Monday update

SHORT TERM: gap up opening, DOW +46

Yesterday Italy voted against centrist PM Renzi’s referendum to streamline the government. Markets, and futures trading, worldwide initially reacted negatively. Then rebounded during the night. Asian markets lost 0.2%. Europe opened lower but gained 0.9%. US index futures were higher heading into the open, and the SPX gapped up to 2200 at the open. The SPX had closed at 2192 on Friday. By 10am the SPX had reached 2209, and then started to pullback. Also at 10am ISM services were reported higher: 57.2 v 54.8. The pullback continued until about 2:30 when the SPX hit 2201. Then a bounce into the close ended the day at SPX 2205.

For the day the SPX/DOW gained 0.40%, and the NDX/NAZ gained 0.90%. Bonds lost 2 ticks, Crude slid 65 cents, Gold dropped $6, and the USD was lower. Medium term support remains at the 2177 and 2131 pivots, with resistance at the 2212 and 2270 pivots. Tomorrow: the trade deficit at 8:30, then factory orders at 10am.

The market gapped up at the open today, rallied to within 5 points of the all time high, then pulled back for the rest of the day. With today’s rally above SPX 2203 we are posting a tentative Minute ii labeling at last week’s SPX 2187 low. This suggests Minute wave iii might already be underway. A rally to new highs would help to confirm this view. Short term support remains at the 2177 and 2131 pivots, with resistance at SPX 2214 and the 2270 pivot. Short term momentum hit overbought during the opening rally, then backed off during the pullback. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: uptrend

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

About tony caldaro

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115 Responses to Monday update

  1. kvilia says:

    Markets are not moving not because they are consolidating – they are waiting for FOMC next week. The move up is done, now whatever FED does, this will be an excuse for profit taking. Gold should shine unless FED is unexpectedly hawkish, e.g. announcing 4 rate hikes next year – not gonna happen.

  2. Same message from one month ago to all those that missed it. Major bulk of spike move over after December 19th. 2240 on SPX should do it. 3rd week of January should determine if this wave 3 has legs are is about to roll over. Intermediate and longer term view still intact. Expectation for wave 3 to be over in 2017 based on earnings miss instead of consumer health has been in play for well over a year, before the signs that we would even have consumer strength. Long term play has been solidified with Trump win. Wave 5, will last 18 or so months (a guess), and will take us from 20 percent below where we are today to an additional 10 percent higher. S/B a 30 percent move for wave 5 in a relatively short time frame. All this is intact based on current geopolitical and technical position.

    • vivelaamo says:

      I doubt anybody missed considering how many time you’ve repeated it. Russell will hit 1400 by 19th December.

      • phil1247 says:

        vive

        shhhh…. be thankful the post is only 10 lines

      • As silly as this sounds I have made these types of spot on major trend change calls before and all the naysayers denied it. In fact even after I “proved” the validity of my statement they continued to view me and my assumptions as naïve. This is the one area of human nature I can’t seem to ever grasp. I await the same results yet again and marvel at our ability to deceive ourselves. I seem to be wired differently than most. It never ceases to amaze me how one part of our brain can dominate. Trump is my geopolitical “trump card” for determining my long term macro view being intact. A Mad Dog general in charge of military and Muslim disdain. A farce cabinet that has exposed the absurdity of his picks and at same time clarity of reasons. Do away with EPA, Housing, Education, and Health agencies. Just as HE himself campaigned for. The gutless Republicans that couldn’t stand up to him when they had the advantage will give into his spending spree without balanced reductions. The imbalance of wealth will be magnified even more before his 4 years is up. Imagine claiming that corporations and wealthy have been taxed way too much when the evidence has been mounting to show the exact opposite. Gap between corporate health and consumer is as large as the gap between wealthy and middle class. Welcome to the attempt to spike the imbalance in one big fell swoop. To think the general public is actively encouraging this. Someone has to show me just how badly corporations have done over the last 8 years. You know the same time frame that the general consumer got knocked down and is just gaining back his balance. Bizzaro world we live in. BTW I am as adamant on THIS call as I was the others, perhaps even more so. Bet against me and I truly hope I am wrong this time. Would love to be wrong.

        • vivelaamo says:

          I always agree with you. Never your reasons but always on new price. The charts don’t lie.

        • tommyboys says:

          Thank God Trump won for sure. Breaking he’s got a commitment from wealthy Japanese man bringing business here. Claim 50k jobs created. Will renegotiate Air Force Ine program – WAY too expensive. About time we get a conservative business man in office that understand ECON 101. Libs will love this country again after they see what they’ve been missing. Real economic issues tackled daily after just 4 weeks as “elect”. Has ANY elect accomplished this?

  3. NINJA SHADE says:

    wow IWM on fire again, within like .10 of Thanksgiving top

  4. lcd00 says:

    GS at 232, is closing in on 2007 highs range of 234-250. XLF at upper trendline resistance from 7 years ago.

  5. DXY broke support at 100.70 yesterday…took it down to 99.98.Rebound today no surprise.If it goes back above previous support and up from there,all you can do is shake your head.But there’s still hope TA wins out and we head down after a backtest of 100.70-75.Off to the casino as usual on Tuesday.Later.

  6. vivelaamo says:

    Since the election we’ve had 2 significant tradable pb’s. why are people expecting one now? This is a continual low volume grind up until January now. Might get a slight pb with volatility next Wednesday but will be brief. I’m talking minutes. All in my opinion and based on nothing but price action for the past year. All the best.

  7. H D says:

    BA quickly working to improve wifi on new Air Force 1 plane, rumors of possible direct server link to Twitter so POTUS-elect can tweet/ run country. all in good humor…..

  8. phil1247 says:

    /GC

    next short in the series has traded

    target 1151

  9. gtoptions says:

    Thanks Tony
    SPY ~ Testing WR1 @ 221.24 ~ No Volume!
    NYA Breaking out of 4 month consolidation.
    SPY/SPX being suppressed by the Futures players. 😉
    GL All

  10. market had 2 chances to break out. 1 at the open and 1 at the backtest from yesterday. Neither worked, My guess is we are headed lower.

    • tommyboys says:

      Consolidating yesterday here on flattish volume. Intraday charts look bullish on my screen. A bit lower then up! We’ll see…

  11. mjtplayer says:

    The VIX made a low print of 11.67 this morning, lowest tick in 3 months and currently trading at 12.16. Traders are very complacent, no fear.

    • Could still get lower — in 10’s. Tony has made this observation in the past … and turned out VIX did made it to 10’s. No predictions … just saying.

    • H D says:

      6 point range on SPX. VIX should also be 6. .15% volatility. In theory it measure fear but that is not part of the math. Pricing options for next week rather cheap IMO.

      • mjtplayer says:

        The Dec VIX contract is trading at 13.19 which is 130bps above spot, standard contango 2 weeks out, but compressed considering spot is trading in the high 11’s.

        The Dec contract doesn’t expire for another 2 weeks, so traders are pricing-in virtually no volatility over the next 2 weeks – very dangerous and complacent considering the Fed meeting is next week.

  12. jeffbalin says:

    I’m thinking we’re in 5 of minute 1? Maybe the last few day drop was 4 of minute 1? I don’t think the Dow dropped enough for it to have had a minute 2 or got nearly oversold enough. Or, maybe we’re still in minute 2 and Dow is a little behind, it’s 2 is beginning soon

  13. kvilia says:

    Looks like a 10%+ day for NUGT.

  14. UniCredit is selling his savers funds to the french Amundi on the rush to try to save good assets belonging to private italian savers. > It is a legal operations to run funds out of Italy since Poste Italiana had to withdraw. Watch out !

  15. lcd00 says:

    4 hour chart: /NQ has had a deep fixation with 4839-4840 for 4 months. I’m paying very close attention to the next reaction at that line…

  16. lcd00 says:

    VXX Weekly Chart. I posted the Weekly positive divergence on VXX a few weeks ago. Now it is even more developed. And the weekly candle rests just above the lower BB as it squeezes to it’s narrowest in years; also near the terminus of a falling wedge.

  17. kvilia says:

    My prediction – hell will break loose after FOMC meeting – mark my words.

  18. johnnymagicmoney says:

    I keep looking at the daily, weekly, and monthly negative divergences, the overbought and oversold conditions conditions the MACDs, the positive and negative divergences, and the complacency and aside from the date of the actual changes in price the charts are screaming stay away from the DOW most notably industrials, financials, and without question the transports. It says Gold, silver treasuries, volatility and staples should be bought. Although I say this is a poor trade over the next few months I have no idea why anyone in their right mind would buy the transports right here. See that triple negative divergence? Some of these things are overbought on longer term time frames that have never been visited or barely visited since the start of this market. Almost every bill on this board used positive divergences to buy any dip yet for some reason assign very little credence to any negative divergence no matter how ugly it looks. The Bulls chalk it up as “unreliable” but are willing to risk their money on the positive divergences. I even see pretty bearish people on here turning bullish. Something stinks for sure

    • CB says:

      Volume seem pretty massive in the last few hours of trading today….comparatively speaking..
      Also, one would think that S&P would now have to downgrade Italian banks….does the market care? Not yet? Maybe not =)
      And how about that dangerous Carrier “precedent,” Trump’s punitive taxation ideas, and his half-baked FX ideas. Really, some mean-reversion would be in order right about now…

    • CampFreddie says:

      Jmm – Pos-Div works well in bull mkts, and Neg-Div works well in a bear. That’s the way I play it. GL.

    • fbender7 says:

      Trade the market, not what you think others are thinking.

    • torehund says:

      Is this to be considered a bail-in in disguise ?
      Was thinking the dollar should turn here anyway ?

    • fionamargaret says:

      I would like suggestions for playing gold and oil (long and short) from someone who does this regularly, and is happy with liquidity etc. TIA xx

      • torehund says:

        Fiona I am not especially into oil, in EW terms it looks like a wave 3 from bottom. That said I have seen a W-3 suddenly break down like a bent straw so be careful, these are the times of Societal upheaval in Europe, we can all hear the sucking sound of banks collapsing. What impact it will have on markets is largely unknown. Either they write down the bonds in Europe along with rate hikes, or the Euro sinks.

        • fionamargaret says:

          …and there is the transference into digital currencies on the horizon….which just seems too pat…
          I shall be careful Tore….you too x

        • Jack Sparrow says:

          if oil turns down from here…its a formation of leading diagonal (wave A) from 26 dollar low of wave 4…B down then C up..C up will be very swift … I am surprised many people have missed the LD pattern..

      • fionamargaret says:

        When I read this over it sounds like I am asking for tips….well, not really….just the symbols to use that are not being discontinued….

    • phil1247 says:

      tony

      at least they are getting a chance to get out ….

      i never held ETNs overnite because i thought they might default overnite

      and you would be left with squadouuuchhhhhh

    • purplember says:

      are UCO or SCO proshares bloomberg oil safe or all oil ETF ? article doesn’t mention these .

  19. I think the Dow made a high of some degree today, expect a decline to start tomorrow. Sp over 2209 wrong under 2200 looks good.
    Happy holidays,

  20. locanbbs says:

    UPDATE: Tony, after looking at the SPX in a somewhat longer timeframe than I usually do (4 hr. instead of 1 hr.!), it seems to me a little premature to speak of an uptrend. Though price did manage to overcome the 34 sma (light green line) and the very short-term upward channel (red lines with white dots, upper right corner) is intact, still the mid-term trend is down (downward channel, red enforced with white).and a strong resistance level is just above (horizontal line, red partially enforced with white).
    Already most of my indicators have given preliminary sell signals, broken down (white circles) or are threatening to do so (still unbroken red lines, sloping upward).
    Spx – 4 hour futures –

  21. mjtplayer says:

    Watch $49.17 in WTI, A breach of this level will confirm 3 waves up from the 11/14 low and a possible failure, again, at the $51.50 – $52 resistance area.

    Dark cloud cover daily candle in the USO, bullish piercing pattern in the SCO – went long some SCO at the close.

  22. bouraq says:

    Chart of the day is GOLD at https://www.tradingchannels.uk

  23. stormchaser80llc says:

    I believe its ok to admit when you are unsure. This is one of those times, starting late last week when I was looking for another high in $VIX but a bullish market. Luckily I have some custom tools in my toolbox in the form of my models, to aid in my task.

    I remain LONG in my 401K due to the 999 ensemble members all being bullish at this time. Negative divergences on the SPX hourly suggest more downside to come, perhaps enough of a break to stabilize $VIX for the time being. Remember though, I have been calling for a new $VIX low which will still likely come.

    And like I said in the Intro, I have begun databasing price action down to the 1-min timeframe, beginning the effort to bring you a real-time trading system based on my proprietary Technicals Model, and Ensemble LONG/SHORT signals. The goal is to support real-time trading for swing traders and day traders alike, something much more meaningful than the end of the day analysis and even end of the day Technicals Model updates.

    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.

  24. While I think we will revisit Italy’s numerous problems, in the short term, it is argued, the “No” vote was widely expected among market players and there is every reason to believe the ECB, which meets Thrsday, will extend its asset purchhase program and NOT reduce the program level of monthly level of purchases of public and private sector securities amounting to €80 billion on average (from March 2015 until March 2016 this average monthly figure was €60 billion).

    I have read that the “ECB has the flexibility to allow for a temporary increase in Italian purchases and such a move would not necessarily need to be rubber-stamped by the ECB’s Governing Council, which is due to meet on Dec. 8 to decide on whether to keep buying bonds after March.”

    From MarketWatch:

    A speech by ECB President Mario Draghi last Wednesday — alongside unsubstantiated media reports first reported by Reuters — that the ECB would step in to purchase Italian debt in the case of extreme volatility in the country’s bond yields, lent reassurance to investors that the central bank was on guard to act should the referendum outcome precipitate a renewed burst of market jitters.

    Therefore the combination of a No vote being largely priced in by markets ahead of the weekend and the widely held belief that the ECB stands ready to use its toolkit to offset any potentially exaggerated market reactions, is seen as the key factor in ensuring the 10-year Italian government bond yield rose by only a measured amount to just over 200 basis points in early Monday morning trade, rather than to the blowout levels feared by some observers.

    According to a research note from the team from Friday, “The asymmetry is bluntly thus: either the ECB extends QE or the probability of a euro market crisis rises significantly. With 2017 being high on political event risk, we think the latter would be actively positioned for by investors if QE was to be prematurely pared back.”

    http://www.cnbc.com/2016/12/05/heres-what-mario-draghi-and-the-ecb-could-do-now-italy-has-voted-no.html

    • Possibly Stephen, very possible. But, and I do underline the But, Italian banking crises could be huge. Seriously huge and can’t think the ECB having the power to put a limit of the fall. They will run to save France and Germany in the case. Monte Paschi is a great concern. Great, great concerne.

      • Italian banks are being given liquidity support by ECB, they have a solvency problem which as long as they have liquidity support and time should end okay. Think Japanese banks in 90’s and Chinese banks today large unrecognised NPL’s but no crisis due to central bank refinancing.

        • NZ, sorry but can’t agree less. We are talking trillions on Italian banking problems mostly due to the facts they have been obliged to absorb other countries bad bonds during the years. Thats comes to say, other countries institutions have absorbed a lot of italian bad bonds. ECB can arginate to a certain roof but not over. Remember Lehaman, since that famous night nobody would consider it thinkable. The choice is now: an Italian problem or a general one? Other europeans citizens would say, let them fall and we will rescue it afters, since no Renzies has been able to makes italians to swallows the toad and pay with their savings (greek and cyprus style) and all speed up reforms have been rejected with the referendum. Doha is withdrawing

  25. captbara says:

    Dax done correction, so now the whole world can join in Santa’s celebrations together 🎅

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