Tuesday update

SHORT TERM: gap down opening then rebound, DOW +22

Overnight the Asian markets lost 0.8%. Europe opened lower and lost 0.7%. US index futures were lower overnight. At 8:30 Retail sales were reported lower: -0.1% v +0.2%, the PPI was reported lower: -0.2% v +0.1%, and the NY FED was reported higher: +0.6 v -16.6. The market gapped down at the open to SPX 2010, and continued to decline until hitting 2005 at 10am. At 10am Business inventories were reported higher: +0.1% v +0.1%, and the NAHB was reported unchanged at 58. With the market hitting short term oversold it then started to rebound. The rebound continued throughout the day and in the last hour of trading the SPX hit 2016 and closed there.

For the day the SPX/DOW were mixed, and the NDX/NAZ lost 0.25%. Bonds lost 3 ticks, Crude dropped 75 cents, Gold added $1, and the USD was lower. Medium term support drops back to the 1973 and 1956 pivots, with resistance at the 2019 and 2043 pivots. Tomorrow: the CPI, Housing starts and Building permits at 8:30, Industrial production at 9:15, then the FED ends its FOMC meeting at 2pm.

The market dropped at the open today, following through with yesterday’s short term negative divergence. After making a low at SPX 2005 in the first half hour the market rebounded for the rest of the day, as short term momentum rose back to above neutral. Typically during the beginning of a downtrend it doesn’t get much higher than this. Today’s pullback fell just short of making it a significant wave. Need to drop below today’s lows for that to occur now. Market appears to be hanging in limbo ahead of tomorrow’s often volatile FOMC statement. Short term support drops to the 1973 and 1956 pivots, with resistance a the 2019 pivot and SPX 2028. Best to your FOMC trading!

MEDIUM TERM: uptrend

LONG TERM: bear market

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

About tony caldaro

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296 Responses to Tuesday update

  1. Edwardo says:

    Tomorrow, basis time, the present wave will equal the 9/29 to 11/3 move. It would be remarkable if tomorrow it also equaled the move in SPX points gained at approximately 245.

  2. simpleiam says:

    TRIN is way up there, and Barcharts survey signal is a Buy. Keep in mind, Smart Money is either leaving the building now, or is already gone.


  3. steplaland says:

    2 hr stoch pointing down.

  4. simpleiam says:

    Looks like some of Friday’s options action might be taking place now.

  5. johnnymagicmoney says:

    Here is the bottom line folks and its very very simple. As long as the market has faith in the FED and its tools the market will not crater – period. When they lose faith then it will crater. Central Bankers are comical in Japan, liars in China, and hysterical in Europe and yet market participants still place faith in them!!!!!!! What does that say about their faith in the FED as of today? May be waning but no more faith? Don’t see it yet unfortunately.

  6. aahmichael says:

    This past weekend, I wrote that I wanted to get short at 2032. However, with Monday morning’s gap, I was afraid that it wouldn’t ever get to 2032, so I got short at 2016. This afternoon, that short got stopped out one tick above Monday’s high, and I just now got short again at 2032.

    • mjtplayer says:

      SPX 50 week MA = 2,032.51

      • aahmichael says:

        Right, and the SPX 20 month MA = 2032.18. While there has been a lot of talk here about how low the VIX got during the previous 2 bear markets, SPX was never able to exceed its 20 month MA in either of those 2 bear markets.

        • Thats good info. I am long VIX so i should look for a clear break of 2032 in order to close the long position and look for a better entry. thank you!

        • vicavale says:

          Plus, the monthly 10MA just crossed down across the 20 MA. Only happened twice in 20 years, in 2000 and 2007, close to start of those Bear Markets. They touched briefly in 2012. Is this time different?

    • phil1247 says:


      spx high today was 2032.02

      did you get short at 2032.02 or 2032.00 ????

      after all ……… this is the internet>>>>>>>>>>>>>>

  7. phil1247 says:

    took profits

    we had a tiny pop

    hasta !!!!!!

  8. Peter Sliney says:

    We still have to hit 2043.00 to conclude filling the year end gap. Then it’s the Fed/ECB vs. Technical analysis. It going be a war.

  9. sweinv says:

    Seems like OEW always at least is two or three steps behind the market. Now we have reached 2030 and that is the line in the sand for the bears.

    • fishonhook says:

      been here before. Upper targets get raised. Rounding tops. Pivot points. Fib retracements all the usual suspects and then the Fed kills it all.

      Doesn’t matter how you label the waves. the crux is are we in a bear or bull market? If bear shorts will do ok in the end. If not get out before OEW calls a full out reversal.

      • CampFreddie says:

        Fair comment Fish.

      • Rancho says:

        Relax, my friend. The CNN fear and greed index today shows Extreme Greed. The market will reverse and you will be able to get out even at least. I have moved my puts to the May expiration. Will see what happens.

    • Sweinv. No, 2030 is not a line in the sand for bears or a bear market. It is obviously for you though.

  10. phil1247 says:

    looks like a triangle is forming in this thrust

    looking to take profits on any further rally

    looking for one more POP!!

  11. Every Week for the past 3 weeks i’ve been warning you… NEW HIGHS are Coming

  12. john b says:

    wow another fake indicator signal, like I said to my friend Dud,the only indicator that works is price itself…..john

  13. mjtplayer says:

    The ECB is now “all-in” with their policy

    The BOJ is also “all-in” with their policy

    The Fed has now dropped the raising rates path from 4 to 2 and the market is even skeptical about that.

    What next? Is all the good news from CB’s now out and priced-in? is this as good as it gets?

  14. simpleiam says:

    Looks like some selling into this rally. Hmm. Earnings reports start in about 2.5 weeks. If stocks are going down, they might need to START doing it soon.

    • johnnymagicmoney says:

      why would they go down analysts have already downgraded earnings 10% so companies should now beat with their buybacks!!!

  15. fotis2 says:

    Well Well what now brown cow?Fiona to say I’ m impressed would be an understatement.Kudos!

  16. fishonhook says:

    Any other bozos like me still stuck short waiting for Tony’s C wave down?
    Whatcha doing?

    • I have some longs, long VIX and some SPX PUTS at 1900 and 1800 aspirin mid april. those are basically lost (but still hoping).looking to see how the market behaves although being long doesn’t seem to be a good payoff…

      maybe i should reduce the vix long?

  17. ewtoriginal says:

    Yellen and this Fed is F.O.S. They have eliminated fear/greed…Oops,keeping saying that by error. Eliminated FEAR. Greed is safely alive.
    Inflation is meaningless and of no benefit. It will become irrepressible if it starts. Ask Nixon. ask Ford. Thank Volcker

    • johnnymagicmoney says:

      people hear what they want to hear plain and simple. She is incoherent, contradictory, and evokes no confidence whatsoever. It is also very clear she has no independence but guess what – too much of the market has their holdings and trades aligned with that twist. Until the sharks decide to twist it back to reality (that she really is incompetent at this point) then the markets are going to go higher.

  18. kvilia says:

    For the sake o the argument. SPX has been in overbought territory almost a month on daily. How long can the index stay overbought without correcting? Just curious.

  19. simpleiam says:

    Let me say that if you think these indices are going down, the VIX has absolutely collapsed, and I’d be doing some serious positioning like mad here. GL All, and May God Favor The Old, The Foolish & The Crazy! 😛

    • kvilia says:

      Long or short?

      • simpleiam says:

        Hi kv, IF you believe that indices are going down, now is the time to start to think about serious positioning. Absolute collapse in VIX. Not at the 10.88 level as aahmichael pointed out, but comparatively speaking to what it’s done of late. If Tony’s level is still 1963, I’m waiting for that first, but I might do a bit of toe-dipping pretty quick.

        • kvilia says:

          Thanks simpleaim, just trying to decode your first statement. I’ve been positioned already on the short side and patiently waiting. Three weeks ago it was hard to imagine SPX would break through 1950. I think risk/reward is definitely in favor of the short trade, especially if you have a stop in mind.

          • simpleiam says:

            Sorry I wasn’t more clear, kv. I’m waiting for the break down before putting some real money out there. Which reminds me, I’ve got to check Dr. Boom’s blog to see where he’s pointing; usually the same direction as Tony. Can’t remember who it was that said it, but someone said Dr. B.’s Dad either worked at EWI, or was close friends with those guys, and taught him (Dr. B.) how to chart at a young age. He’s excellent at it too. Don’t know the whole story; just picked up bits and pieces.

      • lcd00 says:

        In defense of short, VIX hit bottom of Daily BB, at 14.92, first time at bottom of BB since Oct 28, 2015. Also SPX at Monthly 20 SMA (2032) and Weekly 50 SMA (2032). A close and hold above 2032 would destroy the case of course.

    • I have been long VIX through the VXX and down 10% so far. I don’t want to let it go though…

  20. Clear 5:3:5:3:5 diagonal higher with proper form and measurements “at this time” .. could turn into a larger impulse because all of the upward waves are still five wave sequences.

    SPX - Five Minute - Mar-16 1447 PM (5 min)

    Cheers and enjoy the chart.

    • No offense, but what is the point of attempting to count waves when they are simply adjusted after price moves a certain direction…

      Over and over and over again? honest question

      • Good question. Thanks for asking. The point is 1) to find the direction in which five waves are made ‘easiest’. The points to the continuing trend in the market. 2) To determine when a larger movement might stop in either the upward or downward direction. 3) To determine the possible ‘over-night’ gap direction. For example, nothing from today says the overnight gap won’t be higher when the Asian markets react to what the Fed did.

        Your question might be relating to the B wave count in the upward direction. Was it sloppy and require revision? Yes! Welcome to B waves. Did the count of a triple zigzag upward work as it’s supposed to? Absolutely! Triple zigzags are always ‘terminal’, and the channel upward was broken in the downward direction as soon as the (z) wave finished.

        Then, when I watched the C wave downward form, and the truncation occur in the vth wave (live and in real time as I was watching my screen), this tells one that the upward move could be ‘explosive’. When one knows where a fourth wave is, circle-iv in this case, they can often ‘stop into’ (i.e. set a buy stop) once the fourth wave is exceeded – higher in this case, since, by schedule, we know it is prior to a significant announcement. (This is not trading or investment advice – just how Elliott waves ‘can’ be traded).

  21. If it’s topping, the top should fall just shy of spx 2040, methinks. Thereabouts. But who really knows.🙂

  22. NINJA SHADE says:

    Good afternoon! Gold shooting up following the 2pm announcement and it keeps going up after the press conference. I would be interested to see how stocks will react to this, although Crude is also having a stellar day as well.

  23. johnnymagicmoney says:

    honestly she has just about as difficult time explaining her policy as trump does explaining his

  24. johnnymagicmoney says:

    The uh uh uh uh unemployment level will continue to get better but uh uh uh uh but there wont be inflation but uh uh uh the inflation will go up but uh uh uh uh not too high of course uh uh uh it will be perfect actually not too high and not too low uh uh uh uh uh and the economy will continue to improve uh uh uh while we watch the global world uh uh uh but we don’t expect things to get worse but uh uh uh we are watching uh uh uh and pigs will fly and uh no deflation and no deflation and uh dragons exist and uh uh uh

    that’s essentially what they said

    BUY MOAR!!!

    markets to all time highs now and counts will be changed to Primary 5


  25. blackjak100 says:

    At least the greatest breadth thrust in market history is easily explainable now (ECB & FED)

  26. TMF says:

    Yen being up is a possible “tell” that today’s move is the fake out move before tomorrows decline….remember ECB last week ? Down on announcement then up huge next day. So if we wind up big today with Yen up, could mean its all given back tomorrow.

    Trading on Fed day is silly IMO

  27. phil1247 says:

    STILL believe 2050 can be hit today but its got to accelerate now

    • markets so far are not convincing in the rally. I believe we are at the end of this bull market, who knows when this will drop but i would have thought that the us market would have reacted more positive after 3 days of not moving!

  28. The Fed does not want a market crash.Therefore,a lower dollar is preferable to normalizing rates.This is partly political and part economics.I saw one analyst predict a 1% GDP for the first qtr after yesterdays numbers.We may not see them until Dec raising rates.

  29. phil1247 says:

    triangle thrust targets STILL 10 points higher

    prepare to take profits soon

  30. gtoptions says:

    Thanks Tony
    SPY ~ WR2 @ 204.34 ~ MR3 @ 206.03
    IMO this range should contain Major B.
    GL All


  31. C’mon $SPX 2028! You can do it!!!!!!!!!!!!!!

    There it is!

    Now what do I do?

  32. purplember says:

    Bottomline after 7 years of TRILLIONS spend by our federal gov’t and many TRILLIONS more by the FED, our economy isn’t strong enough of .25% (25 basis pt) rate increase from a near zero rate.

    should tell you alot about our economy.

    • ewtoriginal says:

      Yes. Stocks are cheap. Economy is horrible so we at the Fed must keep rates absurdly low for a long time punishing pension funds and insurance cos (Thank God they own equities!) by returning 3% at best vs 7% needed. Both sides of their dovish mouths. Will result in a bad environment as Main street pays very high rents from low Cap rates/high prices and while wages are crushed.

    • blackjak100 says:

      Economy is fine by consuming standards – debt is the problem limiting growth.

      • purplember says:

        BJ don’t agree. retail sales was up .3% when gas prices are so low. should help disposable spending. we’re adding debt to fix our debt problem…..sounds reasonable.

        • blackjak100 says:

          I’m in housing and see it with my own 2 eyes. However, go to urban Carmels Twitter feed which has all the stats (which are non recessionary) and then tell me If you disagree.

          • purplember says:

            bj i’m in commercial and residential RE. and ppl are buying / renting. however when i talk to those in retail, they said it’s dead and been dead for months (below last yr)

      • simpleiam says:

        Agree BJ; Debt is the biggest problem that’s holding down Growth.

  33. johnnymagicmoney says:

    the VIX got down to 15? crap!!

  34. johnnymagicmoney says:

    this could end down a percent today or up a percent or a bunch of nothing

    flip a coin

  35. tomasso60 says:

    banking index is not liking this.

  36. kingfrogcash says:

    Doug Kass says to fade the first move

    • johnnymagicmoney says:

      I have found its not the first move lately but the third move…………………..

      down, up then up,

      or up, down, up

      even though the FED is being dovish beyond what even markets thought thed be (because they are afraid of global risks) the market will read this as MOAR MOAR MOAR at least for the time being

  37. 123 abc says:

    Initial reaction appears to be an ongoing Major-b higher..

    —SPY(5): https://www.tradingview.com/x/ktnAXaWY/

  38. A clear truncation, with a clear economic reason : Fed changes to a more dovish stance.

    SPX - Five Minute - Mar-16 1405 PM (5 min)

    That’s the reason for the patience and flexibility.

    • ewtoriginal says:

      Ha. CHANGES to a MORE dovish stance? Its been a Dove Fest for years and accelerating. I think today they just assured a Trump presidency believe it or not

  39. phil1247 says:

    post triangle thrust targets should be hit quickly

  40. kvilia says:

    So what does it mean? Blow-off top?

    • NEWBIE says:

      it means many are praying for 2040-2080 but instead we may get a deadly c wave or 3 down starting shortly.

    • kvilia says:

      From the speculative point of view the statement was bullish, otherwise it’s pretty warning IMO. I would expect to see the start of wave C right here right now.

  41. Let me be the first or second to say…shocking.Cutting rate increases from 4 to 2.Watch the dollar.Didn t see this coming.

    • blackjak100 says:

      Should Already be priced in

    • ABchart says:

      The market already waiting for only 2 rate hikes this year. So, nothing new.

    • Dex T says:

      Didn’t expect them to announce anything today but the markets never expected them to go through with the 4 rate hike plan to begin with.

      Don’t know what to make of it long term. The Fed is continuing with the hikes but at a slower pace. I guess they are going to keep changing the “plan” down the road.

      • But to see them put 2 max hikes in print and further hikes in 2017 and 2018 less likely is relevant.

        • Dex T says:

          It is relevant for the moment but they put a lot in print that they change down the road. They’ve changed their thinking in the past 2 months so they can change it again in another 2 months- or even next month.

          I’m not really expecting anymore hikes in the next year – maybe 1, but it’s difficult to take their announcements seriously for more than a few weeks.

      • purplember says:

        dex it means economy isn’t strong and we’ll likely get no rate hikes in 2016

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