Thursday update

SHORT TERM: gap up opening then roller coaster, DOW +9

Overnight the Asian markets gained 0.1%. Europe opened lower, rallied, then lost 0.9%. US index futures were higher overnight. At 8:30 weekly Jobless claims were reported higher: 294K v 274K, and Export (+0.5% v +0.3%)/Import (+0.1% v -0.1%) prices were reported higher. The market gapped up at the open to SPX 2072, hit 2074, and then started to pullback. The SPX had closed at 2064 yesterday. Around noon the market had dropped to SPX 2053, and then started to rally. The rally lasted until 3pm when the SPX hot 2071. Then the market pulled back into the close to end nearly unchanged on the day.

For the day the SPX/DOW were mixed, and the NDX/NAZ lost 0.45%. Bonds lost 9 ticks, Crude rose 25 cents, Gold fell $10, and the USD was higher. Medium term support remains at the 2043 and 2019 pivots, with resistance at the 2070 and 2085 pivots. Tomorrow: the PPI and Retail sales at 8:30, then Consumer sentiment and Business inventories at 10am.

The market gapped up at the open for the second time this week. But unlike Tuesday the market closed the gap about one hour after the open and then headed lower. After hitting SPX 2053 the market reversed course again, and attempted to rally back to the highs of the day. We noted yesterday. The market could drop below SPX 2064 and then rally back to 2085. That drop happened today and that rally is still possible. We also noted. SPX 2085 could have ended wave ii/b and wave iii/c lower could now be underway as well. Take your pick. Either way we can now see two waves down from Tuesday’s SPX 2085 high: 2053-2071 so far. Short term support is at the 2043 and 2019 pivots, with resistance at the 2070 and 2085 pivots. Short term momentum hit quite oversold this morning and then bounced to neutral. Trade what is in front of you!

MEDIUM TERM: downtrend probable

LONG TERM: bear market


About tony caldaro

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294 Responses to Thursday update

  1. stan502 says:

    SPX low range close suggests lower to me, although clearly 2040 is holding for now:
    4/29 SPX mthly 2056/2111/2033/2065 Inner markers: 2111 and 2033

    5/6 SPX wkly 2067/2083/2039/2057 GL 1293/1306/1270/1290 SL 17.92/18.06/17.22/17.50

    5/13 SPX wkly 2057/2084/2043/2046 GL 1279/1279/1258/1275 SL 17.43/17.43/16.92/17.13

    congrats to AAHM on his son’s forthcoming graduation and his saving on tuition; best to all

  2. Facebook is one tough nut to crack.

    • mjtplayer says:

      FB & AMZN will be the last to fall, you could probably throw XOM in that category too. Use these stocks as a gauge of capitulation, once you see these stocks tanking 3% or 4% on back-to-back days that will be a sign traders are selling cause they have to, not cause they want to.

      • fionamargaret says:

        GOOG and GOOGL are the best in the group to short…to 610 approx., according to the patterns – FB is just overpriced, and AMZN has a bit more upside….’tho I haven’t checked its pattern since yesterday…..xx

  3. kvilia says:

    I just have one question for the bulls: Are you freaking blind?

    • simpleiam says:

      50dma looking precarious. GL All!

    • fotis2 says:

      I think a close in 2030 would get the ball rolling downhill dont know if many held short from the highs the only ones I recollect is aahmike and Mat

    • Holly Silver says:

      Just as easily be a bear correction has already taken place. Head and shoulders, domed top, etc… more often than not morph into yet another pattern. the origami model that keeps folding into something else. Anyone remember the double top in late 2007? The drop certainly looked like there would be no more new highs for decades yet what happened? Anyone saw THAT ONE? Short term memories?

      All I know this would be the first time in history (that I know of) that sees another deep bear drop just when we have full employment, discretionary income very healthy levels, zero rates, low inflation, low commodity costs, and signs that the consumer is accelerating their spending.

      I would combine the chart pattern and the fundamentals and conclude we are about to launch yet again into uncharted territory. No credit problems that I see that can cause the next debacle. A “false” break down is certainly possible. I will continue to look for consumer growth as the market drops. Not any bear has even conceded the extraordinary improvements the consumer is in after the 7 year mark. I was ridiculed when I suggested 6 years ago that we would enter one of the longest and strongest bull run and that corporate productivity and low costs will propel them higher. No one that I corresponded with on any board saw that possibility. Funny part about it is that these same people forgot their dire assumptions and mistake and continues today with the same rhetoric.

      When will the current drop find a bottom? Wish I knew. Odds favor however the huge stimulus and easing has finally created a situation where inflation will take hold for the first time in 7 years.

  4. fotis2 says:

    You can hear a pin drop in the Bullish quarter silence is golden..

  5. Yuk .. cash has now gotten down to the 90% retrace level. Futures are not (yet). But that widens the range of possibilities for B to a flat wave also, not just a potential triangle. It also opens up the possibility of C being an impulse down (but this seems less likely given the short amount of time in B).

    Messy .. messy …

    SPX - Half Hour - May-13 1453 PM (30 min)


    • aahmichael says:

      If you say that A went from 4/20 to 4/29, and B went from 4/29 to 5/10, then both A and B were 8 days. The whole damn still is still very messy, though.

      • I’m not crazy about that 4/20 – 4/29 count because it leaves out the diagonal, which is predictive of the next leg down. But .. but .. but .. there is nothing wrong with a “barrier” triangle that breaks to the down side too. We’ll have to let the market inform from here.

        • aahmichael says:

          In choppy action there are countless ways to group the waves. You can even count from 4/20 to today’s low as a wxyxz. As I’ve said before, this action is very much like what happened after the 5/20 and 11/3 highs last year.

    • I see the DOW cash has broken the prior low. That’s not fatal for a triangle count for the S&P 500, because the DOW ‘could’ be in a “running triangle”, but it does lessen the odds because that now becomes the only triangle pattern on the DOW that can complete properly (..the “running triangle”). But the DOW is “less than” a 1.382 x the three waves up. So, a ‘flat’ is still a possibility, but that bucks the momentum. Impulse C lower still possible, too.

      DOWI - Intraday - May-13 1526 PM (30 min)


  6. Holly Silver says:

    MFI money flow indicators. It looks down right wrong. Anyone follow this momentum indicator?
    It is moving higher as the market is sliding? A rather dramatic difference. When this occurred it signaled a big up move was imminent. I personally don’t see it happening just yet. Is there technicians that follow this indicator?

    • Holly Silver says:

      I believe I misread the chart. Wishful thinking perhaps?

      • Holly Silver says:

        places SPX 208 call option expiring next week. Might add to it by close. looks like a nie rebound next 2 days regardless of longer term trend.

    • Igor says:

      As with every indicator it’s paramount to know how it is constructed. Since the MFI is an oscillator its settings should reflect your preferred time frame (default settings can be misguiding). Yes, as every indicator it doesn’t work as expected in certain trading conditions. I think I will include the MFI in one of my charts just to show what I look for.

  7. phil1247 says:

    sold spxu 20.24

    /ES target hit at 2038.6

  8. stmro says:

    OK bears won the brawl. Internals (TRIN, breadth) and volume are confirming the down move. If we close in bottom 25% of today’s range, odds are VERY good for follow through on Monday, despite OPEX.

    • EL MATADOR says:

      AMZN and FB better not collapse next week then….. but from the look of the daily candles selling is favored …. just my game token

  9. johnnymagicmoney says:

    The Deadly Barbell

    Just a little food for thought. You have these two huge consumer bases with Boomers and Millennialls. The boomers are downsizing and the millennialls are disinterested in starting families and buying homes and want to put that off. All of this great big ticket purchasing going by the wayside. Its why such a large percentage of new homes are condos and apartments which they count as units in the new home sales. Older people downsize and buy the townhomes and younger people rent the same types of units. Its a demographic barbell that doesn’t help the economy until the female millennial decide to pull the goalie and put a bun in the oven.

  10. kvilia says:

    Pretty awkwardly stopped out yesterday, repurchased UVXY earlier today at $13.59 and holding over the weekend. Good luck to me and all.

  11. 123 abc says:

    Another pattern that rarely seems to be working these days; Head & Shoulders on the DOW futures…

  12. H D says:

    Tony, great week for your pivots, they handed us 2085 and 2070.

    The EW, some count will emerge, eventually. DJI already below 5/6 lows, leading?

    Maybe a bounce from 2043P to keep the bulls in the game 👿

    Have a great weekend all

  13. Wave (iii) of c is now clearly longer than wave (i). Let’s see if it makes it to the 1.618 x (i) extension. Within the potential larger ES 4-hour triangle, the down leg has now hit 78.6% of the up leg. But there is nothing ‘magic’ about that level. Some 85+% retraces can happen in triangles.

    SPX - Five Minute - May-13 1426 PM (5 min)


  14. vivelaamo says:

    Gotta short oil here surely!?

  15. vivelaamo says:

    So far my all in s&p short looking good. Had to take some profit with it constantly bouncing. Watch it plummet now!

  16. simpleiam says:

    If we don’t get a bit of a bounce in the last hour today, it’s possible we see one Monday. Can’t be sure how strong it might be though.

  17. 123 abc says:

    Awfully choppy today, difficult to make sense of what is going on, speculative squiggles…

  18. stan502 says:

    Going thru my charts this morning, here are two that stand out. Credit risk seems to be missing and bonds continue to be bid

  19. stmro says:

    There’s a serious brawl going on here. It’s excruciating.

    • ewtoriginal says:

      Smart money knows upside limited. Dumb (but riskless and OPM Central Bank ) money is desperate to keep it alive so it cant tank. Good thing consumers are confident. Boy are those polls fraudulent.

    • simpleiam says:

      Which brawl? We have so many…

  20. Market continues somewhat whippy this morning. This seems to indicate the triangle is continuing. Overnight the futures took out the low of the prior minute b wave (circle b on yesterday’s ES 4-hr chart), and then promptly rallied on the morning news reports. This all still fits within the continued count of minute a, minute b and minute c, lower, of a continued triangle count on the downward leg. And here is what the SP500 5-min cash looks like in that context. There have been no changes.

    SPX - Five Minute - May-13 1151 AM (5 min)


    • purplember says:

      thanks TJ. do you have a 15min or 60 min chart for bigger picture view ?

      • Here is the ES 4-hr chart for the larger view. Since we made five-waves up to 5, I expect this is only a correction lower, and the small point losses to this time seem to bear that out.

        If we are in the B wave triangle, then we have made a,b,c up; and are now making a,b,c down. Note that the b fractal up to B has already been taken out lower (in the overnight). In the down leg, we have made a & b, so far, and are working on the c leg down. A retrace of 78.6% or slightly more is certainly possible. The five-minute cash chart shows this a,b,c lower.

        ESM16 - Four-Hour - May-13 1210 PM (4 hour)


    • ..there’s a new SP500 5-min cash low of day (LOD) .. confirming the onset of wave (iii) of c

    • alexhartley1 says:

      Is the c wave bottom on your chart TJ a more significant bottom or after a rally are you expecting further downside? Thanks

      • .. on the ES 4-hour chart wave c would be a 0.382 retrace for the wave Intermediate (2) following the Intermediate wave (1), up, marked as 5 on ES 4-hr chart. The c wave bottom on the SP500 5-min cash chart, would be the downward wave of a minor B triangle in progress, and minor C of (2) would happen after that triangle (IF the triangle proves out properly). Otherwise, C would turn into an impulse from the current minor B on the ES 4-hour chart.

  21. fionamargaret says: nice to close above 2080…

    • fionamargaret says:

      …here is what is working…SPXL…AAPL…UWTI…UGLD…TQQQ

      • ewtoriginal says:

        SPXL is working? You must mean from your 2050 low yesterday.

        • mcgcapital says:

          Fixated on 2185… This chop chop chop isn’t bullish activity. Look back at any of the corrections over the last 5 years and the tape is different. Whilst the sideways and frustrating action may continue for a while a break under 2000 is far more likely than a break above 2135

      • fionamargaret says:

        …or not…

  22. johnnymagicmoney says:

    I have just figured it out. It took me a while but I did crack the puzzle.

    Holly is actually Janet Yellen herself

    • purplember says:

      puzzles are fun

    • va89blog says:

      I think she’s purposely being facetious because she can’t actually believe what she’s writing, especially when data say the opposite.

      • Holly Silver says:

        Really? What data? Not fundamental? Check the facts on small business Index. Stayed healthy all during the so called dire 18 month going nowhere market. Consumer sentiment? Shot up so very high after the dire 18 month situation. April Retail Sales Shot up way above the most optimistic levels. Rate hikes this year- a shoe in. Mark this down as I have been pounding this home for a long time now. Pent up demand? you bet. fcats only facts. Discretionary income is where? Saving and reducing mortgage at the same time? nah can’t be. the consumer is dead.

        What do you suppose if the flight from our markets and huge short selling miscalculated the strength of the consumer? it works both ways. A cascading event if proven right or a big rally if wrong. the data is cumulative and painting a strong picture for a nice pickup in domestic market. Discount the data at your risk.

        • simpleiam says:

          You exaggerate everything. Your writing is that of a teenaged drama queen. I don’t care how long you claim to have been in the markets, your blogs reflect otherwise. Are you Newbie’s alter-ego, or what? Got the same rage out of him when he first got here.

        • One thing in support of your thesis imho is that Vix is still acting very quietly here. There seems to be very little fear about this correction. But some may call that contrarian and so would say there is more room to run to the downside.

        • va89blog says:

          Holly, here are facts I’ve written before…compounded earnings on the SnP from 12/2011-12/2015 were -5% per annum. The market went up 12.9% per annum over the same period. Check out the consumer credit numbers, they continue to increase. Corporate balance sheets are more highly levered than they were in 2007 through the greatest period of malinvestment ever. This is the first “recovery” where GDP didn’t grow by over 3% for any calendar year. SnP to EBITA is now higher than the all time peak in 2000! These are facts. We’re in the late stages of a bubble that rivals 1929, but surpasses 2007 and 2000 (by several measures). This is reality unfortunately, but it’s what we get during the tail end of a 35 year debt accumulation cycle.

          • johnnymagicmoney says:

            not sure about 29 home slice or 09 either but do think its going to be very painful for many. The market is ready when its ready and its simple as that. One day it will be ready and longs will go “Ruh Roh”

            • va89blog says:

              Not talking about where the market goes, simply valuation. It’s just math. Who knows what this or any bear market will look like.

          • Holly Silver says:

            The GDP numbers were good for the domestic side. You continue to lump energy exports and manufacturing with the consumer health. The bad numbers on the business side is after 18 months of China crash and EU crash. That’s like looking at the financials at the lows of the 2009 crash. Transition periods always looks bad. You argue the factors that brought us down for the last 18 months are still here. I argue they are vey different today. A recession when business, consumer optimism is peaking? When sales have shown life? Small business are the driver of this market and so is service sector. Please tell me they aren’t the drivers of the market and dominate percentage wise. Please show me where the consumer is tapped out? You bring up credit card us as if its above where its been for a very long time. Nope. You dismiss the actual pocketbook of the consumer and focus on credit card use? Please look at the breakdown by age and financial status. no surge, but higher. I agree it is higher than what it was 2 years ago. The mortgage repayment however is still trending DOWN. You dismiss the largest expense by far by any consumer as insignificant against a few dollars more on credit card outstanding? the consumer has more free money, more savings than any time in this 7 year debacle. The exposure to credit card insolvency has NOT increased because the discretionary Income has INCREASED. Look at the whole picture. Tell me on average Mr. and Mrs. Smith is not in better shape today than at any time in the last 7 years?

            How can you dismiss discretionary income? You seem to think it can’t result in increased spending but the jobs market certainly has shattered anyone’s notion of what to expect these last 18 months. The result is phenomenal against such a dire backdrop these 18 months. Did ANYONE see this possibility? is the jobs data faked and the tight labor market and JOLTS report?

            Why I am excited is exactly because I DO see a BIG rally leg having legs. If the data is so stark that the consumer has this much potential today it portends to great surge in economic activity going forward. The “perfect storm” I coined 6 years ago for businesses and the stock market I now see for the consumer which will translate to the latter surge in the market. the potential is real and explosive. More so today than anytime in the past 7 years. yes I am excited and don’t believe I am exaggerating the possible outcome.

            Even as we speak and the market is accelerating on the downside -18 on SPX, I see the bottom of this current drop as a buying opportunity. The lowed this drop, not exceeding the double bottom, the better the rally.

  23. Gas sales and giveaway car sales a lot of the increase on retail.I know on line Amazon sales are doing well,but when retail store stocks are cratering,what do you believe?Let me tell you that leased cars are the new 2006 housing market.Gold IS hanging in there with a strong dollar–can it last all day?

  24. ABchart says:

    ES update: SPX +4.5 points.

    Today: right now the value shift a little higher. Support 2047/49 instead of 2045/46 target 2068.

    Next week: my system is bullish. Support 2040/50 area, target 2105 and even 2120. Before a substantial and a quick drop to 1950/60 early June.

    DAX target 10300 then 9000/9200
    CAC target 4450 then 3950
    Oil will stay under 48 target 40.50$

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