Friday update

SHORT TERM: another choppy day, DOW -28

Overnight the Asian markets lost 0.2%. Europe opened higher but lost 0.3%. US index futures were higher overnight. At 8:30 monthly payrolls were reported higher: 156K v 151K, and the unemployment rate was higher too: 5.0% v 4.9%. The market opened 5 points above yesterday’s SPX 2161 close, then immediately headed lower. At 10am wholesale inventories were reported lower: -0.2% v 0.0%. By 11:30 the SPX had dropped to 2145. Then it reversed and started to rally. At 2:30 the SPX hit 2157, and at 3pm consumer credit was reported higher: $25.8B v $17.7B. Then the market dipped lower to end the week at SPX 2154.

For the day the SPX/DOW lost 0.25%, and the NDX/NAZ lost 0.25%. Bonds gained 6 ticks, Crude slid 80 cents, Gold added $1, and the USD was lower. Medium term support remains at the 2131 and 2116 pivots, with resistance at the 2177 and 2212 pivots. Today the Q3 GDP estimate was lowered to 2.1% v 2.2%.

The market opened higher today, ran into resistance in the mid-2160’s again, and then pulled back into support in the mid-2140’s. Same story all week. The low for the week SPX 2144 and the high for the week SPX 2166. Despite the waves since the correction began there is another pattern emerging. Maybe this one will finally stick. Best to your weekend!

MEDIUM TERM: downtrend remains choppy

LONG TERM: uptrend


About tony caldaro

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38 Responses to Friday update

  1. alexh110 says:

    Given today’s sharp new low on Sterling I wondered Tony whether you have a long-term view on Cable?
    Here’s the chart from 1953-2016, which looks to me like Supercycle A ended in 1985 at 1.04, Supercycle B ended in 2007 at 2.10, Supercycle C underway.
    Do you think it’s headed much lower than 1.04, and if so how long is it likely to remain a weak currency?

    • tony caldaro says:

      under 1.10 Alex, possibly to 1.05

    • torehund says:

      Stagflation/hyperinflation is the name of the game, Syria, Turkey, Russia, Brazil, Venezuela, Argentina now England. One may wonder who is next on the list maybe China and Europe ? I am sitting in a Fiat prone country too (Norway), but oil strength has given it a breather lately.
      Turkeys currency is one third in dollar terms since 2008, seems like there is a resistance at that point, either the GOV can cope or it drifts into the overt hyperinflation and societal chaos.
      Gov hunts for taxes to stem the rot, just exacerbating the problem, thus strikes and layoffs are happening alongside. Pretty surreal, and the absurdity is that GOV officials in New speak tells everything is ok…when corporate heads are chopped like no time before in history. To compensate Gov creates new phony state employment “jobs” exacerbating the tax burden on the productive force. They say the goal of Socialism is Communism, and in that I believe.

      • cmucha68 says:

        I have seen unexpected things happen to often in the last 25 years. Sudden Limits ups and limit downs even in day time. Therefore I trade options. No margin calls or forced liquidation. Markets come back to normal after a few days (see Brexit) many times. But of courses you can use stops as well. Risk is only that the spreads can become to wide in wild markets and you are stopped out at a bad price.

  2. Sunday’s debate just got more interesting with the leak of the tape from the Donald. Helps the bear case

  3. mtu MTU says:

    MTU weekly commentary – Indecision and Potential Triangles (10/7/16)
    SPX has been in a messy consolidation inside a tight and narrowing range since late September. A breakout out of this range, potentially decisive, is inevitable at this point. Moreover, recent 3-wave up- and down-swings (strongly) suggest a potential triangle is at play. The challenge is that there are multiple potential triangles at play. So a picture is indeed worth a thousand words here. See chart.

  4. captbara says:

    Dax daily in possible bull flag. Seems to be the easiest read at the moment.

  5. torehund says:

    Just minutes after reading the above it is being announced that the US is formally accusing Russia for having hacked the DNC.

  6. vivelaamo says:

    The flash crash last night nearly ruined me while I was fast asleep Never seen anything like it in my time. Disgusting practise. Always using Guaranteed stop losses from now. All the best.

  7. Lee X says:

    Thanks Tony

    Go Cubs ? Yeah Go Cubs ! right ?

  8. Thanks Tony for your time and insight, something always appreciated with gratitude.

    As I mentioned yesterday, I continue to see the market moving into a converging wedge (of course) which will force a significant decision. Recent news, including, a possible rate hike, the questionable health of European banks, the prospects of the ECB standing pat on further policy accommodation and myriad global uncertainties all suggest a downward move.

    But the market appears not to be overly consumed with these events and today, as Tony mentions, casually tagged R1 (2166) and then drifted down the S2 (2145) without stretching measures of momentum or strength

    In the near term, the folks at Market Volume (a great resource) see something different than I do in the short term but in the longer term our views converge.

    Short-Term Market Outlook

    5-day charts (1 bar = 5 minutes) with a 20-period SBV are showing declining SBV oscillator readings at session’s end. Negative money flow on this chart would suggest the possibility of negative trading on Monday (today) after the market open. However, 30-day charts (1 bar = 30 minutes) are showing advancing SBV reading at this moment. Taking into account the most recent bearish volume accumulation we would say that despite negative outlook on 5- and 15-day charts, overall sentiment is slightly in favor of bulls (unless we see declining SBV on 30-day charts).

    Longer-Term Market Outlook

    60-day charts with a 20-period SBV are now showing a small advance in SBV Oscillator readings on the S&P 500 and on the DJI indexes, a small decline in readings on the NASDAQ 100 index and flat readings on the Russell 2000 index. The following SBV values were recorded at session’s end: plus 8% on the S&P 500, plus 4% on the DJI, 0% on the NASDAQ 100 and minus 7% on the Russell 2000. Flat SBV readings suggest market uncertainty. When we however take the large accumulation of bullish volume on this chart setting into consideration, the bears would appear to be favored slightly. We will continue to monitor this chart setting for the development of a clearer trend on the SBV oscillator which could give clues as to the development of a price trend. 1.5-year charts with a 10-period SBV are showing declining SBV oscillator readings. Declining SBV readings are bearish. This chart setting suggests a bearish market sentiment.

    Tony you said something interesting, specifically “Despite the waves since the correction began there is another pattern emerging. Maybe this one will finally stick.” What is it you are seeing and if you have the time to respond remember that I am a special needs EW student………meaning you need to dumb down your response.

    • NEWBIE says:

      This an excellent post, thanks.

    • tony caldaro says:

      the pattern is detailed in the weekend update

    • joecthetruthteller says:

      The mid-range close sets the stage for a steady opening when Monday’s night session begins trading. Stochastics and the RSI are neutral to bearish signaling that sideways to lower prices are possible near-term. Closes below the reaction low crossing at 2127 would confirm that a short-term top has been posted.

  9. Question to those who follow GOLD. David Halsey @ has a theory on why gold has been selling off hard. Don’t want to put words in his mouth but I think he is suggesting that PHYSICAL Gold priced at the Shanghai Gold Exchange (SGE) closed on September 30 at $1327.19 ( ) HOWEVER, gold futures (GC) which is mostly “paper gold…options, futures..derivatives) closed today at 1253.10. A spread of $74 per oz. David speculates that those who hold GC will want to take delivery, and sell the physical on the Shanghai Exchange for a higher price. Which means the Comex/market makers will have to buy gold to back up the sale. Could result in huge loses for he Comex? Question, is it possible that the market makers are forcing gold down, so the public sells their paper gold which helps to minimize losses?

    Does anyone on this board have any working knowledge of the SGE vs, the Comex pricing and how do they square positions on futures expiration?…or what this might portend for the price of gold around futures expiration?

    • NEWBIE says:

      Andrew Hoffman of Miles Franklin probably knows more about gold than almost everybody on the planet. Look at some of his blogs, you could also email him.

    • kvilia says:

      Don’t know internals but my 2c are here. Shanghai was closed for a week, so traders orchestrated futures to decline. At the same time last couple of weeks were the heaviest in terms of physical gold demand. You also have to look at the dollar, which is in a countertrend and moving up. So when Shanghai opens, there are many scenarios possible but for some reason I think it will be impossible to continue short play, so the players will end damping futures and turn around. There is another possibility that if the players have a strong hand, they can drop GC to 1220-1215 to create a panic selling, and then start buying the contracts. I doubt DH’s theory that everyone will dump papers and start trading physical gold will materialize – hard to change the western trading system overnight. But what do I know.
      I’ve been buying on the dips, would not want to see 1215 due to the health concerns 🙂 but certainly will buy more at 1215. There is too much debt flying around and Fed is a joke. As Tony said no rate hikes until 2018, gold will make it 1450. Of course of gold breaks 1215 and moves lower without bounce and participation, something is going on and gold is done. Scary thought, huh?

  10. Anyone agree that the dollar wants to take a trip back to 95?

  11. blackjak100 says:

    Thx tc! Can I assume new pattern is bearish?

  12. Peter Sliney says:

    This market will likely chop its way in to the election. Quick short term opportunities only but that game can get expensive quick.

  13. fotis2 says:

    Great stuff tx Tony nice weekend to all catch you guys Monday.

  14. mike7x says:

    Thanks Tony! New pattern? Cliffhanger for the Weekend Update? Hmmmm…

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