Thursday update

SHORT TERM: gap up opening volatile day. DOW +125

Overnight the Asian markets ended mixed. Europe opened lower and lost 1.6%. US index futures were lower, then higher, overnight. At 8:30 weekly Jobless claims were reported lower: 278K v 294K, and Durable goods were reported lower: -5.1% v 0.0%. The market gapped up at the open to SPX 1899, ticked up to 1903, and then started to pullback. The SPX had closed at 1883 yesterday. At 10am Pending homes sales were reported higher: +0.1% v -0.9%. By 10:30 the market had completely closed the opening gap and hit SPX 1874. Then for the rest of the day the market traded between the opening hour range: 1894-1879-1899-1886-1899, then closed at 1893.

For the day the SPX/DOW gained 0.65%, and the NDX/NAZ gained 1.10%. Bonds added 6 ticks, Crude rose $1.45, Gold dropped $11, and the USD was lower. Medium term support remains at the 1869 and 1841 pivots, with resistance at the 1901 and 1929 pivots. Tomorrow Q4 GDP (est. +0.8%) at 8:30, the Chicago PMI at 9:45, then Consumer sentiment at 10am.

The market gapped up at the open today, for the third gap opening this week. After hitting SPX 1903 the market sold off to SPX 1874. After that it stayed in that trading range, with an upward bias, for the whole day. We noted in the comments section, yesterday after the close, four possible scenarios at yet another inflection point. These are: Major B ended at SPX 1917, Int. A ended at SPX 1917, Int. B was an irregular wave bottoming at SPX 1873, and the Major wave A downtrend is still underway. Confusing right? The next few days should clear up this dilemma. Short term support is at the 1869 and 1841 pivots, with resistance at the 1901 and 1929 pivots. Short term momentum has been drifting up all day after yesterday’s oversold condition. Best to your trading Q4 GDP!

MEDIUM TERM: potential uptrend inflection point

LONG TERM: bear market


About tony caldaro

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280 Responses to Thursday update

  1. stmro says:

    Above 20dma now. Next stop 1990-2000 – THEN we should consider shorts.

    In the short term, it’s really not worth fighting interest rate expectations and currency market flows (which are many many times larger than equity markets) when the world’s 3rd largest economy delivers a policy shock like this.

  2. Gary Lewis says:

    Yesterday I mentioned that there was a successful three day test of the low on the change in the SPY moving average. This suggested that the market would be up today.

    sometimes my indicators work. Chart shows the pop, driven by higher SPY prices.

  3. OneAndOnlyUniverse says:

    And why can’t the mkt rally another 5-8% ???? seems like a lot of experts around here ….Same as 2008 ( seems to be the popular and most recent chart everyone refers ) maybe 2011. CN GOOD CALL ON BIG UP $rut…When the pitch is high , AAh stopped ( only want the best for u) tboys comes around . FRB goes positive. great time to lay em out . Market analyses goes positive

  4. Peter Sliney says:

    If there was a way to link your trading account to physical pain when losing money I think we would cut losses quicker. Unless of course you’re a masochist.

  5. Dex T says:

    From PUG

    On the S&P monthly chart the 13-month EMA crossed below the 20-month EMA on the month close

    This only happened only twice in the past 20 years: Dec 2000 and Feb 2008. Both times it confirmed a Bear Market.

  6. fotis2 says:

    Week bar close above -100 on weekly CCI..

  7. straight up 40 points, not even a 10 point pull back, just like old times, central bankers, and green, green all across the board. .

  8. mike7x says:

    FWIW: From NorthmanTrader: “Well I’ve been posting it for days on end and if you traded it you banked, spooky as it is, but here it is:”


    The Dow needs a closing above 16350 to stabilize for now temporarily. Otherwise, we are not out of the woods here until we pass March. To suggest that the major low has been made, the Dow would need to climb over 17750 level on a weekly closing basis. Keep in mind we are in a string of Directional Changes for the next 3 weeks. So expect this to remain vulnerable and choppy. The maximum on the downside if we elect a monthly bearish is to 12900 to 13000 zone. There, a closing below 16013 will be at least a warning of weakness for month-end.

    Crude has made a slight bounce, but it need desperately to close above $32.35 today just to pause. There is no change of a real reversal in trend here. Crude would need to closing above the $38.35 area just to hint that the low might be in place. Our timing targets are still pointing to this week/New Week. If this turns out to be a reaction high, then a rout to the downside may yet be in the cards. We have a Monthly Bearish coming into play at $36.65, $35.13, $33.30 and a key one at $30.10 followed by $28.25. So we would have to close above $36.65 to avoid a sell signal.

  10. Market is acting almost as though there is a pivot up here or something …

    • johnnymagicmoney says:

      that B wave ended up being wrong ……………..are you saying the Bear call is wrong once again??

      • llerias7 says:

        Expecting to get short oew1956…BUT almost everyone is thinking the same – that is worrisome in itself does not?

      • OneAndOnlyUniverse says:

        Why make it difficult .Were on day 7.

        OneAndOnlyUniverse says:
        January 21, 2016 at 9:13 pm
        * Be Careful being short *
        I mentioned this earlier :
        The oil mkt is about to go on a ripper ( put in significant low over next 5 days, the game is changing quick) and i would think that to be very positive for equities.The amount of shorts on $cl are enormous. On the upper end $spx could see 1990 -2077 and $cl 39-42 next 45-50 days.
        Good luck

  11. Wed Shah says:

    Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria … does anyone see euphoria last month?

    • Euphoria was in Spring 2015.

    • Holly Silver says:

      EXACTLY! I wonder if TONY would change his scenario if the market does manage to break above 2,000 on the SPX. The assumed wave count would also have to be adjusted. I have no crystal ball but given the fact that we are not relying on high energy prices and we are a service nation I find it hard to believe things will get worse. Discretionary spending in 2015 was thru the roof. People in pain don’t spend on hedonistic things. travel, eating out, cars, and toys for themselves. I do believe within 2 months time we will have the answer.

      • valunvstr says:

        Lagging indicators.

      • Dex T says:

        We need some hard facts. Energy is a portion of the U.S. economy and the main indices- if energy doesn’t advance neither will the U.S. markets. A number of other sectors, like Biotech, are also in bears and so are some of the main market drivers (like Apple)

        If you think facebook and MSFT and a few others are going to keep the markets going strongly then by all means invest.

        Aside from short term traders and a few very wise investors, 99% of all people lost money in the DotCom and 2008 bears. This one will be no different.

    • mjtplayer says:

      How about last spring/summer, with a VIX in the 11’s and all-time record high margin debt

      • johnnymagicmoney says:

        speaking of VIX what do you think of my call of 16/17 VIX corresponding with short term top now? =)

        • mjtplayer says:

          Still don’t agree, have you noticed the DOW is up 370pts in a complete melt-up, on a Friday, on the last day of the month….but the VIX STILL hasn’t broken 20. Very impressive for the VIX…

    • Dex T says:

      Pessimism is allowed in bear markets. How many people were euphoric in 2008-early 2009?

      Also, what you consider euphoria and pessimism is purely subjective. People have brought this up numerous times and so what?

      • simpleiam says:

        ” How many people were euphoric in 2008-early 2009?”
        I don’t understand that question, Dex. It was extreme pessimism is 2008-2009. Think you just got your terms confused.

    • valunvstr says:

      Sorry, but that saying simply isn’t true. Investors want to stick with that because of the Euphoria of 2000. But 2007 was Real Estate Euphoria, not SP500 euphoria. Nor was there Euphoria in 1937, 1977, 1980 and I can go on and on and on.

  12. aahmichael says:

    With 2200 more advancing stocks than declining stocks, one would think that the stock market is strong today and breaking out to the upside. However, that’s not how I see it. While I thought on Wednesday that the odds favored that 1917 had ended the countertrend rally from 1812, the market needed to extend itself out 2 more days to let the 20 DMA catch up to it. Now that’s done, and I think the market is done too. The move from 1812 was an abc-x-abc. What’s truly glaring is the fact that NAZ was unable to go even one tick higher than last week’s close. By the way, the other thing of note that happened today is that the 50 DMA crossed below the 100 DMA. (previously, the 50 had crossed the 200 on 1/11, and the 20 had crossed the 100 on 1/13.)

  13. When 1914 ES Globex breaks, the c of B will be done

  14. EL MATADOR says:

    Label at your peril 😮

    • EL MATADOR says:

      Question for the candle/bar line reader, any thoughts or opinions on the potential weekly back-to-back Umbrella candle line (hammer and/or hanging man combo)?
      FWIW – last combo pair (where the second umbrella line was above the prior umbrella line) I could find were during the last 2 weeks of May 2006.

  15. FAN is gone but G is there. Google on Monday reports. In last quarter, after Google report, market went up 60 points without break.

  16. Scott Ford says:

    Anybody got a feel for biotechs? I feel like they are lagging about a month? They sure are not participating in this rally….

  17. Gary Lewis says:

    The monthly line chart.

    P4 bottom? Bottom of sideways channel? Will break next month? I’ve been waiting for this test of the low for a couple of months now. But I bought puts and sold calls today. Troubling.

    • All the traders in the world end up joining one of two lines. One is the “I am troubled” line, and the other is the “I am sure” line.

      The ones in the “I am troubled” line always and surely manage to pull through and do fine

      The ones in the “I am sure line” end up having troubles.

      Such a paradox, I know. I am surely troubled. 🙂

  18. 4bolt says:

    No change to count presented since October 2015 …

    The SPX1929 resistance may not be reached before this “House of Cards built on Negative Interest Rates” falls part …

    Comments, Challenges, and Rebuttals that promote a mutual EW learning experience are always welcome …

  19. phil1247 says:


    bonds going back to test ext long

    if it doesnt hold it will fall back into triangle

    means wave 4 triangle and 5 are done

    bond cycles top at hand

  20. Okay, got pulled back in long at 1908.73 (Stop 1886, for the umpteenth time it seems (so the market can now reverse, sheesh).

    But now I’m going to try to meld my stuff with some EW I’m learning online (trying to become somewhat versed in EW to be really dangerous 🙂 ). For EW practitioners, are you guided by pivots or retracement calcs or ? Interested in how you establish targets for each wave sequence. So, e.g., Major B = (x%) Major A. I know I’m just scratching the surface.

    TC, et al, do you have some reading recommendations for EW to help with basic terminology without getting too deep in theory/rules? I’m ultimately interested in OEW but would like to be somewhat familiar first. TIA

  21. fishonhook says:

    Pug has a target of 1970 for the end of this uptrend

    Tony , based on today’s actions, any target for the end of this C of B?

    Sure feels relentless and hard like a C wave.

  22. gtoptions says:

    Thanks Tony
    SPX ~ WR2 @ 1934
    GL & Good Weekend All

    • Holly Silver says:

      We are not in a 2008 scenario. Credit market is not imploding. Earnings squeeze against very good domestic economy. We should be seeing the lows here and a rally for next 3 to 4 weeks followed by one more decent drop. We have 2 or more years to go before this bull is done. Internals, taking out affect from China/EU is strong. Consumer still cautious on spending but have discretionary income to support further advances. The FED will continue to raise rates this year since it has started from zero and internals will look much stronger once China/EU recover.

      • Dex T says:

        It’s not an exact repeat of 2008, being that it’s not based on a real estate bubble (aside from places like Silicon, Manhattan, etc…) but the bull is definitely over and the drop we are facing is definitely similar in scope and magnitude.

        The EU and China have little chance of recovering anytime soon. China needs the U.S. to recover and they aren’t going to recover with the U.S. having 0.7 GDP growth. Forging their economic data isn’t going to help them either.

        The oil bubble has popped (in addition to several others) and emerging markets and the U.S. indices aren’t going very far without it. Oil needs to be at 70 + to even think of a sustained bull.

        • Holly Silver says:

          Nether a bubble. Oil is not due to weak demand but rather cheap costs to produce thanks to new technology. China is expected to overtake us in 15 years time. they have a huge supply of people that are not even in the grid yet. they can grow exponentially for decades to come and anyone not recognizing this will make a big mistake. They are right now converting their exporting business internally. they are building up their economy and with it they will need all the external recourses to pull it off. it will be a symbiotic relationship.

          Both China/EU have been sliding for years and you think the end is not near? Large governments are not stupid and they have a way for self preservation. No one thought we would ever recover but we have seen record job growth wage growth and discretionary income along with spending not seen in a long time. Sorry but this would be a first for us to experience the type of drop that ONLY happens in over expansion and extension. the consumer is not caught in any bubble today. none.

          • Dex T says:

            You brought up a lot of points- most of which I don’t agree with and will take a lot of time and posts to explain. I’ll discuss some of the key ones.

            Both Silicon and NY are in a bubble. Silicon Valley is insanely out of control. I think you’re the first person I’ve read who thinks otherwise aside from Silicon Valley homeowners and people selling real estate there. There is no way the majority of homeowners and renters can afford to live there for very long. If you don’t believe they are in a bubble then it could explain why you think this bull has a few more years to go.

            Cheap oil will keep the energy stocks low and the U.S. indices low. They aren’t going to break their old highs with just MacDonald’s or Facebook or some other. And the rest of the world (outside the EU, Japan, China) definitely isn’t going anywhere with cheap oil. It’s their number 1 source of revenue.

            No, China and the EU still have more time to go in their bear. They have a lot of issues- many of which their respective govt’s have no control of-or even magnify. China’s economy is a shambles and they have spent decades lying about their GDP growth. With the U.S. in the early stages of a bear they are going to stay down for awhile.

            It’s not just economic fundamentals- but the majority of technical indicators that this board and it’s posters track are screaming U.S. bear market a la 2008. Technical indicators always give notice in advance. And there is going to be a lot more pain in the next year or 2

          • CampFreddie says:

            Holly, yes,yes,yes,agree.

  23. johnnymagicmoney says:

    Remember Tony in October of 14 said that the 12% move had much further to go and that the counter rally was just a B wave and yet we went to ATH’s??? That rally started by the JAPS (followed up by Draghi). Here we are saying its just a fake again and it will be quickly followed by further drops. What if other central bankers follow suit soon and this thing impulses up to all time highs?? Then another 150 to 200 handles from now we change the count and say oh its P5. I believe 100% that 2016 is meat of the BEAR and I’m not knocking Tony because he is gracious and smart but the problem I see with wave counting in fast moving markets is the counts change upon “confirmations” and by that point the markets have moved too much. Wouldn’t it be the millionth time that markets fooled most and went to all time highs and then cratered?? Nothing would shock me. Today feels just like the Fall of 14 (today). Hey Monday could be down 3% but today sure has a familiar ring to it. As some have said on this board wave counting is great for intermediate or long term trends but often misleading on shorter term counts.

    • aahmichael says:

      Wave counting is exactly the same, no matter if you’re looking at 1 minute charts or monthly charts. The only difference is the amount of time needed to confirm or invalidate a count.

    • Millan Tomic says:

      US economy was accelerating and earnings growing back then. Currently, US economy has been decelerating since early 2015 and earnings are contracting. Not just that but it is very unlikely that it will inflect next 3 quarters, most likely will approach recession. So conditions are vastly different vs then.

    • Dex T says:

      What other Central bankers?

      The EU already has negative rates and have been running QE since last March. The Chinese have also done everything they could to control their economy. Their central banks haven’t stopped either from taking a beating. Who’s left?

      The best the U.S. will do is … nothing and hold off on rate increases. These rallies only encourage their view that it’s just wall street babies whining about volatility. With markets at these levels do you really think they are going to unleash more QE?

      BOJ’s paltry negative rate policy move may be good for a rally… but a new wave of a bull market?

      The rallies we have from now on until the bear bottom will only confuse and encourage more people to hold on or invest more and wipe them out.

      • johnnymagicmoney says:

        I hear all of you guys and frankly don’t disagree. Some of you were calling a bear before Tony did and now most are saying its a bear alright. If most could be wrong in the last year then most could be wrong now as well. Bankers and algorithms have played with the charts and counts in a way that is unprecedented I think. Is it retarded that we would reach all time highs on fumes and jawboning and ineffective policies? Absolutely and it would shake my head. I am putting in shorts and exiting all longs around where most people on this board are planning (1950-2000) as well but I wouldn’t be shocked that that count is wrong because few are discussing it. Either way this craters in 16 but maybe not when we think. Just sayin

  24. frommi2 says:

    Looks a bit like the replay of 2008, a short term top was at 2. Feb. So turnaround tuesday again next week?

  25. Any coincidence that BoJ does this on a day our GDP would normally drive the dollar down?Damn devious(and smart) I d say.Gold/GDX hanging in there but for how long?We ll see I guess.

  26. Gary Lewis says:

    SPY 20 day average exceeded. Sticking to my commitment and bot Jun 190 puts. Hope that this isn’t the start of P5.

    • valunvstr says:

      It’s not P5. This is just like July of 2008/ nearly an identical chart. Rally will take us to the 50/200 day ma that are still downward sloping. Adding to shorts there. Time Stamp it!

    • mjtplayer says:

      Those should turn out well Gary, I have this as minor a of int C. That said, after a minor b pullback to the 1,900 area when this minor a tops-out, the minor c that follows could take us up to the SPX 1,960 area – so perhaps a bit early. Also, it’s end of month today, which typically has a positive bias.

      Everything on pace for topping-out in major B late next week in the Bradley turn date window. We’ll see…

  27. kckim04 says:


    Now that we hit 1919 in the SPX, Just to re-ask purplemer’s question. Which of the four scenarios can we rule out?

    Thank you!

  28. phil1247 says:

    es has broken above ext short .618

    buy pullbacks

  29. phil1247 says:

    1130 reversal time

    taking more bond profits off here
    next target is near

  30. James Reed says:

    Question for the OEW community. As a new trader and investor a comment from Tony’s WU has me scratching my head. “Overall, this should be the last decent chance to exit or hedge equities for the next year to two years.” Regarding the potential top of Major B, why would anyone choose to hedge versus selling outright if they believe that equities will probably fall for the foreseeable future?
    Why not just exit all long equity positions?

  31. Page says:

    Oil will close negative and it will not be good for next week.

  32. OneAndOnlyUniverse says:

    1990 -2046 until then

  33. odds of seeing spx 1989-1999 are looking better, 95% long etfs and short six small caps, a 1% allocation of each. 101% invested.

      • Move by BOJ sounds of desperation. need to do something, including screwing savers otherwise…
        since BOJ is ahead of the curve with their non-orthodox fiscal policies expect to get similar actions from the other CB sooner or later. In the short run this trading strategy might work, but one has to be on the lookout every-time, as somebody mentioned here, Chinese might follow with their own depreciation too, as well as other Asian nations. Then what, will be back where we started, with violent selloffs; but you can make money then too; be nimble and profitable.

    • timmy321 says:

      The last time you were here many months ago you were promising multi year rally with little odds of Aug lows being broken. Then you vanished when it broke Aug lows. Now if this doesn’t pan out then you will not be seen here I guess until your next proclamation.

  34. amittsite says:

    While Tony can show better…what I see is dowjones..spx are in minor c of int a of major will be choppy again.

  35. Gary Lewis says:

    Reviewing the Japanese news, is there anything REALLY there? Seems like more bloviating. As SPY approached 192, I was remembering El Mat’s prediction that we won’t hit the 20 DMA and sold SPY and IWM calls. Also sold some TLT calls as despite the continuing rise in price, my numbers suggest sell premium instead of ride the trend. Still watching the close but in the end, on the weekly basis, it looks like next week will result in a test of the weekly lows.

    • Here’s how chart of The Eight Fold Path, for the US Dollar Index, presented here earlier is panning out, so far. An almost perfect fit. Wave 4 may be over, but, technically, the triangle (to alternate with the flat wave 2) has not exactly busted it’s highs yet. So, one more down draft, while not required, is possible in a better attack of the lower channel line. It is interesting how the complete methodology of counting an impulse can be shared on one chart, versus some other methods which seem less transparent.

      DXH16 - Primary Analysis - Jan-29 1033 AM (1 day)

      Cheers and enjoy the chart.

  36. Question:When Japan depreciates–hapoy days are here again.
    When China depeciates the yuan–huge selloffs.Why?

  37. perversionofthemean says:

    Last night, NQ futures broke out from multiple momentum arcs down that had been capping upside. This preceded a confirming breakout this morning from a simple downward trendline across price highs. Even RUT is now taking out lots of horizontal resistance. Other than a snapback to perhaps test the top of NQ’s down trendline, the path finally seems up.
    I’ve been whipped up and down, over-trading, and would welcome a sustained move for awhile, but a lot of this happens at night, and it’s tough to get an ideal entry (thus “chasing” later).

  38. 123 abc says:

    Tony et al, the DOW is leading again; are we ready to say that Intermediate-a completed at 1917 and Intermediate-b completed at 1872 yet ?:

  39. mjtplayer says:

    SPX 1,917 & SPY 191.55 have been taken-out, odds now shift towards the post-Fed drop to SPX 1,872 being all of int B and we’re now rallying in minor a of int C

  40. purplember says:

    with this move up: which of 4 counts are eliminated and any increase in probability ??

  41. When all else fails…get the USD/JPN going and all is well.Amazing,

    • tradeanimal says:

      This relationship has worked rather well recently. Now with negative interest rates in Japan and their QQE which includes buying Japanese ETF’s, the bulls have a window of opportunity.

  42. CLR appears to be in a leading diagonal up, now in final 5th wave. Wave A of C. Any comments from experts????? 😉

  43. The probability continues to appear to be above zero for primary wave-5 (P5) of the current cycle wave to have launched off $SPX 1812 and now underway. A possible solution would have the original primary wave-1 (P1) count reinstated and a complex drawn out primary wave-4 (P4) for perfect alternation with primary wave-2 (P2) .

    • Dex T says:

      Above zero, maybe, but not very much above it. A number of counts have been floating around showing us in P4, but they don’t take any of the other fundamental or technical points into view.

      With bubbles popping all around it’s only matter of time until the main U.S. indices starts going far below. The FANG leadership is already showing cracks. With P1 being so far down do you really want to wait for the indices to reach it?

  44. I am in favor of b of B up finished at 1870 SPX as a flat and now in C up (of wave A of the current uptrend).

  45. More dollar propping.Guess 98.51 was important to keep a cap on gold.Side effect:Continued earnings decrease—but they ll worry about that NEXT quarter.Right now–keep everyone from piling into gold from S&P.Bonds reacted the way you d expect with a .7% GDP by going to 1.94% ten year.Gold should be up $30.Not with a dollar up to 99.54.How long can they keep this dollar up in as slow an econony (and getting slower)that we have.

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