 3 yrs ago , took 4 days and 11 trades and poor execution. Times are changing

      • rc1269 says:

        oh yeah. i trade with jefferies all the time. they won’t be getting any better any time soon. was just giving my JEFF salesguy sht for the hilarious mkt reaction to Rich’s disingenuous comments. good times

        • OneAndOnlyUniverse says:

          Did biz with the entire knesset since the Drexel Bev Hills days. A lot of characters came out of that place , miss none of them .

  9. Selling 50% of my spy calls here bought at the very low. Let run the other 50% and for a free trade. Will top up at retrace

  10. manunidhi21 says:

    what is hidden under that green line MACD on hourly SPX..It turns big everytime..pasta?

  11. mike7x says:

    Link: 3.5 minute CNBC interview with Jeff Saut. This guy is very good with technical and fundamental analysis, with a good track record. Posting for his point of view only, but if the FOMC does as expected (raise rates .25% with dovish statement) than IMO he should be right…

    Stocks ready for ‘rip your face off’ rally:

  12. I have 5 waves on the 15 mnts chart. Possibly, a good top up position could be at the gap. It would also corresponds at a retrace of 50% from the low, and would start or the 3 of 3 or 3 of 3 of 1. An higher high would cancel my waiting but would not top up, just stay as is actually.

  13. buddyglove says:

    Just added here to Dow position @17542, This is going to “Pop” imho.

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