Thursday update

SHORT TERM: gap down opening, DOW -255

Overnight the Asian markets lost 2.4%. Europe opened lower and lost 3.1%. US index futures were sharply lower overnight, and at 8:30 weekly Jobless claims were reported lower: 269K v 285K. Another gap down opening took the market down to SPX 1822 in the opening minutes. Then after a rally the market dropped to SPX 1813 by 11:30. After another rally the market dropped to SPX 1810 by 2:30, exceeding the mid-January low at 1812. After putting in that low the market immediately took off to the upside. By 3pm the SPX hit 1836, pulled back to 1822 just past 3pm, then hit 1839 before ending the day at 1829.

For the day the SPX/DOW lost 1.40%, and the NDX/NAZ lost 0.25%. Bonds gained 18 ticks, Crude dropped 20 cents, Gold soared $45, and the USD was lower again. Medium term support drops to the 1828 and 1818 pivots, with resistance at the 1841 and 1869 pivots. Tomorrow: Export/Import prices and Retail sales at 8:30, then Business inventories and Consumer sentiment at 10am.

During the day we updated the SPX hourly chart to match the SPX daily chart, which displayed five Intermediate waves down from the SPX 2116/2104 uptrend high. Since the three declining waves do not look at all impulsive this downtrend may continue to extend lower. But for now there are some reasonable positive divergences on the daily charts to suggest it may have just ended. Since this is still the first downtrend of the bear market it is difficult to know what characteristics to expect until the bear market has created some trends. We naturally started off with an easy a-b-c down, and now see five waves down. Project, monitor and adjust. If a downtrend low is in place a 50% retracement of the entire downtrend would be quite normal. Medium term support is at the 1828 and 1818 pivots, with resistance at the 1841 and 1869 pivots. Short term momentum was quite oversold at the lows and rose toward neutral in late trading. Best to your trading!

MEDIUM TERM: downtrend

LONG TERM: bear market


About tony caldaro

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264 Responses to Thursday update

  1. The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for January, adjusted for seasonal variation
    and holiday and trading-day differences, but not for price changes, were $449.9 billion, an increase of 0.2 percent (±0.5%)* from the previous month,
    and 3.4 percent (±0.7%) above January 2015. Total sales for the November 2015 through January 2016 period were up 2.5 percent (±0.5%) from the
    same period a year ago. The November 2015 to December 2015 percent change was revised from down 0.1 percent (±0.5%)* to up 0.2 percent

  2. fotis2 says:

    And for something to soothe those shattered nerves..

  3. 123 abc says:

    3% rally now complete. Even if Major-a completed at 1810, a retrace from here appears likely…?:

    • llerias7 says:

      This wave 4 is of larger degree, therefore should expect a little further up…min.:1880-1890´s…

  4. OneAndOnlyUniverse says:

    $Dxy , are you still looking for 120 ( current 95.99 ),that would kill the bear situation.
    It sure looks like Aug 98 ( which would mean 89.5 )- if that comes to fruition
    good shot of Spx 1680.. Can’t have both , thoughts???

  5. rd3777 says:

    This 5,3,5,3 distribution pattern looks to be almost finished. We had one before the last drop.

  6. Lee X says:

    Hey Tony

    Got this pic from the Heartland this am

    You’re way too North😛

  7. elcidul says:

    The way I see it at this moment… Oil at possible top of W4 inflection point at 29.68 (end of W1 on wti-march), also a small H&S on 5min chart with target 28ish. Sp500 and NDX possible running flat and end of W4 in fact(w4 of 5 of M3)….. If I am wrong, price needs to take on 1871 and 29,68… fast😉

  8. llerias7 says:

    Intermediate IV of Major A (or 1) underway to OEW1929 pivot next week…

  9. gtoptions says:

    Thanks Tony
    5up ‘a’ wave complete?
    Have a nice Weekend all.

  10. vannic99 says:

    Just wondering — an informal poll of sorts. Hope it is not inappropriate. Sold some stuff in the last hour leaving me 63% long. Where do others stand?

    • aahmichael says:

      I’ve been 0% in equities since 5/29/2015.

    • tomasso60 says:

      zero long term equities (except a couple of gold stocks which are core holdings) . trade mostly gold – silver stocks – options short term and the odd oil stock.

    • mjtplayer says:

      100% cash

      The last thing I want to think about over a 3-day weekend is how China will open on Sunday night. I’m gonna relax and have fun this weekend, I’ll think about the markets and what positions to take on Tuesday morning.

      Work hard, play hard.

    • fotis2 says:

      Went short on retest of neckline HS did not take even partial profits (Greed) on retest of lows so watching said profit evaporating slowly expecting hopefully a retest and reversal off the downtrend line for back to lows otherwise bad luck having one of those F@#*&!! weeks again….

    • fotis2 says:

      Oh sorry thought you were talking short term nothing for me long term I cleverly got rid of nice long term portfolio back in November 2014 when it hit 1830s and everyone was screaming Bear Bear…

    • fotis2 says:

      Funny thing everyone is also screaming Bear Bear now also Deja Vu??…

    • BDUBS says:

      Hi V,
      Not inappropriate at all. In the money I manage, which is long-term(years) and “long biased stocks both long and short”, I am 60% long 35% short. This is pretty defensive positioning for me as I believe we entered a bear market mid 2015. In a trading account I’m long a small position in S+P’s which ill be out of very soon as I’m only looking for S+P 1880-1900. Also long bigger position in silver which I think, along with gold, goes higher for at least the next couple months. Good luck!

  11. kvilia says:

    Hi big bounce guys, please answer elcidul’s question before you call it the end of the downtrend. What Tony said was that it was possible that downtrend ended. He did not say that donwtrend ended. I will need to see gold and NUGT climaxing and SPX dropping hard to 1780-1730-or eve lower area before the end of major A. Last time we were in solid downtrend, the waves down were sudividing. Why trust a one day bounce as today?
    Finally, who said the correlation between oil and markets will persist?

    • rc1269 says:

      even if the downtrend ended, we probably only have 100 pts more of upside before the next downtrend begins. and it’ll be a fretful 100 pts at that. so personally i’d rather just go take a hike and come back for round 2 rather than getting too cute with my squiggles. but that’s just me.

    • Most since last financial crisis

    • Holly Silver says:

      Stockman? He has predicted the same scenario for over 5 years now. Find it a bit hard to imagine since the problem is exclusively OIL and credit relating to that segment of the economy. It isn’t even a slack in demand. As for here in the US we are seeing the consumer spend more in the last 2 months, wages creeping up, very tight labor market, very high number of want ads, jobs, complacency level high, and a service sector staying in the stratosphere. If anything, isolate the domestic economy away from overseas situation and oil and you get a FED that is going to raise rates. The outside world is trying to derail this. Don’t believe they will succeed. Bu wait for the next deep correction and the same doomsayers will be back. I actually see 2 more rate hikes in 2016 despite this current mess.

      • rc1269 says:

        “The outside world is trying to derail this”

        there is no ‘outside world’; there is just… the world. we’re part of it. many of those S&P companies? yeah, they sell things to the rest of the world too, and rely on the rest of the world to build their things too. and fund them. you might be surprised to find there’s a lot going on in the realm of global finance that happens outside your local shopping mall and craigslist job posting

        but GL with the perma-exceptionalism thesis. i’m American so i really do hope it works out for you!

      • Dex T says:

        As board poster rc stated a number of times S&P earnings have declined 3 quarters in a row-a 90% predictor of recession.

        What evidence do you have to support your position? You mention the strong consumer but based on what? Any facts, figures or charts?

        All of the best technical trend indicators have turned south. We are going much farther down before a bottom hits even if rallies like today get bulls excited. The markets always move first and then news. By the end of this year it will be very clear to you.

        • aahmichael says:

          “As board poster rc stated a number of times S&P earnings have declined 3 quarters in a row-a 90% predictor of recession.”

          RC’s stats point to a bear market. Don’t know if that always included a recession.

          • rc1269 says:

            correct, just bear mkt. did not go back and track vs technical recessions so can’t say

          • Dex T says:

            Ok. Thanks for the clarification.

            My initial point still stands. Fundamental with technical evidence for a bear is overwhelming.

            I need to see hard facts and figures and charts for end of P4 with waves counts that actually follow EW guidelines.

        • BDUBS says:

          I have a friend who speaks to 6-10 mid to large cap. companies daily. If I just take these inputs (orders, trends, outlook), we are CURRENTLY in a recession. Business is horrific! (as recent q4 earnings releases clearly show).

  12. captbara says:

    Nikkei futures look strong. No 15m ema break all day

  13. rd3777 says:

    Interesting expanding triangle in the JPN225 futures.

  14. OneAndOnlyUniverse says:

    Any ewave guys have a running count on $ovx ( cboe oil vol )? If you are trading oil u should be monitoring

  15. mjtplayer says:

    Oh yeah baby – I got me some Pearl Jam tix at Fenway Park!!!

  16. elcidul says:

    Hello, I am new here. Let me ask you this: if this is a bottom on indexes, why isn’t gold, silver, HUI, GDX dropping faster? My opinion is we bottom into start of next week target sp500 around 1760, gold around 1320. I could be wrong if oil goes over 30 today-monday though… what do u guys think?🙂

    • kvilia says:

      Ha, exactly my question, Gold should be getting hammered if it was end of PIV.

    • Holly Silver says:

      Watch out because OIL is a manipulated supply exclusively by the Saudis. Their end game was to wipe out other producers. failed and suspect they lick their wounds and place controls back. The US economy, if anyone is interested, is doing just fine. in fact the exact opposite is happening just when the world markets took a hit. Consumer is spending again and has the means to continue. Internals suggest the FED should start another round of rate hikes in next few months BUT it will be delayed thanks to world dilemma. How we fall into a secular bear with the domestic engines revving up is beyond me. Only another bursting bubble or credit crunch will cause this. Anyone see a bubble or credit scare?

      The end of 2016 will be higher than the start of the year by perhaps 5 percent. Conservative prediction.

    • Brian Warner says:

      I’m new here as well and really lacking in my “wave counting” abilities. I was schooled on Edwards and McGee. That said, I think we have bottomed S+P at least very short term. I am long small S+P’s for a chop, but Im long Silver and Gold for a few reasons, including fundamentals, particularly Silver, and seasonally its a good time to be long. I think the metals could rally WITH stocks (like early 2011). Best of luck!

  17. I repeat my call: PIV done 1810 and now extrem rally to New much Higher Ath PV.
    Regars NybiSibyn

  18. xuwu992000 says:

    A clear short-squeeze going on that will top at the end of the day at 1870.

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