Friday update

SHORT TERM: gap up opening, DOW +35

Overnight the Asian markets gained 0.4%. Europe opened higher and gained 1.2%. US index futures were higher overnight, and the market gapped up to SPX 2053 at the open. The SPX had closed at 2042 on Thursday. At 10am Wholesale inventories were reported lower: -0.5% v +0.3%. Just after the report the SPX hit 2061 and then started to pullback. By 1:30 the SPX had nearly closed the opening gap when hitting 2046. Then after a bounce to SPX 2053 just past 2pm, the market did close the gap hitting 2042 around 3:30. After that the usual bounce into the close ended the week at SPX 2048.

For the day the SPX/DOW gained 0.25%, and the NDX/NAZ were mixed. Bonds lost 7 ticks, Crude rallied $2.25, Gold slipped $2, and the USD declined. Medium term support rises back to the 2043 and 2019 pivots, with resistance again at the 2070 and 2085 pivots. Today the WLEI was reported higher: 51.6% v 50.7%, and the Q1 GDPE was reported lower: +0.1% v +0.7%.

The market gapped up at the open today, hit SPX 2061, and then completely retraced the gap up opening to hit unchanged at 2042 in the last hour of trading. All this despite Crude rallying 6% today to nearly $40. From the SPX 2075 high, set a week ago, the market has been declining in a choppy pattern: 2043-2067-2034-2061-2042 so far. The market needs to take out the recent low and the 2019 pivot, or it may start creeping up again like it did after the SPX 2022 low. Best to your weekend!

MEDIUM TERM: uptrend weakening

LONG TERM: bear market


About tony caldaro

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85 Responses to Friday update

  1. johnnymagicmoney says:

    Oh and here’s another comical one…..

    So Greenspan induced one and Bernake another and both of them are on the private speech circuit making moola saying how we have big problems yet get them together and nothing is wrong and there is no bubble. Greenspan next week will probably warn of a crisis when he gets paid 100k to speak at a Subway luncheon

  2. johnnymagicmoney says:

    Here’s another doozy

    So record cancelled deals… after the baker Hughes and Pfizer cancellations how eager will companies be in the tail end of obamas presidency during an election year stride with confusion anger and fear to strike a deal or go public???? Ask yourself that

  3. johnnymagicmoney says:

    So only one year since 1956 that corporate profits have been this negative and we haven’t entered a recession and that was 1986 and we all know what happened in 1987

  4. torehund says: out for the bot. Good weekend to bulls, bears and the gorillas.

  5. johnnymagicmoney says:

    I know most play gold or oil or the indicies but what individual issues look good to the longs outside of defensive issues? You like The banks, health care, the big tech names, consumer discretionary, what?

    My point is what big growth or cyclical names look great to you chart wise?? It just seems when you scan the top 50 or so there’s a lot more charts that seem hard to buy here and if the individuals look hard to buy how comfortable can you be in the indexes?

    • purplember says:

      what about VRX valeant phar. due for a pop after a large drop

      • the downtrend line is at 42 and dropping by a dollar every day by end of next we will have the clash between downtrend line and the share price,,lets see if the stock can break its downtrend to start the new ride for sustainable period or heads down further till then trade between 30ish and 36 ish

  6. so hopefully this was abc correction for oil after completing wave 1 to 35 under 5 or E, EWs are so subjective leaving room open for interpretation for both bulls and bears

  7. blackjak100 says:

    Not much to add as I was stopped out just above breakeven and just above LOD. I still think 2034 marks int iv. The deep retrace during the day acted more like a ‘b wave’ suggesting int v could be starting out with some type of diagonal. A big drop still seems unlikely as NYMO is still in negative territory. A big drop rarely starts with NYMO is neg territory.

  8. learnedmylesson25 says:

    For amusement purposes only.2001 was before QE.Now we have everything and the kitchen sink keeping markets up.

  9. kvilia says:

    QE4 already happened – just look at the dollar. The sh will hit the fan when the dollar falls low enough to creating an inflation, Then higher interest rates will cause market do a kaboom. Considering market predicts 6 months ahead, here is a good time to start falling. Look at the bonds.

  10. fishonhook says:

    Agree with you 100%
    “The market needs to take out the recent low and the 2019 pivot, or it may start creeping up again like it did after the SPX 2022 low.”

    – the market needs to go down or it is at risk of going up 🙂

  11. EL MATADOR says:

    Big airlines are making waves in the oil market for the first time since prices went into a tailspin nearly two years ago, betting this may be their best chance to lock in cheap jet fuel for years to come, industry and market sources say.

  12. rd3777 says:

    This downward sloping rectangle has shown up @ the last 2 tops with a thrust down out of them. Smacks of distribution and great weakness. I find that pretty amazing that these fractals appear.@ each turn.

    • mrtraderguy says:

      RD, your stubbornness ever since the bottom was put in has been amazing – but I’m amazed you have any money left. You might as well hang in there now, it’s got to come down some time. Not sure when. Hope it works.

      By the way, you may want to put a bit longer perspective in your charts. A few hours can be very difficult to gauge day to day moves.

      Also, a small tip – when you find yourself consistently on the wrong side of a trade, just for kicks, do the opposite of what your brain is telling you to do. May work wonders.

      Best of luck to you.

      • captbara says:

        I doubt he trades off any of his charts.

      • rd3777 says:

        Well if you bulls think this chart won’t crash….oh well…there are fools born everyday.
        respectfully R.D.

        • rd3777 says:

          Like I say…in the land of the blind the one eyed man is king….you daytraders kill me!

          • rd3777 says:

            Anyway this is my last post here….no matter I like Tony….he see’s what I see,a extremely extended market that get’s weaker by the day. The Dow has made a ending diagonal triangle it is a terminal pattern and @ this juncture after a thrust up signals this market is exhausted. The last few days are just 1,2’s and the market will “break”,it just happens . Anyway this blog is refreshing because it’s civil. Thank’s

    • wow this is not good you can also read this as A making the first low, now E is underway which it finishes it can make a upward thrust for 5th…

  13. tony caldaro says:

    for bulls and bears

  14. Tony, can you tell me why the SPX 2043 pivot seems so important?

  15. Arthur Knopf says:

    Huge drop in $SKEW today, -10%, to 113.8. Matches low of early Oct 2015 right before SPX 240 pt ramp. Helicopter money anyone. Maybe FED is going to announce QESPX to start buying stock futures like Japan.

    • Isn’t that something they would do at SPX 1600 ish? Why at this SPX level?

    • valunvstr says:

      Looks like Skew drops like that happen at tops and bottoms. Not sure a lot to draw from it.

    • Hi Arthur ….

      I am curious about the Skew. There were four dumps and recoveries with spikes in teh past two years, and two of these roughly coincided with Skew down-spikes. So it looks like a 50-50 shot. But looking deeper, I have questions.

      $Skew gives a measure of tail risk (i.e., spx dumps in the order of two to three std. devs. from the current mean — so look at BB bands, for example, and triple the widths to get an idea of tail-risk drops).

      I need to understand more about how they actually do the tail-risk calculation. For now, the way I interpret this is: far out of the money Puts have dropped in value by a whole lot.
      It is unclear to me if the model they use to compute option costs (some variant of Black-Scholes) has generated greatly reduced prices for these Puts (and if so HOW? How can a model know **from one day to the next** when so little changes with input parameters?) OR if Put prices dropped simply because Biff and JimJoeBob just dumped a whole lot of cheap Puts for whatever reason. I have a chicken and egg problem here.

      Computing tail risk on a daily basis has to be equivalent to the problem of computing the
      conditional probability of a black-swan event on Friday given that no black-swan event occurred on Thursday. WHO has a model for this?


  16. mike7x says:

    Thanks Tony! Play ball…

  17. Does anyone have any idea what this could mean? From the FED’s website. Thanks in advance.

    Government in the Sunshine Meeting Notice

    Advanced Notice of a Meeting under Expedited Procedures

    It is anticipated that the closed meeting of the Board of Governors of the Federal Reserve System at 11:30 AM on Monday, April 11, 2016, will be held under expedited procedures, as set forth in section 26lb.7 of the Board’s Rules Regarding Public Observation of Meetings, at the Board’s offices at 20th Street and C Streets, N.W., Washington, D.C. The following items of official Board business are tentatively scheduled to be considered at that meeting.

    Meeting Date: Monday, April 11, 2016

    Matter(s) Considered
    1. Review and determination by the Board of Governors of the advance and discount rates to be charged by the Federal Reserve Banks.
    A final announcement of matters considered under expedited procedures will be available in the Board’s Freedom of Information and Public Affairs Offices and on the Board’s Web site following the closed meeting.

    For more information please contact: Michelle Smith, Director, or Dave Skidmore, Assistant to the Board, Office of Board Members at 202-452-2955.

    Supplementary Information: You may contact the Board’s Web site at for an electronic announcement about applications and other expedited items, as well as procedural and other information about the meeting.

    Dated: April 7, 2016

  18. captbara says:

    Long crude, gold, short SPY

  19. kvilia says:

    Thank you Tony. Another good sleep weekend as it is impossible to pick a position. Have a great barbeque dinner if the weather cooperates. It’s been abysmal in the Big Apple this week.

  20. So, here’s the ES 4-hr futures at the settle. The waves made in the last 24-hours neither made new internal highs, nor new internal lows. Sounds like a & b waves to me (in the futures). Cash ‘may’ be in i-ii, up of wave 5. The futures and cash may be in slightly different counts because the futures contains the after hours – which cash does not. If this is a triangle (yet to be proved), then the final thrust out of the triangle might be v of 5 on cash.

    Remember, in a “running triangle” wave (e) ‘must’ come back and cross over the wave labeled as iii or 3, in order to be corrective to it. That is essential. Without it, it is a different pattern operating.

    The 0.764 downward retracement in a symmetrical “running” triangle for wave (c) ‘can’ be matched by a 0.764 retracement for wave (d). If such a (d) wave can not be made, it would be a warning sign for the bullish pattern.

    However, in favor of the triangle count futures again, ‘upwardly’ overlapped. The first four-hour bar down of b today (let’s call it -a of b) was overlapped upward at the cash close. This continued level of overlaps is characteristic of a triangle. If a (d) wave is successfully made, the further upward overlaps would better confirm a triangle.

    The ‘short term alternate’ is more bullish – not a triangle – but a running flat in the futures (counting as w-x-y to this point), but today’s overlaps tend to make that the ‘alternate’ only. That is, today would likely have been much stronger if a running flat had occurred.


    Only if the low of wave (c) of the triangle is violated would a downward count likely be started. I will address the opposite downward count, and show why it is less favored this weekend on my blog.

    Cheers! And enjoy the chart.

  21. 123 abc says:

    The decline is starting to look a bit corrective and choppy. Below is a forced impulsive count in attempt to track the early stages of Major-c wave to the downside —the market needs to take out 2034 to the downside in order to keep the count valid.

    A gap down on Monday and continued selling early next week would create a enough headroom for the upward Beige Book spike on April 13th, which needs to be contained below 2061.

    A move over 2061 would imply Major-b is still ongoing and subdividing yet further. Currently short with stop-loss moved to 2061.


    Thank you Tony et al, look forward to the OEWcc (coffee-club) thoughts this weekend —P.S. the charts are looking bare, perhaps some tentative Minor and Minute labelling ought to decorate the place.

  22. rd3777 says:

    Yep I agree Tony,
    This keeps looking like a top with crude adding a churning or distribution time to the process. The only market with any clarity @ all is the JPN225…very bearish. All have a great weekend!

  23. learnedmylesson25 says:

    Mr C…where is WLEI measuring gains?Is there are weighting on certain countries?

  24. Thank you Tony,
    The fact as Tony mentions that the downchardslope has been choppy makes me think we may see a further uptrend probably next week. As was mentioned before, long term it is definitely bearish and short is the place to be however, this correction will take time.

  25. vivelaamo says:

    Thanks Tony and Page. Have a good weekend.

  26. Page says:

    Thanks Tony. Have nice weekend.

  27. fotis2 says:

    Thanks Tony must say its been a tiring Market so far this year..

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