Tuesday update

SHORT TERM: gap up and go Tuesday, DOW +156

Overnight the Asian markets lost 0.4%. Europe, however, opened higher and gained 2.9%. US index futures were much higher overnight. At 8:30 the NY FED was reported lower: -4.6 v -10.7, and the CPI was reported unchanged. The market gapped up at the open to SPX 2042 and continued to rally. In the opening minutes the SPX hit 2050, then started to pullback. At 10am the NAHB was reported lower: 61 v 62. The pullback ended at SPX 2039 around 11:30, and the market resumed its rally. Around 12:30 the SPX hit 2054, and then began to pullback. Nearing the close the SPX hot 2042, then ticked up to close at 2043.

For the day the SPX/DOW gained 1.00%, and the NDX/NAZ gained 0.75%. Bonds lost 12 ticks, Crude rallied 80 cents, Gold slipped $2, 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, Industrial production at 9:15, then the FED concludes its FOMC meeting at 2pm.

The market gapped up at the open today and continued to rally into midday. This was a bit of a surprise as we somewhat expected an inside day today, so that the rest our technical indicators would align. The market, however, obviously had other intentions off the SPX 1993 50% retracement low. The rebound in Crude did not hurt either. With the two day rally reaching 60+ points, it is now the best rally since the downtrend began. Thus far the rally looks impulsive in the SPX, but only four waves: 2018-2006-2054-2042?. The next two/three days, however, could be quite volatile with the FED and year end options expiration. Short term support is at SPX 2034/37 and the 2019 pivot, with resistance at SPX 2050/56 and the 2070 pivot. Short term momentum hit quite overbought at today’s high then began to decline. Best to your trading on the often volatile FOMC statement!

MEDIUM TERM: downtrend may have bottomed

LONG TERM: bull market

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

About tony caldaro

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274 Responses to Tuesday update

  1. gasman88 says:

    Let’s not forget it’s OPEX on Friday, smart money usually gets paid on that day, market was on a verge of a breakdown 3 days ago, large short interest, then we got sudden reversal and short squeeze. It’s a clean game after all.

  2. wavediver says:

    Tony, did you mean to keep Maj-2 green on the hourly chart?

  3. well as posted today in the morning we’ve hit low 2040¨s :))

    winningtech (@cannonball1246) says:

    December 16, 2015 at 9:39 am

    quant agree when a bearish harami occurs,at critical overbought level,it’s the right time to get out and waiting for the next support level watching next low 2040’s SPX

  4. simpleiam says:

    If using a 3 or 5 minute chart of spx, was a beautiful cup & handle that just played out. Taking some nice profits here. Christmas is paid for! Thanks Auntie J! “Love your suit.” – Hannibal Lecter

  5. mjtplayer says:

    I think the pre-Fed high at SPX 2,060 completed 5 waves for minor 1, the 18pt flash drop post-Fed to SPX 2,042 was minor 2 and we’re now rallying in minor 3 – sure looks like it doesn’t want to pullback.

  6. tommyboys says:

    If 2072 falls it’ll set up some really nice fat targets down the road (2400+… eh hem) 🙂

  7. johnnymagicmoney says:

    Let’s review the obvious

    1) 1993 was a stated pivot before it was hit

    2) 1993 was hit

    3) It did an intraday reversal once 1993 was hit closing in the green for a 35 handle move

    4) The following day saw great follow through via another 21 handles

    5) People comically said markets would go down today

    6) People are then surprised it is up so much

    Lessons to be learned

    1) Pivots should not be ignored

    2) This market likes to be satisfied

    3) Yellen is a partner at Goldman Sachs

  8. gtoptions says:

    SPY ~ > WR1 ~ Next WR2 @ 209.45

  9. Well, I thought we would go down, then up and then down into the close today. Got that one wrong. But really, did anyone really fall for that $1 Trillion Dollar “mis-direction” story? You seriously don’t think the criminals that run this market are going to let us sheep profit from some move they tell you in advance that’s going happen?

    I mean, where was that guy’s story before the August 24th crash? Quiet as a mouse that guy was until 30 minutes before the close on Friday the 21st, where he said that selling would accelerate into the close. DUH! Didn’t take a head quant from JP Morgan to figure that one out. And he never said one word about what would happen on Monday.

    Meaning that EVERY story you see on the internet or TV that gets a ton of publicity will always be mis-direction to fool the sheep into taking the wrong side of trade. And if the story comes directly from one of criminals themselves you have to be a total idiot to believe them. If one thing is true, it’s that these guys will always lie to you so they can steal your money.

    My forecast for the next 2 days is that we go into a rangebound zone of 20 points up/down until this week ends. Then, based on how overbought we currently are right now, we could see some selling early next week before Santa comes and rallies us up into the new year. I don’t see a whole lot more on the upside with the weekly chart looking like it’s ready to go negative while the daily chart is trying to go up.

    Fighting charts usually keeps a market rangebound until they align together in the same direction. I think the weekly chart will win out by the first or second week of January where I think the daily chart will become overbought and then we’ll drop into the end of January. Not sure on whether we reach a new high or not?

    Even with the light volume going into the end of the year I’m not sure Santa can take out the May highs? But one step at a time. For now I’ll just stick with a rangebound next 2 days and the rest is just guessing at this point and can be revised with a different outlook just like the Fed’s always revise their original lie with a new lie the follow week or month later. 🙂

  10. this woman is incredible, what is she smoking ??? she just said 10% probabilities of recession? give me a break!

  11. Interesting that oil down about 4% but HYG is up.My guess is after a little more upside on HYG…it catches back down to oil.Stocks as well.

  12. locanbbs says:

    Last short-term cycle bottom was yesterday. Now all clear till Christmas!

  13. tommyboys says:

    Makes perfect sense that oil puts in a bottom here and begins rallying on higher rates. Increasing rates along with higher inventories – a glut – and hugely oversold conditions make it perfectly counter-intuitive. How many may have shorted expecting higher rates to further pressure it? Effectively was “front run” and now it’ll be buy the news.

  14. lunker1 says:

    looks like wave 5 from 2039 is and expanding ending terminating at 2070ish

  15. fotis2 says:

    5 waves up finito now?

  16. Great job Yellen! Who could hate Grandma? Clever Fed. Next major resistance level for me is 2073.55. Potential short-term short unless sig overshoot.

  17. EL MATADOR says:

    there is a short squeeze going on just saying

  18. locanbbs says:

    Bought SPX at 2060. Christmas rally?

  19. kvilia says:

    Anybody picking up UVXY? It’s tanking…

  20. CampFreddie says:

    Ok, I think I have this right, J. Yellen says hikes will be slow, then says 1.5% by end of 2016. so that’s 4 hikes in 12 mo, so once a quarter?

  21. close at 2070 and gap and go tomorrow? to many people short

  22. simpleiam says:

    53 minutes after… Hope whoever went short sold 30 mins. ago. Have a great day! GL All!

  23. manunidhi21 says:

    Atleast this Lady had the GUTS.
    I think Hillary next on his way unless Trump triumphs

  24. fbqueen3 says:

    Is it possible that this wave could go to 2100 before wave 2 kicks in?

  25. rc1269 says:

    boy does she look regal in purple

  26. Dex T says:

    Personally I’m very happy with the rate hike! I was skeptical but Yellen and team did a good job! It was the right move to make and long overdue.

    However they have kept themselves relevant and the level of uncertainty high with the potential of continuous increases.

  27. kevinm76 says:

    Possible gap fill @ 2030-2040ish to be filled before the ramp higher

  28. buddyglove says:

    Buying Oil here (very speculative)@3649. frenetic basing activity in futz, looks a low to me. aimho.

  29. Well Oil is putting pressure on the market …I’m .pretty much neutral at this time

  30. kevinm76 says:

    2400ish by next fall 2016 FOLKS!!!!! Remember this!

    We are STILL in PRIMARY III…I know thats against Tony but Tony will see this as fact by nexty year and then do the old switch the count to satisfy the status quo.

    The market will now rally hard until the fed is done raising rates. Top is 2017-18 FOLKS….RIDE IT!!!! By then the overall market will be reaching bubble valuations and the then we cam talk about tops.

    Ok to recap-drahgi QE until 2017 and Fed raising rates until 2018=BUBBLE in stocks!!!

    Enjoy if you are long!!!!!


    • Dex T says:

      There is no way we are in primary 3!! How are you counting waves??? How do you account for the Oct 2014 drop and the past year plus of market action? The recent August crash and past few months of volatility??

      The Fed raising rates through 2018 isn’t going to lead to a bubble. If the rates rise as high as economists are projecting through that time period- to 2+% then liquidity is going to get withdrawn from the markets.

      • kevinm76 says:

        You should do your research before you speak. The markets usually on average rise for 24 months after the first rate rise. I have no idea how long you have been trading but you should now this. It’s common knowledge. Just like the santa rally, wall street will adhere to such averages on such policies. Expect it.

        The supposed wave 4 in August was too shallow and doesn’t line up with time analysis of a market top around 2017-18. Thus there should be a REAL Primary IV this upcoming year 2016.

        Price/time analysis is crucial here.


        • CampFreddie says:

          Kevin, thnx, quite thought provoking and you sound very confident.

        • Dex T says:

          I read the debate on the boards that were ongoing about this a few weeks ago and it’s inconclusive at best. It will depend on how far and fast the rates actually do rise. But cheap money that fuels these bubbles will keep being removed from the system. Look at how the markets have been struggling without QE. It will take trillions of additional funds to move them considerably higher.

          It’s not “common knowledge” . Issues like this and the “Santa Rally” are continuously misinterpreted to everyone’s own personal benefit. The definitions are loosely interpreted.

          Price is all that matters in Elliot Wave. Time is of far lesser to no real importance.

          That you are looking for a “real” P4 is your own inherent bias. There is no way that the past year of trading activity was anything like a wave 3 trades.

    • phil1247 says:

      FOLKS!!!!! how many times are you going to post the same drivel????

  31. EL MATADOR says:

    Careful with potential subdividing wave 5 that will ram this thing to higher into the 2070 pivot zone. Possible selling won’t accelerate until Yellen stop yelling

  32. rc1269 says:

    curve is flattening pretty good here. going to say that means trend move in spx is more likely down than up. fwiw

  33. Vox Zeit says:

    Potential irregular Minor-2 in progress?:

  34. oïl is down more than 4% take note

  35. kvilia says:

    The Federal Open Market Committee unanimously voted to set the new target range for the federal funds rate at 0.25 percent to 0.5 percent, up from zero to 0.25 percent. Policy makers separately forecast an appropriate rate of 1.375 percent at the end of 2016, the same as September, implying four quarter-point increases in the target range next year, based on the median number from 17 officials.

    I personally think this indicates a return to normal and ending an era of free money. I think I read that initially this sends markets down but later (6 months?) markets recover for great returns going forward. Could it be that we are starting the spiral move down soon?

    • Dex T says:

      Very possible.

      A .25% hike isn’t much but if the Fed is intent on continuing and raises 4 more times next year then sizable amounts of money will be withdrawn from the markets. I can’t really see how we’re going to get much of a P5 (if at all) with 1% + interests rates in addition to no QE.

  36. ariez5 says:

    I think SPX made a 5 wave ending diagonal from 2039 yesterday that just topped here at 2063. Now down.

    • GYN LAB says:

      Agree with the 2064 top, that spike down w4 and w5 top at 2064. Guess this can pull back down towards the infamous 2019 pivot to shake out longs in Minor2 or int ii before a true RIP higher in w3

  37. Lee X says:

    -DIV on SPX eh?

  38. mjtplayer says:

    Well, there’s the rally celebrating the Fed giving the market exactly what it was expecting. Time to sell the news?

  39. Dex T says:

    Initial move is down!!

    • simpleiam says:

      where? I saw it go up just after announcement.

      • Dex T says:

        It went down first prior to turning back up.

        • simpleiam says:

          It bounced in a matter of seconds, right? Well, let’s see what happens; you’re probably correct. This is a sustained upward move above the 5th wave Tony counted, so would be quite a B wave, IF it is such.

          • Dex T says:

            On the ES the move went down to 2031 prior to turning back up.

            Normally this is the “initial” move- the first sizable reaction to the announcement.

            I suppose it depends on how you define your initial move- whether by price levels or time, or candles closing, etc…?

          • simpleiam says:

            Might be the case, this time, but not always. You know what you’re doing, so just ignore me. I’ve learned not to place any money for at least 45 mins. to an hour after announcement using this method. Used to be an hour & a half. GL!

    • simpleiam says:

      It might have bounced briefly, but I was referring to a sustained move, and it’s up.

      • ariez5 says:

        Disagree, Simple. It was down.

        • simpleiam says:

          Will see. It’s only been 14 minutes from announcement, and a quick bounce is not the usual. Like I said, you all are probably right. Therefore, we would not see any more upside from here.

        • tommyboys says:

          Depends on your timeframe. For me first move was down, then it rocketed. Now it’s normalizing. May be all the selling we’re gonna get on this one. Just look at your charts (1 min, 5 min, 15min etc…).

          • simpleiam says:

            How fast was the move down, is what I’m suspicious of. Got a nice sustained move upward of a few minutes, then down for a while here. Wondering if more upside. My point is it usually takes that 45min to a hour timeframe.

  40. quantmaven says:

    Previous FED reaction:

  41. OneAndOnlyUniverse says:
  42. purplember says:

    rate announcement at 2pm eastern then Aunt Janet speaks at 2:30… pure speculation but possibly down for that 30 minutes (2pm – 2:30) to finish wv 2 2026 to 2034 area then up when Yellen speaks ???

  43. gasman88 says:

    Does anyone know any algo programmers who could give us an inside into what the computers will do after 2pm? I don’t think any humans will be fast enough to enter trades, it’s all pre-programmed and ready to go. I predict initial dip and then huge rally

    • quantmaven says:

      I think you will have time to react, just not in the first seconds but that’s too dangerous I wouldn’t trade right at the announcement. It’s probably safer to stay in the sidelines for the first 15min and then you leverage up and get in the trend defined by the market.

      • drwarmington says:

        Was it you or someone yesterday that plotted a potential down trend overnight and then a move up pre decision, move down after decision and then a huge move up? It, so far is doing the opposite, which would now bring a move up after the announcement and then big down. We will know soon. I am short now and will add if we get a first move up or cover if we go down first.

        • quantmaven says:

          Yes it is me. It’s because I thought 5 waves were completed but it was not the case so this count was wrong. I updated it this morning. Expecting a downward move after 2pm and a rally still.

    • mjtplayer says:

      I’m looking for a wave 2 bottom tomorrow, not today. Downside target around the SPX 2,020 area – or Tony’s 2,019 pivot “range”, which would be somewhere between a typical .50 – .618 retrace

    • lurchft says:

      buy low sell high?

    • simpleiam says:

      I’ve noticed after big Fed announcements, there’s usually a trend move, then counter-trend move, then back to trend move. Can last an hour, but since this is so important, I’m saying 45 minutes. I’m just watching for that counter-trend move.

  44. quantmaven says:

    Consumer staples (CONS) + Utilities (UTIL) seems to be extending a 5th wave while all the non-defensive sectors are doing a B wave intraday following this morning 5th top. Also crude oil seems to be doing a 4th wave of C hinting it will sink on the 2pm release. To recap: CONS + UTIL to rise while everything falls within the first 15min, then when the bottom is reached, CONS + UTIL becomes the laggards while all the non-defensive rallies strongly into the close.

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