Monday update

SHORT TERM: another consolidation day, DOW +21

Overnight the Asian markets gained 0.1%. Europe opened higher and gained 0.4%. US index futures were higher overnight, and the market opened at SPX 2169 – five points above Friday’s close. Right after the open the market pulled back to unchanged by 10am, then rallied to 2171 just past 10am. Then the SPX dropped to 2156 by 12:30. After that the SPX worked its way up to 2167 by 3:30, before settling about unchanged at 2164.

For the day the SPX/DOW were mixed, and the NDX/NAZ lost 0.70% – the rotation continues. Bonds lost 20 ticks, Crude added 35 cents, Gold dropped $10, and the USD was higher. Medium tem support remains at the 2131 and 2116 pivots, with resistance at the 2177 and 2212 pivots. Tomorrow: retail sales, export/import prices and the NY FED at 8:30, then business inventories at 10am.

The market opened higher today, the DOW/R2K made new all time highs, and hit SPX 2171. Then after a pullback to SPX 2156 in early afternoon, the market remained in that trading range for the rest of the day. Since Thursday’s SPX 2182 uptrend high the market has been in a 2151-2178 trading range. This range appears to have occurred because of the rotation out of growth stocks into cyclical stocks. When this concludes, which may require a final washout in tech, the uptrend will likely resume. The SPX 2182 is being counted as Minute wave i of this Minor 3 uptrend, with Minute ii currently underway. Short term support is at SPX 2151 and the 2131 pivot, with resistance at the 2177 pivot and SPX 2194. Short term momentum continues to go sideways and has yet to get oversold. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: uptrend

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

About tony caldaro

Investor
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176 Responses to Monday update

  1. bud67 says:

    SP’s setup, to turn lower….hmmm

  2. phil1247 says:

    Tony

    DRYS…….
    102 at lunchtime

    now 67

    widowmaker

  3. bud67 says:

    Next Bear Market – gets confirmed when the SP500 drops below 1810.
    Hope, we can call the SP top, earlier than waiting for the 1810 crossover.
    Bud

  4. mcgcapital says:

    If we’re looking at the Brexit scenario, FTSE smashed through resistance around 6430 to 6630, then backtested 6430 before further advance. On the Dow, we’ve not made much more headway over the last 3 days so I think the risk of a reversal is high. 18400 as the high of the recent trading range looks like an initial target. I don’t agree that we’re about to break much higher just on the basis of trump’s presidency. However, taking one trade at a time, the next 500 or so point move will be down IMHO. If and when that happens can reassess what the longer term outlook is.

    • vivelaamo says:

      Agree. But I do think pb’s from here are opportunities. The usual suspect will jump on to call any pb a crash in the making. But we know better….

  5. mjtplayer says:

    Spot and front month VIX contracts getting hit hard, no surprise heading into Nov expiration tomorrow. The “powers that be” usually smash the VIX into expiration so that they don’t have to pay-up on the contracts they wrote. Look for a reversal int he VIX either tomorrow or Thursday.

    The Dec and later contracts aren’t getting hit to any degree the front month and spot contracts are, so the VIX suppression is very short-term.

  6. captbara says:

    RUT, Nikkei barely any retracement. Latter one is not surprising with UJ screaming higher.

  7. vivelaamo says:

    S&P is up because of crude

  8. scottycj1 says:

    Trains leaving the station

  9. phil1247 says:

    Fotis

    hope you got long spx

  10. Dollar not yet breaking out despite very good economic numbers and bond yields retracing a small amount. The equities chart has a pattern that is recognizable. It suggests a breakout is imminent and one that would fit with a year end rally. Not yet definitive since it needs to close above 2172 and soon.

    I do see a clear fundamental reason for the January reversal and that would be strong dollar, strong competition for free money to flow into bonds. The moves between now and then have me confused. That confusion should be resolved once we break clear of the 2172 range. Could be today or tomorrow.

    Going just by chart recognition we should break much higher and soon. Based on intuitive “gut” feeling the surge in dollar and rates suggests the market has not fully grasped the consequences and we might be experiencing an emotional play that is way ahead of itself.

    I will be playing off the range bound move. A breakout from here would have me go long. A failed attempt over next 2 days would have me go short.

  11. bud67 says:

    Thank You, to all of you. Who contribute, your time and energy.
    To the OEW site, for investment, or trading info….Bud

    • bud67 says:

      GLD, or Gold has a nice base at $115, and OIL
      is completing it’s bottom pattern, nicely as well. So,
      Gold and Oil, look to be moving upward, together…this time.

    • bud67 says:

      My thoughts – SP500 Primary W4, was completed early in the year.
      The current price advance in the SP500 index, maybe quite extended.
      Both, in time (2017 high) and price….just my thoughts – have a
      great week. I ‘am done, commenting for a while…Bud

  12. H D says:

    #drybulkshippers

  13. mjtplayer says:

    US Dollar index (DXY), monthly candles. Pretty clear C&H, upside target is the 2001 high at 121

    https://www.tradingview.com/x/IgSNDLXx/

  14. GDX above lower bb at 21.32.Currently 21.58.Good first step…with DXY up.See how this goes.Need to pull away from 21.32 toward 22.

  15. cosmos77 says:

    UWTI gapped up this morning to 18.50 leaving an island reversal bullish chart pattern. Short-term target @ 20.

    • cosmos77 says:

      Reuters Christopher Johnson | LONDON: 11/15/16

      Oil prices jumped more than 3 percent on Tuesday, bouncing back from multi-month lows on expectations that OPEC will agree later this month to cut production to reduce a supply glut.

      North Sea Brent crude oil LCOc1 was up $1.30 a barrel at $45.73 by 1350 GMT (8:50 a.m. ET) after hitting a three-month low of $43.57 on Monday. U.S. light crude CLc1 was also up $1.30, at $44.62. It reached a three-month low of $42.20 on Monday.

      Oil producers in the Organization of the Petroleum Exporting Countries are due to meet later this month to agree to limit output. An outline deal was reached in September but negotiations on the detail are proving difficult, officials say.

      • fionamargaret says:

        BP were saying demand, supply in equilibrium…just need to get rid of the oil in storage.
        They were bullish as am I.
        Thanks Cosmos….hope everyone does well.

    • fionamargaret says:

      Thanks Cosmos…..we will try again tomorrow….nice to have you around. x

      • cosmos77 says:

        UWTI hit the top of the hourly BB and trend line resistance at 20. Might take some off the table for a pull back to 17, then try it again. I was away and missed it today, so hope to have another chance tomorrow. Good luck.

  16. mjtplayer says:

    I’m surprised that nobody has mentioned it yet. The DOW made an ATH yesterday, on the supermoon. Now it’s turnaround Tuesday, maybe yesterday was the high and now we correct a bit.

  17. blackjak100 says:

    same patter in ES past few days/weeks….make a new high overnight and then selloff into market open. This will have to change if we are going to take out ATH.

    • joecthetruthteller says:

      If December resumes the rally off last Wednesday’s low, Oct’s high crossing at 4919.50 is the next upside target. First resistance is Oct’s high crossing at 4919.50.

  18. fotis2 says:

    CL long setup daily

    http://invst.ly/2ria6

  19. NINJA SHADE says:

    RE bj, P5 ED two possibilities atm

    • blackjak100 says:

      exactly…although I’m not sure I agree with your conclusion for 2300 UNLESS Maj b is still ongoing. It would look better with a deeper retracement as b was awfully shallow for a diagonal. A plunge from here to complete maj b would catch everyone off guard. The huge problem I see with maj b ongoing is all waves must be ZZ in ED and it looks nothing like a ZZ as the decline from 2194-2084 looks like a 3. It looks like a completed ZZ at 2084. Anything is possible.

  20. Richard Glackin says:

    fiona, I had no problem with either of your links and I want to say thank you for this…the woman is truly spectacular. In so many ways, she makes sense for anyone with an open mind, exactly what is going on and why it is.

  21. Thank you, Tony, for the Monday update. Bought some OEX puts just in case disaster strikes though.

  22. torehund says:

    ..swamp is the trend, it drains itself.

  23. blackjak100 says:

    Interesting….

  24. blackjak100 says:

    lots of bullishness on this blog and rightfully so. In fact, maybe more than I’ve seen in quite some time. Lots of people waiting for 2145ish to get long which probably means 1 of 2 things. Either the market never gets there and exceeds 2194 soon or it blows right through it to the downside. With the growth stocks tumbling, a HO signal on the clock, a ralleye built on Trump policy hope, and waning breadth…I’m a little more cautious here. However, I’ve always maintained 2194 would be taken out first before any kind of sell-off and I have not wavered from that. Int charts still look bullish (defined by weekly moving avgs slope and location), but they were bullish in Aug 2015 as well.

    Anyone else think this isn’t going to play out as easy as the bulls think? I’ve seen this too many times.

  25. nyjsec314 says:

    Small Caps leading the charge is mucho bullish long term

  26. New highs 355 new lows 330.McC +7

  27. Thanks Tony for your always useful insight. For reasons already discussed, I’m paying close attention to $NYA which, all things considered, had a decent day. And I’m paying close attention to interest rates which we all know are moving up globally and rapidly on fears of Trump induced inflation. We all understand the received wisdom on correlations between bonds and equities over the long run but in the short term its messy. Real messy. PIMCO notes the annual correlation (short term) between stocks and bonds between 1927 and 2012 has changed 29 times with wild swings in correlations. And you can see increasing rates did not interfere with increasing equity prices around 2013 when the trailing P/E ratio was around 17 But in mid 2015 when the trailing P/E was closer to 21 and rates crept up to 2.4%, rates MAY have played a contributing role in the correction. And now, with the trailing P/E close to 25, I don’t think we want to see the ten year yields above 2.4%. I mention P/E ratios only because in some studies, involving longer time frames, there are decent correlations between CAPE P/E ratios and rates. And, of course, they are used in inverted form in the roundly criticized Fed model. https://fred.stlouisfed.org/graph/fredgraph.png?g=bwIk

  28. bouraq says:

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

    • Thumbs up! Nice job, Bouraq!

      • blackjak100 says:

        Nice to see you back jedi! I think it’s been at least 2 years since I last saw you post.

        • Yes, it was almost 2 years, Blackjak. I cashed out “investments LONG” in February, 2015. Sure never thought it would be this long before the market signaled a LONG “Buy” again IMHO.. When I stopped posting, I did advise I was going to cash and would post again when market looked like a buy. I “believe” (one never knows) that time is now.

          I always enjoyed your posts, Blackjak100. You and I used to think alike often. Cheers!

  29. CB says:

    The issue of protectionism keeps coming up over and over again because it’s so important. Just take a look at the action in AAPL, FB etc… in the last few days… What does it tell you?..
    Trump is clearly underestimating the global consequences of some of his policies. Here’s a little warning from GS to explain things: http://www.bloomberg.com/news/articles/2016-11-14/goldman-sees-the-possibility-of-staglation-under-trump-presidency

    • bolderbob says:

      Globalization will continue but our values to provide workers with benefits will now get factored into the equation. Fair trade vs Free for our trading partners…this isn’t going to hurt but it will mean less flight of US jobs to the lowest bidders IMO.

      • CB says:

        Let’s hope so Bob. We need to realize that Europe and China will not hesitate to retaliate against our own companies with new tariffs and /or antitrust actions if necessary, and that will severely affect companies like AAPL, Google, FB etc. Unilateral actions may be popular in the Trump Tower, but around the world reciprocity is the name of the game.
        Also, just as Obama cannot force anyone to issue unprofitable health policies, Trump cannot force businesses to keep operating where their labor costs are not competitive. In a free market economy it all boils down to free movement of capital and labor. The only way we can create new jobs in the U.S. is if the vast majority of those jobs is in “new” innovative industries. So regardless of what Trump may have been promising in many parts of the country, those old coal mining jobs are not likely to come back (because we are radically changing our entire energy policy for instance).
        Since our gov. cannot directly interfere with private business decisions, the only way it can really help is through tax incentives and educational and /or research assistance. Let’s hope we can avoid any punitive trade measures such as tariffs . The historical precedent clearly argues against it (the 1930s).

  30. Tony, I hope you don’t mind if I share another trader’s posts (see below).. Besides you, he is the only other person that I follow. Like you, he is unemotional and trades only on the facts. We can all learn from difference perspectives, charts, analyses.

    https://twitter.com/CiovaccoCapital

    Thanks for the consideration!

    • CB says:

      Lots of great charts and ideas, Jedi. Thanks for sharing. Great to see you back!

    • and yet it seems the markets have priced to perfection a massive infrastructure program for the industrials and a practical clean unchallenged repealing of dodd frank for the banks…..nothing will run as smooth as utopia…as of 2 weeks ago there were many inherent risks in a DJT win and now at this juncture risks are not even being factored ,,,,This is the classic absurdity of markets these days ..extremes….years of moves in a few days or weeks….

      • also keep in mind it was the low interest rate fed driven environment that may have held up the markets from any major corrections these past couple years ..take that off the table and suddenly we are bullish due to fiscal spending? while the dollar rallies?? and rates rise? again this seems very suspicious to me

    • cyanus66 says:

      Interesting.
      After many years of wandering the blogosphere, I ended up following TC and CC.
      Exclusively.
      Not by chance, it seemeth …

  31. Huge run up in 10 year note and dollar. I do not agree the stock market can hold long at these levels. we are NOT in expansion era pre 1987. We are not in boom period of 1995 – 2001. We are currently in a 30 year deceleration with a current rebound within the declaration parameters.
    Debt load, and inability to ever launch sustained GDP over 3 percent will not allow for inflation to solve our problems this time around. Debt pressures world wide to large and getting larger. we will accelerate our spending and national debt once again under this leadership. it will not translate into sustained economic growth.

    Impossible for the dollar to stay over 100 for more than 2 more months without a major drop in equities. The stretched valuations and dollars influence on overseas contributions to that profit will be felt immediately.

    As sure as I was that consumer health was strengthening during the long 18 month sideways market move I am just as sure of this. I have been obsessed with the dollars strength for a long time and have mentioned this fact for as long as I have posted here.

    I place my 6 year Macro View against my understanding of past and future trend. If the dollar stays over 100 for more than 2 months and the stock market hold up I will abandon my long standing view and be rudderless to understand future course.

    Once the quarterly reports trickle in from early January, assuming market hold up, it will be a catalyst for a dramatic reversal and one that lasts longer and deeper than most expect.

    I can now see the end game for this wave structure. I suspect either the dollar retraces significantly lower on its own or it does so thru a stock market drop. One way provides an answer to how the equities market can hold up till January. the other way means at least a temporary steep drop in equities to force the dollar to drop.

    This dollar surge along with 10 year yields is going to test my 6 year understanding of market.

    • tommyboys says:

      There is no longer term correlation between the dollar and equities. What it did or didn’t do “last time” or the time before has zero predictability “this time”.

      • phil1247 says:

        tommy

        AMEN!

      • phil1247 says:

        why in the world does everything have to ” correlate ” ?

        • johnnymagicmoney says:

          you know when the markets fall apart? The answer is “when they fall part”. I have no idea when this thing tanks and correlations can be meaningless sometimes but there is one thing that is a truth and that’s elasticity. Too much of anything is a bad thing inevitably. Too much stimulus, too high rates, too low rates, too much debt, too high prices, too low prices, too wide spreads, too narrow spreads and on and on and on. There are so many elastic things going on out there that I just don’t see many of them continuing and when you have a snap of that elasticity you have shock and that shock tends to mean lower prices or recession or both. I think we are past the point of no return and have been for some time. Its just time at this point. I utterly disagree with Tony about his being a new up cycle. I see this as P5 and P5 only and nothing else makes any sense to me. How much longer and at what point P5 ends are the only two questions I have but new economic expansion and bull market? That’s a pipedream so I agree with you Golly.

          • I have a known track record of calling moves before most see them on their charts. I am talking big moves, and unpopular ones. Perhaps some people that actually do follow my views can attest to that. If you want to post your trading views and keep score I will gladly oblige. To suggest there are no longer any criteria the market goes by is naïve. Whether we understand their method is another matter. You call macro moves as random? I have done very well over the years trusting my defined methods. Short term is like quantum mechanics to me. Long term is like Einstein’s discoveries.

      • joecthetruthteller says:

        tommy, agree!

      • Correlate? Why use TA charts? Correlation is crucial. Wave structure has to correlate. My understanding of the dollars influence might be wrong so in that sense it doesn’t have to correlate.

      • Many different dollar indices. This not the one trading around 100 but is close enough to make a point. https://fred.stlouisfed.org/series/DTWEXM#0

  32. kvilia says:

    Learned, Phil – any good feeling about GC defending HWB today? Will it follow through, that’s the question.

    • My two cents…the upside is the +div on the weekly.See by Friday I guess.Or the next Friday.GDX still below the lower BB.Couldn’t break through it earlier.Keep an eye on that.Personally,I’m just waiting right now.

    • phil1247 says:

      I am not as interested in 1211 defending

      as i will be interested to see the extension short broken at 1236

      then a pullback must hold the .618 retrace

      then i am a buyer of gold

  33. My only observation, is Elliot wavers are all bullish. Tony, avi Gilbert Manley others, while Non Elliot wavers are bearish after this next extension. Guess that’s what makes a market, be interesting to see who is right.

    • fionamargaret says:

      Prechter said we were on the last tick….seemingly he has a blog and a letter….both do not say the same thing….??
      I will not discuss history in this…..again sorry….x

    • bud67 says:

      I am leaning toward – SP500 at 2500 ish…

      • bud67 says:

        and should clear 2200, soon enough…
        NY a/d line suggest a short term high,
        however, I own the SSO from lower levels
        and no wish, or thought to sell…Bull has
        much longer to run. IMO

        • fionamargaret says:

          2203 is the top of the Bollinger band….SPXL….
          UWTI should do well, oil will probably do a run until Opec
          UUP betting on a strong dollar
          Hope you do well Bud

          • fionamargaret says:

            The big boys are thinking the Iran agreement is toast, so Iran’s oil will no longer be available…..we may get Tony’s price yet….70…that should scare some shorts..

          • bud67 says:

            your a good friend to the OEW site.
            wishing you good health, and fortune
            on the oil investment. welcome, your thoughts, as always…..

  34. vivelaamo says:

    I expect us to see 2140 before the santa rally. Will be a hell of a place to go long.

  35. Thanks Tony
    DB target is 20600,interesting where is the pitch’s midline now
    19k is a resistance by fibo and also 38,2% of DB target
    http://invst.ly/2r1-z

  36. captbara says:

    Nice to see Tony agrees with my assessment as well🙂 Essentially tech is hurrying to finish their corrections to rejoin minor 3 asap without spoiling the rest of the party. We got daily +ve divergence for RSI(5) and MF on many big names today.

  37. CB says:

    Thanks Tony

  38. bolderbob says:

    Hi Tony,
    The US$ was hurting stocks, commodities when it was in its big rise a few years ago. For the past 18 months or so it has been in a broad sideways movement. Now it is looking like it may break out to the upside. Your count is bullish for the US$. Do you think stocks will go up with the US$ breaking out. It seems at odds with the past so that is why I am asking. Can oil go up to $70 as you suggest if the US$ does break out. It seems to me if the US$ breakout above 101 then stocks and commodities could have trouble moving forward.

    • tony caldaro says:

      those types of correlations do not work 100% of the time
      USD rose from 1978-1985 … stock market was rising too from 1982
      USD rose from 1995-2001 … crude started its secular bull market in 1998

      • bolderbob says:

        Thanks Tony…it would seem odd but that is what the charts seem to indicate

        • I am thinking it could only occur if China keeps stimulating their economy and buying commodities, you might have noticed that the PBOC has been controlling their currency via a basket of currencies for example the CNH has been depreciating against the AUD and NZD these couuntries are major exporters to China. So there could be some breakdown in the traditional correlations occurring. Havn’t quite figured this one out, but Tony’s count on the Shanghai infers China’s domestic economy will continue to perform well. Anyone else with thoughts on this would be great.

          • Tony any thoughts on a relative basis what will perform the best in the US i.e. Russell 2000, Nasdaq, S&P 500 or Dow Industrials?
            Trump policies look very positive for the US economy, yet I can’t quite work out whether he will follow through with his trade rhetoric. If you look at China, Japan and Korea they all manipulate their currencies, block access to their home markets and in the case of Japan and Korea are subsidised by the US security blanket and pharma R&D spend. Which makes you think there is some risk of regionalisation and thus lower global growth, but that all comes down to whether Trump trade chatter is all talk.
            I am long Nikkei in USD, Italian equities in EUR and Nasdaq. Thinking Trump may not be so good for little old New Zealand as it’s hitched it boat to China, lucky we still have the strong historic relationship with the US. New Zealand’s economy has benefited from China buying its commodities, houses and tourism flows, seems like all these things are peaking.

        • torehund says:

          If you get a sector bubble, commodities can go down further in USD-terms, and market still rally.

  39. First, Tony, you continue to be an outstanding resource for many. Your professional, non-emotional posts are food for many — who choose to take out all emotion out and just see the sign-posts ahead.

    Caution to some who believe it is “crazy to go long here”: Do not let emotions dictate your trading. Price only rules. IMHO this market is a screaming BUY. Reasons:
    * The Russell is a leading market indicator and it ROCKETED “up” past week.
    * Breakouts after a LONG consolidation period dictate going LONG — back up the truck!!! In this case, the Russell has broken out to the “upside”. This screams BUY. See chart below. History shows this in the past (go check out long consolidation periods in the 80’s and 90’s and see what happened — market exploded long for literally years afterwards.).
    http://stockcharts.com/h-sc/ui?s=%24RUT&p=D&st=2012-08-02&en=today&id=p61761374682&listNum=5&a=444460701
    * Trump’s policies will be good for U.S. (infrastructure). Yes, it’s true. The Russell is U.S. stocks and, sure enough, it is moving straight up on a Trump victory
    * Major indexes 50 and 200MA are upward sloping (not bearish sloping).

    I stopped posting here in early 2015 advising I was going to go to cash … and that I would not post again until market was ready for a “buy”. IMHO that time is now. Disclaimer: I went all in LONG last Wednesday morning in pre-market. The dead give-way was 800 point loss in futures and then only teeny-tiny negative before market open. I elected to back up the truck at 8:30 a.m. for an all in on the TNA. I did take all profits today, BUT … I fully expect to “jump” back in after what I am “expecting” to be a pause that refreshes. See charts below for why I elected to cash out in 2015.
    1. Advancing stocks were bearish:
    http://stockcharts.com/h-sc/ui?s=%24NYA&p=W&st=2012-03-01&en=today&id=p29631927178&a=384350535&listNum=7
    2. Transports were not participating (they are now):
    http://stockcharts.com/h-sc/ui?s=%24TRAN&p=W&st=2011-01-01&en=today&id=p03910296141&a=321134427&listNum=7

    Good luck to all! God Bless America! I believe we are on the road to recovery for most Americans (not just the 1%’ers).

    Thanks, Tony, for all you do for FREE! You are the Master! 🙂

  40. bud67 says:

    IMO…only a matter of time, before the 2193 high,
    is “exceeded”…..

  41. 123 abc says:

    Thank you Tony et OEW team. Superb analysis of nailing the low in BDI earlier this year —outrageous price action in DRYS. With the shipping industry moving, the call for Primary-iii is gaining momentum.


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