Wednesday update

SHORT TERM: typical bi-polar FOMC day, DOW -2

Overnight the Asian market gained 0.7%. Europe opened higher and gained 0.8%. US index futures were higher overnight, and at 8:30 Durable goods were reported lower: -4.0% v -2.2%. The market opened right at the high of the day SPX 2175, then began to pullback. At 10am Pending home sales were reported higher: 0.2% v -3.7%. The pullback continued throughout the day until right after the FED released its statement at 2pm: After putting in a quick SPX 2159 low print the market started to rally. Just past 3pm the SPX hit 2172, thn pulled back to close at 2167.

For the day the SPX/DOW lost 0.05%, and the NDX/NAZ gained 0.60%. Bonds gained 14 ticks, Crude slid 90 cents, Gold gained $21, and the USD was lower. Medium term support remains at the 2131 and 2085 pivots, with resistance at the 2177 and 2212 pivots. Today the Q2 GDP est. was lower to 2.3% v 2.4%. Tomorrow: weekly jobless claims at 8:30.

US index futures were higher overnight aided by the rally in AAPL. This apparently carried over into overseas markets. along with talk of another BOJ QE program. The SPX opened higher and then immediately sold off. Meanwhile all the foreign markets closed higher. After drifting down until the FOMC statement the SPX hit last Tuesday’s low at 2159, and then started to rally. Today marks the tenth day the SPX has remained in a 20 point, (1%), trading range. The 2177 pivot has been tough one to crack. Short term support is at the 2131 and 2085 pivots, with resistance at the 2177 and 2212 pivots. Short term momentum vacillated above and below neutral the entire day. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: uptrend


About tony caldaro

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114 Responses to Wednesday update

  1. Jim Guthery says:

    Anybody have crude bottoming around 41ish?

  2. trondack says:

    I found the FED bot!

    Get Market Status ( Bull Neutral Bear )
    If Market = Bear -> Cut 1/2
    else If Market = Bull and “Red Sea parts” -> Raise 1/4
    else -> Hold


    Thomson Reuters report as of July 26th. My previous report from 7/28 using another source is pretty darn close to Reuters. Make your own interpretation. You decide if the news is positive or negative for future growth.

    • Current standstill is impressively long and usually has a fast breakout or breakdown. Given the good news on the domestic front and now over 50 percent of earnings out I will be betting for a breakout event early next week. Market can’t seem to find an excuse to fall here. Perhaps I am reading this wrong.

  4. reddragonleo says:

    Every day now feels like the previous day… or maybe I’m trapped in Ground Hog Day? I think I’m starting to even look like Bill Murray now… old and tired of 14 days straight trapping in between this zone of hell. LOL

  5. scottycj1 says:

    Dows previous ATH was 18,351… my CIT day—- Dow pulls back close to the previous ATH at 18,368 (missed by 17 pts) A positive close sets up buyy signals on numerous timeframes. GLA

  6. johnnymagicmoney says:

    I know I am harking on this but check this out

    Company A Company B

    Market Cap 360b 360b

    Trailing PE 320 75
    Forward PE 80 25
    PEG Ratio 3 1
    OperatingMargin 3% 37%
    Profit Margin 1% 24%
    Cash 15 billion 21 billion
    Debt 17 billion 0 debt

    Company A is Amazon and company B is Facebook

  7. Another interpretation of current market earnings and expectations. 50 percent mark and the breakdown is as follows.

    The disbelief in a market that has defied peoples perceptions for years.

    • Sources like this are of little value. There are many reporters that spin the news this way or that. I prefer to use respected, highly analytical sources of information, rather than news articles from the mainstream media.

      • H D says:

        Hi Christine, who specifically do you prefer?

        • Factset Earnings Insight and Thomson Reuters Earnings Aggregate. Those reports are pure data, little interpretation, and no opinion.

          • H D says:

            ok. Pisani sites the source of data in his article as Thomson Reuters:mrgreen: I prefer charts but agree that if oil gets/stays below $40 earnings will be lower. You disagree?

            • The article Pisani wrote is very “soft.” He is no rockstar regarding data interpretation. In fact, I prefer Steve Liesman. I posted the link for last weeks Thomson Reuters report, which clearly shows that earnings revision downard for the remainder of the year outnumber positive revisions 59% to 41% and are increasing. Click on the link and take a look for yourself. I don’t think the price of oil has a negative affect overall on stock prices. It has a negative effect on oil companies, commodity prices, and banks because of risk of loan defaults. The price of oil can, however, be used as a barometer of global economic strength. I’ve looked at the oil charts and the median price has been around $45 a barrel. Therefore, the rise to $120 was a bubble. Chances are the price will remain below $45 a long time because of the oil glut, American & Canadian oil resources, Iranian oil coming online, Saudi Arabia’s poor finances, etc.

              • nsteve24 says:

                Thomas Reuters is not reliable either as they have numerous FX clients, notice today’s false reporting on the Japanese government “pressuring” the BOJ to boost stimulus led to the 1:45pm USD/JPY spike which led the the $ES spike? Bloomberg came out and corrected but USD/JPY spike stayed at 105.5 level regardless.

              • I think Thomson Reuters is still more reliable than the mainstream media.

      • This article is presenting FACTS on current earnings and expectations. If you think their numbers are wrong cross check it. I can assure you CNBC is not in the habit of falsifying business reports. So far down 2.8 percent for quarter and exceeding expectations. Expecting a small positive Q3 and a big 9 percent for Q4. Given the domestic economy and the slew of very positive economic readings it is not a stretch by any means. they even presented arguments on what could derail the results in the future, especially if OIL doesn’t maintain a 50 dollar a barrel reading by end of year.

        It is so easy to verify using your favorite search engine. Why make an initial assumption they are wrong? I find that strange. If anyone does find this article is misleading or just plain wrong please inform me. I always want to get the best information available.

        • Posted a link to the Thomson Reuters report from 7/15 which does not support Pisani’s interpretations. Click on the link and take a look. And, again, Holly, refrain from critiquing other’s opinions. I commented on the value of the source, not your habits or opinion. CNBC is mainstream media for entertainment. Factset and Thomson Reuters are data resources for industry use.

    • Thomson Reuters 7/15/16 earnings aggregrate report shows that 59% of companies have reported downward earnings revisions and 41% upward revisions for the remainder of the year. Link:

      • Page ONE of YOUR report states the following:

        Second quarter earnings are expected to decline 4.7% from Q2 2015.
        Of the 36 companies in the S&P 500 that have reported earnings to date for Q2 2016, 64% have reported earnings above analyst expectations. This is above the long-term average of 63% and below the average over the past four quarters of 70%.
        50% of companies have reported Q1 2016 revenue above analyst expectations. This is below the longterm average of 60% and above the average over the past four quarters of 48%. For Q2 2016, there have been 85 negative EPS preannouncements issued by S&P 500 corporations compared to 38 positive EPS preannouncements. By dividing 85 by 38, one arrives at an N/P ratio of 2.2 for the S&P 500 Index.  The forward four-quarter (3Q16 – 2Q17) P/E ratio for the S&P 500 is 17.1. During the week of July 18, 91 S&P 500 companies are expected to report Q2 2016 earnings.

        MY report is current with 50 PERCENT IN. Went from 4.7 percent negative to 2.8 as of today. hey if you want to insist there are 59 percent downward revisions as opposed to 41 upward I find it NOWHERE in YOUR report. Perhaps you can extract the exact wording and on what page you found it? Find it strange that it is revised downward with a smaller negative result.

        I though you never respond to my posts? Just present facts and support them. I believe my report stands and the market has responded in kind.

        • tony caldaro says:

          Are you two at it again
          Just agree to disagree and let is go

          • No I’m not at it Tony. I just commented that Thomson Reuter’s and Factset are better sources of data than the mainstream media. As usual, Holly has to post long defensive argumentative posts. I did not critique her opinion, I commented on the article and again, have been answering other’s questions in response to my posts. I have no desire to interact with her to any extent, believe me. She has even referred to the Thomson Reuters report as “MY report” which is just ridiculous. Sorry, I will avoid her since she seems to have something personal going on with me and I hope she does the same.

          • rob623 says:

            Please act like mature adults. Think twice before you post inappropriate remarks!!!!!!!!

        • They reported earnings that were above expectations that had already been lowered, and the percentage at which they did that was below the median percentage in past quarters. This is Q2 data, not Q3 and Q4.

      • Anyone wanting to review the data for the 59% downward earnings revisions vs 41% upward for the remainder of the year can look at the table and graph on Page 5 of the 7/15 Thomson Reuters report


  8. johnnymagicmoney says:

    You know I am not excited about any long plays outside of defensive equities but I was extremely confident Facebook was going to have an amazing Q. They did. They absolutely crushed everything. After hours up huge. The way Apple moved (up 8% when earnings were down 20% from year before or Amazon has moved in prior periods (up 15% last Q when it made a measly profit and trades at a silly valuation) I would have figured Facebook’s report was good enough for a 10% explosion today.

    Nope Facebook has sold off all day and is barely up now.

    Can’t explain anything anymore. Seriously I just don’t get stocks whatsoever anymore. I don’t know why I use my brain. Id be better off not using it.

    • All about current valuations and future expectations. Not too hard to figure out. FB has a 75 P/E and moved up in a years time from 80 to 120’s. Future growth already seems to be factored in. AAPL had low expectations and a P/E of 12. Went from 120’s to 100 in the year. As for AMZN this stock does dominate the on-line retail market. It’s valuations were absurd for years BUT today the projection for earnings growth is over 80 percent in just one years time and over 40 percent annually for the next 5 years. I would never bet against this retailer.

      There usually is rational behind such high profile and high volume stocks. Just like the markets behavior all these years, when looking back it doesn’t seem so irrational especially in a zero rate environment around the world. Always try to compare market behavior in the different environments.

      When will this very long narrow movement end? A breakout with a narrow consolidation should give the edge to the original trend to continue. Another fast move is in store. Odds should be given to the upside but not with strong conviction. Usually earnings season is a slow period and right after the news gets cumulatively digested. Will the street like what it sees for the future?

    • bfquant says:

      Sometimes the market decides to care about valuation. It can also decide on a whim which measure of value it would like to use. That’s why some people don’t weight the fundamentals too highly.

  9. scottycj1 says:

    Not tall + Constriction = __________________ ?

  10. Atlanta GDP cut again to 1.8%.Fits the pattern.Should help gold,put a dent in the DXY.C ya later.

  11. frommi2 says:

    Watch out below! I have a completed EDT in RUT, a completed impuls in QQQ,FTSE,DAX. Only the S&P500 is not that easy to count, but with some squiggles its possible to count it as complete, too. Awaiting Primary? C wave down now, should be good for 15-20% down. August and September are the worst months of the year, so if you are still waiting for an upmove, be careful!

  12. gtoptions says:

    Thanks Tony
    SPY/SPX working on the 7th and final corrective wave?
    SPY ~ Backtesting MR2 @ 215.45 then higher.

  13. mtu MTU says:

    [830am] ES update –
    ES is struggling to get inside the “wedge”. A test of the green line is probable if the red line holds. See chart.

  14. jobjas says:

    consolidation before moving up to 2200

  15. captbara says:

    With NYMO nearly below BB, the setup is good for bulls. Maybe we’ll get it today with some more chop. And right before the BoJ tonight too.

  16. CB says:

    Goldman Sachs on the stimulus plan in Japan: “Our event study of 25 economic stimulus packages since 1990 shows that while the market often rallied in anticipation of a package, it underperformed or declined in the first month post-Cabinet approval in 18 out of 25 occasions” …

    • vivelaamo says:

      Be interesting to know how the market normally reacted in the first few days. My recent recollection suggests there is there’s normally a spike. (Could be wrong). Still looking for pb’s to go long. The boat may have already sailed though. S&P should bounce off the 18 day MA today.

      • CB says:

        Hi vive, for sure, it would be nice to have a study like that as well =)
        Agree with your short-term take. Looks like “sideways” is the new pb right here…and later on we get a larger correction as you’ve said…Wave 4 on Tony’s chart, so BTSM must be the new acronym😉 (buy the sideways move).
        GL everyone!
        Thanks Tony!

    • vivelaamo says:

      Hi, what is this chart showing? Didn’t really understand it. Thanks

      • captbara says:

        Basically it shows when the trading range of the last 10 days has been very small, the future median returns are likely to be positive.

        • mcgcapital says:

          Would be more useful to look at it versus all time periods. Think it would show below average returns up to 3 months out and also below average up probability. Longer term (6 and 12 months) is stronger, but then have to be mindful that the observation period only covers 10 years or so of data and all of the data points occurred during bull markets.

      • When trading range’s constrict over either a short or long term, it usually signifies that a big move is coming — either up or down.

        • captbara says:

          The chart says it’s usually up.

          • Maybe so, but the truth is that a constricted range can go either way. See how NR7 days and constricted Bollinger Bands are interpreted. .

          • purplember says:

            cap the last 3 dots on chart in 2014 and 2013. it sure looks like the market drops after the dot. am i missing something ?

            • captbara says:

              It does. But if you take the median return over several future timeframes of all 11 previous instances, they’re all positive. That’s all the chart is pointing out.

              We may even be negative 3 months out. But if you notice the 6 mo return, it was positive 100% of the time, and 91% 1 year later. Those are the strongest takeaways from the data.

    • greggw2gs says:

      Capt, very intriguing analysis. If you have time to help me learn a little more about this I would be appreciative. If so could you shoot me an email at Thanks Gregg

  17. torehund says:

    USD vs Euro:
    Seems like European banks might start to feel the negative rate policy as money is silently withdrawn…Not an overt bank-run yet, but nevertheless reasons to ponder a rate hike to stem the leakage. That said its not the perfect moment to rise rates as it never is when emotions run high and inflation bites. Just rising rates a bit also signals the Govs are taking notice and that makes depositors extra nervous and hardly satisfied with the yield…To avoid this vicious circle there has to be a lot of Euro- printing just to keep banks solvent.
    Fat lady hasnt sung yet, but we are approaching some kind of a Waterloo event.

  18. ajney says:

    Still think we get a new trend between tomorrow and Monday.
    Intra-day energy waves US: 9:30-10:30 am, 1-2 pm wave hits.
    Intra-day energy waves India: 11-12 pm, 12:30-1:30 pm

  19. stormchaser80 says:

    Eeek, Technicals Model is looking UGGGLY. Time will tell if breakdown will continue and lead to Change in Trend or not, but market needs a stick save, and fast…

  20. Some thoughts on the difference between listed company profits and GDP and how they can disconnect . GDP= cental government GDP + state & local government GDP + unlisted private business + consumer GDP + listed private business GDP compared to the stock market = listed company GDP or profits. This explains why the stockmarket does not always agree with whats going on in the economy ie bond markets follow nominal GDP stock markets follow listed company profits. Hope this is a profound insight everyone!! Took me awhile to work this out.

  21. Wow. I just read Daneric’s latest update and he said that Robert Prechter’s current Primary Count from Elliott Wave International has the market in P5 up? Can anyone confirm this? And if true, how long has EWI had this P5 count? Anyone know?

  22. alexh110 says:

    Thanks very much for restoring comments Tony!
    Just looking at your ultra-bullish count, isn’t there a problem that this seems to violate the long established Secular Bull/Bear pattern? It leaves us with a 9 year Secular Bear (2000-2009), which would seem at least 50% too short on the time axis.

    • tony caldaro says:

      Hi Alex
      2016 would be the low

      • alexh110 says:

        Thanks Tony.
        I’m not sure the 2016 low is deep enough to be the end-point of the Secular Bear.
        I think it ought to end with a more significant long-term wave.
        While it’s true the 1929-49 SB ended with a rather shallow downtrend from 1946-49, that was set within the context of a 20-year contracting triangle.
        Since 2000 we’ve seen an expanding triangle, which suggests to me a much deeper low is needed.
        A 20-year expanding triangle has never been seen before, so I think that could explain the unexpected parameters of the current market, and why it’s deviating from historical norms.
        Possibly the current uptrend is needed to clear the violation of the expanding triangle in 2014, and provide a final top before the Cycle 2 Bear can commence. For that reason I favour your Primary B count.

  23. I’m having a good laugh that the “market” doesn’t want to make a new high.2176 would give -divs on the daily and I think,the hourly.”They” don’t want that,and would rather tread underneath for a while…but looks like with Facebook etc tonight,we may get it anyways.BBs can be ridden for a few days and -divs can be ignored–IF the CB Gods will it.Follow through on GDX would be nice to see.Good luck all.

  24. fotis2 says:

    Month end comparisons DAX,NIKKEI looks nice undecided on SP futes,GOLD and CL

  25. torehund says:

    Thanks Tony, oil has entered its summer lulls. I dont have oversight of all sectors, but Biotech lifts the indexes, especially Nasgaq and Rut. Could be close to a breakout.

  26. fotis2 says:

    Great stuff thanks Tony Nikkei playing along nicely..

  27. blackjak100 says:

    The reason the market can’t break out is the weekly upper BB is at 2170. Pretty straightforward. it looks like more sideways action on the way or need a spike in volatility which means a move to downside first.

  28. 123 abc says:

    Thank you Tony et al, much appreciated.

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