Friday update

SHORT TERM: consolidation day, DOW -22

Overnight the Asian markets lost 1.1%. Europe opened lower and lost 0.4%. US index futures were relatively flat overnight. At 8:30 monthly payrolls were reported higher: 178K v 161K, and the unemployment rate hit a 9 year low: 4.6% v 4.9%. The market opened unchanged at SPX 2191, then rallied to 2198 by 11:30. After that the market started to pullback. Around 2pm the SPX hit 2188, then bounced to close at 2192.

For the day the SPX/DOW were mixed, and the NDX/NAZ gained 0.10%. Bonds rallied 15 ticks, Crude rose 50 cents, Gold added $6, and the USD was lower. Medium term support remains unchanged at the 2177 and 2131 pivots, with resistance at the 2212 and 2270 pivots. This week the Q4 GDP was lowered to 2.9% v 3.6%, and today the WLEI was reported higher: 58.3% v 57.2%.

The market opened unchanged today on a good payrolls report. Rallied to just under SPX 2200 and then pulled back for the rest of the day. Yesterday the NDX/NAZ led the SPX lower, while the DOW rose. Today the NDX/NAZ/SPX rose, while the DOW was lower. It still appears Minute wave ii is underway with support likely to arrive within the 2177 pivot range (2170-2184). Reviewed the recent decline in the Bond market, compared it to similar declines in the recent past, and the results will be reported in the weekend update. Best to your weekend!

MEDIUM TERM: uptrend

LONG TERM: uptrend

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

About tony caldaro

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34 Responses to Friday update


    • Couple charts to keep track of for a rebound–goldfingers crossed.With a weekly +div on GDX,based on similar–could be 20-40% from the low at 20.13.If India stays out of the manipulation/interference game,that is.

  1. Trump just insulted the Chinese by talking to Taiwan.The fun starts early?

    • Taiwan buy billion dollars weapons and military equipment from US. Can at least say good morning and congrats for the elections.!
      Or, are we living in a dictatorship tabooing reality ? Are you still in a puritan and punitive mentality not dignifying a modern and forwarding looking? Are you still wetting your pants when speaking china military communists forces? Are you allowing a massive country to abuse the freedom of a smallish one? Are you thinking the buddhists monks of Himalaya have to be erased from their land for suppressive thinking?
      Please get up and oogy-boogy, be with the changes. Oppressions ends, in US China Europe and surrounding, either fiscal than economical …….

  2. This is the latest income and outlays report that came out 2 days ago. it is in direct contradiction to the current wage report of minus .1. Even if correct the prior 2 months were gang busters.

    “The income side is the best news in the October report, rising 0.6 percent to beat expectations by 2 tenths. An upward revision to September, now at plus 0.4 percent, is another positive. The wages & salaries component shows back-to-back gains of 0.5 percent which is very solid. And October spending would have been greater if not for savings as consumers moved their money into the bank with the savings rate up a sharp 3 tenths in the month to 6.0 percent.”

    I expect the wage component to be revised much higher. the consumer has not only seen a huge gain in income but spent at the same pace and managed to increase saving. Anyone thinking we are near a reversal in domestic economy is betting for an external event. Without it there is zero chance of that happening. Lets move to employment. The numbers are actually very high considering the pool of qualified workers is shrinking.

    I am as adamant as I was early this year. the consumer is in “great” shape. Anyone thinking the market drops because of the consumer is basing it on a wish. I expect to see the dollar hold very strongly at 100. In fact I believe both the dollar and stock market will see new highs in next 2 weeks. I am very focused on fundamental analysis and that is my forte. I wonder why others can’t see what I see. I saw the strength of the consumer one year ago while everyone was looking to find an entry for the crash of wave 5. TONY’s technical view changed from seeing a wave 5 to being in a wave 3 run. I happen to be at odds with his view since he does not see wave 3 finishing up anytime soon.
    ===========================================================================
    Market action: I believe we either found the bottom today or will so by Monday. SPX 2240 should be hit in next 5 to 10 trading days. If it hits next week we could see 2300 by December 19th. Whatever heights we hit by the 19th it should hold for rest of year. Sideways till 3rd week of January.

  3. zvyezda says:

    I thought the following essay by the Russian political philosopher, Alexandr Dugin, might prove interesting as he relates Sorokin’s model on decline and then promising rebirth in the social dynamic of history that is analogous to the recent Fourth Turning discussion.

    http://katehon.com/article/donald-trump-swamp-and-fire

  4. Thanks Tony. I was expecting a lower low but not a freefall as the market, in my eyes, needs to move higher to within, say, five points of the recent high to make the last leg down to the 2176/2177 area. But currency and bond yields intervened in a constructive fashion with ten year yields dropping along with the dollar. Along with falling rates, the the dollar fell because the euro rose on speculation of increasing odds the Italian referendum may pass. All of this complicates what we might want or expect to see. From an analyst:

    With less than 2 weeks to go before the December Federal Reserve meeting, investors were not impressed by the latest U.S. jobs report. They were happy to see job growth rise by 178K, but the increase was less than 200K and accompanied by a drop in average hourly earnings. The fall in wages was surprising and probably the weakest component of the report. The Fed will still raise interest rates later this month because theunemployment rate is down to 4.6%, its lowest level since 2006. However the chance of an early 2017 follow-up hike faded with the subdued nonfarm payrolls report. While the dollar did not fall by much, ten-year Treasury yields dropped nearly 6bp, signaling the possibility of additional profit taking in the new week. Fed fund futures show a 100% chance of a hike this month but the odds of another quarter-point move don’t exceed 50% until June 2017. Which means that investors expect a hike followed by a long pause. The U.S. dollar has had a great run but after Friday’s data, the uptrend is exhausting with the market fully discounting a 25bp rate hike. As the rate decision nears, we could see more two-way action in the currency. There are no major U.S. economic reports scheduled for release next week. The ISM non-manufacturingnumber is the most market-moving piece of data on the calendar but its significance is lessened after the NFP release. Instead, the focus should be on comments from Fed Presidents Dudley and Bullard and any potential guidance they may provide

    • pooch77 says:

      Were are you seeing freefall?

    • Its interesting without a QE policy like Japan there is a balance sheet contraint on the US private sector and only instutionally on the US government which more a political constraint than an operational constraint. The yield cannot steepening to quickly otherwise it will dampening US economic activity due to high household and corporate debt. In WW2 the US Fed and Treasury co-ordinated a fiscal spendup by pinning the 10yr rate to 2.5% much like Japan is doing today at 0%. Will be interesting to see if Trump appoints a hard money head of the Fed or keeps Yellen or brings in someone who will bring back co ordination between the Fed and Treasury then he can easily complete his infrastructure rebuild for the US. The Fed can buy new government bonds not taken up by the private sector to help pin the yield curve down so bond investors wear a negative real return. Call it a tax on the wealthy.

  5. The seasonal trends looks good for the US markets like US biotech for a trade to new highs, global growth us picking up plus weak EUR and YEN is great for European equities and Japanese equities only risk in 2017 is a peak in Chinese housing boom probably march 17 that leaves a great next few months for equities. The fear trades gold and US treasuries should remain under selling pressure in a volatile range as people cut losses but most of the damage is done in the short term. Thanks Tony .

  6. kvilia says:

    As crazy as it sounds, if GC breaks above 1192 – 1198 area, it will most likely get up to HWB from highs to low – 1267. 1192 – 1198 level will be tested on Monday considering weekend volatility, so there is your answer regarding Christmas present – either 1267 in the next few weeks or reversal at around 1190s and move down below 1100 for sure. Do you want to stay naked short or long tonight, that’s the biggest question. I guess depends on the balls’ size.
    Have a good weekend, and Tony – thank you for keeping us around.

    • kvilia says:

      BTW, I am counting a complete wave structure from 07/07/16 to 12/01/76, and that correlates with the chart Fotis posted yesterday.

  7. 123 abc says:

    Thank you Tony et al for a week of great OEW updates.


  8. CB says:

    “Reviewed the recent decline in the Bond market…and the results will be reported in the weekend update.” Thanks Tony. Should be a great read as always. I look forward to reading your bond mkt update. Can you tell me what the title will be : “Bonds: a girl’s best friend’ or “Simply: fuggedaboutit” ? 🙂

  9. For Fiona and all.I looked back–only a month earlier.
    Carl Futia’s blog,October 29th.

    “December Gold:  A bull market is underway in gold. Support is now at 1240. A drop visibly below 1240 would be long term bearish. Failing that the next upside target is 1420.”
    It’s a bull until it isn’t.A bear until it’s not.No charge for that.But I basically agreed with him,just don’t like the assuredness of these guys when they make statements like “a bull market is underway in gold.”
    It wasn’t.But maybe it will be..lol.

    • fotis2 says:

      There is no-one on this planet that can foretell a trend change.

    • fionamargaret says:

      Did you see CF’s outlook I posted to your attention this afternoon….I think it has changed…he is now a bear..do look..and report back!!….I made my 1g + on NUGT…but I am going to scan what the numbers are doing so we can maybe buy and hold a bit longer.
      We are going to drive Tony crazy again with our gold talk but we need a really liquid affordable stock with tremendous volatility yet a pattern that can be worked out….NUGT .
      1000 shares 7g on a good day for buying…

    • pooch77 says:

      Carl changes at time like the wind,Spring Heel Jack and Pretzel are much better

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