Wednesday update

SHORT TERM: higher open on OPEC deal, DOW +2

Overnight the Asian markets gained 0.4%. Europe opened higher and gained 0.3%. US index futures were higher overnight. At 8:15 the ADP was reported higher: 216K v 147K, at 8:30 personal income (0.6% v 0.3%)/spending (0.3% v 0.5%) were reported higher and the PCE was reported higher (0.1% v 0.1%). The market opened 5 points above yesterday’s SPX 2205 close, rallied up to a new high at 2214 in the opening minutes, and then started to pullback. At 9:45 the Chicago PMI was reported higher: 57.6 v 50.6, then at 10am pending home sales were reported higher: 0.1% v 1.5%. By 10:30 the SPX had pulled back to unchanged at 2205. Then after rally to SPX 2211 by 11:30, the market headed lower again. At 2pm the FED released its beige book: https://www.federalreserve.gov/monetarypolicy/beigebook/beigebook201611.htm. Heading into the close the SPX hit 2199, and ended the day there.

For the day the SPX/DOW were mixed, and the NDX/NAZ lost 1.15%. Bonds dropped 21 ticks, Crude rallied $3.90, Gold slid $15, 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 at 8:30, then construction spending, auto sales and ISM manufacturing at 10am.

With OPEC agreeing on a cut in production energy stocks rallied, carrying the SPX/DOW with them into the open. Soon after the open the SPX/DOW made new highs, the SPX by one point, while the NDX/NAZ did not and started to pullback. For most of the morning the SPX/DOW tried to rally, while the NDX/NAZ was declining. Then in the afternoon they all declined together. At today’s lows the NDX had dropped below the low of Monday a week ago. The NDX/NAZ look like they are in a wave 2 pullback. Waiting on the SPX/DOW to follow. Short term support remains at the 2177 and 2131 pivots, with resistance at the 2212 and 2270 pivots. Short term momentum put in another negative divergence at today’s high. 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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151 Responses to Wednesday update

  1. kvilia says:

    If gold holds on here – NUGT target – 8.4. If it breaks it, next target – 11.87.

  2. Going long at end of the day on the S&P. If it trades below today’s low at any point tomorrow I am out.

  3. mcgcapital says:

    December generally has a decent sized drawdown prior to the low liquidity Xmas and New Year rally, especially if November has been strong. There’s nothing to say this time is different. 2140 SPX, 18700 Dow, 6500 FTSE and 10200 Dax all look possible, before finishing the year at current levels or 1-2% higher.

  4. Lee X says:

    Well guys and gals I want to wish you all a Merry Christmas and a healthy and happy 2017 !
    I know what ya’ll are thinking that yeah sure you’ll post again in 5 minutes haha but nope I assure you that’s it from me this year.

    Trade for yourself and remember your Mother is the only one that loves/loved you , everyone else just tolerates you . =)

    • tony caldaro says:

      merry Christmas senor CL

    • kvilia says:

      Cheers, Lee – ho-ho.

    • CB says:

      Hey Lee, it was good talking to you the other day and I hope you will feel better soon. Just think about all the fun we used to have here over the years- it will definitely make you smile, I guarantee it🙂
      Here’s a nice quote for you, Lee: “No man succeeds without a good woman behind him. Wife or mother, if it is both, he is twice blessed indeed.” – G. Winn.

      You are so blessed, Lee. Just think about it as often as you can.

      Happy Holidays & enjoy all your blessings, Lee!

    • wanderer says:

      Happy Independence Day, too!

      • CB says:

        LOL… Ya think?

        Lee, geez, do you even realize that we’re gonna be bored to death without your zingers?….that would be terrible… I’m getting very concerned about you 🙂
        Need some good motivational lyrics or quotes? “Independence Day” quotes, Lee? 😉 We aim to please. Whatever it takes… We take risks here😉
        Have a great evening everyone.

  5. gtoptions says:

    Thanks Tony
    Curious, does anyone think this is a w4?
    Symmetry with the 2147/2125 wave.
    Carry on. GL All

  6. vivelaamo says:

    Just how Russell lead the way up its now needing the way down. I’ve already gone long but I can see us going as low as 1280 which would be the best xmas present I could want.

  7. llerias7 says:

    Tony, a low in 2180´s is satisfactory for a minute ii retrace? I smell a rally tomorrow with the Jobs report…(start of minute iii (?))

  8. phil1247 says:

    Tony

    sorry about all the posts

    but i havent posted anything this week till today …..

    can i save them up and use them all at once ? 🙂

  9. ariez5 says:

    Anyone have a theory why the dollar has been weak all day with yields spiking to 2.49? Is the dollar foretelling a drop in yields (maybe not-so-hot jobs report), or can the dollar and yields be decoupling?

  10. phil1247 says:

    last one………

    /es 2188 target hit

    now bounce or collapse in extension shorts ?

  11. kjb0 says:

    You are correct Johnny. They just don’t it. It’s like trying to convince a democrat that their tax and spend policies and political correctness are ruining the country. They are taking God out of everything. They burn the flag. We are not supposed to say Merry Christmas anymore. We have boys using thre girls restrooms. We are 20 trillion in debt. Which brings me to my next point. The next crisis will be a debt crises. Both personal and government. The majority of that is interest paid to the Federal Reserve, which is comprised of “private ” banks and bankers. That money is taken out of the “public” system and used to make the bankers filthy rich. We just keep going further down the rabbit hole. The government will soon realize that their only way out is to print and borrow money from “public” central banks. Then the interest paid will stay in the system and be used to the benefit of the tax payers. Abolish the fed. My take on the market is this. The market is rotating here at the top. It is starting a multi year decline according to various cycles. Gold may hit 1500 but will then drop to below 900. Oil will drop to $20 . There will be no V wave recovery this time in the stock market. We will have an ABC correction that will surprise everyone how low it goes. That’s my story and I’m sticking to it. Tell me….who is worried about a wall of worry?

    • I suggest you never look at the data that determines trend because right now we are on the launch pad. Dismiss wages, spending, discretionary income at your own risk. the everyday man is not pontificating on the world debt, only on his monthly bills, spending and saving. Nothing to indicate it is getting worse and in fact everything indicates the opposite. real wage and spending growth is here today. if it stops tomorrow so will the market. For now enjoy the good times. Most bears have wept these last 7 years while the real world decided to get back on its feet. Look at what is, not what you expected it to be. No moral barometer determining market behavior.

      • johnnymagicmoney says:

        I started out as a bear late in 15 when the S&P was at 2100 or so. I haven’t missed much. My negative stance will save my butt eventually. I cant lose much by being defensive but I can lose a butt ton by taking large amounts of risk at these levels

      • kjb0 says:

        My goodness man, who trusts data in this day and age. You see only what they want you to see. What did your data tell you before the big drop of 2008 ? You are not seeing the forest through all the trees. Maybe I am wrong, but I do not see 2017 as being a good year. I definitely do not see it as a wave 3. I will stay in cash for now. We are headed for deflation. Credit will tighten, housing prices will fall with the mortgage resets, and cash will be king.

  12. captbara says:

    Dax heading for 10400 into the referendum

  13. phil1247 says:

    ok folks

    have fun ………im done

  14. mjtplayer says:

    The 10yr just tagged the 2.49% resistance area from the June 2015 high, it’s now or never for the bond market if it’s going to hold. Failure to hold here could set-up 3% as the next stop.

  15. phil1247 says:

    /ES

    extension long has failed

    support drops to 2098 ( no typo)

  16. pooch77 says:

    This wave will last longer than this week

  17. johnnymagicmoney says:

    the selloff begins like right now

  18. Fun-da-mentals – Absolutely no doubt about the recovery. Anyone questioning how the economy can withstand an absurdly low 10 years bond yield and rising borrowing costs should just evaluate the data. We had in the last 2 months a one percent gain in income and spending. that’s a huge pickup. Housing, cars, manufacturing, consumer confidence, and on and on suggests the market will go to da moon. Not many however are pricing in what will happen soon if this pace continues. Rates will rise again and in first quarter of 2017, Oil could rise enough to cause costs to pick up, Bond yields will become attractive as competition for your money. Wages pressure and stronger dollar is a concern. Continued worry over China’s rapid property expansion seems contained according to Morgan Stanley. http://www.chinadaily.com.cn/business/2016-12/01/content_27536861.htm

    Many sharp market corrections happen as a result of rapid changes not anticipated. we are experiencing right now rapid change not seen since the housing debacle started. I have predicted that the initial rise in rates will actually spur faster and higher borrowing in order to lock it in. the assumption NOW is for at least 3 more rate hikes in 2017.

    I am still correlating the dollars strength with stock markets ability to stay the course. This weeks majority of data was higher than anticipated. if the jobs report is strong, specifically wage growth we should see another move higher in the dollar. it should actually break new highs again.

    • johnnymagicmoney says:

      you want to keep pointing to rising wages or spending as why the outlook is so strong but rising yields and dollar are part of the outlook as well. Our whole entire “recovery” since 09 has been built on a smashing of the dollar and profits are meager at best and that was this past quarter when the dollar was much lower. Sorry profits materially higher are not coming. The manufacturing will fall off, the housing sector will fall off, borrowing costs will increase and the market at some point will start freaking out about all of this. Recessions start when rates start to rise generally to cool off inflationary forces and it generally starts at full employment. We are there right now. Its not that rates will still be historically low. Its the change in the rate environment and the sharp increase in that change when mountains of debt have been built up at distorted levels. This is going to pop…..its just a matter of when. Tony’s count of being in a new bull market is utterly wrong.

      • mcgcapital says:

        Good post Johnny. Enjoy reading your comments! Think you’re spot on about the macro outlook, it’s been a 35 year bond bull market and if this is the end of it, it doesn’t bode well for the economy or equities or property given the amount of debt accumulated in the system.

      • Spending AND costs are rising much faster than at any time in the last 7 years. In fact every component you mentioned is MUCH higher today. The market “anticipated” this growth and held for an 11 percent earnings gain well before the data confirmed the strength. A huge spurt in spending and income can’t be denied and dismissed. Most likely will translate to higher growth and spending. I don’t doubt that outcome. I doubt the ability tor companies to retain the higher revenue without incurring higher costs. In other words will costs exceed their profit potential.

        I deal in facts, not suppositions or wishful thinking. that never works for investing. you must be rigid in your betting system. You have to “prove” your case with facts or trend analysis based off those facts. Why would you think the wage and spending component will suddenly drop? there is NO data today that remotely suggests that. In fact it suggests the complete opposite. we are starting in the basement when it comes to rates and borrowing costs. If discretionary income keeps building the consumer will be able to handle it. it’s called inflation. Commodity inflation by itself is destructive. Wage inflation is not. Lets see what the latest data shows on Friday.

        “Recessions start when rates start to rise generally to cool off inflationary forces and it generally starts at full employment. We are there right now”

        We have been in a 3 decade long deflation cycle and in last decade an acceleration of that deflation. No inflation. Just a “normal” upside in a very clear downward path. we would have to go over 3 percent in the 10 year JUST to be where we were in 2015? Was 2015 a crash? You talk as if we are in the 80’s? real inflation here is a good thing. In this debt ridden world however there is such thing as too good. if inflation really picks up debt will be an issue. 200 basis point move off 10 year note will be a problem, not the 25 basis point move this December and not even another 25 point move expected in first quarter of 2017. Almost no way we crash anytime soon. A 20 percent correction is possible due to earnings misses. Sorry but to suggest we are in wave 5 and about to crash makes no fundamental or technical sense.

  19. johnnymagicmoney says:

    NYAD NYAD NYAD

    So everyone and their mother on here was blah blah blah about the advance decline and now we have falling advance decline and divergence, everyone and their mother talked about positive divergence anytime we had a selloff. OMG positive divergence its gonna rally! yet now that we have various indices all over the place showing hourly, daily, weekly, and monthly divergences all of a sudden it doesn’t matter because oh “its unreliable”. Oh and how about rising yields and a strong dollar. Go look at the selloffs in 14,15, and 16 and look at where the dollar was or yields were and look at them now. Oh but that doesn’t matter anymore. Should we discuss rising wages, declining productivity, higher inflation prints and the fact that the FED is behind the curve.

    Here is the fact……………bulls look at their counts and find one that works for them. Everyone who has pipe dreams of S&P of 3000 and so on will change their counts to a bear first. You look at the action at everything in the market aside for energy and banks the last two days and honestly tell me that’s healthy. That is not indicative of being in the meat of a new market. That is indicative of the end.

  20. Jack Sparrow says:

    time to short oil around 52 (with a tight stop) and then after few dollars drop , go long for a move upto 70

  21. Bud Fox says:

    starting to have my doubts about the OIl market advance thus far….end

  22. tommyboys says:

    Tony can the Nas complete a correction with the Dow just embarking on one? Nas off 150 pts already in a few days while Dow still at high?

  23. Just a quick update.GLD broke and then recaptured 111.Silver still ok.GDX rising RSI yet.Nasdaq -div working well.If GDX +div worked as well….lol.Tomorrow is probably the proverbial line in the sand on all of the PM complex.The reaction to the jobs number at these levels will tell everything.Good luck all.

  24. captbara says:

    What’s making the Dow stay up today?

  25. H D says:

    If you don’t quite understand elliot wave, take a look at today’s CL chart, 3 wave pull back and 5 wave impulse. One of the better examples I have seen. People are still trying to sell it too. JMHO

  26. phil1247 says:

    DOW

    target 19260

    want to sell all DDM there

    • phil1247 says:

      but tight leash because /ES extension long is under pressure

      and if the extension breaks ……..
      well….. you know the rest ……🙂

  27. bolderbob says:

    Hi Tony
    Looking at the SPX it does seem the correction has started. Do you still think it will be about 30 points and over in a few days? I was looking at the seasonal that show tax selling to about Dec 12 on average so was wondering if the pullback might coincide and last until then?

  28. johnnymagicmoney says:

    Market is bidding up financials and energy stocks like they are tech stocks. Market is so disconnected from reality. The valuations in the big integrated oils are trading g with the expectation that oil is going to like 80. Sorry folks oil going higher will bring back supply a d flood the market. OPEC cuts are irrelevant with oil sands and shale And a million other energy discoveries world wide not to mention alternatives and the sharing economy and how that steals from demand. No sense

  29. phil1247 says:

    /CLF7

    a=c is 51.06

    front run by a penny ……………

    .LEE….i know you like those pennies 😉

  30. phil1247 says:

    /GC

    next target 1158

  31. mjtplayer says:

    10yr yields continue their relentless rise, now at 2.44%

    The next resistance area is 2.49%, the highs from June 2015. If yields rise above this area, there’s really nothing for resistance until 3%

    Rate sensitive sectors like REIT’s, utilities, home builders and consumer staples continue to struggle and grossly under-perform the market.

    • johnnymagicmoney says:

      Cracks me up….your three years any increase in yields or the dollar freaked out the market……now rates rising incredibly fast is a good thing. No risk is priced in whatsoever. That’s why I laugh when people say it’s bearish. There is no pricing of risk right now. The mad buying of banks because of higher rates is extremely flawed logic. Ah whdn rates go higher and higher the economy suffers and you make less…….but keep buying them after forty seven vertical gap ups Mr market. I will laugh when they implode

    • phil1247 says:

      remember all the flak i got saying

      ” sell into any bond rally”
      for months on end?

      especially from aah michael

      who said bonds and gold are the ” truth tellers “.
      ..as he was loaded with bonds and gold
      i am now accumulating 3 to 5 year notes

      bring on higher rates now …i am loaded with cash

  32. mcgcapital says:

    FTSE has broken below 6730 support. Still see it selling off down towards 6500 before a Christmas rally towards 6900.

  33. Bud Fox says:

    Good Morning Tony and the contributors to OEW. My message to share this am is.
    I have noted, my chart of the SP500 OBV. Now, yes. I understand how old this tech
    indicator is. But – I raise the point, in that. The SP500 OBV is currently, and has
    been very Bullish, from the 2009 low. I am not good a posting charts, so do look
    at it on your own system, or email me, [ bud_67@hotmail.com] and I will send you my copy.
    Bottom Line – the OEW wave structure is true, and the SP500 OBV confirms the
    Bullish pattern…that’s all…end

    Oh..Tony. a bit early but – have a great Xmas season. For you, family and friends…
    I am done for the year.

  34. The BIG problem is RussiaUkraine. None will be able to stop them if they are falling in a spiral of conflicts. Hoping Putin will show to be very clever or it is going to be a great mess.

  35. Lee X says:

    Now that’s a fiddy print in CL

  36. Just read the Harry Dent article about India causing a big cascade of gold selling.He figures gold down to 700,back to 950 and then down to 500.Deflation.Says get out before the announcement.No pressure.It would be a 40% down day in GDX.Can’t we just get a little rally to 1230 before that?That’s all I ask.India wouldn’t make an announcement like that around a Christian holiday would they?If it isn’t CBs mucking gold up–it’s governments.

  37. stormchaser80llc says:

    My signals say to stay on the sideline, but all 999 of the ensemble members in testing are still bullish, which is interesting. New highs were made in the cash market today, but on futures there was no new high or low to form any new divergences. The McClellan Oscillator is now diverging lower slightly, and the %stocks above their 20/50 day moving averages took a hit. Similarly, it was a bad day for the proprietary Technicals Model, while its still positive it is nearing zero in a hurry. While the nail is not yet in the coffin for this bull run higher, its getting closer. Need technicals to become supportive in the near future if this market is to make a new high. Oh, and we made a good call staying bullish oil even after Tuesday’s bad day!

    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.

  38. Jack Sparrow says:

    so fiona and otheres – if oil makes a slight new high to 52 and then pulls back….that would be extremely bullish-

    for elliot wave followers- that would mean we had a leading diagonal from february low (wave A.. B to down for next month?two or so and then C move up to 70ish

    • Jack Sparrow says:

      typos: Leading diagonal from feb low to 52ish to be hit in next few days (wave A) then correction in form of abc ( wave B) to come in next few weeks and then wave C to start upward around january going to 70ish in 2017

  39. Everything is geared up for a dollar selloff, $XJY and GDX rally.Some event must trigger it.Something to cause massive short covering.If it isn’t payrolls,I don’t know what it could be.Estimates are high after ADP today.What does ADP ever know?Analysts say seasonal tendencies show November should be a big month.So if everyone is on the same side?
    Goldfingers crossed.

  40. Market will catch many off guard in 2017. Current earnings for quarter over 3 percent as the expectation is for another 3 percent in fourth quarter. These numbers are very doable and will likely beat by 2 percent. I was the first to suggest we would see much stronger earnings this quarter than most expected. The problem: For all of 2016 earnings growth will probably be flat. Price for 2016 already over 7.5 percent. For all of 2017 earnings growth expected to be over 11 percent. The forward P/E is 16.8 well above mean. That means the earnings picture better be close to projections just to have a slightly positive growth in stock market. In other words the street already baked in strong earnings growth. If dollar and cost structure change those projections can be way off. I am already assuming it will be.

    I will reevaluate my position on wave 3 ending in early 2017 based on the CEO’s own forward looking projections. Most announcements should be made by third week of January.

    My adamant stance on late 2015/early 2016 puts me in the same position I was then. Not many believed me. I foresaw accumulation in discretionary income, strength in the dollar, and breakout in stocks when most saw the opposite. I let fundamentals guide my long term assumptions. It helps me discard a crash event possibility this year. If the factors that will cause higher costs change I will also. if corporations manage to adjust better to the changing environment I will also. Nothing written in stone.

  41. torehund says:

    It is what it is…
    Norway is rapidly approaching a Crisis in Government, alongside elections in Italy. This seems to be the tune for Europe in general.
    Stagflation is imported from overseas US relative economical strength, mixed with gross incompetence in public sector/corruption. So why not sneak out the door and hope that someone else will be there to take the blame ?
    Crude oil surprised, I thought it had made its final 2s but then snapped todays big one into a larger wave-2, sure if you fight for your life you find a LAST possibility in the restrictions of an EW pattern, Amazing🙂
    We all need Tonys cool head guiding us through the coming rag-dolling period.

  42. Thanks Tony. There seems to be a variety of opinions of what sub minute wave we are in and I know you believe we are in 1 while I’m inclined to think we have been in 3 and MAY have concluded that wave today as its inextricably linked to wave 1 which is about 100 points. 62% of that added to 2152 gives us 2214 which proved to be a decent short. I think this will be confirmed if the ASSUMED correction underway starts taking out structure, including 2198 and particularly 2194. I would also like to see VIX move to the levels we saw when the market declined from 2182 to 2152. And a gap down tomorrow would help the bearish case. If none of this unfolds, I geuss its another dip. https://www.tradingview.com/x/0n5Qcyi9/

  43. SPX spent all day putting in a Bullish Butterfly pattern with a buy signal at 2200 triggered on the close, 2200 is also the Weekly DeMark support level (S1) and sits on a short term trend line…

  44. johnnymagicmoney says:

    Apple down .9% Exxon up 1.63%
    Google down 1.7% Wells Fargo up 2.04%
    Microsoft down 1.4% Chevron up 2%
    Amazon down 1.6% Bac of America up 4.5%
    Facebook down 2% Citigroup up 1.6%
    JNJ down 1% Schumberger up 5.2%
    AT&T down 2.1% Pfizer up .7%
    Walmart down 1.3% United Healthcare up 1.6%
    Verizon down 2.3%
    Visa down 2.3%
    Merck down 1.6%
    Intel down 1.7%
    Oracle down .9%
    Comcsat down .9%
    IBM down .8%
    MasterCard down 1.6%
    Amgen down 1.3%
    Gilead down 1.6%
    Coke down 1.9%
    GE down .9%

    So Consumer Discretionary, Consumer Staples, Technology, Utilities, Telecom, and Health Care all down big but S&P 500 down 4 handles

    sorry but this market is super dangerous, super emotional, super duper deluded at this point. This is not healthy

  45. 123 abc says:

    Barring any further subdivisions, there appears to be enough waves now to end the Trump rally and commence a pullback. Just in time for the Italian referendum this Sunday —risk-off over the weekend and gap-down on Monday?


    • johnnymagicmoney says:

      not if Futures get bid up 50 handles in ten minutes before the open. The FED’s great risk asset experiment must never ever end!!!!!

    • guavaghaut says:

      Thank you. There is comparatively little wave analysis in the comments here, and your contributions are very helpful.

  46. Lee X says:

    Thanks Tony

  47. NINJA SHADE says:

    Thanks TC! ED from w4 flat at 2195, as long as yesterday low holds one more HH will be a good short

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