Tuesday update

SHORT TERM: gap up opening, DOW +76

Overnight the Asian markets gained 1.3%. Europe opened higher and gained 1.1%. US index futures were higher overnight on positive earnings reports, and at 8:30 the CPI was reported higher: 0.3% v 0.2%. The market gapped up at the open to SPX 2143, ticked up to 2144, then began to pullback. The market had closed at SPX 2127 yesterday. At 10am the NAHB was reported lower: 63 v 65. Around 10:30 the SPX hit 2135, then rallied back to 2144 by noon. After that it drifted lower to end the day at SPX 2140.

For the day the SPX/DOW gained 0.50%, and the NDX/NAZ gained 0.85%. Bonds gained 6 ticks, Crude rose 45 cents, Gold added $8, and the USD was higher. Medium term support rises to the 2131 and 2116 pivots, with resistance at the 2177 and 2212 pivots. Tomorrow: housing starts and building permits at 8:30, then the FED’s beige book at 2pm.

While Q3 earnings reports have been coming in positive, the recent positive major bank reports have been received with mixed results. After hours NFLX reported a strong Q3, ramped up 20%, and with that the missing catalyst we noted yesterday may have just arrived. The market gapped up at the open, hit SPX 2144, pulled back, and then rallied back to the highs before dipping some to end the day. As long as earnings continue to impress a new uptrend should be underway. Short term support rises to the 2131 and 2116 pivots, with resistance at the mid-2140’s and low-2150’s. Short term momentum hit overbought during today’s rally then ended the day at neutral. Best to your trading!

MEDIUM TERM: downtrend may have bottomed

LONG TERM: uptrend

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

About tony caldaro

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125 Responses to Tuesday update

  1. here is hoping Gary is right on his short. Im with you.

  2. blackjak100 says:

    well we got the bounce I was expecting…however not as strong as I suspected. If we take out Fri HOD by any margin before the close, I think a short position can be initiated. The key word is initiate meaning it may need to be added to. I closed my long position for a small profit and think it’s hard to be long here.

  3. NEWBIE says:

    Last 2 days were a blessing for bulls. If you hold long overnight from here greed and insanity has probably overtaken your mind body and soul.

  4. fionamargaret says:

    Thanks Chris Kimble

  5. kvilia says:

    So I was stupid to play DUST for a change, and this was not a good game – was lucky to get away with a 2% loss. Hopefully GC will retrace to 1255-1258 so I can get back in NUGT.

  6. H D says:

    Relatively mild opex week. Coming in to 10 handles from LOD. Some -D if we do get old faithful- whipsaw Wednesday.

  7. captbara says:

    Dax daily bull flag breakout imminent. Don’t trust the other indices😉

  8. shauryagh says:

    Market has turned into a zombie and will remain so for the next year or two until earnings catch up and bring down valuations.Until then buy S&P at 1990.Sell at 2190

  9. phil1247 says:


    looks ready to attack 99

    probably not a plus for commodities
    but i dont use correlations much
    good indicator if gold can shrug off surge in dollar

  10. phil1247 says:


    1268 extension short resistance has finally broken

    we already came back and retested it at 10am

    by coincidence? … it is also the .618 extension long level
    support drops to 1257 if ext long fails

  11. Page says:

    Gold miners run is over for now.

  12. johnnymagicmoney says:

    XBI to 52, IBB to 250, INTC to 33,

    GDX to 26, Crude to 60, TLT to 137

  13. The Astra says:

    I would like to short the Dow Jones at 18230 for targets of 17850 with stops at 18300.

    We are trading at the top of a downward trending parallel channel.

  14. johnnymagicmoney says:

    reading a good article in Bloomberg today about how lots of previously ominous signs or indicators have proven to be false indicators (we all know this) in this market especially as of late and that the distortion due to unprecedented intervention is the chief reason. There is a good and a bad to this. The good is the markets ability to shake off not only these warning signs but all warning signs and that is also the bad is that the market’s conditioning will make it vulnerable to the real warning signs that they also dismiss. Its really a cry wolf market and the towns people don’t believe risk rearing its head anymore. Who the hell knows when the wolf comes. It will come though and my guess is when it does come people will think its BTD time. They will be the most hurt

    • fionamargaret says:

      …the hedge guys seem to work against the technicals…at least that is how it seems to me…

      • johnnymagicmoney says:

        most hedgies are hurting so I cant say they are helping negate the negative signs. In fact I think this lack of correlation in various indicators which used to be highly correlated is the reason for their underperformance. Passive investing is king right now.

        • On the flip side,can bullish indicators be trusted now,as well?With everything so convoluted,are selloffs –out of nowhere–more possible also?

          • johnnymagicmoney says:

            good point…………

            its like the China data …………..In the last two months credit expansion increased over 500 billion (us dollars). 35 to 40% of it went into housing. They essentially are doing their darndest to keep GDP afloat by putting massive amounts into the property sector (creating another bubble) to keep GDP afloat. Moreover isn’t it interesting that their GDP every single quarter is exactly at the expectation or exactly in the middle of their target every month??

            1) no one trades on the Debt to GDP levels
            2) No one looks at how much of that debt is for refinancing existing bad debt
            3) No one wants to look at the data that does show deterioration
            4) No one wants to pay attention to the massive increase in house prices in extremely short periods of time there
            5) Everyone wants to trust that the Chinese are honest about their data
            6) no one pays attention to the capital outflows
            7) No one pays attention to the constant devaluation of their currency
            8) No one wants to look at the manipulation of their markets.
            9) No one wants to look at how much of their GDP is fueled by massive government debt infusions
            10) No one wants to look at the amount of reserves the Chinese have burned through
            11) No one wants to pay attention to the shadow banking system or increase in bad loan

            Investment community says oh they reported GDP that met expectations – stable economy! BUY!

            its that silly right now

            • If the market was to trade the obvious we would not have had a 7 year bull run. What seems manipulative or complacent turned out to be the correct call. There is always a point where their own good fortune creates a dangerous sense of security. Are we there? I believe we are close. No amount of intervention and manipulation can prevent the market from gaining back it’s equilibrium. we are in a stretched valuation and most fundamentals are working against a big earnings spurt. The strong dollar, rise in bond yields, rise in LIBOR, should not help this market and earnings going forward. The only saving grace would be a huge pickup in consumer spending and business investments.

              Clearly we are near some sore of juncture be it a final move or corrective. Seasonality, after October, is usually strong. Since I perceive the window as small, between now and November, I will be playing for a fast drop immediately ahead.

              • After the fact analysis.How does anyone know in real time that the market is rigged and will ignore H&S breakdowns.You don’t.But it IS a setup for future shenanigans that people will ignore and lose their life savings.Complacency is not a good thing.

  15. abchart says:

    Oil from 12 October: near a top!

  16. phil1247 says:


    post triangle thrust and extension long targets both at 53.40

  17. Latest forecast: 2.0 percent — October 19, 2016

    The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2016 is 2.0 percent on October 19, up from 1.9 percent on October 14. The forecast of third-quarter real federal government expenditures growth increased from -0.1 percent to 0.3 percent after Friday afternoon’s Monthly Treasury Statement from the Bureau of the Fiscal Service.
    Housing starts–no factor in GDP.Hmmm.
    GdX hit the 20 d sma at 24.70 and sunk back below.Back when GDX fell out of the BBs for 3 days–this was my first line of resistance.Back then ,the sma was at 25.20 though–moving down fast.See how this goes.MACD crossing up.A big reversal from here lower,would not be bullish.A push through to 25 is.Good luck all.

  18. Had expected a better start today. The street looking past this quarters earnings is expecting a 7 percent rise next and a massive 15 percent rise in 6 months. This obviously has to b revised. The LIBOR rates or late have gone up and suggests credit concerns down the line. Still looking for October surprise drop.

  19. stmro says:

    Ok people, Gartman is net long again. You know what to do.

    [W]e have to admit that the trend is up; that the monetary authorities are continuing to supply reserves to the systems around the world and that that supply is making its way into equity prices rather than into plant, equipment and labor. We are seeing, in broad global terms, what we have previously referred to as the Zimbabwe-isation of the global capital markets and we’ve no choice but to accept that fact and to recognize that that trumps all other “fundamental” and/or technical concerns

    • fionamargaret says:

      …nymex they were going to have at 55, but break-evens (that is their lingo) for Saudi oil is 75-80, and I think there is a slight quid pro quo with their bond offering, so being optimistic, the hedge guys will try and get it there….
      I think gold will take care of itself once it shows itself going up every day….

  20. FOMC Member: Williams, Harker, Kaplan, Dudley are scheduled to speak today.Broke above 1263 (200d)Backtest 1300 likely.Then a resell?Coincides with 26 GDX.That’s the plan.See what Fedheads think.Good luck all.

  21. CB says:

    “They don’t even hide it anymore 19 (87)” .. Nice numerology, HD… and dammit, those guys just want to let us know how good they’re, yes? ….you can’t make this stuff up…

    Also, it just hit me…anytime we want to grab Lee’s attention, we need to start a sentence with #GoCubbies =) This year is so special for them… So, #GoCubbies #GoCubbies

  22. fotis2 says:

    Thanks Tony!An interesting observation just struck me.Of the thousands of posts/comments/views from a number of trading blogs that i’ve read over the years never ever have I come across a post the likes of “Aaah the good old days when we were making money by the buckets”…

  23. kvilia says:

    DUST – back to upper trend line?

    • torehund says:

      What you have outlined could be an X wave and a reaction upwards could be expected. Its also a play on Usd strength. Martin Armstrong seems to be negative to Gold these days, you may have wind in your back too🙂 Good luck.

      • kvilia says:

        Thanks, tore. I think gold will be fine, this is just a momentum trade.

        • fionamargaret says:

          Interesting chart Kvilia…so I had to think how we could both win at the same time.
          Under certain circumstances stocks might sell off and gold perceived as a safe haven, and be bought….especially if bonds were selling off too…totally fictitious, but perhaps the hedge guys were covering bases…x

  24. torehund says:

    Thanks Tony.
    Just a side-note on the daily spx; the uptrend scenario may be reinforcing itself as there is an abc relationship emerging in the macd lines from the march high. Maybe the c needs to be just a bit longer.

  25. Anyone concerned the Dow and SPX have been below the 50d for a month?Or is
    that bullish–a pause that refreshes…lol.I read the Raymond James analysis…that “earnings should start accelerating within a quarter or so.It goes with our belief that the bull market will transition from an interest rate driven market,to a earnings driven bull market.”
    But if earnings don’t materialize–what the hell–we’ll still have interest rates.Lol.To me,it’s all about the dollar…still.Later.

  26. stormchaser80llc says:

    Both the SPX hourly and $VIX hourly suggest another higher high is coming for SPX (low for $VIX). This could occur overnight or tomorrow in early trading. I’d still like to see new highs in Oil and the HYG:IEF ratio which would set up the technicals just right for a change in trend lower. We need to keep watch of the SPX Summation Index which is nearing a negative value for the first time since Jan-Feb 2016. Also, our proprietary Technicals Model (cumulative) is nearing a bearish cross of its 200 dma for the first time since Jan-Feb 2016. If these occur soon, chances are that the relief rally is over and the new primary trend is much lower.

    More discussion and charts here: http://navigatethemarketstorm.com

    My site is 100% free. If you are visiting for the first time, be advised that I do ask new users register for a free login to see daily posts. This takes 15 seconds. This is to protect myself, ensuring that everyone agrees to my legal documents.

  27. ariez5 says:

    I think these are corrective waves. Agree with those saying we haven’t seen the bottom yet.

  28. Market is not allowed to go down. Us 20 trillion in debt, baby boomers retiring, a third collapse in 17 years isn’t allowed. Again wwe were promised growth in the second half of the year, which again won’t happen. Bears will get all excited, call for a crash, all that will happen is the fed won’t raise rates in December markets go higher, same pattern over and over

  29. CB says:

    Thanks Tony.
    Do you remember what you were thinking about the market the day (or days) before it crashed in 1987?
    This link is for uber-bears only =) http://www.businessinsider.com/the-sp-500-looks-eerily-similar-to-right-before-the-1987-crash-2016-10

    • tony caldaro says:

      compared to now? it’s different
      then we had a downtrend off a high, a weak uptrend, then had already entered another downtrend before the crash occurred

      • The question is…are all crashes the same?Do they even rhyme?What’s your thought on that–and how many crashes have we actually had to compare?

      • CB says:

        Very interesting, Tony. What you’re saying illustrates how important it is to have a method and stick to it at all times. Kudos to you, Tony. You saved yourself a big headache then =) My husband used to sell naked calls then – he was pretty happy too…😉

      • Lee X says:

        In 1987 the previous week before Monday Oct 19 th We(not a mouse in my pocket but the group I worked for) were swamped with continous business starting in the last hour and a half of Wednesdays session all day Thursday and all day Friday. Monday was actually slow compared to the days prior, at least for us

        • CB says:

          That;s interesting. Lee. How did you interpret that?..were they selling MOC?..

        • H D says:

          Hey Lee, interesting history. “we” joked 9/7 that 21 (87.87) was a high. They don’t even hide it anymore 19 (87)….Only NYA, the made a HH that day. Who knows. It’s almost deer season so “we’ll” give it 2 more days.

    • ufa123 says:

      If you recall the market was tanking the week before Monday 19th and in the UK we had a big storm on Friday that closed the UK markets. When we opened on Monday we had to correct 2 days of falls. Options were triggered and down we went. The only safe place to be was cash.

  30. bouraq says:

    Chart of the day is $RUT at http://www.tradingchannels.uk

  31. i thought we will in wave 5 lol now we are in wave 3 did i miss something lol

  32. mtu MTU says:

    [EOD] Stocks –
    Overall, it looks like a weak upward gap in SPX today – no higher highs and reaction at the green line resistance (Chart 1). As long as the green line holds, a probe of the green line in Chart 2 looks probable. SPX closing above the green line makes it possible to fill the gap above. Chart 3 updates the tracking counts.

  33. teej911 says:

    I dismiss your logic and replace it with my feeling of confusion and feel everyone should invest off that. I have no chart. Sorry!

  34. Thanks Tony. Everything told me it was going to roll over at the close, but I paid a steep pricing in waiting and waiting. In case anybody missed this, its interesting in that October is a very complex month and this article discusses the bright side of the month. If October’s low is in and the past hold true, 2250 is in sight. http://www.marketwatch.com/story/the-stock-market-is-setting-itself-up-for-a-possibly-monster-year-end-rally-2016-10-14

    • Agree with the part that says year end rally. I still believe (very strongly) that the lows of October are not in. In for a wild ride if we do get that flash crash this month. I will be betting November and December’s rally regardless. In fact my model suggests that tomorrow is the final spike move before a cascading drop. If we hit around 2160 I will be buying heavily into the close. I know it’s usually a sucker bet but when the market obliges me by following my script I have to see it to conclusion.

  35. kvilia says:

    Investing on fundamentals is prohibited in the bull markets.
    Thanks Tony – I agree with Johnny.

  36. johnnymagicmoney says:

    So now the catalyst for the market to break out of a three month drift down is going to be a 120 dollar stock that made twelve cents a share? Come on Tone

    • tommyboys says:

      Cynism will break then crush you as it has to so SO many before you. Listen to Tony – decades of experience.

      • johnnymagicmoney says:

        I’ve listened to Tony before and it cost me. I am 1900℅ in disagreement with new bull market counts. No offense to Tony. I gave him flak too much in the recent past and was unprofessional in doing so but I will state what I believe and see with all due respect. This market is held together by bubble gum. I call it the McGyver Market.

        • johnnymagicmoney says:

          I just listened to 250 billion in new credit in China and everyone says oh my new credit everything is fine there. No one questions where the credit has gone anymore. How long the McGyver Market lasts who knows but it ends very badly in China especially

          • That’s not a timing tool. Trying to decide what breaks the back is a losing one UNLESS you have specifics that have NOT been invalidated yet. 7 years ago not one person ever anticipated that the consumers health would be the strongest now of the whole cycle. Most thought we would never get this far or strong. I came to a smart conclusion early in this bull cycle that it’s not the debt load that matters. It’s the strain on that debt. In a zero or negative rate environment creditors remain happy. I have always believed the end game can only come about thru rate pressures. In such a huge debt environment the bar is lowered on where that rate can’t cross. In any event we are no where near that threshold. This has been MY theory from some 6 years ago.

            As for rate hikes there is absolutely no need to equate inflation with raising rates here. we have a huge imbalance that is allowing for more speculative gambling. We need to just “normalize” rates again and that means another 100 basis point move. No danger at those levels. I believe we have a while to go. The current domestic environment will allow for a couple of more hikes. Initially it will actually spur spending further by forcing people to invest before the next assumed hike.

      • kvilia says:

        tommy, are you nuts? Nobody listens to anyone, this is internet🙂
        As to your suggestion, Tony is a very generous host and very smart person. With that being sad there were few times that his position was not confirmed. At low 1800s that was a bear market, and then top of B was lasting several weeks. With that being said Tony suggests the best probabilities possible, it’s just not all the time probabilities play out according to the anticipated scenarios.

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