Thursday update

SHORT TERM: gap down opening then rebound, DOW -15

Overnight the Asian markets lost 0.6%. Europe opened lower and lost 0.7%. US index futures were lower overnight. At 8:30 jobless claims were reported lower, import prices lower, the Philly FED was lower, and the NY FED was higher. At 9:15 industrial production was reported flat, with capacity utilization slightly lower. The market gapped down at the open to SPX 2421. It had closed at SPX 2438 yesterday. In the opening minutes it bounced around in a narrow range, hitting 2420, then 2427 by 10am. At 10am the NAHB was reported lower. The market declined to SPX 2419 by 10:30, and then started to rebound. The rebound continued into the afternoon with the SPX hitting 2434 at 3:30. Then a dip into the close ended the day at 2432.

For the day the SPX/DOW lost 0.15%, and the NDX/NAZ lost 0.45%. Bonds lost 9 ticks, Crude slipped 30 cents, Gold slid $5, and the USD was higher. Medium term support remains at the 2428 and 2411 pivots, with resistance at the 2444 and 2456 pivots. Tomorrow: housing starts and building permits at 8:30, consumer sentiment at 10am, and its options expiration.

The market gapped down at the open today. By 10:30 both the SPX/NAZ took out Monday’s lows, the DOW/NDX did not, then the market rebounded into the OEW 2428 pivot range. An options related resumption of the uptrend? Or just an oversold bounce with options activity tomorrow? Despite the SPX/NAZ marginally breaking Monday’s lows there was no follow through by the DOW/NDX. Still a mixed market with Techs lower, and Cyclicals holding. The key levels to watch are SPX 2416 and 2406 on the downside, and 2444 and 2446 on the upside. A break of the first will likely lead to the second. For now the medium-term trend is still up until those lower levels are broken. Short term support is at the 2428 and 2411 pivots, with resistance at the 2444 and 2456 pivots. Short term momentum hit oversold this morning, then bounced to above neutral. Trade what’s in front of you!

MEDIUM TERM: uptrend may have topped

LONG TERM: uptrend

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

About tony caldaro

Investor
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132 Responses to Thursday update

  1. vivelaamo says:

    Tony can you ban zerohedge links?

  2. captbara says:

    Looks like Trump’s tech meeting on Mon is going to trigger the blast off. NAZ will be great again very soon.

  3. thumbs up to PPT. they did a excellent job this week. Have a nice weekend all

    • Dex T says:

      Great point!

      AMZN”s total 2016 profitability was 4 billion. The first year in it’s history that it made a profit. They are spending 13 billion to buy Whole Foods.

      AMZN has never been a cash rich company- they kept spending and investing in search of profitable business ideas- from electronics to retailing to cloud and now to groceries (lol!)

      Has nothing to do with “accounting” but an overall much weaker business and more hype then other firms.

  4. phil1247 says:

    Tony

    thanks and have a great weekend !

  5. phil1247 says:

    https://caldaro.wordpress.com/2011/01/18/interest-rates-the-economy-and-the-1yr-t-bill/

    fed will do what the market tells it to do

    fed follows the market …
    fed does not lead

    • vivelaamo says:

      Zerohedge! Great time to go long when zerohedge is posted.

    • Dex T says:

      Kashkari is the only one who admits to making the decision based on “faith” . He should be removed from his position for that.

      The data is mixed. It may not all be as strong as the Fed would like but with everyone trumpeting how strong the U.S. economy is there is no reason NOT to raise rates.

      Interest rates were over 5% in 2007… they just made it to 1%- it’s absurd the tantrum that the investing community throws based on these moves- all of which were announced LONG ago

      • Dex T says:

        Also Trump currently has Gary Cohn searching for a new Fed Chief replacement. Yellen has 6 months left and will likely hike once more.

        Trump already has some new candidates for the Fed

        We may very well be seeing some policy changes shortly (though it’s impossible to say what)

      • kvilia says:

        According to this chart, interest rates will not be anywhere near 5% if the decline continues. As a matter of fact Fed will be forced to revise their policy in the next 6-12 months, which will very well coincide with the end of wave v. Right now it is my desire as well as respectful members of this forum to take advantage of the wave iv decline.
        https://fred.stlouisfed.org/series/A191RL1A225NBEA

        • Dex T says:

          I’m not expecting rates to get to 5% – only commented on where they were and how far they have fallen.

          Every tiny increase get’s excessive whining even though investors keep talking about the strength of the U.S. economy. It’s either one or the other.

        • vivelaamo says:

          Does that include me? 😊

  6. cj32 says:

    Cr, CBZ

  7. vivelaamo says:

    Hope Amazon buy Tesco

    • Dex T says:

      Why? What could they possibly add? I’ve been to Tesco in the U.K. and it was a solid place to shop

      • vivelaamo says:

        I have a lot of Tesco shares. Tesco isn’t solid place to shop at all. They skimped on quality for years and messed around with the accounts. It’s why the share price halved !

        • Dex T says:

          I see. I had decent experiences with them but why not just go to Waitrose or Marks and Spencer?

          AMZN isn’t going to make it better and they just spent 3.5x their sole yearly profit to buy Whole Foods so you may have to wait some years. In the meantime you can follow how Whole Foods is doing.

  8. why the resistance at 2431.

  9. vivelaamo says:

    Hmmm. It’s btfd dips until it isn’t. Which will come soon but the move down won’t last long.

  10. captbara says:

    Nice DZZ down today. Wonder if they’ll save the big move for Mon.

  11. Dex T says:

    Stockop.

    AMZN wasn’t profitable for 20 years. It wasn’t an “accounting strategy” (LOL ! mindboggling that you believe THAT)- it was because they were unable to deliver in a very competitive industry. They have built a successful brand name and networking among retailers has been their key strength. The market has generally rewarded them regardless of what they have done.

    AMZN is all about cost cutting. Whole Foods is about delivering quality. Their products are expensive but some are better than those found at the average grocery store

    AMZN is going to go in and started cutting costs and that means reducing quality. They are not going to deliberately destroy it but AMZN management has no ideas on what to do other than cut costs.

    This is going to lose a portion of Whole Foods customers who shop there only for quality. In every Whole foods location there is no shortage of grocery stores with top notch items.

    • Dex T says:

      The market can do what it wants but as someone who goes to Whole Foods every few weeks (I used to go weekly) there is zero chance I will be giving them my business.

      I know what AMZN is all about and there are dozens of other stores to choose from.

    • stockop says:

      regretting even commenting originally so this will be the last one.
      1) YES it was indeed an accounting strategy. I’m sorry you can’t see that and I can infer you dont have an accounting background. NOLs are a very real and useful thing, they absolutely abused the system and had to change their tune a few years ago when it was on its way to being politicized by the Obama administration. (re: think Trump casinos and why it didnt bankrupt him and why he paid less taxes in the future)
      2)http://www.businessinsider.com/amazons-profits-what-people-dont-understand-2013-10
      it was also as a result of investing, a business strategy.
      3) your post is all conjecture. you are stating what amazon is going to do, and yet you don’t work for them. “cutting costs and reducing quality” yes they do cut costs and thats why as a business Amazon has one of the tightest margins in the world. but reducing quality?? never have i ever heard or read such a thing. lower prices is not a result of lessened quality, its a result of predatory pricing. one example to prove ur point would be awesome, dex.
      I wouldnt be betting on Amazon to fail and yet you seem completely sure of it.

      • stockop says:

        to clarify* it wasnt just the potential for it to be politicized. shareholders pushed the company to finally show a profit which arguably had a bigger pull on them finally showing one.

      • Dex T says:

        1) Don’t believe it at all. The very reason AMZN went into the grocery store business was because their execs were desperate for a cash generating business. They know they were struggling in their current industry and looking for ways out. If they had a truly great business like so many other companies they wouldn’t have to rely on accounting excuses.

        2) This article only proves my point. AMZN was struggling to make money and kept diversifying to look for steady cash flows. It’s growth consumes it’s revenue but helps keep it’s stock price high- which is at the center of it’s “model”.

        I’m not betting on AMZN to “fail” but I certainly think they will have a negative impact on Whole Foods and the quality of service. They are two different industries with two different cultures and mindsets. Whole Foods has stood out in a very competitive field as a place that offers quality and that isn’t at all what AMZN is about.

        We can discuss this forever but have to wait and see. Personally I will be looking for other stores to buy from.

        • SPYtrader says:

          Amazon is making big money from their Cloud business and it is growing rapidly.
          Over half of their operating income comes from this segment and it’s only about 10% of the total revenue. They can afford to have low profit business when they also have high margin in other areas.

          • Dex T says:

            They have had low profit their entire existence. As I posted earlier AMZN execs have been looking for a business with profitability and settled on food.

            AMZN has a niche but they are way overvalued. They established a brand name

            They add zero value to Whole Foods and are going to take it down a notch and turn it into an ordinary grocery chain. An online retailer isn’t going to do anything good with a grocery store.

  12. 2440 close, hop on the long bus, money for everyone for the weekend. Could be a bull trap, but na, Just buy

  13. gary61b says:

    ESU7, Triangle to wedge to london bridges falling down….lol

    • gary61b says:

      Esu7 I think needs to tag 2418 before move up is legitimate. Thats my two pennies.

      • gary61b says:

        On a friday before the weekend, drop into the 2418-16 level and park it as the closing bell rings…

  14. fotis2 says:

    Good place to start longs on $/yen
    https://invst.ly/44hdo

    • phil1247 says:

      fotis
      you were saying it was a bull flag in mid may at 111.5
      but i tried to warn you that it was a short below 112
      hope you didnt buy back then buddy 🙂

      • fotis2 says:

        That was on the 4hour chart broke out and collapsed loosing trade but this one looks solid buddy note the broke bear flag on daily/reversal put in a 3BR and +D.I like this setup think its got legs to 114

      • fotis2 says:

        Also everyone and his uncle is convinced of $ meltdown not?Except mjt

    • chrisk44342 says:

      I would add to longs on a more meaningful retracement on the hourly chart

  15. ATL GDP still sliding–2.9.Raise those rates so we can get this recession out of the way.Ttyl.

  16. phil1247 says:

    /zb broke short
    ext long target should get hit … ie new highs
    will sell remaining cash bonds at target

  17. phil1247 says:

    /esu7

    shorts and longs breaking since last friday
    anyone remember what that implies?

  18. kingfrogcash says:

    Amazon to buy Whole Foods, tanking Sprouts, Kroger, Walmart. Brilliant!

    • Dex T says:

      How is it brilliant?

      AMZN has zero experience in the food industry and struggled for 20 years to turn a profit in their own (online sales/electronics) specialty. They only turned a $4 billion profit last year. Now they are overleveraged

      The food industry is one of the most competitive areas with razor think profit margins. Whole Foods was withering on the vine due to their.overpriced products. Now it’s going to turn to shit.

      • Dex T says:

        My family and I occasionally shop at Whole Foods but now going to avoid. AMZN is going to be replacing their quality items with garbage.

        • stockop says:

          u are really negative. not even a whole foods fan but the fact that u cant see the benefits to AMZN breaking into the grocery business by buying a company with the infrastructure intact is truly mind boggling. weird how amazon went up today and the rival grocers all tanked, guess u know more than the collective wisdom of the market…

          • phil1247 says:

            we dont do personal attacks on this site stock op
            keep it focused on the markets … not individuals… thanks

            • Dex T says:

              It’s ok Phil. Thanks for the word but I can handle any and all comers.

              AMZN has a groupie fan base for some reason and they can do no wrong.- earn no money, provide poor quality service, etc…

          • Dex T says:

            I deal with facts not daydreams. It makes sense for some people at AMZN who are searching for cash flow but is going to ruin Whole Foods as a business.

            AMZN has zero experience in a highly competitive industry in which most well run businesses struggle to turn a profit.

            Whole Foods has done ok but their profits as fairly thin as well.

            AMZN is going to come in and substitute Whole Foods quality products for cheaper quality items to cut down on costs. Overall quality and service at Whole Foods is going to decline.

            In a couple of years many of Whole Foods customers are going to flee to other stores.

            AMZN stock has always been rewarded for some reason even if the others are in better shape financially. The market has a mind of its own.

            • stockop says:

              their inability to earn money was a result of them taking overt advantage of the US tax system which makes it so companies that operate at a loss (NOL-net operating loss) pay no taxes. not as a result of their business model. simple accounting. while you can believe that all you want, for the most part, every industry AMZN gets involved in they are insanely successful. You can pick and choose random products (AMZN fire phone for instance) that are failures, but as a whole they are top tier in the industries they enter. They wanted to get into the grocery business and as you said they had no experience…..so they went and spent $14B buying a company with decades of experience. They are not going to fire all of the employees and start fresh. If you don’t think they are data mining/paying for data…. that will determine how they approach the whole foods business ON TOP of listening to a decades old grocery store management. why would they buy a company and drive it to the ground?!?

      • scottycj1 says:

        Amazon is in the process of acquiring companies and expanding its operations during a time of super cheap money. After they run half the retailers out of business because their margins are so low (preditory pricing) they will increase markups and be one of the largest companies in the world…and very profitable. I expect you will have some acidic response.

        • stockop says:

          well said. i ain’t buying at these levels but come the next recession i will be backing up the truck. they already are one of the largest companies in the world. i think you meant to say the largest lol

  19. hooloo1957 says:

    Is the Spy down so much this morning because it paid a dividend? Does anybody know?

  20. http://www.marketwatch.com/story/equity-allocation-indicator-flashes-bear-market-warning-2017-06-16
    Here’s another bear warning sign.Percentage of households invested in stocks.Good luck all.

    • phil1247 says:

      typical Mark Hulbert

      chicken little … bearish for years
      think his fund is DOWN in this monster bull in stocks
      think….. prechter 2.0…
      he will be correct once every 7 years

  21. vivelaamo says:

    Would stock market even care about a recession?

    • That’s a good question. Answer is probably not. Still no where to put your money, interest rates still low, which allows for higher PE. There will always be hope. Hope of a tax plan , hope of stronger GDP, hope of more QE from the bankers around the world. Need sp 500 to have a PE of around 40, then a 50 percent hair cut is still 20.

      Buy the dips rules the markets. Giddy up. New highs today

      • Dex T says:

        Interest rates are going up steadily. If you are speculating in real estate, which a huge portion of the market has been doing the bank is going to be owning it very soon

    • Dex T says:

      Normally the stock market “predicts” the recession and we see significant drops before it occurs.

      This bull has been very unique but we will see some big drops around /during a recession

  22. joecthetruthteller says:

    A predictor with a perfect track record on the American economy is moving closer to signaling a recession

    http://www.businessinsider.com/interest-rate-spreads-close-to-signaling-recession-2017-6

    Looks to me like its not time to worry yet though.

  23. vivelaamo says:

    Thanks for RJ posts Fiona. They expect big move up next week and they are usually right more often than wrong. Sometime to bear in mind.

  24. Richard Glackin says:

    Looking for input on Silver…from it’s May 9th low of 16.11, silver has run up to 17.70 then retraced to a little more than 61.8% at 16.63. To me, it looks like 5 up and 3 down where that final ‘C’ wave down appears complete with 5 waves. Any reason to think it is not done? Since the 13.62 bottom, that gives a count of 1,2,i,ii,1,2. In a fear projected scenario, the subsequent wave 3 could project as high as nearly 25.00. Thoughts? Thanks!

  25. torehund says:

    Humanity is sidestepping the population, look nowhere else than to my homecountry. In the latest horror story government took away the child from her mother because she didnt provide enough help with here school homework. Bureaucracy at work, full throttle. Wish for oil to plummet to 10 Usd, so that all the stalinist in Gov go unfunded into their own abyss👹

    • fionamargaret says:

      Numbers suggest 41 for oil Tore….maybe you need your break to Peru (not that that will change the world, just enable you to deal with it better).
      Sometimes all I see is heartbreak, but then along comes something wonderful to tip things on its ear.
      Go and have fun…..Fotis is thinking Angolan Fishing….x

    • fotis2 says:

      In Europe we are still very much in the Middle Ages the ones that rule and the unarmed peasants they rule over with the only exception being Switzerland.

  26. Me:Slow grind up to complete C&H on S&P…2478-2480.
    Ira gives a big warning on S&P losing its embedded reading today again.Thinks it’s ominous.DOW still embedded,so is crude of course.1250 support on gold.Later all.

    • fionamargaret says:

      I had an extra couple of charts….Tom McClellan, and 2 instead of 1 from Chris Kimble.
      I perhaps should have tried sending them in 2 parts, but everything is awaiting moderation.
      Sorry!

  27. stormchaser80llc says:

    Same old market. My trading indicator based on my proprietary Technicals Model went from BULLISH to NEUTRAL Monday, although my favorite unrelated signal remains BULLISH. My proprietary Technicals Model, while still positive, has flashed 5 negative divergences since mid April, a sign that a major top is coming soon.

    While SPX has traded sideways during the last 10 trading days, but SPX’s Advance-Decline line made another new All Time High yesterday. Most Breadth indicators, though off their highs, are still positive. Participation fell markedly again for the small and mid caps today, something to keep an eye on. VIX hourly is close to triggering a MACD SELL signal shortly unless can find strength tomorrow. Oil still has that feeling that a lower low needs to be put in before a turn higher.

    Supporting charts and much more FREE analysis at my site (http://navigatethemarketstorm.com) However be advised that I do ask folks to take a few seconds to register for a log-in, making sure you agree to my legal documents. On my site, be sure to check out the real-time Trading Platform (look for it on the top menu). I am taking feedback!

  28. Leaving aside all the cryptic mumbo jumbo on this site, I’m giving you all a heads up , the NDX has already done a 5% correction and tested it so for all you gamblers out there it’s a cheap long…

  29. Thanks Tony. After losing 26 points yesterday and during ON trading, the market, after getting its footing, recovered 16 of these points….exactly 61.8% at today’s high. Assuming we are still in Intermediate IV, is this possibly a B wave? We’ll know tomorrow but I’ve been at this awhile and it does not “feel” like it wants to go down but sentiments can change quickly. Alternatively, its all part of a difficult, messy IV.

  30. mcgcapital says:

    Today looked like a pin up for opex to me. Everything looks toppy/bearish apart from the Dow. I’m short FTSE from 7540 and hoping to run it to 7100-7200. There were literally about 20 hits on the 7550 resistance area so if that was it today for a pullback it doesn’t look right. Hoping for a break of 7380 soon to confirm which I guess will tally with spx 2406.

  31. pooch77 says:

    Embarrassing to call this a correction as the dow is now down 40 points from
    the top and daily chart is imbedded at top,not even a blip

  32. Mary773 says:

    Tony,

    Your SPX 60 minute chart shows 2415 as the completion of iv. Does it work for 2415 to be wave a, 2443 to be wave b, and today’s low of 2418 to be the completion of iv?

    Thank you.

  33. ko68 says:

    Thanks Tony! What du you think about crude oil? Bottoming process?

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