Thursday update

SHORT TERM: quiet opening, DOW -40

Overnight the Asian markets gained 1.9%. Europe opened higher but finished mixed. US index futures were higher overnight. At 8:30 weekly Jobless claims were reported lower: 262K v 269K, and the Philly FED was reported lower: -2.8 v -3.5. The market opened three points above yesterday’s SPX 1927 close, and then immediately started to pullback. At 10am Leading indicators were reported lower: -0.2% v -0.2%. The pullback continued until 11:30 when the SPX hit 1916. Then after a rally to SPX 1925 by 12:30, the market pulled back to 1915 just before 2pm. After another rally to SPX 1925, the market pulled back again to 1915 by 3:30. After that a bounce into the close ended the day at SPX 1918.

For the day the SPX/DOW were -0.35%, and the NDX/NAZ were -1.10%. Bonds gained 19 ticks, Crude lost 40 cents, Gold rallied $27, and the USD was higher. Medium term support remains at the 1901 and 1869 pivots, with resistance at the 1929 and 1956 pivots. Tomorrow: the CPI at 8:30 and it’s Options expiration Friday.

The market had a quiet opening for the first time since February 4th. The SPX opened at 1930, the high of the day, and immediately began to pullback. No gap up opening, no rally? The SPX hit 1915 three times today, for marginally the biggest pullback since this rally began at 1810. This pullback is 16 points so far, the previous two were 14 and 13 points respectively. While we are still counting five waves up from SPX 1810, as noted yesterday, the current pullback has not overlapped the previous high at SPX 1888 yet. This suggests the market could rise a bit further to make it seven waves, or continue to pullback, as we expect, and overlap SPX 1888 to complete Int. B. Options expiration tomorrow could provide the answer. Short term support remains at the 1901 and 1869 pivots, with resistance at the 1929 and 1956 pivots. Short term momentum dropped to neutral after yesterday’s negative divergence. Best to your trading the often wild expiration Friday!

MEDIUM TERM: uptrend likely underway

LONG TERM: bear market


About tony caldaro

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126 Responses to Thursday update

  1. johnnymagicmoney says:

    VIX down two days in a row with market down two days in a row


    • johnnymagicmoney says:

      the BTD action of today and yesterday and the inability to show any volatility after up 6% in 3 days tells me this wants to move higher soon (which is retarded if you ask me). Then I look at 3 gap ups (right below) which should be magnets, a shift from panic to extreme complacency in less than a week, broken charts in everything except bonds, utilities, select staples, massive global risk, and silly oil expectations now proving to be baseless and I think why isn’t this flying down??

  2. Page says:

    Doesn’t look good, It will be ugly next week.

  3. fotis2 says:

    Multiple choice question:Channel Down or Bull Flag?

  4. blackjak100 says:

    RC, you checked the minor sell off but I would argue we need to pullback further first. Still daily RSI at 63 is too close to overbought IMO if we are targeting 1957-1964 next week. It would be nice to see a 38.2% at the minimum

    • llerias7 says:

      Also $NYMO is at high levels…announcing a very good drop…that would set the stage for a rally [(c)of B] around central banks meetings next month…

  5. ABchart says:

    Christine Lagarde: “We are not in the same situation as in 2009”

    Even worse? 😉

  6. mjtplayer says:


    Since Wed mornings’ gap-up, the market has been basically trading sideways for 48 hours now and on very light volume. Looking forward to normal trading next week, once OPEX is behind us and those on vacation with their school aged kids come back to work.

  7. Thanks TC; the education continues, but I’m just about there. Then the real education begins.

    By my system, a close below 1899 challenges the Bull leg. A move down from there can go to 1896/1880 with 1868/1862 a possibility.

    A short would trigger at 1887.26. A close above 1918.67 and the bull continues.

    Ultimately, I believe 1957 or 1991 is the goal.

    YTD Performance at 7.4%.

  8. torehund says:

    …at some point everything has to make waves, sure the FED wants it otherwise. Let them off the bottle for a week of too, and then we will see…

    Cheers and good weekend to bulls and bears 🙂

  9. mjtplayer says:

    NAZ leading the move higher, lead by the FANG stocks and bear market rallies in semi’s & biotech. Otherwise, a pretty flat day on a choppy OPEX.

  10. NEWBIE says:

    spx is going to 1940+ THEN you short it like a mother!

  11. Gold up slightly…GDX down 2.5%.Neg div at work I guess.Would like to still see gap filled at 17.13.Missed it yesterday by .10.Good luck all.

  12. On Target

    Shrihas (@Shrihas1) says:

    February 17, 2016 at 2:04 pm
    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.

  13. 123 abc says:

    Tony et al, have we qualifed to label Intermediate-a at 1930 yet, perhaps tenatively?

  14. rc1269 says:

    So far this market seems pretty intent on following the script to a T. I’ll ask the Q again – is the mkt gonna let it be this easy?
    The answer so far – to the last time i asked the Q – has been a resounding ‘yes.’

    Is it really possible that everybody can stare at the Aug-Oct 2015 timeframe and recognize that the setup is so far nearly identical (wave count notwithstanding), and yet also have it come to fruition in the same way yet again? The market likes to surprise. Can its ability to be absurdly predictable also be a surprise? suppose we’ll find out

    • gtoptions says:

      I was also looking at that time period, technically. But, it also looks like Dec 21-28 time frame on the hourly chart. IMO

    • OneAndOnlyUniverse says:

      what script ?

      • OneAndOnlyUniverse says:

        Maybe one of these – i don’t know – i’m sure you don’t know either. Does your script have the Spx trading 1990 -2008 , mine does

        • rc1269 says:

          >>Does your script have the Spx trading 1990 -2008 , mine does

          that would be “the script”, yes. the ultimate upside will be anybody’s guess, but that’s the general plan. which also happens to be a near replay of Aug-Oct 2015 double bottom setup, per my reference. the only difference is this one stops out at about 76.4% of the length of that one if your target comes out. personally i was favoring the 61.8% extension vs Aug-Oct, which targets a more conservative 1964. Either way, playing the double bottom analog script has already netted somebody +6.8% SPX.

          see my post from a week ago re: “can it really be this easy?”

          that script suggested we would get a strong bounce off of the double bottom. check
          then pause around 1927-1934. check
          then minor selloff. check

          now, if all holds we’ll meander up to said targets over the coming month before we head lower (thus following your other scripts regarding the “we’re going to continue lower” analog)

          so, we have that laid out. you know it. i know it. which means the bots know it. my question is, is it going to be that easy or will we get a wrench in those plans? of course it could be possible that both you and i are so much smarter than the rest of the market that even though this script seems obvious to us it is not obvious to the market. therefore it will surprise the market, but not us. it could happen…

    • Dex T says:

      Yes. It may look incredibly easy to you and others well versed in trading and market history but the majority of financial “professionals” are likely pulling their hair out looking for direction or just not caring- to say nothing of the average investors who are oblivious to what is occurring.

      2008 has taught people that stocks should eventually go up and the Govt. will step in to fix everything.

      Aside from a tiny percentage of market technicians I doubt most people are even looking at the 2015 chart. Or any charts at all.

      • rc1269 says:

        fair points. would not be the first time i thought something was painfully obvious and then waited for a long long time to realize it and catch up.

        case in point – working with RMBS and CMBS in 2006-2007. it sure took a looong time for risk assets to start pricing in what seemed very obvious to many traders for a long time.

        two things are always a struggle: not being too early on a thesis, and assuming the market is actually efficient

    • aahmichael says:

      I mentioned that in my post over the weekend, however, there is at least one huge difference between the two time periods, and that’s the weekly candlestick off the double bottom lows. This bounce is much weaker than last October’s launch, so I don’t expect an extended flat this time. In fact, I doubt that it’s going to be able to get over the 1/20-2/03 trendline. That TL stopped all the indexes on Wednesday. Since it’s a rising TL, there is still room for a HH if the market needs do to that, but to exceed that TL looks like a longshot to me.

      • EL MATADOR says:

        It should also be noted that during the Sept-Oct bounce there was a lot more available buyback funds readily available to prop up the mark in which the investment banks (GS and it’s peers) were given the green light to buyback relentlessly at will. This time around there is less buyback funds available even though investment banks have been given the green light so yes bounce will be weaker

  15. Looks like Oil Freeze didn’t help much 🙂

    • Dex T says:

      The “oil freeze” was non-news. OPEC never had any intention of increasing production. Oil inventory continues to build and the world is swimming in oil.

      • Correct. I was just being sarcastic. I do think oil is going lower. How much is the million dollar question 🙂 25 or 18 or 11

      • Lee X says:

        You mean decreasing production right ?

        • Dex T says:

          Well both. I think that OPEC is pumping as much as they realistically can- all factors being considered.

          They have been hitting record production highs recently but I don’t know how feasible it is that they keep breaking records.

          • Lee X says:

            Ok Thanks

          • OneAndOnlyUniverse says:

            Just Facts ( not from business insider or marketwatch) – look how oversupplied we are.
            4-week moving ave. crude supply v demand M/bd

            1/22 16.73 v. 16.70
            1/29 16.45 v. 16.42
            2/5 16.22 v. 16.16
            2/12 16.29 v. 16.05

            p.s. you have zero clue about the oil market

          • Dex T says:


            There is more oil now in storage out than anytime since 1930- fact. I’ve seen the stats you posted but so what? They validate my point. Supply is higher than demand so there is no fundamental reason to rally yet. And OPEC and large oil giants, like Exxon, have made it abundantly clear that they don’t expect much either.

            I expected oil to rally numerous times in the past year and wrote so on this blog. A year ago I expected oil to be over 70- it didn’t make it. A few months ago I expected it to get over 50 but it broke down to under $26.

            So far it hasn’t. Maybe it will maybe it won’t- I have no skin in the game.

            You are just upset because you made numerous large bets on a number of stocks and ETF’s (like ERX you bought over $21) on an oil rally that has not yet materialized and are sitting on losses – or minimal gains at best.

  16. Jordi G says:

    Everybody and his aunt are expecting another we’ve up to yesterday’s highs. This make me wonder, is there any possibility that all the corrective wave has been done? are we going to break the lows next week?

    Erdogan wants war, and certainly I’m not going to keep longs open the weekend. I suspect Erdogan, or Saudis, are going to make some stupid actions this weekend

  17. kvilia says:

    About the short squeeze – those who are waiting, are in the wonder land. Era of free money is ending, and it maybe ending with fireworks. This is one off situation when Fed wants to raise rates but can’t since growth was artificial. There are so many sellers because everybody is afraid of the status quo knowing Fed has run out of bullets. I don’t think the panic will be of the 2008 magnitude since back then nobody knew of the scale of the issues. For the past several years everybody was guessing when this giant cyclope is going to fall. It looks like its the time. The only time short squeeze happens will be after an exhaustive round of selling with extremely obersold conditions. Right now we are just 200 points from the top without any QEs in sight. Risk/reward is obvious here. Who knows how much time and how many bounces there are left before the collapse. I’m sounding like zerohedge now but if you think, they were correct all along, just really bad with timing. Not this time, otherwise I will be extremely surprised.

    • Fed still has options, NIRP, Helicopter money, forward guidance and QE, QE would be unpopular for many reasons, but may get invoked next year! These insane bank policies continue as the world is awash in debt that will never get repaid.
      Fed is clueless as was there .25 increase, look for another .25 increase next time.
      Which will eventually (perhaps years out) lead to a new monetary reset after our current system has crashed and burned. There is gold, bitcoin as alternates that are gaining favor as most see the fiat paper game as ending….I think we hit 1950 ish today as it is OPEX!
      Bearish and waiting for the next level to short. Best to your trading!

  18. simpleiam says:

    Dr. Boom has some GREAT charts, and always an interesting format. Keep on scrolling to see all from Jan. 2016. Looks like he was pretty spot on with everything, except possibly, UCO. A very good forecast for one so far into the future. Look familiar?

  19. rc1269 says:

    Meanwhile Core CPI has snuck back up to 2.2%…

    Biggest risk for US markets this year? The Fed actually keeps hiking rates

    • alexhartley1 says:

      MId-March I think they’ll say f**k you to the markets belief that they can’t raise rates and raise them again. It will start the next leg up for the USD after this period of the consolidation and likely tie in with a market top between 1956 pivot and 2000.

      At the moment the Fed doesn’t care about the stock market. The incumbent is on the way out.

      • simpleiam says:

        If economic reports don’t weaken, then, you’re probably right; if not March, then June for sure. However, if crude falls below 25 and tends to stay there, then, there’s just a chance The Fed will stand pat.

        • alexhartley1 says:

          Agreed. However I think oil (as suggested by some smart here) will probably rise to test resistance (38-39) into an early – mid March top in line with the equity market rising and topping.

          Perfect set up? Maybe too easy?!?!?!?!

  20. rc1269 says:

    Moody’s just concluded their review of Baa rated E&P and MLP companies. They were not as kind as S&P was in their recent review.

    APC, HES, CLR, SWN, MUR, WES – all downgraded to junk from IG. pretty messy out there today.

    • simpleiam says:

      I think “messy” might be putting it mildly. Can’t get it to attach, but WSJ has an article today about how the low crude prices are more far reaching than many think or know. The interview of the author should be up on shortly. I think it’s even more far reaching than the article states. We’re all in big trouble.

    • mjtplayer says:

      Thanks RC. The markets were already pricing these issues as junk, nice to see the rating agencies catch-up to prices. The market is always smarter than the analysts or rating agencies 🙂

      it certainly is a case by case situation. HES & APC certainly show stress, but not nearly as bad as MUR or MRO – which look very questionable.

      • rc1269 says:

        well the market wasn’t quite pricing them cheaply enough it seems. post downgrades:
        APC 24s are down $5 to $75, or +90bp. APC 44s are down $6 to $61, or +70bp. HES 24s are +70bp and their 41s are +60bp, CLR 24s are down $3, SWN 25s +55bp (and they were already HY at S&P).

        so yeah, they were cheap before. but were not priced to junk just yet.

  21. Gold surging yesterday. The potential island reversal formation on GLD washed away.
    Gold down pretty heavily the past few years. A simple reversal to the mean would put it in the mid teens. On the other hand, if these Central bankers are really as clueless as they look, it could make a new high.

    Bought back my Rand Gold shares yesterday slightly higher than where I exited a few days earlier.

  22. Potentially topped out, our pre market chart last Friday on SP 500 so far working out for Major 4 of 3

  23. purplember says:

    on CNBC 9pm eastern the real life story of the Wolf of wall street is on tv. some may find it very interesting.

  24. valunvstr says:

    This is not good news for bears (short term at least).

    Bear funds just hit a four year high AFTER the 6% rally? I’ve looked at the sp500 overlaid with this information and there is no way we don’t run to 2000 having that knowledge. NO ONE believes in this rally and the proof is they are shorting into it. It DOES NOT mark tops. Total bummer…going to have to wait for those eager to short, get squeezed when we break 1950.

    • bhtrade says:

      And the squeeze will likely begin in earnest with a gap over spx 1950. probably before next friday

      • bhtrade, there is no squeeze. This is real selling. Norwegian fund had urgent meeting with Norway finmin weeks before. They have agreed to my copyright strategy of “Sell and Fold”. ATM, Bullard is talking too much. Government servants should keep quiet, they can never write destiny for billions of people.

  25. 123 abc says:

    SPX futures appear to have five minute waves for Minor-a and five minute waves for Minor-c so, perhaps Intermediate-a is now complete?:

    Thank you Tony et al.

  26. Professional Swing Trader spotted 60 million print on SPY at 193.88 level by dark pool. Which implies, Bearish below 193.88 Now!

  27. mjtplayer says:

    A side note – the QQQ’s printed a daily “dark cloud cover” candle today. This suggests we’re heading lower, possibly in int B

    • lunker1 says:

      check out the one on AAPL. outside day. I think AAPL had been in a 6 week wave 4 diamond that is now continuing down in wave 5 from $124 in Nov. 5=1=$80

  28. Anyone has any opinion on TWTR? Shorted at 17.30 and now stuck with it. All of sudden there are developments.

    • Dex T says:

      when/why did you enter the trade and what were your targets? Do you have a stop? How long are you willing to hold it?

      It sounds like you were caught off guard from initial targets so consider exiting with a small loss or waiting for the markets to pullback some (since they are all very overbought) and then exiting soon.

      Personally I think Twitter is going to head into penny stock territory but that is some months away

    • jobjas says:

      Minimum target for TWTR 11.9

    • EL MATADOR says:

      IMO, TWTR has mo-mo-jo on it side right now. It near a short term resistance zone but once it break out of wedge and green trend line it straight to 22.89 near the cyan trend line then might have enough juice to test 31.87 near the magenta trend line. Any pullback from current resistance zone very like to be shallow. The ball is in your court to decide what to do manana. GL

    • Got out at a small lost at 17.90. Gotta love sleepless nights 🙂

  29. EL MATADOR says:

    RC and MJT any thought on KMI credit worthiness?

    • mjtplayer says:

      Slight signs of credit stress, but nothing overly concerning.

      BBB- credit, 1yr notes at 3.2%, 3yr notes at 4.5%. Yield curve has normal contango, just slightly elevated yields, especially for BBB- paper. Trades as though it’s rated BB.

      There are certainly others in far worse shape than KMI; like MUR & MRO.

  30. Looks like we should be in a b-wave retrace after the 130 point rally from 1800 to 1930 – the question now is how big will it be:

  31. ariez5 says:

    Seems like the risk off sequence is 1. Oil gets hit, 2. High yield gets hit and yen rises, 3. Nikkei gets hit, and then 4. SPX gets hit. We got 1 and 2 today.

  32. tomasso60 says:

    thanks TC

  33. skmcobra says:

    Tony, you mentioned 7 waves in your blog today. Do you believe there can be 7 waves in EW? What happened to the standard 5 waves up and 3 down, or vice versa?

  34. ABchart says:

    Thanks Tony!

    All in one: (SPX, CAC, DAX, €/$, WTI, Gold)

  35. captbara says:

    Gold maybe looking to complete C of 2 overnight.

  36. M1 says:

    Here today’s and first Poll results (among Tony’s blog readers/traders)

  37. mjtplayer says:

    Tony – uptrend confirmation yet?

  38. There was a general idea during the bull market that when downtrends were confirmed that they were pretty close (days usually) from ending. Uptrends, on the other hand, could last for weeks or months after being confirmed. Does the opposite hold true for bear markets?

  39. I go shopping…come back and gold is up $20 from when I left.GdX blows to new highs with a nice -div.I never did find time to buy more today.I will on a pullback.Good luck all.

  40. Feels like tomorrow will be a big down day, shrug. 🙂

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