Tuesday update

SHORT TERM: higher open then pullback, DOW -19

Overnight the Asian markets lost 0.4%. Europe opened higher and gained 0.3%. US index futures were relatively flat overnight and at 9am Case-Shiller was reported lower: +5.2% v +5.4%. The market opened one point above yesterday’s SPX 2168 close, rose to 2174 in the opening minutes, then started to pullback. At 10am Consumer confidence was reported lower: 97.3 v 98.0, and New home sales were reported higher: 592K v 551K. The pullback continued to just past 11am when the SPX hit Thursday’s low at SPX 2160. The SPX then rallied to 2169 around noon, pulled back to 2162 just past 2pm, and ended the day at 2169.

For the day the SPX/DOW were mixed, and the NDX/NAZ gained 0.20%. Bonds added 1 tick, Crude slipped 30 cents, Gold rose $5, and the USD was lower. Medium term support remains at the 2131 and 2085 pivots, with resistance at the 2177 and 2212 pivots. Tomorrow: Durable goods at 8:30, Pending home sales at 10am, then the FED’s FOMC statement at 2pm.

The market opened slightly higher today, rallied to within two points of the all time high, then pulled back to Thursday’s SPX 2160 low. A complex Minor wave 4 flat, following Wednesday’s Minor 3 SPX 2176 high? At the low the market set up a positive short term divergence, rallied to SPX 2169 and ended the day. The market is having a hard time finding a catalyst to break through the 2177 pivot. In fact, for the past nine trading days the market has traded within a 20 point, (1%), range. Certainly enough time to work off the overbought condition after a 100 point rally. FOMC tomorrow, Q2 GDP and BOJ on Friday, might be enough to get this uptrend moving again. Short term support is at the 2131 and 2085 pivots, with resistance at the 2177 and 2212 pivots. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: uptrend

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

About tony caldaro

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81 Responses to Tuesday update

  1. mjtplayer says:

    The S&P can’t seem to break out of this trading range, day 11 of the S&P being stuck trading between 2,160 – 2,175. Amazing, can’t remember a tighter trading range for so long, just 0.7% total trading range for over 2 weeks now. Boring…..

  2. NEWBIE says:

    Topping now on spx, next down to a at 1750, b at 2000 and c below 1500.

  3. As I was hoping for (mentioned on the weekend)post Yellen:Silver up .70,gold and GDX moving up nicely.Good luck all.

  4. mtu MTU says:

    [315pm] SPX update –
    Post-FOMC tracking. Unless SPX delivers a breakout, there have been lower highs and lower lows since July 20. See chart.

  5. Macro view holding nicely. Market is preparing for rate hikes. the FED has telegraphed this and baring outside events we will see multiple hikes. Muted response but the short term “no hike” outcome should prevail with another rally leg. Good news for the consumer is not necessarily good for corporate earnings. For now we are still in a goldilocks situation. Accelerated spending from consumer should offset higher corporate costs over next 3 to 6 months. The street will not like the next set of hikes, when it does happen. The FED has managed to revive the economy 7 years into the recovery. They are playing it very cautiously. Look at the bank sector for signs that rate hike is coming. they should do well. Set up still for a new high by November thru January range. I actually expect really good economic news to derail the stock market but that should be 4 to 6 months down the line.

    • CB says:

      Interesting thoughts, Gary. Thanks. The bank index has been doing pretty well the last few days…
      What’s a bit puzzling is why people were buying treasuries again today… The bond market saying to the Fed: “not so fast” ?

    • CampFreddie says:

      Gary- agree, as usual.

  6. FED NOT RAISING INTEREST RATES (but will increase stock purchases until November).Have to read the extremely small print with a microscope.

  7. frommi2 says:

    Has someone a bullish count for the FTSE?
    To me it looks like a finished ABC since the bottom in Feb. And i can count a lot of other indices similar now. So maybe its time to revive all the bear counts again? (B wave in S&P500/QQQ/RUT finished?)

    • mcgcapital says:

      Early days yet, but think FTSE will retest the breakout area at 6440-6500 in August. Then see if it has legs. 6779 the high. Same ballpark as the bounce in August 2015 and recovery in December 2014.

  8. purplember says:

    CL if one wanted to argue that CL will do 5 waves up to make new highs, that’s dead. with $26 low and the high of 1st wave 41.90. However, today’s low of 41.74 violated wave 1, thus we only have 3 waves up from $26 to 51

    • so that means eventually a new low? <26

    • captbara says:

      Still can’t ignore that very obvious IHS on daily. That said I haven’t bothered to check the wave count since I’m not playing CL.

      • fionamargaret says:

        I always worked out bands for oil..26-40, 38-50, 51-40/41….41-50 hopefully…..

    • CB says:

      a tough trade, for sure.. on the daily it looks like a HS and on the weekly it’s an IHS…..GL to all the CL traders. It must be a lot of fun to trade it =)

      • fionamargaret says:

        ..once you start, you get hooked…..so far it has kept to the bands……but because of the negativity around supply/demand, be very careful…we soon shall see ….

        • CB says:

          True (re: being careful =).
          Using those leveraged ETFs can do some damaged unless they’re used only for short periods of time. Mostly, when oversold rallies in oil are being used to prop up equities. You may get a nice rally like that right now as oil is quite oversold short-term. So, good luck with your trade!

          • CB says:

            oops..typo,sorry…Should read: those leveraged ETFs can do some serious damage unless…

          • fionamargaret says:

            ..good points…I am presuming all of you that ask me about oil, know I day trade mostly…that is why the 3x…if you don’t know about something, just ask….
            It is particularly difficult this time with oil as there is no history, so no pattern formed.
            Let’s see if it holds 40/41……and then worry about it reaching 50…..

  9. captbara says:

    We chopped around so long that we fell from 62 to -15 NYMO and will probably get a buy signal today.

  10. phil1247 says:

    / TLT

    bearish below 141

    intitial target 135

    support 128

  11. Atlanta GDP down another tick to 2.3 from 2.4.Durables lousy.Must be everyone’s buying houses and flipping them,because they’re not putting durables in them…lol.If the Fed raises rates the rest of this year,the market will crash because of the dollar tearing up.They may threaten it,but don’t believe it.Gold should like all of this…hopefully gold stocks do too–goldfingers crossed.Good luck all.

    • CB says:

      ” they’re not putting durables in them…lol” .. So true. A good summary of the current conditions, learned =)

  12. mtu MTU says:

    [1140am] SPX update –
    Be(a)ware of these potential triangles, follow up and pre-FOMC outlook. See charts.

  13. phil1247 says:

    / CL

    continues in extension shorts

    below 48 target remains 14 dollars

    • purplember says:

      i went short CL at 48 and have been in / out. (DWTI ) wish i just keep shorts whole time.

      • fionamargaret says:

        Well Done Purple….I watched it, and hoped someone was benefiting…scary though.

    • Scott Ford says:

      14 dollars in what time frame phil? early 2017? do you follow ton’y count which sees another rally after this decline and then the drop to 14?

      fiona, whats your next target after we bottom here?

      • fionamargaret says:

        …no target…except to buy around 40/41…..UWTI at 19……but even then it might not work, because there is no defined pattern….if we are successful in the buy, I will be able to project out to some target….

      • fionamargaret says:

        ..trying for 50….

    • fionamargaret says:

      I missed you Phil…..please don’t give up on me….
      Even the Saudis are not projecting when things will get better, except around 2017….but no lows…if we can turn around at 40 and establish a pattern, we are off to the races…..x

    • fionamargaret says:

      Phil…did you read the article by David Rosenberg on TLT (I posted maybe at the weekend..forgotten the day)….you are going to be so rich….and you, Purple and Scott shorting oil successfully, while I just lost…….maybe power ball ticket guys just for playing….

    • ugh, i finally got the drop in oil i was looking for, but ended up closing options because the expiration is coming up. i cant seem to win with oil.

  14. NEWBIE says:

    I think I’m one of the only people in the blogosphere that is short right now, I’m looking for a monster correction of 38 to 50% off the highs which will take us somewhere in the ballpark of 1500 spx in extremely quick fashion.

    • See my posts from yesterday. I think you’re right about direction of next big move, but it may take a little time before it develops.

    • How long have you seen this crash of yours? At some point you have to review your failed assumptions and figure out why. This move today is perhaps the least likely for a crash. 2 year ceiling decisively broken. Domestic economy improving on most segments. Earnings already out for the most part. new defined channel. Short disruption and quick snap back from BREXIT. Interest rates not rising. Commodity costs still very low. Jobs, housing and spending continues to show no let up. What would cause the drop NOW? Strange to think it will always fall while you actually participate in a Technical Analysis board. No TA or Fundamental analysis could possibly come to that conclusion today.

      • Holly, Have you not gotten Tony’s messages he left yesterday in the thread where you confronted me yesterday to knock it off? He said “just state your opinion” in a few sentences WITHOUT CRITIQUING OTHER’S OPINIONS.

      • From Factset Earnings Insight report from 7/22:

        Earnings Scorecard: With 25% of the companies in the S&P 500 reporting earnings to date for Q2 2016, for Q2 2016, the blended earnings decline is -3.7%. Earnings Guidance: For Q3 2016, 14 companies have issued negative EPS guidance and 5 companies have
        issued positive EPS guidance.

      • ST Ng says:

        When economy was bad and many earnings forecast were kissing the dust last year, the market didn’t crash when many were expecting it. So when it appears like the economy is turning up and the sky seems to be brighter and when most people are expecting a super rally, would it live up to expectation or the rugs will be pulled instead?

      • vivelaamo says:

        Gary I agree. Daily calls for 1500 without any rational for it fundamentally or technically is one of the reasons this comments section got out of hand and had to close. I do not agree with your fundamental argument but I do agree technically the sky’s the limit. CB’s can pump the market up for a lot longer. I’m just frustrated we are not even seeing a decent pb to go long.

    • CampFreddie says:

      Newb – The reason you are the only Bear in the blogosphere is because all the others are broke,busted, blown-up or bankrupt.
      Also you have called crash many times over the years on this blog and this has obviously tainted your credibility somewhat. Gl.

      • NEWBIE says:

        Campfreddie, you make some good points. However, I am solvent and believe it or not I trade both ways.

        • Newbie, all you need to do is look at how compressed the Bollinger Bands are on a logarithmic all data monthly chart for the S & P 500. Then look at the plunge the market took the last two times this happened. The market is already trading at the very top of its range, there is no reason to believe that the market is going to break out higher.

          • kvilia says:

            I agree with you. You maybe also right about the timing – still need another blow off top, which coincides with one of the Tony’s scenarios. To me 2200-2250 is the top for SPX, should see some August fireworks. I am long 50% now and ready to flip over in the coming few weeks.
            P.S. Namaste amigo Tony – the blog looks much cleaner 🙂

  15. elmer510 says:

    With many counts on the table – it tells us there’s a lot of uncertainty around. So i have to keep calm and become more sure about where the market is headed.

    Now the oil price is weaker again – which has been a minus factor for SPX earlier. Many investors are bearish about the oil price now when the driving season is ending.

    The big issues are unsolved – the credit expansion and housing bubble in China. And the public debt possible tsunamis in a lot of western countries like Greece, Japan, Portugal, Spain, Italy, USA and more.

    But it’s impossible to predict exactly when such imbalances will create severe economic downturns. Some time western governments will be forced to increase taxes and lower their spending. This will create economic problems when domestic demand is lowered.
    And the moneyprinting can’t go on.

    Human capital is also a problem caused by immigration of many low educated people from poor countries. When Clinton/Sanders shall raise the minimum wage till 15 USD – this will destroy millions of easy come – easy go service jobs.

  16. locanbbs says:

    UPDATE: Rut (hourly futures):

  17. ajney says:

    Due to some additional number crunching, intra-day wave hits have changed a bit to hit between 11am-12 pm, 2:15-2:45 pm

  18. fionamargaret says:

    TWTR is a company I think has tremendous potential, but why don’t they tap a broader market??
    I am always hearing people say their mother does not know how to use it….are you listening Jack Dorsey….inclusion is good.
    I see TWTR at 24, but if the market was expanded……..

  19. locanbbs says:

    UPDATE: Rut (hourly futures) –

  20. blackjak100 says:

    Clearly the fed is going trigger minor 5 of int 3 of major 3. We all have witnessed this game for 5+ yrs and almost always the market goes up after FOMC especially since overbought conditions are gone. It will end beyond 2191 to make int 3 longer than int 1. I do not have a great target in mind just yet. Just hoping for decent entry tomorrow AM.

  21. Six day dreading range 2177-2158 going to break one way or the other. I beleive we will touch the upper channel of 2180 at that point boom higher or drop. I will be shorting 2180 with a stop of 2185
    Looking for 2131 first and go from there.

    Good luck all

  22. ajney says:

    The equity markets in US were behaving as expected. Tomorrow is make/break day for bull-bears with major energy wave on July 27-28. We noticed a slightly different count on the Dow, which has the uptrend from June 27 ending last week in an extended fifth wave. This differs from the usual count where we are in a fourth wave correction and has significant ramifications for the bull and bear case.
    Details with charts at astroanalytics.wordpress.com

    Intra-Day US: Intra-day energy waves will hit between 9:30-9:45 am, 1:15-1:30 pm, 2:15-2:45 pm (could have predicted this, at least for tomorrow without any astroanalytics :)) )

    Intra-Day Indian Markets: Expect changes between 9:15-10:00 am, 12:00pm-12:45 pm.

  23. locanbbs says:

    So FORGET THE INDICATORS – We’ve had our dip for the short-term cyclic bottom. Buy and hold!
    Rut (hourly futures):

  24. stormchaser80 says:

    Suspect you’re right Tony, need techncials to diverge on the Daily chart more before a change in trend. Positive divergence on the hourly chart from the lows of the day today vs. yesterday suggest this up move may be beginning.

    Technical picture for all SPX stocks though positive, has been weakening substantially for weeks now shown by daily readings from my model. At my site I post more details along with a chart showing something interesting in the cumulative Model vs. SPX chart

  25. 123 abc says:

    Thank you Tony et al.

  26. mjtplayer says:

    Thanks Tony, day 9 of trading sideways on light volume. Fed tomorrow, we’ll see if they can get the market going in one direction or another. Would expect hawkish language given the market at ATH, but they don’t have the guts to raise rates. BOJ Thursday, not sure what people are expecting, they’ve been “all-in” with monetary policy for a while and it’s clearly not working.

  27. mtu MTU says:

    [EOD] Stocks-
    Be(a)ware of these potential wedges and triangles. See charts.

  28. vedana2016 says:

    I inadvertantly posted this comment for Monday. I hope I’m not out-of-bounds by reposting here for Tuesday.

    I’m a follower market breadth and generally adhere to the principal that breadth deteriorates substantially in advance of major declines. Thus, when breadth is strong, as it is now, probabilities favor continued advances in the major averages. I’ve developed the following chart using % of stocks above their 50dma to assist in identifying when to become defensive.


    It may take a bit of time to decipher the chart when you view it for the 1st time, but the buy and sell signals on the SPY (red and green vertical lines) show that this indicator has done a reasonably good job of staying in sync with the larger trend. When the 2EMA of the indicator is above 80, as it is now, breadth is very strong and any price weakness should be temporary.

    ‘Hope someone finds this of interest.

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