Thursday update

SHORT TERM: rally continues, DOW +235

Overnight the Asian markets gained 1.0%. Europe opened lower but gained 1.2%. US index futures were lower, then higher overnight. At 8:30 weekly Jobless claims were reported higher: 269K v 257K, then at 9:45 the Chicago PMI was reported higher: 56.8 v 49.3. The market opened six points above yesterday’s SPX 2071 close. Then it retested SPX 2071 by 10am. After that it started to rally. The rally continued right into a SPX 2099 close, with only 5 point pullbacks along the way.

For the day the SPX/DOW gained 1.35%, and the NDX/NAZ gained 1.25%. Bonds lost 3 ticks, Crude dropped $1.50, Gold added $6, and the USD was higher. Medium term support rises to the 2085 and 2070 pivots, with resistance at the 2131 pivot. Tomorrow: ISM manufacturing, Construction spending and Auto sales at 10am.

The market opened higher again today for the third day in a row. From Monday’s double bottom SPX 1992 low, the SPX has now rallied over 100 points in three days. Quite an impressive rally, when considering the largest pullback since that low has been only 11 points. While we were expecting this advance to stop at the 2070 pivot, or possibly the 2085 pivot, the fact that it has exceeded both suggests something else may be underway. With the market currently less than 1% away from fully retracing the entire Brexit meltdown, and 2% from all time highs, we’ll wait until new highs are made before we drop the most bearish scenario. This market has had four uptrends since the May 2015 SPX 2135 high, and all have ended between SPX 2111 and 2133. This just may be another one. Short term support is at the 2085 and 2070 pivot, with resistance at SPX 2113 and SPX 2121. Short term momentum is about as overbought as it ever gets. Best to your trading!

MEDIUM TERM: uptrend may be underway

LONG TERM: neutral


About tony caldaro

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403 Responses to Thursday update

  1. kvilia says:

    Late congratulations – happy birthday and many more to come!

  2. Pingback: Tickers – Value Trap or Tactical

  3. captbara says:

    Right shoulder coming in next week.

  4. micky says:

    looks like its setting up for a lill w3 gap up on Tuesday..

  5. NEWBIE says:

    Wouldn’t be surprised if market crashed next week.

    • fionamargaret says:

      TLT still has at least 10 upside…

    • micky says:

      monster wave ?

      • fionamargaret says:

        well micky, you know I am totally lousy at wave calling, but there are enough experts on site….I do numbers and patterns…USLV yesterday with 10 upside, UGAZ about 10 upside….TLT is very bullish with 10 minimum of upside……put in stops….

    • Dex T says:

      Ideally it could/should. Stats point to a down move after such extremes moves to the downside and then upside.

      In addition, as was pointed out by mjtplayer it’s a Bradley turn date- so we should be seeing a reversal.

  6. ajaysinghi says:

    Happy holidays everyone !!

  7. phil1247 says:

    and the entire gang ……………….

    have a great holiday weekend !

    dont know about you all………………….. but i am exhausted

    rest up for next week

  8. gtoptions says:

    Thanks Tony
    Happy Fourth of July!

  9. Here is where The Eight Fold Path Method thinks we are in the count. Some light buying on the first day of the month. Wave iii was within +/-1 SP point of 2.618 extension.

    SP500 (15 Min)  7_1_2016 TC


    • fionamargaret says:

      How many waves left TJ…describe please…

      • If it’s a true impulse, then (iv) needs to finish, and then (v). Remember, if (v) doesn’t complete as expected, then the analyst must simply assume that the count is c = 2.618 x a, instead. But Elliott teaches us when price is beyond 1.618 to count like an impulse, first.

  10. phil1247 says:


    pop up to target

  11. Dex T says:

    World Biggest Pension Fund Seen Losing $43 Billion Last Quarter

    “Japan’s Government Pension Investment Fund will probably post a 4.4 trillion yen ($43 billion) loss in the April-June quarter, according to calculations by Yohei Iwao, executive director of the institutional equities division at Morgan Stanley MUFG Securities Co. That follows what he estimates was a 5 trillion yen decline in the fiscal year ended March 31, which would amount to the worst performance since fiscal 2009 when the fund lost 9.7 trillion yen.”

    • Dex T says:

      All that QE for nothing! What a waste.

      • EL MATADOR says:


        By Mike Larson:
        Why is yield chasing so out-of-control these days? I’ll give you 11.7 trillion very good reasons!

        That number represents the dollar value of sovereign bonds globally that are now yielding less than 0%. Not only is that a mind-bogglingly high figure, it’s up a staggering $1.3 trillion just since May, according to new research from Fitch Ratings.

        Long-term bonds make up an increasing percentage of the NIRP pie, too. The dollar value of negative-yield bonds with maturities at least seven years from now has surged 86% in only two months. In Switzerland, you can’t find a positive yield unless you buy a bond maturing almost a half-century in the future. Then in the wake of an announcement by Bank of England Governor Mark Carney that his central bank may cut rates further, do more QE, or otherwise loosen policy, yields on a handful of U.K. bonds slipped into negative territory for the first time ever.

        The result? Investors are engaged in the most-heated yield chase in world history. They’re buying utilities. They’re buying consumer staples. They’re buying telecommunications names. They’re buying bond funds, bond ETFs, even zero-coupon Treasuries.

        Investors are engaged in the most-heated yield chase in world history.
        They’re even buying gold as a “yield” play. After all, the 0% interest rate on a gold bar beats the negative-0.12% you “earn” on a German 10-year Note, or the negative-0.31% you “earn” on a Japanese 2-year Note, to cite just a few examples.

        You never hear about it on CNBC – but the result is that ultra-safe government bonds are absolutely trouncing stocks. Not only that, but safer, more reliable, higher-dividend, lower-volatility, non-economically sensitive stocks are absolutely beating the pants off the supposedly “sexy” names that the talking heads like to trot out on TV.

        Alphabet (GOOGL)? It’s down about 10% year-to-date, while Netflix (NFLX) is off 20%. Widely held banks like JPMorgan Chase (JPM) and Bank of America (BAC) are down 7% and 22%, respectively. Microsoft (MSFT)? It has lost you almost 9% so far in 2016, while Apple (AAPL) has cost you 10%.

        What about popular transportation stocks, like FedEx (FDX) or Delta Air Lines (DAL)? A gain of less than 1% … and a loss of 28%. Widely held industrials like General Electric (GE) or General Motors (GM)? Try minus-2% and minus-17%. Even those names every tech guru likes to gossip about — Facebook (FB) and (AMZN) — are only up 6% and 9% this year.

        By comparison, the Vanguard Extended Duration Treasury ETF (EDV) is up 23% in the first half of 2016. The SPDR Gold Shares (GLD) is up 24%. The iShares US Telecommunications ETF (IYZ) has risen more than 14%, while the Utilities Select Sector SPDR Fund (XLU) has gained 20%.

        • Dex T says:

          Exactly! great article!

          The bulls continue to make claims about equities being the “only” place to invest but this is clearly not the case.

          • You can’t trade on generalities. If you did the last 10 years would be a total loss.
            Debt saturation and it’s consequences. Will it fail at a zero to negative rate policy? There have been benefits from this deflation spiral. The consumer’s debt burden in the US is at a 30 year low. You will not have a depression or even recession when the cost of borrowing and buying goods is this low, especially with the tight labor market. recent manufacturing data has shown a steady rebound this whole year. the supposed contraction is once again showing signs of acceleration. that suggests overseas is recovering. The benefit of zero rates you need only look at the housing market. It is the ONE factor that caused world wide debacle and the one that is needed to shore up. It has done just that with the zero rate policy. Why people look at a situation and conclude every action has ONE consequence is absurd. We were able to dig ourselves out of the largest home debt devaluation. As a result individuals are doing as well as they have in a long time.

            I will argue that the reason the stock market has done so well for so long is exactly because of no growth. No excesses like internal inflation allowed for home prices and values to recover. The FED did exactly what was needed and their actions allowed this 7 year recovery to take place. The tricky part to get out of this vicious deflation cycle and start real inflation again. Nothing is a given and this experiment goes on till one side wins.

            As long as the consumer is happy spending will continue. the data support this view. Even the manufacturing base shows a steady recovery in 2016. On the stock market front I am perplexed at this juncture. I still see unfinished drops occurring before we can launch into a new up leg.

            The pressure for lower yields started in the 80’s, so please lets not confuse the recent FED actions with as long tem trend. Anyone see otherwise?

            • Dex T says:

              Very few people trade. Many fund managers don’t either. The buy and hold method is the most common by far.

              While I don’t expect the average Joe to do anything – a professional money manager would look at the indices and see that there are better investment choices and options as highlighted in the article.

              You keep repeating the same points over and over about the economy- many of which have been debunked by numerous people on this forum. In previous weeks you arguing that the world indices, including EU, would turnaround and help propel the U.S. up- this is clearly out of the question now.

              From an EW perspective – if this is still a bull then we must be in the final leg up. There are no other viable counts.

              • Not at all. Nothing debunked since the last 7 years has not been explained any other way. Stupid investors and manipulation is your answer? So I guess they smarten up someway and the powers that be fail eventually to FORCE the market higher.

                I’ll stick to my debunked assumptions. Love it when low rates have only positive results for a failing market but not for the consumer. A record breaking number of jobs got dismissed and the consumers ability to thrive in this low rate environment seems to get dismissed so often and so long it’s as if we never did have this result to begin with.

                Debunk the whole of 2016 manufacturing trend. debunk the last 2 months of spending that SURGED. 1.5 percent rise in that dire time period. you known where after 2 years we are supposed to be falling off a cliff. Talk or debate with facts, not one sided generalities. It’s like the UK’s argument and ideology on staying independent and leaving the EU. They too used generalities and false assumptions based on emotional bias. How has it worked for them? Anyone STILL think they will do better because of the exit? Facts seem to get in the way of ideology. Scotland will leave. London gone as financial center. trading with the EU still requires migration to stay the SAME. Money supposedly gained by not contributing to EU coffers will be replaced by money still flowing into EU if they want to remain a trading partner. In one phrase I can sum it up this way. The UK screwed themselves royally and everyone knows it.

              • Dex T says:

                Of course they have been debunked!! I am not going to repeat the same arguments over and over and over again- nor repeat what so many other people on this site have posted.

                You speak of generalities but that’s all you post- If you see great economic data- fine you obviously aren’t going to be convinced otherwise.

                Low rates and QE got the indices to where they are now- but there is nothing to suggest they are going to keep on going up. The foreign markets you were waiting for are clearly still on the way down.

                Yes, I think the U.K. will do great once they leave- so do many others! – Because they will no longer have to financially support the EU and get nothing in return. The U.K. is one of the top economies in the world and everybody knows it- Being part of the EU was beneficial to some politicians and bankers and the weak countries but not to the average citizen footing the bill

        • johnnymagicmoney says:

          Crazy market

          Again who knows when itbends or what price but its going to end very badly with great losses and great gains for many

        • fionamargaret says:

          Well I hope you kissed NG Mat…..I suggested yesterday UGAZ had 10 upside, so he smartened up….
          USLV I suggested yesterday 10 upside, just put in stops…….think he showed his stripes today….
          I’ll look at different commodities at the weekend and let folks know how much upside in each….oil is the only correcting one I have looked at…

  12. cj32 says:

    SPX and NUGT…cr. to CBZ

  13. phil1247 says:

    bot spxu 26.11

    25% short

  14. So is it any real surprise that with the 10 year yield at 1.45% and the yield on the S&P at 2.2% we have seen a re-allocation of money into the equity market?

    • purplember says:

      blue you’ve made this point many times. FED has and is creating bubbles in many assets. does .7% over 1 year really motivate an investor much ? one also has to consider the risk of capital invested more than yield.

      • FED not creating bubbles. They want to desperately raise rates but external forces have prevented them. We are heating up domestically and they will be behind the curve. The FED would rather have a stalled equities market than excesses develop. I originally heard the argument that the FED was preventing consumers from building their new worth because they cater too much to financial industry such as banks and brokerage houses. Obviously that’s not the case. Given the situation they started with their choices were limited. before the BREXIT we saw a steep rise in bond yields and the assumption was 2 rate hikes this year. You can’t blame external events on the FED.

        • purplember says:

          FED doesn’t or hasn’t created bubbles. Gary did you live in a cave in 1999 and 2007. FED could of taken action to stop the excesses in the market but choose not to.

          • Greenspan? yes he was an idiot that stated the market would surly police itself. the FED however never creates this mess. They police it and sometimes let the prisoners run the prisons. But you can’t tell me they orchestrated the toxic mortgage scheme? you can’t tell me they wanted a crash? The problem always stems from the legislative and executive branch. the Fed can’t dictate policy. Break up the banks instead of trying to weaken Dodd/Frank restrictions.

            Policy dictates excesses not the FED. we will always go thru boom/bust and absolutely nothing in a capital society would change that. it’s the extremes that must be stopped.

            Scape goat? How about the US citizens that stood by and voted back in the same corrupt politicians and bad policies simply because they feel they also provided “pork” for their projects and spend excessively on keeping them complacent. Massive debt came from only one source. Fix the corruption in Washington.

            So what does the angry citizen do about this mess? Vote in the most corrupt bully of a rich businessman you will ever meet with no qualifications or ability to lead. Or vote in an established political machine that is also corrupt to the core. We picked them out of dozens of Republican choices while the Democrats stepped aside and made the path clear for ONE candidate. that’s our political system for you. Now that needs changing but it requires WORK and commitment on the part of each citizen. We just are too lazy to follow thru. Most people don’t even know who their local and state representatives are.

    • EL MATADOR says:

      with most assets rallying and with bonds and most commodities massive outperforming the equities please enlighten us where the outflow are to prop up the equities

      • aahmichael says:

        Only a total market novice would make a statement like the OP has made. He’s comparing apples and oranges. Bonds pay interest. Stocks pay dividends. Apparently, he doesn’t know the difference between interest and dividends. Dividends are taken out of the stock price, which means that a dividend is nothing more than a periodic forced liquidation without a transaction fee…along with a tax consequence. Dividends have nothing in common with interest payments.

        Also, if there was a reallocation from bonds into stocks going on, then bond prices would be going down, because people would be selling their bonds and putting that money into the stock market. Instead, the exact opposite has been going on for the last 2years. Bond prices have been on a non-stop path higher, because people have been putting money into bonds, while stock prices have been churning sideways the entire time, which means if there is a reallocation going on at all, then it’s been in the opposite direction as he claims.

        • EL MATADOR says:

          Yep ….. dividend = mandatory distribution =)

        • Dex T says:

          Excellent, clear and logical explanation as usual!

        • vivelaamo says:

          Then why does it feel like stocks keep going up? Is it an illusion created by the strength and duration of the up moves compared to the short sharp falls?

          • aahmichael says:

            I have no idea how things “feel” to you. Do you own a portfolio of stocks? If so, how have they done in the last 2 years? Do you ever look at charts? A quick glance will show that last months’ range in SPX was inside the range of the last 24 months, with the last high occurring 14 months ago. In NYA it’s even worse, as last month’s range was within the range of the last 33 months. Or how about the Transports? Even after the latest 4 day market surge, they’re still 18.83% lower than their last high, which occurred in November 2014. Or how about the Russell 2000? Even after the latest 4 day market surge, it’s exactly where it was in November 2013. I could continue, but hopefully you get the picture.

            • vivelaamo says:

              I get the picture but if the economic picture is as bad as seems to be painted on this site then surely the fact the S&P is still up is a very bullish sign?

    • johnnymagicmoney says:

      But like mikey says …..what is breaking out? Treasuries gold and safe equity plays…..looked at my long portfolio of stocks the other day (about 15 stocks) and nine were hitting new highs yesterday….. None of them growth or cyclical plays. Market is approaching highs not on banks or tech or biotech or even smaller issues (which look far from healthy technically here). Even if market breaks out so much of the market has major resistance short term while energy is overstretched and has long term resistance. For market to rocket much higher (more than a marginal high) you are asking the apples googles and wells fargos of the world to rocket through resistance and lower highs and that seems nuts. Meanwhile international looks bad. You can point to the major averages but the components of what everyone is so giddy about is bifurcated. To me that’s not the sign of a healthy market. A blow off at best and even then as manybhave pointed out it would set up monthly negative divergences I believe. Comments??

  15. jobjas says:

    SPX – the rise from 1810 seems to be culminating in a giant expanding diagonal

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