Thursday update

SHORT TERM: gap up opening again, DOW +228

Overnight the Asian markets lost 1.2%. Europe opened lower and lost 1.4%. US index futures were higher overnight. At 8:30 weekly Jobless claims were reported higher: 284K v 277K, and Export (-1.0% v -0.6%)/Import (-0.4% v -0.2%) prices were reported lower. The market gapped up at the open to SPX 1898 and immediately began to pullback. At 10am the SPX hit 1879, a new low for the downtrend, and then started to rally. Just before 11am the SPX hit 1918, pulled back to 1902 by 11:30, and then headed even higher. Just past 3pm the SPX hit 1934, pulled back to 1919, and then closed at 1922.

For the day the SPX/DOW gained 1.55%, and the NDX/NAZ gained 2.05%. Bonds lost 6 ticks, Crude rose 65 cents, Gold dropped $17, and the USD was higher. Medium term support rises back to the 1901 and 1869 pivots, with resistance at the 1929 and 1956 pivots. Tomorrow: Retail sales, the PPI and NY FED at 8:30; Industrial production at 9:15; and Consumer sentiment and Business inventories at 10am.

The market gapped up at the open for the fifth day in a row. One would think the market would be up 50+ points for the week with all these gap up openings, but it is unchanged. After the opening the market sold off to SPX 1879 and then rallied into the last hour of the day. Today’s rally is the best one since the market started its decline from SPX 2082. Thus far it is four waves: 1918-1902-1934-1919. If the market has not entered a bear market yet, there are two possible short term scenarios. 1. Major 2 just ended and the market starts impulsing. 2. The market retests todays lows and then starts impulsing. Short term support is at the 1901 and 1869 pivots, with resistance at the 1929 and 1956 pivots. Short term momentum touched overbought at today’s highs and then turned lower. Best to your trading options expiration Friday!

MEDIUM TERM: downtrend

LONG TERM: bull/bear inflection point


About tony caldaro

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437 Responses to Thursday update

  1. Dex T says:

    Five minutes left. Another rough week for the bulls-weekly charts look awful. Markets closed Monday. Historically a bottom tends to occur after MLK day so I doubt we saw the lows.

  2. Why is it that no one has the stones to call for a $20 handle in oil until it trades down to $31? Really? Where were they when oil was $90?

  3. Volume 268 m shares SPY at 350pm.Not a capitulation.

  4. None has anything to sell anymore.

  5. Jim Guthery says:

    Anyone going long oil here?

  6. stan502 says:

    Feel Lucky 1:50 in Well do you feel lucky enough to hold into Tuesday morning ?

  7. Justyn Byrne says:

    Expanding triangle on the DOW – hard to get the upper trendline correct plus I have no idea how to trade it as they are very rare.

  8. Yahoo Finance headline says it all

    Why the heck are the markets tanking?

    ROFLMAO… its called Bear cycle… more sellers than buyers

    But in all seriousness, my economic thoughts are the markets are bracing for 3-4 Trillion write-down of bad Chinese debt in their bloated banking system, and the after shock thereof…

    Oil is the excuse for now, but I think the smart money got out awhile ago and is waiting

    Some stocks are so sold out that they can only go up, like XON today a good sample. They washed everyone out at 18.75 this week and now its 25.50 just 2 days later… nobody left to sell

    Bear markets are lots of fun…

  9. Just a note about volume on SPY…3pm its 238m.At 1230pm it was what 170m?Volume had slowed in last 21/2 hours.

  10. blackjak100 says:

    if TC is correct with failed P5 at 2104, it’s easy to see we could be heading back to 1947 to complete a 4th wave expanded flat and then down to 1841 pivot to complete major A/1. Then, a big rally to 2000-2020 for major B/2.

    • what if 2134 was Primary 3 top?
      666 to 1370 1370-1074 10740-2134… the FIbs fit

      If this was p4 now… 1730 is 38% of P3…

      In meantime, again if any questions about bear cycle still…

  11. simpleiam says:

    Tony & All,

    Here’s one of a couple of notes I’ve received today from Investment Advisors. Of course, not all of them have Tony’s years of experience/memories, but interesting nonetheless:

    “In our last message, I said to keep an eye on S&P 500 (SPX) 1920. That number obviously didn’t hold so now the next major support zone is around SPX 1867 – 1870. We would like to see this range hold.

    Prices are also stretching below the bottom boundary of the weekly consolidation triangle.

    This should now put upward pressure on prices, as first this line “attracts” prices down to it, and then when the polarity flips, “repulses” prices away. Today (Friday) in our opinion, has all the signs that strongly suggest an upside move is going to begin very soon, although this trend could go out with a bang and seemingly breakdown before rebounding in spectacular fashion, either late today or early next week.

    Bottom line, this is one of the more difficult junctures in the past 20 or so years that I’ve been following markets. Stocks are objectively oversold but markets are not responding well to that. There are lingering long-term concerns but also many positives when looking at other oversold markets. There are basically three possible scenarios and we’d give the probabilities like this:

    • Oversold Bounce – 60%
    • Flush lower then bounce -30%
    • Outright collapse of 5-15% – 10%

    The August low is such a massively important level that it could entice enough buyers to step in and finally give us a tradeable bottom, but there is a decent chance we get one of those quick undercut lows below the SPX August low of 1867 to flush out the remainder of the weak hands and take out what I’m sure are roughly a BAJILLION stop orders conspicuously sitting right underneath. We still think it’s much more likely we are nearer the end of this mess than the beginning, though we will obviously continue to watch for further deterioration. How we close today will be quite important since weekly closes show the prices at which traders are willing to hold positions over the weekend.”

  12. Hi Tony,
    IMVHO we are getting closer to my target for P4, which I personal feel will be less than P2 at about 16-17% decline from the highs which would put it just below SPX 1800 at SPX 1790.

  13. Justyn Byrne says:

    The DOW is down 469 – if it closes -450 or lower then it will make the top 20 of all time daily drops:

    Wiki link

  14. Dex T says:

    Fed’s Williams says ‘gradual’ is key for 2016 rate hikes

    “The Federal Reserve’s interest rate hikes this year will be “gradual” and will hinge the strength of the economic outlook for 2017 and 2018 rather than daily market swings, a top Fed official said on Friday. ”

    “Repeating what has become a mantra for U.S. central bankers in the face of mounting economic headwinds and financial market swoons, San Francisco Fed President John Williams said the Fed is not locked into the four rate hikes most officials expected in December, but will raise rates “three or four or five times” this year depending on economic data. ”

    “Meanwhile, he said, he does not watch daily financial market gyrations so much as longer-term trends.”

  15. purplember says:

    RUT and TRAN leading rebound much more today than other indexes.

  16. kvilia says:

    ABchart: one argument in favor of your charts – will they really allow markets to drop into elections with Fed aboard? It looks like your time frame for rally is early summer, isn’t it?

  17. llerias7 says:

    Remember this?

  18. Interestingly and FWIW January 16, a Wednesday, is the anniversary of the bear call in 2008. I have been out of market for several months due to personal not involved at the moment. I think it is always useful to study previous turning points.
    “wednesday update
    Posted on January 16, 2008 by tony caldaro
    SHORT TERM: OEW confirms a bear market, DOW -35”

  19. kvilia says:

    A. The bottom is imminent.
    B. Does not look like it’s going to happen today.
    FED emergency meeting on Monday?

  20. ABchart says:

    SPX Weekly: Big Picture.

    SPX Weekly: Zoom.

    Hope it will work!

    DAX and CAC update Sunday.

  21. stmro says:

    Check out this week’s numbers:
    17.9% bullish
    45.5% bearish

    If you download their full dataset since 1987, there are only 16 weeks in history with a lower bullish pct. 15 of 16 were triggered in the period between 1988 and 1992 and a short term bottom was formed in the following week in only 6 out of the 15 instances.

    However if you look at more recent history, since 2000, there are 4 other weeks with a bullish pct below 20:

    14/04/2005 – dropped 3% the next week before quickly recovering to form a long-term bottom
    10/01/2008 – markets would drop a further 50% before bottoming in 2009
    05/03/2009 – marked the bottom of the financial crisis
    13/11/2003 – markets dropped a further 3% the following week before recovering to form a long term bottom.

    Make of it what you will. You can get the data yourself in the link above.

  22. berniebaruch says:

    Favorite Comments on Financial TV on days like today:

    1. Market is down 490 points, trading off its low (maybe 530)
    2. We started paring back volatility back in the summer so we were expecting this decline.
    3. This volatility doesn’t bother us. Our investment time period is 3-5 years.
    4. We have no idea what stock prices will be tomorrow or next week or next month.
    5. Don’t open your 401k statement.

    If they are so smart, why do 80 percent underperform their indices?

    Provide your favorite.

  23. mjtplayer says:

    Tony – on your hourly SPX chart, looks like a completed “3 drives” pattern (1,901, 1,879, 1,858). Could be a significant low. Obviously the pattern is busted if 1,858 if taken-out, but could be a cheap long with a stop at 1,858.

    XIV just tagged the bottom of the channel, with a slight overthrow. Given how washed-out we are, time for a small XIV long.

  24. phil1247 says:

    remaining shorts from 1873 es … stop is at 1867

  25. ABchart says:

    Future CAC (FCE February) 30 minutes:

  26. phil1247 says:


    if this latest short completes target

    it will go thru 50% extension long

    if that fails it will plummet to ext long .618 level at 1789

    • purplember says:

      phil. great calls but i’m having trouble reading your chart. “if short completes, it will go to 50% extension long” what number is that or how far retrace ?

  27. stmro says:

    Oil decisively breaks $30. No support until $20.

    We broke the August lows on SPX today on weaker internals (NYAD cumulative) than August, so no divergence there. Bull market is over i think. It might bounce now due to extreme oversold readings, but that bounce should be a sell.

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