Wednesday update

SHORT TERM: FED raises rates 25 bps, DOW -119

Overnight the Asian markets lost 0.2%. Europe opened lower and lost 0.5%. US index futures were flat overnight. At 8:30 retail sales were reported higher: +0.1% v +0.8%, and the PPI was reported higher: +0.4% v 0.0%. Then at 9:15 industrial production was reported lower (-0.4% v 0.0%), as well as, capacity utilization (75.0% v 75.3%). The market opened 4 points below yesterday’s SPX 2272 close. After a small rally to SPX 2273 in the opening minutes the market pulled back to 2265 by 11:30. At 10am business inventories were reported lower: -0.2% v +0.1). Heading into the 2pm FED announcement the market rose and hit SPX 2276 soon after the following reports: https://www.federalreserve.gov/newsevents/press/monetary/20161214a.htm, and https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20161214.pdf. The market then pulled back to SPX 2248 just past 3pm. Then after a rally to SPX 2265 in the last hour of trading the market pulled back to close at 2253. Another volatile FED day!

For the day the SPX/DOW lost 0.70%, and the NDX/NAZ lost 0.4%. Bonds lost 29 ticks, Crude dropped $2.05, Gold slid $15, and the USD was higher. Medium term support drops back to the 2212 and 2177 pivots, with resistance at the 2270 and 2286 pivots. Tomorrow: weekly jobless claims, the CPI and the NY/Philly FED at 8:30. Then the NAHB at 10am.

The market opened lower today, bounced, and then hit SPX 2265. After that it rallied to SPX 2276 just after the FED raised rates to 0.75%. Then the market “sold the news” and the SPX dropped to 2248 before rebounding some into the close. We can count 9 small waves up from the Minute ii low at SPX 2187, and then today’s pullback. We are going to count this activity as the first-second waves of Minute iii, unless, the SPX continues to decline into the 2220’s. Then the recent high would labeled Minute iii, and this decline Minute iv. Still expecting higher prices ahead for this uptrend either way. Short term support drops to SPX 2252 and SPX 2243, with resistance at the 2270 and 2286 pivots. Short term momentum dropped to quite oversold during the pullback. Trade what is in front of you!

MEDIUM TERM: uptrend

LONG TERM: uptrend

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

About tony caldaro

Investor
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171 Responses to Wednesday update

  1. Bud Fox says:

    I think – we need to ask. Is the SP500 index price at a crest, of importance.
    Open, for your opinions…..

  2. pooch77 says:

    What hapoened to Gary Lebowitz?Sorry if i mis spelled

  3. pooch77 says:

    Tony you at Xmas Party

  4. Bought some shares of the lotto ticket DRYS…for a short term trade

  5. phil1247 says:

    scotty

    lost interest in spx for now because shorts and longs are both breaking

    which suggests….
    ..anyone… anyone???
    Bueller?

  6. vivelaamo says:

    I’m quite exposed on the long side now. A larger correction tomorrow or next week will be bad news.

  7. phil1247 says:

    fotis

    you still in gold short??

    here is something i noticed

    the current ext short is bearish below 1142

    what is interesting is that the target and the C = 1.618 of A level
    are both at

    1117.5………….coincidence ??? maybe
    but a good place to exit shorts if there is participation there

  8. mcgcapital says:

    Finally some signs of weakness on the Dow, pullback could be due here. Indecision candlesticks on the daily chart and the size of the pullbacks are bigger than the last two consolidation areas. Could break up of course.. but offering a low risk stop loss above 20,000.

    • vivelaamo says:

      Be carful. Tomorrow is normally the last day before holidays and a low volume grind up. Of course it could be different this year.

      • mcgcapital says:

        Not expecting it to move too much either way now until Jan. Everybody has front run the santa rally so not sure we get another sharp move higher. The last few years the first half of December was weak which set it up but this year we didn’t get the dip.

        • vivelaamo says:

          True but I can see a low volume grind up to at least test recent highs.

        • radrian6 says:

          viv and mcg,
          For now, I have to agree with mcg — my 10-minute charts for RUT and SPX are displaying mean-reverting behavior rather than trending behavior. This could change if the Santa rally kicks in but right now SPX is in a triangle and RUT still contained in a down channel. When RUT broke out on Dec 5, the futures displayed classic “stair-stepping” all the way to Dec 9. Today, the RUT futures broke out then sold off — no “step.” Also consider CNN’s “Fear and Greed” index is at 86 — that seems a bit high to start a wave 3 (per Tony’s count).

          • vivelaamo says:

            I see your points but RUT looks like it’s in a bull flag to me which I expect to break out next week. Very low volume trading will slowly creep up to the years highs. After Jan I expect a proper correction.

            • radrian6 says:

              I agree on the potential bull flag viv but I doubt any breakout will be significant — wave 3 seems unlikely. Extension past IWM 138.82 proves me wrong and by my indicators, a sustained break below 135.17 ends the 60-min uptrend.

            • After Jan I expect a proper correction.
              Seems everywhere you look, that’s what folks say.

              OTOH, what POTUS ever complained that his private ride (these days Air Force One) cost too much.

  9. captbara says:

    If you squint a bit GDX looks just like this emoji 💩

    Might not show up correctly but it’s the classic triangular headed one

  10. If I didn’t know better,DXY looks like it wants to create its own little H&S.See what the Fed has to say about it though…probably 20 speeches next week.Why don’t they just get their own 24 hr cable channel ?They can accomplish two things.Have their meaningless ramblings broadcast ad nauseum to all of their devotees AND cure insomnia.
    They don’t have to get rid of the Fed–just make them stop talking.

  11. bfquant says:

    TC. A few ETFs I’ve been tracking since your emerging markets call. EEM and AAXJ. These appear to be rolling over. Do you have a view on these over the intermediate term?

  12. Fwiw…GDX DID stop at 18.68….Gilburts secondary low.He’s been so wrong on gold.Guess he was due.Silver trying to hold 16.00.I wont bore the masses with too much PM talk…lol.Just a little bit.Later.
    Btw…did equities shoot their last load for a while?Just asking.

  13. scottycj1 says:

    I’m blown away by the fact we are in the most explosive, most profitable and biggest moves in the stock market and all the people on this blog are interested in is gold, bonds and crude. Unbelievable !!!!

  14. Bud Fox says:

    GDX low PO is 17.90 ish by Pugsma

  15. phil1247 says:

    fotis

    dont listen to me

    my 5 yr notes are taking a beating

    thank goodness i didnt buy 10s or 30s ……….

  16. vivelaamo says:

    Tomorrow may be the last chance to go long US indicies for a very merry Christmas.

    I got positions in RUT and SPX but will keep adding on any sort of dip.

  17. llerias7 says:

    Tony, are we still in minute iii or minute v of minor 3?
    Do you think there is any chance Trump presidency be blocked monday, or is just rumors?

    • tony caldaro says:

      No change from what was posted in this update.
      Rumors? Nonsense.
      Did any of these deniers take the time to read the electoral college rules?
      It is up to Congress to accept the final electoral vote from every State.
      If they think it does not coincide with how people voted in that State they can reject it.
      This process occurs in January.
      The vote-switchers, just like the vote-recounters, are wasting everyone’s time.
      The Donald will be sworn in on January 20th.

      • llerias7 says:

        Glad to know it…thanks!

      • H D says:

        They’re not wasting my time. Little bit bigger issue with the legitimacy of this POTUS than a birth certificate IMHO.

      • tommyboys says:

        Once the people have cast their votes and they’re counted – That’s IT! Why do we need 50 more guys (electorals) to cast the same votes? Why not just apply the electoral votes per each state???

        • tommyboys says:

          The big question all the media has skirted is WHY? What makes people think Putin would rather have Trump at the helm than Clinton? Trump will be significantly harder on Russia and ALL foreign governments than Clinton EVER would…so??

      • trondack says:

        “The Donald will be sworn in on January 20th.” Yes, Sir – and D.C. can make a clown out of anyone. My nicknames for D.C. & Manhattan are Washingtonwood & Manhattanwood because they produce more fiction than Hollywood!

  18. Gdx to 12 is an extreme Case.
    Gdx to 16coming soon

  19. Page says:

    Gold and miners bounce is coming next.

  20. FWIW,Avi had a secondary bottom target of 18.70 on GDX…if 19.80 failed.The bears win under 18.70.So maybe a bounce here to fill the 20 gap?We’ll see.

  21. phil1247 says:

    tony

    now that euro has broken support

    ext short target is 1.014 on /6E

    close enough to par for you ?

  22. I was looking at the monthly GDX.That looks lousy also.Won’t be any +div if it breaks 12ish…which I think it might with a H&S broken at 20(seems to me).If today holds–two more black crows,in addition to the 3 previous.RSI at 16 on the daily–got to 9 a while back.CBs win again–dollar saved–gold demolished.

  23. phil1247 says:

    Fotis

    T boone sent me a tweet
    he said he told people oil was going up

    but he was shorting the daylights out of it in his private account

  24. captbara says:

    Have to stay bullish as long as Dax remains in the retaken up channel of 2009-2015. The (formerly) weakest gives the best clues.

  25. Hugh Jazole says:

    So, the crisis phase of the 4th turning has passed? Do I understand that correctly?

  26. phil1247 says:

    /CL

    ext shorts continue
    put back on SCO sold yest

    now 200 % short crude

  27. captbara says:

    USD 103.5ish IHS target in sight

  28. blackjak100 says:

    FWIW, yesterday generated the 5th HO signal since 10/27. It’s hard to imagine a P3 beginning like this regardless if they turn out to be false or not.

  29. vivelaamo says:

    Any thoughts on cable? Ive added to shorts on the break of recent trendline. First target is lower BB but I think we could see Oct lows. Any views would be appriecated.

  30. vivelaamo says:

    I’m going to wait for a 123 low on gold. As mentioned before very reliable pattern for tops and bottoms. You may miss some of the move but better than trying to catch a falling knife.


  31. While perusing sites,Trader Moe had a chart with two short term scenarios.Dollar just wont quit tonight.Really crappy economic news today doesn’t matter.Mitch McC says AGAIN any spending must be revenue neutral.No big spending extravaganzas he says.So another normal day of insane market movements in most categories.

  32. johnnymagicmoney says:

    I’m tired of these dumb arse articles about its not yet a bubble because the things that were present in past bubbles is not here in this market so it’s not a bubble. Oh and you tell me when 30% of the worlds debt was negative and yet even though the yields were negative investors and banks flocked to buy trillions more because they would go more negative!!! Yeah right definitely not a bubble. DUMB ARTICLE

  33. NEWBIE says:

    Raising rates upon the shoulders of the greatest credit bubble in all of history is not wise.  Every single past crisis was preceded by rising rates…here we go again.  The odds of a deflationary mistake are rising along with interest rates.  Know why you own gold or silver in the first place and know history.  Never before in history has a fiat currency gained value versus gold in outright deflation. JSMineset

  34. stormchaser80llc says:

    Finally got a pullback that we have been awaiting, no significant changes to yesterday’s thoughts though. With new highs on SPX yesterday and closing above the top Bollinger Band with little/no negative divergences on the daily chart, things still look bullish. Drilling down to the hourly SPX chart, you can see that the 2270 pivot and yellow bottom of the Sept-Oct triangle extension are once again acting as resistance. Over the past several days this chart has shown negative divergences. It remains to be seen if SPX is consolidating or topping. But the fact that $VIX has not yet made its new low, continued positive values for the Technicals Model (despite a lower value today) suggest to remain long, like all 999 ensemble members have been showing for quite some time now.

    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.

  35. Tony,

    Looking at the strength of US short-term interest rates it appears the market thinks the FED domestically is behind the curve we have seen some strong weakness in JPY, EUR broke 1.05 and NZD and AUD look in trouble from weaker local economic conditions, New Zealand & Australia have very highly geared housing markets facing higher offshore interest costs. Plus the local Chinese can’t get capital into the Australia and New Zealand bank system to pay down housing commitments. Seems your original scenario of higher USD is more probable at least for AUD and NZD. Fed didn’t mention emerging markets wants to hike and focus on domestic economy, despite the global sensitivity to US interest rates. if they hike to fast it could be a policy mistake Are you more comfortable with your EURUSD long-term target now?

  36. HUI broke 175 with gusto.Unless it retakes and goes from there…133.Maybe lower.

  37. blackjak100 says:

    TC, time to refine your rate hike indicator?

  38. captbara says:

    Gold has yet to even come close to touching ema 13 on the way down since 1276.

  39. bouraq says:

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

  40. Thanks Tony. Along with others, I’m inclined to think what rattled the market was the fact that the Fed is now penciling in three more rates hikes in 2017, up one increase from the last meeting. All conditional of course. Further, the policy prescription is internally inconsistent with median estimates of core inflation in 2017 1.8% and 2.0% in 2018. Additionally, Yellen implied the Fed doesn’t expect the labor market to show much more improvement and that fiscal stimulus from Washington probably isn’t necessary. Odd. So, three more hikes while inflation is below where it should be and a languishing labor market. The Fed is possibly getting ahead of the curve, something they will likely have to walk back. I have serious reservations as to how seriously this statement should be taken.

  41. Sorry I’m late,just had to take a quick shower to get all the blood off.Not arterial wounds,more capillary and a couple veins.Still hurt though.Bandages applied.Gold didn’t hold 21.13(understatement)so it was a one day dice roll for me.Still a + div on weekly GDX.Fib 61.8 at 19.80.This is the whole ball of wax for GDX.The last stand.
    Market looks like it priced in all 3 rate increases today. (not lol).Fed knows exactly what they are trying to achieve.They could have said 2 rate increases next year,but said 3 for a reason.Now they can lie and backtrack all year.SOS-different year.A bounce tomorrow would be nice in gold.
    Longer term,Nadeem Walayatt says gold is a buy at 1100 for a rise to 1400 next year.That’s all I can come up with now.Personally,I’m now curious if Santa leaves town now.Later.

  42. Bud Fox says:

    Mr C. just fantastic investment timing work — I use the 012SPX weekly
    chart as he draws extensively….Being long term, I trust his work…Thks TC

  43. mcgcapital says:

    This has been an utterly relentless move up on the Dow. At a guess would say today’s high holds for a bit and we have a bit of a pullback for a few days before an Xmas rally. Intermediate trend is still up but the ‘easy’ gains are probably mostly behind us.

  44. vivelaamo says:

    Thanks Tony. I said there would be a pb today and I think it may be over already. Next two days could be the last chance to see further declines for this year. All the best.

  45. 123 abc says:

    Thank you Tony et al, great OEW update on today’s FED news.

    Remaining short from yesterday at 2272 with a stop at 2277. Expecting a pullback to the 2212 pivot range.


  46. radrian6 says:

    Tony,
    Some help, please. I counted 7 small waves up … could you give the price levels for your 9-wave count? Happy holidays to you.

  47. kvilia says:

    Thank you, Tony. I’m on vacation, learned – any hope with gold? I don’t know Feds stance except that they raised a quarter. Thanks!

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