Thursday update

SHORT TERM: trading range continues, DOW -16

Overnight the Asian markets lost 0.2%. Europe opened higher but lost 0.5%. US index futures were higher overnight, and at 8:30 weekly jobless claims were reported higher: 266K v 253K. The market opened one point below yesterday’s SPX 2167 close then began to pullback. In the opening minutes the SPX hit 2160, then rallied to 2168 by 10am, before revisiting 2160 by 11am. After that the market started to drift higher. In the last hour of trading the SPX hit 2173, then dipped to close at 2170.

For the day the SPX/DOW were mixed, and the NDX/NAZ rose 0.35%. Bonds gained 3 ticks, Crude dropped 85 cents, Gold slid $4, 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 lowered to 1.8% v 2.3%. Tomorrow the BOJ announces their stimulus package, Q2 GDP will be reported at 8:30, the Chicago PMI at 9:45, then Consumer sentiment at 10am.

The market opened slightly lower today then pulled back to remain in the 20 point range for the eleventh trading day in a row. Thus far the entire sequence appears to look like a double three, taking the form of a Minor wave 4 flat. Apparently this market has been waiting for some sort of catalyst to clear the range. Maybe the BOJ or Q2 GDP will be it. Short term support is at the 2131 and 2085 pivots, with resistance at the 2177 and 2212 pivots. Short term momentum has been bouncing between overbought and oversold all week with no net progress. Trade what’s in front of you!

MEDIUM TERM: uptrend

LONG TERM: uptrend


About tony caldaro

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112 Responses to Thursday update

  1. Scott C says:

    Hi Tony et al,
    I am curious if you feel we have enough waves in place to be at B now or with a small spike higher? Or do you want to see us into 2250-2280? Or all the way to the max? What i mean by that is it better for the B wave to run to those levels or is it just as equivalent if it finished with one more push higher? Is there any precedence in having a short 5th here or a truncated one if we had a pullback to 2131 pivot?

    Also, are the percentages of a the B wave count 50%; the NYSE 50% and then the Dow super bullish one still as an alt/outlier?

    I Left myself in a lot of positions for that B wave count before your writeups turning neutral and us knowing about the proprietary indicator (WROC) that went off above the 2085 pivot and curious how this is tracking. Everyone seems to see resolution to the upside even in the EW world.

  2. gtoptions says:

    Thanks Tony
    Nested 1,2 complete?
    GL & Good Weekend All 😉

  3. Foxbiz says Europe will release stress test results at 4pm EDT,including Italian banks and Deutschebank. Fact or fiction?Welllll,we couldn’t possibly handle the truth,so–fiction,I’m sure.
    Will the market ignore another -div on the daily SPX?Time to roll over boys.

  4. NEWBIE says:

    Smart money buying physical gold , silver, and uvxy. Dumb money long.

  5. johnnymagicmoney says:

    GDP estimate was 1.2 1stQ revised to .8 (ouch)

    GDP for 2ndQ was supposed to be 2.6 revised to 1.2 (ouch ouch)

    no FED rate increase = GOLD!!!

    • mjtplayer says:

      Average it out, was just had 1% GDP growth in the 1st half of 2016. Nothing has changed, the economy is still lousy. European GDP missed too. Global growth, as a whole, is very weak.

      • the wheels of the world economy are greased with dollars and debt, so they have to make the dollar attractive and push more debt. An attractive dollar means lower currencies across the board and economies abroad pumping and humming, maybe coughing here and there but if that is what it takes they the Fed might have to rise. Last rise was in a 0.9%GDP print so considering your number that might be just enough. Sometimes I agree with Gary…

        • attractive debt too…considering negative interest across the world…we might be the off white yellow shirt best suited for that. I am sure Fed and US Gov will have more debt to push to understanding parties seeking some return on their dollars.

    • Consumer purchases were up 4.2 percent. I would call that a good number. Businesses contracted their spending for the last 3 quarters. At some point they will have to revamp spending.

  6. How low can Crude go before it affects the SP500? 41 seems like a resistance area right here.
    While quarterly earnings are clearly upbeat and driving the negative percentage to around 2, the next quarter guidance is only a 3 percent swing upward. All the baked in earnings are thrown into 4th quarter with a big 9 percent expectation. If Oil doesn’t behave itself and breaks below 40 that number will be revised lower. So just how critical is Crude in the overall picture of the indices?

    • Revision: meant to say Q1 will have the 9 percent gain.

    • fionamargaret says:

      Gary would have to look at the performance of the S&P when oil was around 26…

      • Conditions are way different even if OIL was to drop again. Companies already went thru that process and would already be much leaner. The weaker leveraged companies already left or got consolidated. The first 4 to 5 years of the post housing debacle saw companies adjust to the new environment very well. The domestic consumer during the worse of the oil decline never went into a recession and in fact discretionary spending saw no difference. I am not talking about a recession but rather how it would affect the earnings picture across the board. I assume a weak OIL picture would reflect weaker demand against the now increased supply. Is that reflective of overseas contraction or just an over supply issue?

        • johnnymagicmoney says:

          yeah those GDP numbers were awwwwwwwesome lol

          • GDP range this whole recovery has been from 4.5 to 0. In that time we tripled in price. next quarter is pretty consistent between 2 and 2.5 percent. based on actual domestic spending and other activity it should hit around there. Anyone worried we go into a recession here? I look for correlations that work between earnings and economic data. In a zero rate environment you have to use historic parameters meeting that condition. At this stage I am only concerned about the ability to produce more profits, not fall into a recession. I suppose if we do get 4 percent GDP at year end people would find reasons to expect a crash there also. Deep drops or crash scenario over next 5 months seem remote.

        • how about states like Russia or SA that base their budgets on certain oil prices? Venezuela is a case pending right now…heavy crude not so much market for it as oil sands are pushed forward. And Canada is in that pot too.

  7. mtu MTU says:

    [1140am] SPX/INDU update-
    The notable divergence between SPX and INDU (Chart 1) appears to favor the green 4 or the blue [b] (Chart 2).

  8. I’ve said it a few times before,that with a lousy GDP and $XJY gaining 3 yen…gold should be up $40 minimum.Gaps are being filled on $XJY as I thought they might.Now at 97.30-one gap filled–next one at 99.Short term trading,I’d probably take profits on gold at $XJY 99 unless XJY can break the previous 100 high.With the C&H(weekly), it could,and be off to the races to 120.I mentioned a pullback to 94ish for a right handle and gaps filled after that.That’s happening.Now we see if there-s a breakout or a double top.Good luck all.

    • scottycj1 says:

      I have a Gann target at 2290…..right in line with his target—figured a different way

      • fionamargaret says:

        …just take a wee peak at UWTI Scotty……it turned around… far…..and I had given the bands to the FT yesterday evening, so won’t be red-faced….hopefully.
        Everyone else gave terrific narratives but oil price of 30-35. Still could happen, but I had to believe in the bands which had worked perfectly…..

        • fionamargaret says:

          …now it is up to 50/55 hopefully….I shall review at the weekend…xxx

          • nsteve24 says:

            not going anywhere near 50/55 till 2017
            CBs cannot control lack of demand, OPEC output just reached a record high in July

            • fionamargaret says:

              ..I am so glad you came back Steve…I always appreciate your input – you really know your stuff….
              I shall look at all the numbers at the weekend…and let you know what they say..x

              • fionamargaret says:

                …and where are Mat and Sparrow…..maybe gone to Paris….

              • fiona
                CL hit 40.50 and went back up. is uwti still a buy or what?

              • fionamargaret says:

                MC I suggested you wait until oil was 40/41….that is what i did and bought UWTI this morning when it turned….now, I don’t know how high it is going, until I look at some of the numbers. I shall let you know…..
                I would also like to take a look at TLT again, but not end of month…..
                Where is Phil today…I hope he is fine…

    • nsteve24 says:

      global macro poor: Aug 11 – Sept 15

  9. Beautiful GDP number.Just wonder MR C,just as in Japan,how we can have full employment with housing in a boom cycle-but no growth.

      • I’ll buy that…lol

      • purplember says:

        exactly Mr. C debt is growth killer. $20 trillion = every household OWES $190,000. Bush added 4 trillion and obama 8 trillion. why are they doing this ?

        we add $35,000 of debt per SECOND. think about that for second or $35k worth ha ha

        • tony caldaro says:

          Bush had to play for a war
          Obama to avoid a depression

          • purplember says:

            had Obama given $70,000 to every household in america to spend instead of gov’t spend, i believe economy would be growing fast. gov’t is just wasteful

          • va89blog says:

            He only pushed the depression out several years. Eventually, like the 1930s, deflationary pressures will take over and the system will collapse under its weight. Long term this is healthy and needs to happen.

            • Very unhealthy that our economy is set up so that prices have to keep rising anyway. Just makes people have to act like rats on a treadmill trying to keep up. Doesn’t make sense why this is necessary except to prop up Wall Street, and to keep people happy about how much their assets have appreciated. It all seems like some kind of shell game. It’s hard to believe that rents in the NYC area in 1950 were $25/month and a 3 bedroom home could be purchased for $15,000.

    • nsteve24 says:

      Wave 3 into 1% GDP, looking more like over extended 5th by the day

  10. mcgcapital says:

    I have the FTSE as having topped now at 6779 and about to head to test 6440 in August. Likewise the SPX towards 2100, and possibly 2085. Just one more central bank meeting to navigate through next week (Bank of England). These are swing trades – stops at 6800 and 2185. At that juncture we will see how the picture looks but feel the intermediate term uptrend is unlikely to be finished.

  11. captbara says:

    Well Boj was a bust. And now GDP too. Guess it’s up to the ECB next week.

    But it looks like we’ll get that NYMO under the BB today. All these events are just distractions!

    • mjtplayer says:

      Fed was hawkish, BOJ disappointed, Q2 GDP missed – so what’s the catalyst now?

      On the other side, oil is nearing $40 with heavy resistance in the $38 – $40 area – it better hold, otherwise it takes the whole market down with it, again.

      XOM & CVX just reported results this a.m. – what a disaster. CVX reported a huge loss, largest loss in 15 years and XOM missed by a mile. These companies are taking-on massive amounts of debt just to sustain the dividend yields – a very dangerous game. If oil stays lower for longer, they will destroy their balance sheets and credit ratings, all to keep an unsustainable div yield?? XOM has already lost it’s coveted AAA rating, if they’re not careful, they will fall further down the rating slide.

      • The entire system is being held up with spit and duct tape and the solutions proposed by the “powers that be” are more spit and duct tape. It’s pretty obvious that everything that is going on signifies a system that is in an unhealthy state.

        • NEWBIE says:

          Christine, yes its very obvious and many have realized this years ago. However, the powers that be keep pulling rabbits out of hats and prolonging the collapse.

        • johnnymagicmoney says:

          whats interesting is there are companies like Facebook that are unbelievable. There always will be pockets of wealth and growth but whats beuatiful is when prices get reset considerably companies like Facebook will be cut in half and when fear sets in to max levels I cant wait to buy great companies at cheap prices and calls and longs and all types of leveraged plays on just about anything and if the entry point is great I’ll just sit back and chill and watch monies explode. What an amazing opportunity that’s coming up. Shorting is tricky because of the counter moves but long and strong off max fear bear troughs are a gift once every decade …………….can’t wait Christine!!!

  12. tvbala1 says:

    Mr Tony
    Will history repeat this August, just as the markets crashed in August 2015?Or is this different this time?You are a keen follower of market history.

  13. locanbbs says:

    Tuesday, Aug.2, is new moon (~ cycle bottom). After that one whole week free of “bottoms”. If we don’t get a breakout then, well forget it!

  14. Hourly chart of SPX, red channel has been strong keeping action within itself and now getting pushed upwards by the purple channel.

  15. stmro says:

    This comment is just non-sensical:

    “Kuroda says BOJ easing designed to prevent overseas uncertainties from hurting Japanese business”

    In a global economy, you cannot arrest the global business cycle. Thats not how things work!

    • johnnymagicmoney says:

      One time ago I never paid attention to the Japanese economy then I remember sitting on a plane and reading a special report on Japan and their future. I was shocked and fascinated on the perfect storm that awaited the Japs. Since then it has gotten more comical (and it will continue to get more comical).

      There only solution the way I see it is

      1) Increase immigration considerably (to counter their massively aging population and workforce, to increase consumer spending considerably, and to bring down labor costs to become more competitive in trade).

      2) Focus on highly educated adults in the tech, engineering, and science industries. They have lost business to places like Korea and they continue to fall behind America. TV’s Stereo Equipment and Nitendo (regardless of Pokémon) are a joke to places like Facebook, Google, Microsoft, etc etc etc etc etc etc etc I realize I am ignoring good tech businesses in their country but think about them versus us in the last twenty years. Boy have they failed

      3) Eliminate their archaic corporate structure and promote leadership positions based on performance and not senority. They have made some headways their but have a ways to go. maybe this old culture is part of the reason they have fallen behind in their creation and entrepreneurism.

      Why it won’t happen?

      1) They are a culture that constantly lives in denial. They are too proud.
      2) They are one of the most discriminatory nations in the world which is why they won’t have immigration and its also why people wont move there. Plus their language is a barrier
      3) Their dent to GDP levels and their negative interest rates and the fact their population (which owns most of their bonds) will start cashing in those bonds to live off of is a financial disaster that has reached an inflection point of no return.

      Japan is screwed over the next ten to twenty years. I laugh when people are bullish on their economy.

  16. stmro says:

    I suspect its this line thats keeping stocks up right now despite the lack of additional JGB buying or helicopter money:


    Im already out of the longs i bought when we exceeded 2134. However i’m going to wait for it to close below 2160 which is the base of the last 2 week range before shorting. Hoping for a 3-5% dip and then a buying opportunity to hold through to end of the year.

  17. locanbbs says:

    NDX may be “leading”, but only slowly –

    and the others are NOT FOLLOWING!:
    SPX –

    DJII –

    RUT –

  18. chrisk44342 says:

    Hi Tony, good to see the comments again. I understand the wave count. It makes sense that the consolidation would be labeled as a 4. I don’t use MACD I use my own metric, so on my daily chart the SPX looks embedded, and embedded markets in a tight consolidation below the upper BB generally don’t make it to the top. I’m not forecasting anything, just making an observation.

  19. NEWBIE says:

    Everybody and their mother is long waiting for 2200 plus. Perfect time for a rug pull. Now down to wave A= 1750,B= 2000, c= 1500

  20. stmro says:

    BoJ disappoints. SPX crashes down 10 points but instantly recovers, unlike USD/JPY, which is still down significantly. I think we’re ripe for a 5% correction over the next 2 weeks but behaviour like this keeps me on the sidelines.

  21. ajney says:

    The equity markets remain non-committal and trapped in existing formations. However, we do expect resolution by Monday closing and be tradable for directional traders.

    Intra Day Wave Hits US: 10-11 am,1-2pm

    Intra Day Wave Hits India: 9:15-10, 1-2pm

    • fionamargaret says:

      Toronto is closed on Monday……for all the gold traders out there.

      • Ajney says:

        posted my view on crude in the Wednesday comments.

        • fionamargaret says:

          Yes thank you Ajney… the oil price bands I had worked out, I had oil 26-40, 36-50/51, 51- 40/41.
          Oil has never broken the bands, so I am watching with interest to see if it turns around at 40/41, which I think it will……

  22. Okay,we need a little bearish view (mine)courtesy Bulkowski’s blog:
    “On Monday, 32% of stocks in my database are in bear market territory (down at least 20% from their 1-year high).

    A week ago, it was 33%.

    The fewest was 31% on 07/31/2015.

    And the most was 70% on 02/11/2016.”
    This is only my interpretation,but I posted this factoid a while back when the number of stocks were around 40%.I theorized that at 2% a week,it should take us a month to get to the 2015 extreme of 31% stocks in bear market territory.Will that be the top?The 70% extreme was the bottom.Will history repeat 7/31/15 and give us another August correction?I’ ll let you know in a month…lol.(Meanwhile,food for thought.)

  23. stormchaser80 says:

    My SPX model, based on technicals of all SPX stocks, shows considerable weakness remains in place.

    • CB says:

      Thanks Storm.
      So you take into account market breadth etc. in your indicator, if you can characterize it in general terms…? thanks.

  24. gtoptions says:

    Thanks Tony
    Not much chatter on here about your third count. Maybe it’s too Bullish, or maybe they don’t want to be verbally assaulted by a certain someone. 😉
    So I’ll just post my technical interpretation and let it speak for itself. GL All

      • Well there’s no sure thing.I remember a year ago,gtoptions had a great chart of the NYSE breaking the previous years low-which happened in 2000 and 2008-and led to bear markets.I said,”Great chart.”
        Which it was…and so is this one–unless it doesn’t do what it’s supposed to…lol.

        • gtoptions says:

          I’ve since updated that chart, sorry for not posting it here when I updated it.
          NYA has since reversed back above the inflection.

  25. kvilia says:

    Thank you, Tony. Sure need that advance before PV tops out in Aug/Sep.

    • If this advance stalls (as it’s doing) and turns out to be a false breakout, it might just be enough to spark a make the bulls give up and spark a sell-off.

      • blackjak100 says:

        If this was a false breakout, we would be back under 2135 by now IMO. The breakout looks real IMO. The market is near the upper weekly BB with embedded slow stochastics. This is about a strong a market as you can even with the 2 week consolidation.

        • Thanks for that insight, Blackjack. I am going to run the chart and have a look myself. BTW, does anyone know where Soulsurfer went?

        • The SP500 is 1% above previous highs on paltry volume. The fact that the market is at the top of it’s Bollinger band doesn’t mean it will stay there, in fact, it often reverses there. The VIX is extremely low and is in a pattern like it was in November of last year prior to the Nov-Feb sell-off. The stochastics on the daily, monthly, and weekly charts for the SP500 are ready to turn down and we have a bearish candlestick on the S & P weekly chart. Not to mention negative seasonal and Presidential cycle influences.

  26. bouraq says:

    Chart of the day is $DAX by

  27. locanbbs says:

    FINALLY – NDX is taking the lead upwards!

  28. vivelaamo says:

    Sp bounced off18 day MA today. Last time it did that it rallied a further 100 points. We are still some way from daily Upper BB. I took a speculative long on the bounce. Will probably be a scalp, as bud mentioned I want more downside before taking more positions.

  29. vivelaamo says:

    Textbook bull flag on the DOW chart. Could BOJ be the catalyst for the next let up.

    • bfquant says:

      My thought is that we get a higher high in the morning, but then the entire rally from Brexit lows looks to have a completed 5 wave structure. The tell will be one of those classic pop and fades on a Friday led by Biotechs lower.

  30. bud67 says:

    Trading suggestion — I like SHAK as a Buy 40-38….end

  31. mtu MTU says:

    [EOD] Stocks –
    SP500 found support right at the EW channel (Chart 1) and hints at a small-degree wave [5]-up (Chart 2).
    ES futures continues to struggle against the red wedge resistance (Chart 3). One count from its nominal high suggests (at-least) another leg lower (Chart 4).

    • bud67 says:

      MTU – keep a close watch on the SP market. Think,
      your on to the coming rally in the SP above 2174.
      Thus, a guess. If the SP reached 2140 intraday, that
      would a gift – this is my investment plan, as well….Bullish.

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