Friday update

SHORT TERM: flat opening sideways day, DOW +24

Overnight the Asian markets gained 0.3%. Europe opened higher and gained 0.7%. US index futures were higher overnight, and at 8:30 housing starts and building permits were both reported lower. The market opened unchanged at SPX 2432 then started to pullback. At 10am consumer sentiment was reported lower. Just before 11am the SPX hit 2423 and then tried to rally. The rally continued into the close and the SPX ended the week at 2433.

For the day the SPX/DOW gained 0.05%, and the NDX/NAZ lost 0.25%. Bonds gained 4 ticks, Crude added 25 cents, Gold was flat, and the USD was lower. Medium term support remains at the 2428 and 2411 pivots, with resistance at the 2444 and 2456 pivots. Today the Q2 GDP estimate was lowered to 2.9% from 3.0%, and the WLEI was lower too.

Quiet day with mostly down to sideways activity on this options expiration Friday. It would appear most of the option related volatility occurred yesterday. These expirations, in recent times, have turned into Thursday or Friday affairs. Short term the breakout levels SPX 2444 and 2446 remain, as well as, the breakdown levels SPX 2416 and 2406. Meanwhile, despite the spike in AMZN today after the WFM announcement, the Tech sector remains weak. More on this in the weekend update. Enjoy your weekend!

MEDIUM TERM: uptrend may have topped

LONG TERM: uptrend


About tony caldaro

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34 Responses to Friday update

  1. Ira is still fascinated by gold above 1250.Even above 1214.Below that,he throws
    in the towel.He’s impressed with bonds.Dollar is embedded and oil must hold 43 something.He also says,”The Fed is wrong about the economy.It’s weak.”
    G’night all.

  2. torehund says:

    God weekend Tony and all following the blog.

    • fionamargaret says:

      …and to you too Tore.
      I was getting tired of my own company, and hoped you would come on the blog.

      • torehund says:

        Still here Fiona 🙂
        Attaching a little surf-piece from Pacasmayo, Poemape and Chicama. The latter is the easiest spot, Pacasmayo is more of a grown boy place, wave is fatter, more powerful and just paddeling out on a big double overhead day takes what I haven got. Planning 2 months in Chicama warming up, then possibly some attempts at Pacasmayo. If for some reason I surf out of my own abilities, there are tubes just 7 hours away North in a place called Lobitos. A real famous spot (Hemmingway fished fishe there) is Cabo Blanco, well that place I will surf in my next life its fast and tubular 🙂
        Its a friendly and including place, like it used to be in Europe 40 years ago. And all food is home-made, pescado sudado is my favorite, small Hallibut in a delicious yellow sauce. They also have their own Chinese style food that is supreme.

        • fionamargaret says:

          Thanks Tore.
          I have quite a bit planned for my next life too..x

        • fionamargaret says:

          Really nice video and terrific soundtrack Tore.
          The buildings look Hemingway-esque in their attitude to the sea….from a time gone by…

  3. fionamargaret says:

    I shall post the charts tomorrow, but maybe you would like some music…Celibidache who likes music to be played slowly, to notice every detail…..and Sonny Stitt, who just liked playing….

  4. vipulm555 says:

    Dow is for Bulls
    QQQ is for Bears

    S&P is for traders / choppers

    Everyone’s market, can’t Trumph that!

  5. bfquant says:

    The thing that has me betting against a triangle in the QQQ, and in the S&P for that matter, is the lower lows in the Nasdaq Composite and Nasdaq Equal weight. The latter two have the looks of 1-2 1-2s lower.

  6. 123 abc says:

    Good weekend all, thank you Tony et al.

  7. Thanks Tony. Another odd day of selling followed by buying, the latter being similar to yesterday. Neither 10yr yields nor the US dollar bothered to rally into this rate increase and both continued to decline today. The dollar peaked around the time of the Dec, 2016 rate increase while 10 year yields did increase going into the March, 2017 Fed meeting but since then yields have joined the dollar in the drift lower. I want to believe the dollar is telling us the entire Yellen narrative is wishful thinking and ten year yields are confirming below target inflation. The Fed would have us to believe we might see four more rate increases through 2018 but the fed funds futures market is only betting on one more through June, 2018. As I have said before, this, combined with global funds being underweight US equities, may be a decent environment for equities absent tail risks, including the economy.

    • tony caldaro says:

      In January, 2016 the FED’s wannabe rock stars all came out for 4 rate increases, after the first one in December 2015. We got one. It is best just to ignore them. They follow the market’s lead, and for the most part are uncertain of the future. They are best at following than leading, and reacting when necessary.

      • Total agreement but I still like to measure their actions against their guidance. In addition to what you said, I question their honesty, have reservations about their obsessing over their “credibility” and unwillingness to admit mistakes. Bernanke asserting the sub prime mess would be contained is a classic.

        • fionamargaret says:

          ..or consider Trichet, who against a backdrop of surging oil prices and a weakening banking system in 2008, decided to raise rates right at the top of the oil peak, to fight inflation.
          I remember the interviews with him….he would not even consider he had made the wrong decision….central bankers are a special breed.

        • tony caldaro says:

          FED speak: they have to talk the talk.
          Their main goal is to keep the markets stable, not to say what they really know/feel.
          They all knew Housing was in a bubble, but could not say it.
          Their mandate is moderate inflation and full employment.
          If talk fails to work then they take action, i.e. lowering the discount rate 50 bps on options expiration in August 2007.

          • Tony, you just ripped the cover off the ball,sending it out of the park with that one. I THINK Dodd Frank added a degree of maintaining financial stability to the Fed mandate by authorizing the FED to take the steps necessary to prevent larger banks from exposing themselves to possible failure. The Fed should have been doing this anyway. And it would be tempting to add broad financial stability to the Fed mandate but risks of constant macroprudential micro engineering likely outweigh possible benefits. And politicians would have a hand in defining financial stability, making the idea totally unworkable.

            • tony caldaro says:

              Politicians come and go, and are subject to the whims of the moment. Even judges are transitional and reinterpret clearly written documents like the Constitution.
              The FED has a set of policies handed down from chair to chair to follow, There is a continuity unlike politics. The FED should not be politicized again.
              When politicians mess up financially it is up to the FED to fix it. Not the politicians. They simply retire from public life and give high paid speeches or become lobbyists.

      • Tarun Varma says:

        Tony – I can recollect you had published a bond market update in 2016 suggesting end of bond bull possibly. However I couldn’t find it in the search function. Happen to have a link to that update? I saw the one from 2015 (May), but I could’ve swore there was another in 2016 (late) or 2017 (early) unless I’m wrong.

  8. vivelaamo says:

    RUT gave everybody 2 chances in 2 days to go long at the 18dma so don’t cry about it when we continue up.

    SPX I’m sure did something similar.

  9. bfquant says:

    Classic late cycle behavior. “I want to be in the Dow”! And… One low margin business merges with another low margin business that takes it even further outside its core competencies.

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