Thursday update

SHORT TERM: market declines after higher open, DOW -72

Overnight the Asian markets gained 0.3%. Europe opened higher, but lost 0.3%. US index futures were lower overnight. At 8:30 weekly jobless claims were reported lower: 234K v 247K, housing starts were reported higher: 1226K v 1090K, building permits was reported higher: 1210K v 1201K, and the Philly FED was reported higher: 23.6 v 21.5. The market opened 2 points above yesterday’s SPX 2272 close and immediately began to pullback. By 11am the SPX hit 2265, bounced to 2270 by 11:30, then dropped even lower. Around 2:30 the SPX hit 2258, then bounced to close at 2264.

For the day the SPX/DOW lost 0.35%, and the NDX/NAZ lost 0.20%. Bonds dropped 21 ticks, Crude rose 25 cents, Gold slipped $1, and the USD was higher. Medium term support drops back to the 2212 and 2177 pivots, with resistance again at the 2270 and 2286 pivots. Today the Q4 GDP estimate was reported unchanged at 2.8%. Tonight there is a speech from FED chair Yellen at 8pm, and tomorrow is options expiration. Also on Friday, Donald J. Trump is sworn in as the new POTUS.

The market opened slightly higher today and then declined to within 4 points of last week’s SPX 2254 low. While the SPX/NDX/NAZ have remained in a tight range, or made new uptrend highs, today the DOW traded at its lowest level since the first week of December. The uptrend leader in November/December continues to lag. The SPX, after making a new all-time high at 2282 in the first week of January has displayed nothing but choppy sideways activity since. The recent SPX action looks similar to the choppy action before the declines in September/October. Short term support is at SPX 2254 and SPX 2245, with resistance at the 2270 and 2286 pivots. Short term momentum dropped from overbought early to quite oversold at the low. Trade what’s in front of you!

MEDIUM TERM: downtrend underway?

LONG TERM: uptrend

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

About tony caldaro

Investor
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111 Responses to Thursday update

  1. captbara says:

    Back in DXJ & UJ from the lows. Playing the IHS setup in Nikkei and USD.

  2. magnus1234 says:

    For me Major 1 of SPX is completed and Im out of ES and SPY. Im trading what is in front of my TV screen. ROW will not trade happily on Monday.

  3. phil1247 says:

    gold

    1232 extension long target is validated
    now that we have surpassed 1210

    selling some at 1219 unless it blasts thru

  4. phil1247 says:

    fotis

    back at 2265 / 2266
    test test and retest

  5. EL MATADOR says:

    Here are the only 4 trend lines i care about …. either way the bigger intermediate picture is bearish

  6. bfquant says:

    TC. Does the NDX/NAZ look like an ending diagonal to you at this point?

  7. captbara says:

    Looks kind of like a LD from 2277. The picture should become much clearer next week is my guess.

    I like USD here though as a wave 2.

  8. fotis2 says:

    Bingo.Here it goes!Baie dankie meneer Tony..

  9. phil1247 says:

    long spx 2266

    anyone recall what that number was???

  10. Nice speech.I think he actually means it.Good luck President Trump.

  11. cyanus66 says:

    Democracy is a fine thing.
    My best to all here, pro/con Trump. DJT will do all right, and the $USD, among others, seems to agree. Here’s to a little optimism in the future, for a change.

  12. Page says:

    Prepare for a significant stock markets fall around the world.

  13. kvilia says:

    Gold is starting to break out.

  14. zvyezda says:

    Noon & oath. Now official.

  15. purplember says:

    Trump Train. …. All Aboard !!!!

  16. Dex T says:

    I would love to see Trump barge into a Federal Reserve meeting and begin a shouting match with Yellen over policy… I wonder how she and the others would react???

    answer back with well reasoned arguments? raise rates/lower rates? cry and resign?

  17. CampFreddie says:

    Adding to gold short here @spot 1203.5

  18. Hello Tony and crew. Been away from the market for past months. Everyone needs a break at times. Now back but looking to get a feet wet again. Looking forward to 2017.

  19. torehund says:

    Congrats with your president, a man that talks to you and not down to you.
    Volcanoes and quakes fires the transports, even dry bulk is taken out of its sleepy state, maybe for real.
    Good weekend Tony and all.

  20. phil1247 says:

    gold

    still bearish below 1210

    target 1190

  21. phil1247 says:

    sold TBT

    not buying bonds……just taking off shorts at targets

  22. Jim B. says:

    Important time in market these last few days of the month. Could get a classic star or inverted hammer on the monthly spx chart which could signify a significant top

  23. Last night,around 2am,gold was up to 1208,the old breakout level.This morning I saw it had fallen back to 1202.New resistance levels of 1208 and 1218 that need to be taken out for further progress.GDX in the middle of nowhere at the moment.Good luck all.

  24. cj32 says:

    Cr.CBZ

  25. vivelaamo says:

    Donald Trump is the president of the richest most powerful country in the world. Crazy!!!

  26. stormchaser80 says:

    Today I added a calculation based on my 2 volatility models. I will report daily the percentile that the day’s volatility fell in looking at all trading days since 1990. Today my 2 volatility models indicated that the current market is only more volatile than 0.7%/0.9% of all trading days since 1990. To say it another way, todays market is less volatile than 99+% of trading days since 1990. This along with the very narrow Bollinger Bands on multiple charts suggest something big is coming.

    Today I noted that my proprietary Technicals Model is back in negative territory, and the McClellan Oscillator is much more negative than yesterday. The number of stocks above their major moving averages continues to decline. I can see some similarities with early September 2016 where there was a quick 3% loss. At SPX hourly, technicals suggest at least 1 more lower low should be coming.

    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.

  27. mjtplayer says:

    28 trading days since the SPY closed with a 1%+ move in either direction on the daily. Incredible sideways (boring) action for almost a month and a half now, daily BB width now 387bps on the SPY, tightest band width since mid Aug.

    Something will break, just a question of when and which direction; probabilities suggest lower after a tight trading range following a big move up.

    • Dex T says:

      Using a climate change indicator to predict Federal Reserve policy seems highly dubious. You can make thousands of such connections without them having any meaning

      The train of logic in the article is REALLY stretching it- weather patterns affect crop yields affects food prices etc…

      Fed Fund Futures is saying otherwise- that we are going to see 2 or 3 rate increases this year.

      • Dex T says:

        Also, McCllelan is making a mistake assuming that the Fed really takes these detailed studies into consideration- they don’t and admitted as much when they raised the rate because of Trump’s election. The key drivers are mainly political and the U.S. doesn’t even need a central bank to function. It’s another questionable bureaucracy

        He also needs to take into consideration that Trump is coming into office and going to nominate additional members to the board.

        Yellen will be gone in 1 year and will be facing a lot of pressure under the current administration.

  28. CB says:

    OK, decision time – so will he or won’t he be able to stay off Twitter tomorrow? 🙂 https://www.screencast.com/t/TAtM8RcD2 GL all.

  29. Signs of overheating in the broader economy are “scarce” at the moment and risks are small that such conditions could suddenly emerge, said Federal Reserve Chairwoman Janet Yellen on Thursday, signaling she saw no reason to rapidly raise interest rates.

    “Even if the labor market is not overheated currently, one might worry that overheating could rapidly emerge as labor market conditions strengthen further, causing inflation to surge. I consider this unlikely for several reasons,” Yellen said in a speech at the Stanford Institute for Economic Policy Research.

    The labor market might strengthen further as the economy continues to expand at a moderate pace, but GDP growth is still being held down by “a variety of forces,” including slow labor-force and productivity growth, weak growth abroad and lingering headwinds from the financial crisis, the Fed chairwoman said.

    “Although I am cautiously optimistic that some of these forces will abate over time, I anticipate that they will continue to restrain overall growth over the medium term, likely holding down the level of interest rates consistent with stable labor market conditions,” she said.

    With the Fed approaching its goals of low unemployment and 2% inflation, “a natural question is whether monetary policy has fallen behind the curve. The short answer, I believe is ‘no,’ ” Yellen said.

    Reports that firms cannot find qualified workers are not evidence of a “serious worker shortage,” the Fed chairwoman said, and wage gains do not seem consistent with an overheated labor market.

    She noted that core inflation is rising mainly because of the waning of the effects of earlier movements in the dollar, not upward pressure from resource utilization.

    In December, Fed officials raised interest rates by a quarter-percentage point to a range of between 50 and 75 basis points and penciled in three more moves this year.

    Yellen left no doubt that she supports this stance.

    But deciding when to move and by how much “will not be easy,” she said. There are uncertainties from fiscal policy and the outlook for the global economy, she added.

    Yellen warned that delaying rate hikes might force the Fed to later raise rates rapidly, which could disrupt financial markets and push the economy into recession, she said.

    “For these reasons I consider it prudent to adjust the stance of monetary policy gradually over time – a strategy that should improve the prospects that the economy will achieve sustainable growth, with the labor market operating at full employment and inflation running at about 2%,” she said.

    The Fed policy committee will meet again on Jan. 31-Feb.1. Economists don’t believe the central bank will raise rates at the meeting. Financial markets see no chance for a move, and think June will be the next meeting with a rate hike.

    -Yellen,talking out of the OTHER side of her mouth tonight.
    I was going to predict that she’d be dovish tonight after yesterdays hawkishly perceived hokum.That’s how she does it.

  30. captbara says:

    Dad called again, still fearing a big crash after Trump gets in. I know he listens to mainstream news a lot though. Could it be yet another post Brexit/election ramp in the works?

    • mcgcapital says:

      Seems unlikely.. after all nothing unexpected is about to happen unlike the election and Brexit so there won’t be a mad scramble to reposition portfolios. A crash is unlikely with longer term charts still showing positive momentum but hard not to argue an orderly 3-5% pullback is coming with Dow and Rut breaking support and SPX momentum rolling over

    • CB says:

      well, it could, why not? 🙂
      Nice work with $nymo, capt! I’m curious to see how things play out this time. Thanks for the chart!
      Most people I’ve talked to today think that retail traders have been front-running this alleged “sell-the-inauguration” trade, in which case you are right that we may continue to rally for a bit longer…

  31. bouraq says:

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

  32. lunker1 says:

    lowest close since Jan 3
    from 2234 to 2282
    .618 = 2252
    C=A = 2251
    82-34 = 2248
    below that cluster
    .886 = 2239
    C=1.62A=2237

  33. Thanks Tony. Todays high was simply a retracement trade from the recent high of 2279 and low of 2263 as marked by the white dotted line. In the larger scheme, we appear to be trading in a triangle with evenly matched (degrees) lines of ascent and decent. In my eyes the market is tilted to the downside with the possibility of a 2% correction if not something greater but its a difficult call because of the symmetry. https://www.tradingview.com/x/aYXFMOxt/

    • An alternate view from Urban Carmel:

      Urban Carmel ‏@ukarlewitz 37m37 minutes ago
      More
      Urban Carmel Retweeted Urban Carmel
      $SPX does better when $DJIA down 5 days. Up avg of 1.7% w/in 3 days and 1.4% on Day 3. Same odds as $DJIA

  34. jobjas says:

    EW analysis of HD

  35. vivelaamo says:

    Be patient. There will be better opportunities to go long.

  36. mtu MTU says:

    [EOD] Stocks-
    Potential bullish triangle and IHS in SPX if it decides to breakout upwards (Chart 1, green). On the bearish side, serial LDT remain in play (Chart2).
    http://market-timing-update.blogspot.com/2017/01/market-timing-update-11917.html

  37. 123 abc says:

    Thank you Tony et al, great update. It appears the election rally ends at inauguration with a gain of 9.5% in 2.5 months —happy inauguration day!



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