Friday update

SHORT TERM: gap down opening reversed again, DOW +108

Overnight the Asian markets lost 1.7%. Europe opened lower and lost 1.2%. US index futures were lower overnight. At 8:30 monthly Payrolls were reported lower: 215K v 242K, and Unemployment was reported higher: 5.0% v 4.9%. The market gapped down at the open to SPX 2050, dropped to 2044, and then drifted higher ahead of the 10am reports. At 10am Construction spending was reported lower: -0.5% v +1.5%, Consumer sentiment was reported higher: 91.0 v 90.0, and ISM manufacturing was reported higher: 51.8 v 49.5. After the ISM report the market started to rally. At 11:30 the market had closed the opening gap and hit SPX 2065. Then after a pullback to SPX 2059 by 12:30 the market moved even higher. Heading into the last hour of trading the SPX hit 2075 then pulled back to close at 2073.

For the day the SPX/DOW gained 0.60%, and the NDX/NAZ gained 1.00%. Bonds ended flat, Crude dropped $1.65, Gold lost $7, and the USD was lower. Medium term support is at the 2070 and 2043 pivots, with resistance at the 2085 and 2135 pivots. Today the WLEI was reported higher: 50.7 v 49.3, and the GDPN was reported lower: +0.7% v +1.4%.

The market gapped down at the open, dropped to support at the 2043 pivot, then started to rally after the ISM report. In the last hour of trading the SPX hit a new uptrend high at 2075. This has been one relentless rally since the Intermediate wave B low at SPX 1891. Some say it is currency related, others the US is the only place to be invested, still others it is being driven by secondary indices, and some the bull market has resumed. Whatever the reason, markets worldwide have been down the last couple of days, and all the US has done is go sideways then move higher. Will try to make some sense of this in the weekend update. Short term support is at the 2070 and 2043 pivots, with resistance at the 2085 and 2104 pivots. Short term momentum rose from quite oversold this morning to overbought this afternoon. Best to your weekend!

MEDIUM TERM: uptrend

LONG TERM: bear market


About tony caldaro

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87 Responses to Friday update

  1. torehund says:

    Thanks for the general guidelines Tony.
    I aired yesterday the possibility that the bottom we lifted off of could be the P-2, which implies we are now entering P-3. Its the most bullish count out there of any EW count and implies the monthly MACD is about to hock up in a major way. As we can see from the Monthly SPX the long upward drift on the 60 min has managed to flat out the MACD lines, and a hocking up could be next.
    In this case we could be entering the strongest bull phase ever experienced in Stocks, at the expense of strength in currencies. If so, will the indices front run the decline in Ex US currencies ?

  2. vivelaamo says:

    Serious question to all? Is there any scenario from here they could not have a label applied to it? I.e. That it’s just impossible to apply any sort of label based on EW rules. Or is that impossible? I do find EW fascinating at times, especially the way rd creates his charts. I’m just interested to know if it can ever be wrong to the point it can’t exist as an EW model?

    • Thanks, Tony!
      It almost seems as though your question is asking if EW (it?) “can be wrong to the point it can’t exist as an EW model?” (some obscurity as to what “it” is). Just keep in mind that there have been numerous occurrences of extensions, irregular extensions, and complex irregular extensions and occasional truncations.

    • Yes. There are two problems with most casual or beginning wave analysts. The first is they lack the proper measuring tools to measure Fibonacci extensions, and second is, if they have the tools, they ignore them. When many of the people below post their charts, they are almost completely unsupportable by the facts. Whereas .. have a look at this DOW chart, below. Doesn’t wave Primary 3 (circle 3) have the usual 1.618 extension expected from the point labeled? Doesn’t wave Primary 4 have exactly the 38.2% retracement expected?

      DOWI - Two Week - Apr-02 0757 AM (2 week)

      Many people don’t like to deal ‘measurements’, not even to hang as much as a picture on the wall to get it centered, but that is exactly what can be objective about Elliott Wave.

      Next, look at the undeniable non-overlapping five-wave down sequence for (C) of Primary 2 (circle 2). That should tell one something. It is a “C” wave. Next, look at the fact that the “running flat” correction is a structure which ‘predicts’ great strength to follow. Isn’t that what happened? A huge run up in the form of a 1.618 Fibonacci extension.

      Based in this chart in May, 2015, I was able to predict the top to the day, and I was able to make another prediction as well. I said that because the B wave of Primary 2 was a higher B wave, that the waves that occurred would ‘not’ make a higher wave until wave 4 (circle 4) was completed. These are two ‘predictions’ that have come true. This is not ‘the Elliott Wave in retrospect’ as glibly try to put it.

      Now that wave 4 is completed – as either a double zigzag to provide alternation with the running flat for 2, a wave 5 ‘should’ equal a wave 1, unless it truncates. That is the next prediction. But, the upward wave ‘already’ has enough length to call it wave 5. It is beyond the 78.6% retrace level.

      • vivelaamo says:

        Interesting. Thanks for your response. So I take you are expecting a all time highs. But let’s just say starting next week we plummeted to form a new low for the year. Would you then be able to re-label the chart quite easily?

        • Hi, Welcome. No. Because primary 5 is already high enough. It would simply be the truncated primary 5th wave. The issue that people want to ignore is that “we did have the 38.2% retracement of the 3rd wave”. We ‘did’ have it. Look at the chart (other people/chartists) and see it. Elliott theory whether you use Elliott’s, Prechter’s or Neely’s version allows for truncations when the fifth wave is beyond a certain level. We are now beyond that level.

          Also, the “..just say we plummet next week” is purely hypothetical. Purely. The market is currently making new daily higher highs. There is no case for a new bear yet until there are lower daily lower lows, and certain levels are exceeded lower. Those haven’t happened yet. Further, we don’t have a) a Doji candle at the top, nor b) an outside reversal day down to indicate a top.

          I urge people to put “the whole picture” together, and not just a few aspects of it, or worse not challenge their ‘pre-conceived’ notions about how their version of Elliott Wave is somehow better. It seems to be working ‘just fine’ on the venerable Dow.

          • vivelaamo says:

            But why do you think wave 5 will be truncated? If wave 5 = 1 then doesn’t It have a lot higher to go?

            • I don’t think it ‘will’ truncate. My answer was in reply to your hypothetical. Wave 5 ‘should’ grow to equal wave 1. That is what is ‘typical’, or ‘most common’ in an Elliott Wave. The issue is, unlike some other counts, I have us at the end of SuperCycle 3 with this Primary 5th wave up. So, a truncation after such a long wave rise (from 1932) is not necessarily unexpected. But, the issue is clearly not even relevant until lower daily lows begin to get made or a wave 4 breaks down and overlaps.

              Fibonacci numbers 55 + 34 = 89, 89 + 1932 (year) = 2021 (next bottom year)
              Year 2009 + 8 (Fibonacci number) = 2017 (most likely top)

              • vivelaamo says:

                Oh I see it was in answer to the last question. Thanks for your posts today. Very insightful and interesting you’re view different quite substantially on Tony’s regarding where we are currently are. Interesting few months coming up.

          • spindoc73 says:

            Is the assumption that Wave 4 has already completed mainly a function of the potential encroachment of the lower channel boundary that would be inherent to more corrective activity?

            • That, and more! Too much more corrective activity for wave 4 would take it out of the range of ‘the prior fourth wave of one lower degree’. That would be the fourth wave low in Oct, 2014.

  3. rd3777 says:

    #Stocks #Dow The longest Bull Market in U.S. History has come to a End The Bernanke Fed 3 Wave Paradigm has Ended!

    • rd3777 says:

      It is finished….3 generations….

      • kvilia says:

        Finest scotch from me if you dont have to redo the top of C.

        • rd3777 says:

          Sounds good to me. Lagavulin if you please. (C) of [Z} is 11 waves into the top,with a extension xa,xb,xc,xd.xe should be it. I count Bernanke’s wave as W,X,Y,X,Z a huge triple zig-zag distorted by Fed policy with QE…a epic bubble. Thanks R.D.

        • fionamargaret says:

          You know how we used to rotate sectors, maybe in a global world we start to rotate countries – thus when the US seems overpriced, we switch to China(EEM), then to Europe, etc.etc.
          I know there is a lot of money wanting to go in the US – discussed at European meetings yesterday – safe haven from the increasingly difficult situations in Europe and elsewhere.
          Maybe all markets will become overpriced(?) and an alternative to buying property.
          Our own form of helicopter money if you will. x

    • vivelaamo says:

      You’re charts look good (although I don’t understand why X and Z’s are in play). My question is, why does it have to end here?

  4. Tony Jordan says:

    I think yield is a little mentioned factor in the performance of US stocks. With interest rates as low as they are, stocks can look attractive from a dividend or relative cash flow perspective. This pro-stock attribute will automatically push PEs higher making them look bubblish on a nominally historic basis but not necessarily on a relative one. Why are US stocks outperforming the rest? I’d expect the US to outperform in many areas. Looking at other economies and markets, such as Europe and Japan, we can see that the US is the least ugliest of these 3 major regions as far as investors are concerned … almost a win by default. Furthermore the US has the deepest markets (i.e. liquidity) and that’s another plus for “big money” when things look dicey and uncertain.

    Turning to gold the standout feature of the recent weakness in the metal price is that the gold miners are not really following the metal down. According to Stockcharts gold closed the week $64 down from its $1287 high from 3 weeks ago. XAU, HUI, GDX, GDXJ & GLDX closed the week only giving back 11.5%, 10.2%, 14.4%, 9.7% & 16.6% of the enormous rally they’ve put in since January 19. Another apparent anomaly … silver was down 2.6% yesterday yet SIL closed positive and finished on the high of the day.

    Here’s an hourly chart of the HUI. Ready to bust up and out?

    Here’s the gold weekly. Successful back test of a breakout?

    • Therefore the key is for the Fed to keep bond yields down.How is this being accomplished?Negative rates,QE in Europe influencing our rates lower.A falling 10 year bond is not a sign of recession then–but of Central Bank actions.Only a rising 10 year would cause the end of the bull?(Just asking)But we ve also seen yields fall in stock market selloffs.How can we explain a day like Friday that had decent job growth and a good ISM number but the 10 year drops to 1.76% yield?If yields don t rise on data like that,when will they?Does the Fed and world Central Banks have that much of a vice grip on rates?Finally if lower rates are a cushion for stocks,why did we have 3 selloffs in the last 8 months of over 10%?Any theories?

  5. torehund says:

    things may turn magic, the surrealistic P-2 bottom may come through🙂

    • Jim Guthery says:

      Not that this article is going to change the counts at all – earnings will probably will bring in new highs of Finoa’s 2185

    • K-Tastic says:

      Yes, earnings will be fun to watch. FANG, Security, SaaS and Data Center related companies all have expectations to meet/beat and raise.

    • ewmarkets says:

      “The last time earnings fell for such a long stretch was the period between the fourth quarter of 2008 and the third quarter of 2009, right after the financial crisis.”

      The above statement is interesting. SPX bottomed before the first quarter of 2009 ended. Earnings kept going down until 4th Quarter of 2009. So basically, the stock market was 9 months ahead of the earnings trend. Negative growth in earnings for the next quarter is already discounted in the current stock prices. I think the market sees positive earnings growth 2-3 quarters down the road.

  6. I made a sarcastic comment about Yellen calling Draghi to bust a trendline on rds chart.Tonight I read on zerohedge that at the double bottom,Yellen DID call Draghi (supposedly about Deutschebank and other minor problems)after which the markets have torn off and 250 S&P points later here we are.I was slightly stunned,but not surprised.Not far behind a persons imagination lies some reality.Of course they don t release those phone records until now.Have a good two days off all.

  7. Igor says:

    Link I posted on Thursday update under fishonhook post ‘All short term bear counts gone’ is not working, so I try again:

  8. rd3777 says:

    The [Z] wave advance the the most powerful rally since 1933 (NYMO) seems a fitting end to the greatest mania bull market in history. Wave [Z] looks complete as of today with 7 waves in C to complete this rally.

  9. Thanks Tony
    Nikkei down OK!!!
    Eurusd up OK!
    Oil down, VERY WEIRD!,didn’t hold $38 support
    H&S Eurusd target 0,8
    Diamond target,if confirmed,1,25(pullback to NL)

  10. captbara says:

    Nikkei needs to join in the party. Looking at JPNL, it may have completed a leading diagonal from Feb and the sharp drop being W2.

    • K-Tastic says:

      El Matador, no worries, Central Bankers will continue to engineer economic growth through ZIRP, NIRP, LTRO, QE, TARP, BURP, FART.

      Earnings don’t matter, especially financials and energy, so just “ex” them out. Oh, and this is the best one. Looking at companies on a constant currency basis when the $ is strong. But when it was weak all through Bush’s term, very seldom did I hear anyone talking constant currency because earnings were great. Now, CC is all I hear about. “Yeah we missed, but on a CC basis we didn’t miss as bad.”

    • I wonder what that would look like ex energy?

  11. steplaland says:

    Happy Final 4. Bears took Q3, Bulls rebounded inQ4, Bears stormed out of half with big lead but Bulls tied it up at end of Q1. Bulls have momo and slight lead in final Q but they are tired from exerting a lot of energy playing catch up. Going to be quite a quarter.

  12. rd3777 says:

    Thanks Tony, The market made the 7th wave up in the C today so that it fufilled all the wave structure for a top. The market drove to a top Wednesday,Thursday and today making a triple top for the final advance in this supercycle bull market.
    This all took place as crude begin a 3rd wave down,the Nikkei also started a 3 of 3 down,and the DAX started a wave 3 down. The U.S. has some catching up to do and this rapid manic advance is fertile ground for a quick decline.

    Here is a chart of Mcdonalds today on a 5 minute chart. It shows a perfect 5 wave extension into a top followed by 3 mountain tops. We shall know Monday if we have made a top. Have a good weekend.

  13. stmro says:

    Today’s SPX rally diverged from:

    – Breadth
    – Money Flow
    – RSI / MACD momentum indicators
    – Every major non-US index in the world

    In short, i don’t trust it. Whether it’s a B wave of a bear market or wave 1 of a new bull market, it’s nearing completion.

  14. simpleiam says:

    Thanks Tony!

    I actually just saw something on Fast Money I agree with. Steve Grasso had a really good review of the overall chart (SPX), and “the wall” that awaits at ~ 2100. Doesn’t mean it can’t rally, just a look ahead. When the link becomes available, I will post it.

  15. ABchart says:

    New auction at the close. Bullish to 2082 (SPX 2090/92)
    We may have an ending diagonal, target 1950/60.
    Chart tomorrow.

  16. steplaland says:

    My Last Stand…. next week

    • Forget it. You got it once, you got it twice, The third is the dangerous one and it will blow.
      None has waited the last candle to get out. Opposite.

    • Yellen says “Is that little old trendline all you got?.Why we ll bust through that with one call to Draghi”.
      That s on the next episode of Janet Yellen-Bear Slayer.

  17. mjtplayer says:

    No doubt Tony, this rally has been absolutely relentless, today might have been the biggest surprise of all. Massive daily reversal in the US indices, likewise in the VIX in the opposite direction. I just don’t know what to say at this point…

  18. torehund says:

    Just stopped at a local night open gas station to catch on to the general public consensus. Taxi drivers, cops, the gas station worker; all part of the real world giving me valuable input concerning how the economic climate is evolving, devoid of all the propaganda that is constantly spewed from the media.
    Stories of extreme stagnation popped up, a taxi driver making 1,5 USD an hour on a 6 hour shift…Police reported of empty streets, and unusual silence even around easter time (which is normally prime time for burglaries).
    The gas station worker reported ever shrinking customer base, not only is fuel consumption shrinking, groceries, sausages e.t.c have lesser and lesser buyers. Night time shopping for double price groceries is going extinct…
    Thanks to all of you in here, and especially Tony for his relentless efforts.

  19. canadianloonie says:

    Market Analyst….top top top..sure .sure ..sure…wonder whats next…there are not many good analysts out there…kinda sad…

  20. Tom Mathis says:

    Hard to understand Martin Armstrong’s “Sling Shot” concept, but are we in that now that will take this market DOW to 23,000 if not higher and completely negate any EW counts?

    • torehund says:

      If I understand him right : Martin is in the belief that Government will collapse before the market does so..that implies that investors fleeing the currencies will hike markets drifting to the lesser of two evils.

  21. One final thought, the market is smarter than all of us and about 9 months ahead. Perhaps the weaker US Dollar is enough for the SP 500 type stocks to have tail winds in the 2nd half of 2016 relative to 2nd half 2015 in terms of earnings, and market is pricing this in well in advance.

    That and the fact that the bank pays no interest, negative interest rates are bullish for Stocks and Gold, and nobody wants to buy a 10 year or 30 year bond at these rates. The PE ratios must climb and expand or at least stay high… so if earnings recover in the 2nd half of 2016 then the market is simply marking up ahead of that

    That and technology continues to make corporations lean and mean

  22. 123 abc says:

    It appears a final Micro wave higher is now in progress to complete Major-b wave. In the futures, the final set of five Micro waves is forming an expanding triangle formation…


    Expecting the final Micro wave higher to be contained within the 2085 pivot zone…


    @2080.1: Minute-i * 1.382
    @2082.8: Intermediate-c = Intermediate-a * 1.382
    @2085.1: Minor-1 * 2
    @2087.0: Minute-v = Minute-iii * 1.236
    @2087.2: Micro-1 * 2
    @2087.6: Minor-5 = Minor-3 * 1.382

    Thank you Tony et al, look forward to the OEWcc (coffee-club) thoughts this weekend.

  23. Gold down but GDX has an extremely bullish reversal day (i hope),going from 18.50 in the a.m. to 20.10–the high of the day-at the close..Don t tell me gold stocks and S&P are on the same wave length now.I ll take it.Have a good weekend all.

  24. mike7x says:

    Thanks Tony! History in the making… April fools… And the cherry blossoms are still on the trees…

  25. Lee X says:

    Thanks Tony

  26. The close over 2064 for us confirms Primary 5 to 2200 plus is underway. A clear 5 waves up from 1810 still…. the key being we never shorted the uptrend because it kept climbing the 13 day EMA Line , and still is.

    At some point an ABC correction unfolds, but the confirm on that is likely a piercing of the 13 day EMA… currently around 2042

  27. vivelaamo says:

    US markets are still BTFD. Can’t see enough justification to stay short for now. May as well wait until we top out properly and trade Europe in the mean time.

  28. pfm225 says:

    its not over until….its not over………thx tony

  29. M1 says:

    Thanks Tony.!!

  30. allen1929 says:

    Thanks Tony

  31. i wonder when you change bear to bull ?

    • believe OEM confirmed a bear at 1852, and probably will confirm a bull at 2135… just how it is… Elliott Waves tend to tell you what just happened, but not specifically what will happen. I love Elliott Waves myself, but obviously when your in a wave pattern you cant be 100% sure what it is until it terminates…. so this now 5 wave up from 1810 we could not be sure about until we saw the clear 5 waves…

      it is what it is

      Again, the key is whether you got wrecked because you shorted the market on the way up instead of watching basic stuff like 13 day EMA etc… that would have kept you out of trouble. Many E wavers front run with a short and get killed.

      Once 2064 was taken out on a closing basis it simply indicates the most probable course is Primary 5 from 1810

      Question now is when does Major 1 end?

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