Tuesday update

SHORT TERM: gap up and go opening, DOW +223

Over the holiday the Asian markets gained 4.3%. Europe gained 2.5% over the two days. US index futures were higher yesterday, and overnight, and at 8:30 NY FED was reported lower: -16.6 v -19.4. The market gapped up to SPX 1883 at the open, moved to 1888 in the opening minutes, and then started to pullback. The market had closed at SPX 1865 on Friday. At 10am the NAHB was reported lower: 58 v 60. Around 11am the SPX hit 1875 and then resumed its rally. Heading into the close the SPX hit 1896 and closed there.

For the day the SPX/DOW gained 1.50%, and the NDX/NAZ gained 2.20%. Bonds lost 7 ticks, Crude slipped 35 cents, Gold dropped $35, and the USD was higher. Medium term support rises to the 1869 and 1841 pivots, with resistance at the 1901 and 1929 pivots. Tomorrow: the PPI, Building permits and Housing starts at 8:30, then Industrial production (est. +0.2%) at 9:15, and the FOMC minutes at 2pm. Busy day!

The gap up opening took the SPX over the 1869 pivot to start the day. Then after a pullback to within its upper range the market rallied to the lower range of the 1901 pivot and ended the day there. We can now count five waves up from last week’s SPX 1810 low: 1836-1822-1888-1875-1896. Thus far this looks like Intermediate wave a of a Major B uptrend. Tomorrow’s Industrial production report and FOMC minutes could create some volatility. With short term momentum extremely overbought would expect a pullback soon. Short term support is at the 1869 and 1841 pivots, with resistance at the 1901 and 1929 pivots. Best to your trading!

MEDIUM TERM: potential uptrend underway

LONG TERM: bear market

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

About tony caldaro

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252 Responses to Tuesday update

  1. OneAndOnlyUniverse says:

    Get ready for another 60-80 spx pts , this guy is one of the greatest fades ever.

    PUG SMA, LLC ‏@PUGStockMarket 2h2 hours ago
    I love it when a great wave count comes to play-out to perfection. Cha-Ching! 💰😎

  2. HYG bumping up against the six month downtrend line that has turned it around every time.A break above 77.25 would be impressive.
    Gold seems to be watching to see if SPX holds above 1927 or not.Holding steady but will buy more GdX on decent weakness .Good luck all.

  3. Gary Lewis says:

    Bought SDS this afternoon and closed out short SPY puts. Getting a tad overbought. But please don’t trade on my comments. Not responsible and will not apologize if my timing is wrong 🙂

  4. john b says:

    Possible LD down , if so it should gap down tomorrow

  5. spindoc73 says:

    As intense and persistent as the US markets have been over the past few sessions, DAX futures have been in step but boosted. Not sure if will show on this link, but the their rally is pressing right up against a channel line this afternoon. After watching it for spells, I can’t imagine the channel will hold.


    • rabbittrader1 says:

      FOR THOSE WONDERING ABOUT CRUDE OIL. wE HIT THE 26 AREA IN wti crude. wE ARE NOW HAVING A LITTLE CORRECTIVE RALLY ( based on elliot wave and NEWS of a supposed russian Saudi oil output cut ,(which will not be honoered by Iran or other opec members. And so oil will drop again to $26 the $22 per barrel and extend its drop into the $14 per barrel area by October (as then SPX will also vbe crashing then to SPX 1475. But this is not the end of the BEAR for the stock market. Gold should be in the 1500 per ounce area by then IMHO. Rabbit.

  6. kvilia says:

    While there is a lot of optimism in a-b-c up, I’m still seeing a channel with SPX just touching the upper trendline. Another drop to 1800sh from here? We shall see. One way or another, the channel will be violated, and today the hourly is quite oversold for this to be an upper trend line.

  7. blackjak100 says:

    TC, is this about the limit for daily RSI in a bear market? Shouldn’t go any higher?

    • tony caldaro says:

      bear market rallies can be like a:

      • blackjak100 says:

        true, but 3 days straight of 1% gains…seems a little unusual. Guess we’ll find out. Can’t recall if this happened in 2007-2009.

    • rabbittrader1 says:

      We are going to 1973 SPX in this corrective rally . Probable LAST CHANCE to get short until the final rally into early May. Meanwhile Gold has made its minor 4th wave correction and is about to complete its fifth wave up of this strong third wave. Gold AGAIN is coiling like a spring as I forewarned before the last move up into the 1264 target. Many are now thinking (with this correction underway) that the gold bull will fizzle. IT WILL NOT! Next target for gold is in the 1337 per ounce area (as the SPX crumbles again). Forewarned is forearmed. You know wat to do , if not ask me! Rabbit. Time for tea with the Mad Hatter. R.

      • EL MATADOR says:

        Why does it have to rally into May? Why can’t the Rally end This month or 1st week of March and decline into May? It’s happen many times before so why not this time?

        Who are the “Many” now thinking that the gold “bull” will fizzle? I sure have not heard “Many” unless your are still read Jeffrey Currie stuff.

  8. blackjak100 says:

  9. Sell and Fold strategy back in focus.
    SPX should turn back from 1934.
    Tomorrow (Thursday) should be down to 1900.
    Friday will be up closing 1917ish.
    Next week range 1910 to 1952 and next week close at 1923. Last standing BULLS will be sent Below Poverty line. Ben Bernanke tried to take the team and results are there for you to see.

  10. johnnymagicmoney says:

    Look at today’s chart of TLT ………….hit that high 128 level 5 times refused to drop further and now rallying


    • johnnymagicmoney says:

      conversely IWM tried to break the highs of this morning quite a few times and couldn’t and now failing ……………………hmmmmmmmmmmm

  11. mike7x says:

    The FOMC minutes was supposed to include a video presentation this time? Maybe not. Or…

  12. Lee X says:

    Thanks for sharing your systems buy signal on the Peso , said no one
    I can’t believe no one here didn’t see that coming

  13. Dex T says:

    I have compiled a list of the more important reasons of why we are in a bear market, most taken from this blog but also from some other places. Please feel free to add others, make corrections or reword something if it isn’t clear. I will take all suggestions and rework the list

    Since the bulls are out in with their nonstop-“why can’t the bull go on forever” chatter (and will probably keep on asking as long as the rally continues) I figured it will be easier to post the list.

    1) Tony Caldaro’s OEW bear market signal was triggered on January 15, 2016- The last time this occurred was on January 16, 2008

    2) The monthly MACD of the S&P is headed straight down and until it crosses well below the zero line and resets the trend will remain down

    3) The 34 week MA crossed under the 55 and 89 on the S&P- the only time this happened in the past 20 years a bear was confirmed

    4) The past 3 quarters of S&P earnings and past 4 quarters of sales were negative. Since the Great Depression there were 16 out of 17 times when this occurred that either was at the end of a bull market or led to a bear market. (Thanks to rc1269)

    5) Soulsurfer’s analysis of simple moving averages shows that the S&P has been in a bear since August 2015

    6) The price of oil has collapsed from over $100 in June 2014 to around $30 (as of Feb 2016). Thus the 40 out of 500 energy companies on the S&P will remain depressed and unable to help advance the indices. Emerging markets will remain in bears as oil is the single most important source of income for them.

    7) The U.S. Federal Reserve has ended QE in October 2014. As of February 2016 they have made it clear that additional QE is out of the question. In addition, they have embarked on a path of possible interest rate hikes with a target of 1.25% at year end 2016 (though this may not materialize)

    8) The ECB has been running an extended QE program since March 2015 and has enacted negative interest rates and is in a confirmed bear market as of February 2016

    9) The Japanese Central bank has enacted negative interest rates and are running QE programs -Despite these initiatives the Nikkei is in a confirmed bear market

    10) Chinese economy is in chaos to the point where their govt. has intervened and threatened severe punishment to those who sell their stock holdings or short the market.

    11) Worst first trading day and week of 2016 in over 80 years- during the most historically bullish time of the year.

    12) 70% of stocks in the S&P are in confirmed bear markets as of February 2016 (according to Arthur Knopf)

    13) The Russell 2000 Index is in a confirmed bear market- down over 20% as of February 2016

    14) WM%R dropped below 80- only other times to occur in past 20 years were in 2000 and 2008 -confirming bear markets

    15) Breakdown of the Full stochastics on the S&P – below 80 and dropping

    16) VIX remains in an elevated state- trading at around 22 as of February 2016 and is in a clear uptrend making a series of higher lows and higher highs- volatility remains in the background even if not present in every rally

    • Dex T says:

      The above list is long and certain to grow but the list in support of the bull case is much shorter.

      The best piece of technical info is that the bulls have managed to still hold the long term trendline from 2009 (Fionamargaret had a nice chart showing this) and there are still some leaders in the indices (like Facebook) keeping them roaming around.

      Most of the rest of the bullish arguments center on “it looks like P5 is starting” (?) and the U.S. Fed will do “something”- and by “something” they mean nothing in that the Fed will simply maintain rates as is.

      There are some other points but they don’t deserve to be dignified by a response.

    • Page says:

      17) Cover your shorts

      • Dex T says:

        any point to make?

        I’m not short and don’t plan to be until S&P 2000. I expect the market to churn back and forth from 1800-2000 the next 2 months a la 2008

    • rc1269 says:

      That’s great Dex, but tell us how you really feel


      • kvilia says:

        He just talked himself into tears 😉

      • Dex T says:

        It needs to be said. The same questions are being asked every day- sometimes multiple times about this being a bear market- and the same answers are given over and over again.

        And when asked to justify their positions the bulls come up with…nothing… I went through pages of comments and it’s all-

        The Fed will do this or that… like what???? Nobody seems to know. or maybe P5 has begun… just because it looks good and looks like it could work on a chart

    • Holly Silver says:

      Who are you trying to convince? If the technical move breaks above 2040 it suggests to me the odds of this being a correction is 50/50. if it breaks above 2130 its 100 percent.

      Fundamentals today suggest no recession. I need to see both coincide. I will stick with the long term trend till proven otherwise. Sure looks like a classic double bottom and “V” shaped recovery so far. Oil should hold above 29 and Gold has to break below 1190.

      Never make assumptions based on longevity. I have been a stubborn bull thru this drop simply because the domestic economy is doing well. Perhaps that will change quickly.

      • Dex T says:

        Whoever wants to. It’s mainly for my fellow bears and some of the other more impartial traders. I know that 99% of the public are going to be oblivious to it and lose big.

        It saves me the time of having to retype answers.

      • rc1269 says:

        “If the technical move breaks above 2040 it suggests to me the odds of this being a correction is 50/50”

        so wait, all this time when you were telling us this definitely wasn’t a bear market, your odds that ts *is* a bear market are greater than 50%? otherwise why would we need to rally to 2040 before your odds *improve* to 50/50? i’m confused. or, maybe i’m not…

    • tony caldaro says:

      4a? SPX, non-fudge GAAP earnings have been down 5 quarters in a row.

    • aahmichael says:

      11a) Worst first 28 trading days of any year in history.

    • Thank you for the summaries, Dex.

  14. mharrison60 says:

    Hi All,
    Does anyone have an approx ranking / link to a web resource for the relative volatility of different bear market plays (I recognise importance to moderate size of positions and that cash is an okay position too)

    It took me a while to recover a bad mistake with 2x inverse etf so likely will now steer clear and not confident to try options. Miners more comfortable but still big swings so probably limit of my comfort zone. Happy with mid-low volatility eg gold, fx and bonds

    Thank you

  15. mike7x says:

    FWIW: From The Fat Pitch: $197.5 to $200 therefore seem like reasonable upside targets for a small bear market rally now. Especially early into a bear market, no more than a small rally like this might be expected. Those levels are highlighted below (Link chart). Above $200, and SPY will be back inside of the trading range that prevailed for the better part of a year (yellow shading). At that point, a rally back to the December and November highs will back on the table.


  16. 123 abc says:

    Tony, does the count from 1810 still remain the same from yesterday? i.e. is it correct to assume that four Minor waves completed at 1836-1822-1888-1875 and an extended Minor fifth wave is now in progress?

  17. Just sold TQQQ for 84.59 for an Int. b pullback.

  18. Lee X says:

    Thanks Tony
    Glad to see everyone having fun 😉

  19. john b says:

    1926 area was upper end of my target although my system is still long,i doubt we get to the 1940,s

  20. H D says:

    Tony, any DJI alt count to the bear? 3-3-5, A = 15450, this being impulsive C up in B from 15450? 16538 for C=A

  21. stmro says:

    See if 1929 pivot holds today. At this rate, we’re probably gunning for Tony’s upper bounce targets.

  22. johnnymagicmoney says:

    shorted more IWM around 101

    too much too fast

  23. B Seagle says:

    UVXY getting close to BUY signal

  24. jeffbalin says:

    I still can’t wrap my head around the failed int 5 in Major A in the Dow. How can I adjust my thinking…. The comp and Spx look fine, my signals are going green and never mind the Dow I guess? Basically I assumed the Dow would not fail. That seems like a reasonable assumption to me, but was not correct thinking this time. I know these things will happen, but failures seem almost common recently. Thank you.

    • rc1269 says:

      >>failures seem almost common recently.

      i do agree with this. my thinking: the more algo trading takes over and the better computers get at both reading/calc’ing waves and pivots and also sniffing stops, the more failed waves we will get. failed waves trap the most people offsides, which is precisely what the bots are good at. IMO

      • john b says:

        agree and prolly another reason or two as well,i think that’s why oew works much better than the poor ew guys who just cannot nail anything anymore.

    • Jake Ladd says:

      Could it be that failed int 5 is instead two irregular abc’s and we are now in C of iv?

  25. aahmichael says:

    I know people are getting all excited here, but to my eyes, we most likely just completed a corrective move from 1810. There are 3 ways to count it, but none of those 3 ways is an impulse wave. I’ll just point out that (1810-1860) = (1875-1925)

  26. Hello
    Fantastic blog
    Good luck
    Thank you

  27. johnnymagicmoney says:

    this board is getting a little too bullish here, not to mention all the talking heads. I just shorted at 1924 (that’s close enough to the first FIB retracement). I can unwind it if need be but this has gone up way too much too fast

    • johnnymagicmoney says:

      shorted IWM at 101

    • I said it on Friday…we have 2 good days, and all of a sudden “We’re going to the moon!” I think we’re still in the ‘Denial’ stage…’Anger’ to follow…

    • valunvstr says:

      Be quick, the bullish divergence in MACD daily tends to lead to better bounces than just being oversold. Even in bear markets. Look for the 20-40wk and 10 month ema. I know no one wants to talk about 1970-2000 but it is very possible with this set up. All the bears will capitulate that 1950 (that’s all everyone is talking about) and it will also be great timing for the bulls to get excited. This IS a BEAR market. That said, we likely see 1970-2000 before next hard rollover.

      • IMVVHO we will see new highs before we see new lows. The bull is still alive. How many more gap ups over the pivot do you need to see? So we’ll have a P5 without the oil stocks, unless they join us later on. Whenever I can go to the gas pump and pay $2.19 per gallon we are far from a recession. Rates are low. Where do you invest? Nothing has changed yet. I think we could actually start to melt up into a “I can’t believe we made a new high top”.

  28. stmro says:

    People, people, take a step back. How quickly and how far did we drop in Jan? This bounce is not atypical. It’s amazing how short your memories are.

    It is possible that this is PV, but not likely. Still expect to start shorting at 1950 with max headroom of 2000.

  29. mjtplayer says:

    SPY open gap from 02/01 is at 193.68

  30. as posted on my blog :
    “standard_and_poor | February 16, 2016 at 9:36 pm
    mkt update for wednesday’s, 2016/02/17, trading:
    very likely that wave C completed and Primary wave 5 started at 1810.10 during thursday, 2016/02/11.
    from friday’s blog comments, 2016/02/12: “the wave structure from the high of 2134.28 on 5-21-15 to 1810.10 on 2-11-16 appears to be complete as a corrective abc”.
    if correction is complete new all time spx highs are in the making.”

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