Wednesday update

SHORT TERM: consolidation day, DOW -55

Overnight the Asian markets gained 0.3%. Europe opened lower and lost 0.7%. US index futures were lower overnight. At 8:30 the PPI was reported unchanged, then at 9:15 industrial production was also reported unchanged and capacity utilization was reported lower: 75.3% v 75.4%. The market opened 6 points below yesterday’s SPX 2180 close, dipped to 2173 by 10am, then bounced to 2179 by 10:30. At 10am the NAHB was reported unchanged at 63. The market then drifted lower until about 1:30 when the SPX hit 2172. After hitting that low it drifted higher into a SPX 2177 close.

For the day the SPX/DOW lost 0.20%, and the NDX/NAZ gained 0.45%. Bonds added 3 ticks, Crude slipped 35 cents, Gold slid $3, and the USD was higher. Medium term support remains at the 2177 and 2131 pivots, with resistance at the 2212 and 2270 pivots. Tomorrow: weekly jobless claims, the CPI, housing starts, building permits and the Philly FED all at 8:30. At 10am FED chair Yellen gives the economic outlook report to congress.

The market opened lower today, went into a small seven point trading range, in what looks like a consolidation day after yesterday’s rally. With the FED chair reporting tomorrow and options expiration Thursday/Friday, traders appeared to be on hold today. Technically, if we count four waves up from SPX 2084/2085: 2147-2125-2182-2151/2152, we could count another four smaller waves up now: 2171-2156-2181-2172. This suggests the next rally, should 2172 hold, could top off the first wave up of this uptrend. This uptrend continues to impulse higher. Short term support is at the 2177 pivot and SPX 2151, with resistance at SPX 2194 and the 2212 pivot. Short term momentum dropped to about neutral during today’s pullback. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: uptrend


About tony caldaro

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121 Responses to Wednesday update

  1. fotis2 says:

    Wassup with Crude ?Sneaky one that does its own thing no consideration for positions.

  2. johnnymagicmoney says:

    I think the sad thing about this market is it will inevitably lure in even the investors that are still shy from 09 and when it does it will pull the rug from them at the worst time. Pension funds which are way behind will increase equity allocations. Investors who just read the headlines about all time highs will put their hard earned money in and all of them will lose profoundly once again. Its always been a casino but at one time it was a Benjamin Graham market too. Benji is dead in this market.

    • torehund says:

      My 5 Cents goes to a Magna P-III squeeze were you cant discern any waves at all, and the dollar goes with it. Thats my 5 Cents.

    • bud67 says:

      Hi…do not know you, and just read your comment. So….if critical,
      I am not intending to give that message. But….investors, have had there
      opportunity as well – 2009, and 2011. Since the 2009 low, in my work.
      We have seen the Primary Waves 1,2,3 and 4. There has been since
      2009, investment opportunities.

      Now, from the Feb low of 1810 (SPX). W have advanced into a P5 up,
      pattern. And, we know, once P5 end, so will this Bull run.

      Oh, my wave count comes from the PUGSMA free charts. I look at, the OEW
      counts, and resolve in my mind, which or both, to follow.

      The issue now, in this market is simply – time – Meaning, how much longer
      will this Bull market dance higher. The short answer is – well into 2017.
      Thus, no major Bear market is on the immediate horizon….Comments?
      Done with comments for this week, now go back to reading you wisdom….end

  3. mcgcapital says:

    Still expecting 2-3% off the indices in the short term. Of the ones I follow:

    FTSE is in a tight range between 6730 and 6820. Would favour this breaking to the downside as the sideways consolidations on the FTSE often are continuation patterns, so shorts around here with stop above 6820 area.

    Dax has rejected the crucial 10800 resistance level on Wednesday, so shorts here with targets sub 10500 and stops above 10800.

    SPX is within touching distance of the ATH, is overbought and momentum is diverging. So shorts here looking for 2140 and stop just above 2200.

    Dow and Russell are the strongest indices, but Dow has been range bound for 5 trading days and has started to lag SPX which it often does before down legs. Shorting with stops above 19000. Russell is still trending higher but the rate of gains is slowing, wouldn’t be selling it yet but expecting a turn soon.

  4. where is Phil, He is helpful at times like this,

  5. cosmos77 says:

    UWTI wave count: From the bottom at 15.80, I can count five impulsive waves up, i.e., 17.20, 1665, 2030, 18.95, and 2050 top. Correction waves from top: a = 19.10, b = 19.90, and c under way with first support at 18.25 – 18.35. After that there is a gap to fill down to 17.30, but since the gap was part of an island reversal, it might not get filled any time soon.

  6. captbara says:

    Gold mini HnS target hit at 1210. Next flush to break the 1200 pivot could be a big one.

  7. If the dollar breaks out above 100 as it looks to be doing without any equities stall I must conclude this third time is the charm. The current stock pattern seems to conform to the post BREXIT rally. That suggests this current move will not stop at 2191. It also suggests a very strong move for weeks to come. I hesitate to call this move given my reluctance to dismiss the dollars rise above past 2 stalls. But if I was to bet, as I am, I must stay long until proven otherwise.

    I will tell you that a rise of this proportions carrying over to New Year gives me confidence on my long established Macro View of a deep and long drop in 2017. There is no way earnings can catch up to expectations especially if costs rise as they are. We also have the Trump factor and a sworn in date of January 20th. that time frame fits with my deep drop scenario. Will he anxiously announce his plan to deport 2 million illegals immediately and the other 12 million later? Will he announce a total Muslim ban? I suspect he will. He seems anxious to do so and has already hinted at this. The tax cut is already a know entity and the street is trading off that today.

    With currently hit 2188 as high so far today. I will “anxiously” be waiting for the next resistance level of 2191. If it punches thru I can be confident of my assumptions going forward. I caution all the bulls to remain level headed in 2017. The need for emotional balance will be tested. First test should be today or tomorrow with 2191 setup for possible retrace. I will be looking for signs of a stall there.

  8. fotis2 says:

    Where the Bears today?Always awol at critical points

  9. cj32 says:

    Cr. to CBZ

  10. bud67 says:

    OIL, my PO is near $14….Bud

  11. captbara says:

    Beautiful subdividing impulses in the Nikkei. Very easy to track on the hourly chart.

  12. captbara says:

    Apple in talks to move iPhone manufacturing back to the US. Trump got them that scared already?

  13. cosmos77 says:

    The OEW wave count is getting down to the nitty gritty and smallest squiggles (i.e., pico level). Since micro wave 4 bottomed at 2152, I can clearly count four completed nano waves up and working on the fifth. Nano wave iv bottomed at 2172 and now nano wave v is made up so far of pico wave 1 to 2183, pico wave 2 bottomed at 2179 and pico wave 3 is in progress and is strong as you would expect from a third wave, but should run into strong resistance at 2191 -2194. Since pico wave 2 appears to be a simple zigzag, pico wave 4 should alternate*, but would expect it to terminate around the 2177 OEW pivot area. Pico wave 5 should be weak to follow the established pattern and have problems getting too far above 2200 to complete minute wave I. This is all just my opinion. We’ll see how it actually plays out.
    *QEW tutorial Lesson five states: Wave two zigzags are usually followed by triangles or complex corrections in wave four.
    Thanks Tony for your guidance and good luck to all.

    Gartman: The trend in equity prices is still from the lower left to the upper right. Weakness is to be bought, especially in infrastructure-oriented equities. If you’re uncomfortable being outright long, there are myriad ways to hedge yourself. But you want to err upon the side of being bullish on stocks.

    Beyond that, I think you want to err on the side of being bullish on the U.S. dollar and bearish on the euro. I think you want to err on the side of avoiding debt securities, because I think interest rates are going to rise. … If you’re a punter, you probably want to be short the bond market; if you’re an investor, you just want to steer clear. And I think you want to err on the side of being bullish on gold, but specifically in euro terms. That’s my story and I’m sticking to it.

  15. liborval says:

    HI Tony, how big min. II could 20pts or more?

  16. johnnymagicmoney says:

    VIX is moving higher along with equity prices into a massive sea of negative divergence. If markets don’t take a breather soon I throw my hands up and say whatever Mr Bull bend me over again

  17. scottycj1 says:

    New all time new high in the Wilshire 5,000 today….significant

  18. kvilia says:

    I am hearing gold bull newsletters are turning away, is one, citing Trump basing the economy on strong dollar. Unfortunately I have to agree. We may actually see some aggressive rate hikes coming in. With that it’s going to break the bull, so I/m seeing as before 1500-1600 before summer of next year, at the same time bullish long term on US markets. I will use the next opportunity to exit NUGT and have to agree with captbara – will be lookinging at DUST. If this is the case, Trump is doing the right thing deflating the bubble and causing debt crisis early in his presidency to come up clean and nice in 4 years right for elections. You can say whatever you want about Trump but he is not stupid.
    Oil will most likely go down as well.

  19. captbara says:

    NQ_F IHS in play, target 5150

  20. johnnymagicmoney says:

    negative divergence on S&P hourly, daily. If it goes to new highs then weekly and monthly

    negative divergence on Russell

    plus a bunch of other moronic levels that need to be worked off

  21. -div on daily,hourly SPX.From what I read,Avi says GDX,ideally should not exceed 22.50,then drop to 19.80 and tear off from there.Avi has been too bullish the last few months.He got the last move down right though.FWIW.Later.

  22. My target for today or tomorrow, hopefully today is 2202

  23. -div on hourly DXY still there.GDX and gold still green.That HAS to be a positive…doesn”t it?

  24. mjtplayer says:

    Shorting the IWM right here at 130.70, at or very near the end of the expanding diagonal pattern; stop at 131.50

  25. bud67 says:

    Oil…nice pop-up this am…overcome price resistance? Probably will…

  26. ko68 says:

    Thanks Tony. You dont find it probable that last weeks low at 2151 was minute i?

  27. torehund says:

    Thanx for update.
    Tony dont you think its a bit risky to fine count waves at this point, at least for investors that count on the P-III scenario (one missed day in the market may be risking loosing the train). When fractals suddenly summate it could go straight up with little chance to get in at a good price.

  28. stormchaser80llc says:

    First, I’d like to point out that my proprietary Volatility Model fell today by about 16% even though $VIX was up over 2%. Traders can sense that the Volatility Model does a much better job at assessing risk of a whipsaw market vs. $VIX.

    The market continues to consolidate. While SPX lost a little today, I show how the market likely has not yet topped given lack of negative divergences on SPX and positive divergences on $VIX. In addition, feel good about continued upside given the performance of my proprietary Technicals Model.

    More discussion and charts here:

    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.

  29. cosmos77 says:

    Tony, thanks for your guidance during this interesting market. Based on your wave count, it appears that we are now in the fifth micro wave and maybe close to the top of minute wave i. As you point out there are four nano waves so far in this fifth micro wave and the fifth nano is underway . So, building on that, if nano wave 5 equals nano wave 1 (which was 19 pts), then minute wave i should top around 2191 and then we should expect a larger pull back for minute wave ii (e.g., 38.2% of the total minute wave i or 41 pts or 2150), before embarking on minute wave iii, which could be quite strong and propel the market well above 2200. However, it needs to stay above 2171 for this to pan out. A break of the 2171 wave i peak could be a failed fifth which is bearish short term.
    Thanks Tony and good luck all.

    • cosmos77 says:

      Correction, A break of the 2171 nano wave peak could be a failed fifth, which could be bearish or it might mean nano wave 3 is extending which is bullish. I hope that clears that up..

  30. Its really very simple.Unless the backtests of these broken H&S patterns go back above the breakdown levels…the PMs are sunk–for a while.I still see a great -div on the monthly DXY chart.When that kicks in…should take DXY down back to…91? (Or lower.)

  31. bud67 says:

    Good Evening….The OEW, Bull Market continues to roar upward,
    in EW fashion. And while price for the SP500 is heading higher this
    year. Time, another critical element, is starting to show signs that
    in the 1st qtr of 2017. The SP500, will make it’s crest above 2500.
    Or, that vicinity. SP500 common target is 2500, in my work. Not
    an exact number but pretty close. The BEAR MARKET, follows
    and the downside is estimated to be near SP 1600, or a bit
    lower in 2017-18 time frame. As for me. I have not been an
    aggressive trader, or investor of late. Been traveling the USA,
    most recently and that is always a big thrill for me. Fir example.
    Moab, the red rock formations are really a photographers
    dream. Winter season is arriving in the Rockies tonight, and the
    winter storm moves into the plains, on Monday and Tuesday. Cold wave
    follows…Thats all I have, enjoyed OEW critique of the SP…Thanks

  32. blackjak100 says:

    Something has to give…

    It shows the Goldman index is pointing south as the S&P 500 heads in the other direction. “Moving down means that real people and business are facing tighter conditions — more expensive rates to borrow money, says Helen Thomas, of the Blonde Money blog.

    • Yes, quite good.

      When thinking about Beethoven piano soloists, have to think back to the iconic Glenn Gould, germ-o-phobe, and all around nut case. But just look at those spider-man hands!

      Here is the famous 1970 concerto (5), where the original soloist scratched at the last minute, and Gould had just few days to practice. Quite a few notes to memorize!

      Most Beethoven keyboard soloists are just trying to get through the thing without a major blunder. On the other hand, Gould nearly attacks the piano. “Damn the torpedoes!”

      And, if you listen closely, Gould is humming again. This was his final public performance, age 38.

      • @Tom – Thanks for sharing! Didn’t know Glenn Gould, beautiful. Will share some on my tweeter feed.

        @Tony – Thanks for all you’re doing and sharing. Have been following you for past 7 years, always a pleasure to read your work. Be well.

      • CampFreddie says:

        Tom – Thanks for Gould, its been a long time since I listened to this troubled musical genius.

      • I saw Andre Watts interviewed on PBS one Sunday, after a performance of one of the Beethoven Concertos. The accolades were flowing
        “How great a performance ….” etc.
        It finally got to be too much for Mr Watts, who finally said …
        “You know, I only played it. I didn’t write it.
        And that was the end of the interview.

        Too bad the guy who wrote it can’t be interviewed.

        • fionamargaret says:

          Thank you Tom for the quite delightful gift of the Gould recording….you obviously don’t only like music, you know music. Bear with me though, I have a limited selection from which to choose. x

  33. kvilia says:

    Have you heard of a large oil reserve found in Texas just last week? I have not had time to confirm. Also, dollar looks like either forming a triple top or breaking to the upside. I have some NUGT, and it bothers me. Will it retrace from the lows so I can sell?

    • kvilia says:

      Bu the way, I still think this is mother of all bull traps and 1500s are coming. Interest rates are going up, and with all the debt around, especially in the emerging markets, there is no freaking way the new wave of growth start without a recession. I think gold may sell off further into the FOMC meeting where they raise a quarter and say that they will need to monitor economic conditions before raising more. That’s where dollar should break down and gold rebound. Of course Trump seems to be smart or have a very smart crew, so he can choose to trigger a quick debt crisis and be done with the that within year or two to become electable again in 4 years. So really tough to make investment decisions here until we know the interest rate stance.

    • cosmos77 says:

      This must be what you are referring to:
      USGS Announces Its Largest Oil And Gas Discovery Ever In The States.

      • fionamargaret says:

        Really interesting Cosmos…..just what we need, more oil.
        I think there are too many people negative on oil….only 8% of traders are positive.
        What about the Iranian elections later in the year, and if we are playing the new PE ideas we rip up the Iran agreement, and that takes a bunch out of the market.
        Because we are also “making Russia great again”, the Middle East is slightly nervous, so maybe a risk premium should be added to the price of oil.
        There is a clear path higher for oil…..quite a bit higher…

        • torehund says:

          I concur to your fundamental views, its the Euro I dont trust. Remember the Deutch mark, it traded about at half a dollar at the time I grew up.

        • cosmos77 says:

          Fiona, you probably noticed the gap up to 20+ in UWTI this morning. It is close to a trend line resistance in the area of 20-22 and am skeptical it can go much higher short term without a catalyst of some sort like a production interruption, but I’m holding my longs and watching for now.

          OPEC meeting Nov. 30 and what I am reading is that a deal is possible but any cut in production would potentially trigger increased production elsewhere, which reduces the effectiveness of any agreement. For example,.Brazil and Russia could fill any gap left by OPEC cuts. Also, I think renegotiating the nuclear deal with Iran seems more likely than ripping up the deal entirely. There are six other countries involved, all with their own agendas and would have to agree to accepting higher prices. I think ripping up the deal is an overstatement, but the Donald wouldn’t overstate something, would he? Iran will likely keep on increasing production because they desperately need the money as does most of the OPEC countries. I was in the UAE in October and saw first hand what low oil price is doing to the economy. They are not in a recession, but they are cutting back in many areas, which affects living standards. No doubt the producers would all would like to see prices higher, but can’t afford to cut back much on production.

          From what I read a bigger threat to oil supply is vulnerability of some of the pipelines. Robbie Fraser, commodity analyst with Schneider Electric, said the possibility that instability and supply disruptions will continue has also made investors more bullish on oil. “It’s a pretty big combo in a pretty tight window here,” he said, when added onto optimism over an OPEC deal. So status quo for now seems likely.

    • fionamargaret says:

      Learned has posted some great charts on gold and miners I will do numbers on gold tomorrow when the market is open, and let you know what I think….

      • fionamargaret says: is still holding above the level with the Brexit vote, Europe is still going to have difficulties and bank problems and gold go well together.
        At the moment we have higher bond yields, with not much sign of inflation, so that is mainly the negative for gold….

        • fionamargaret says:

          Kuroda has just announced unlimited bond buying, so that has knocked back yields some… about manna from heaven….

  34. bouraq says:

    Chart of the day is $DJIA. Join for more.

  35. captbara says:

    Yellen and friends tomorrow.

    • CB says:

      Oh my … with friends like these., you just never know, right? 😆 … Thanks capt. ! Good to know. Thanks Tony as always!
      OK Janet, be a good friend tomorrow and remember that we’re due for a small rally in gold.. Thanks Janet 😉

  36. llerias7 says:

    “This suggests the next rally, should 2172 hold, could top off the first wave up of this uptrend.” – you mean end of minute (i)?

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