Wednesday update

SHORT TERM: gap down opening, DOW -219

The SPX rallied 1.2% the first two days of the week. Then overnight Tuesday, it was reported the US was preparing an additional $200B in tariffs against China. Naturally China stated they would retaliate. ES futures dropped immediately and remained substantially lower heading into Wednesday’s open. Asian markets dropped 0.8% overnight, and European markets lost 1.4%. The SPX gapped down to 2776 at the open, closed at 2794 yesterday, rallied to 2786, then headed lower. The low for the day was SPX 2771 just past 2pm. Then the market bounced to close at SPX 2774.

While perusing the charts yesterday we noticed a very clean rising diagonal in the NYSE from the April downtrend low. Then a large pullback during June. Followed by a rally into early July: https://bit.ly/2ubPmvR. This pattern could explain the choppiness in the SPX/DOW over the past few months. Diagonals are created by three wave advances, in an overall contracting five wave pattern. We carried the same leading diagonal pattern onto the DOW charts, even though the ‘e’ wave has some overshoot: https://bit.ly/2KXDjfB. When you add in the two counts posted on the SPX charts, bulls and bears have plenty to choose from. Overall, two of three counts suggest higher prices are ahead for this month. When one adds in the impulsive NDX/NAZ/R2K patterns, and new highs in market breadth, probabilities suggest this April uptrend will continue. A rally above SPX 2802 would eliminate the Int. wave iv triangle posted on the SPX daily chart too. Good luck, and best to your trading!

MEDIUM TERM: uptrend still underway

LONG TERM: uptrend

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

About tony caldaro

Investor
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344 Responses to Wednesday update

  1. E says:

    My newest guess is there will be one or two final exhaustion gap days before a big fall. Monday would be a good turning point. (Now watch as the reverse will happen.)

  2. E says:

    Bull charge!!! 2820 cliff target. LOL.

  3. stcoleridge says:

    Way to go all you sophisticated “professional traders” buying the NDX up 1.6%. Us lesser mortals lacking guile and nous have to settle for buying much lower down in the morning hours.

  4. 2793 major support . no need to think about a short until it breaks

  5. mcgcapital says:

    Had a quick look through the comments on election night back in November 2016. What struck me was how little back and forth there was around how good or bad a Trump presidency would be and nearly all talk was linked to markets. Even Holly/Gary wasn’t ranting back then and was quite objective in their analysis so not sure what went wrong.

    It’s hard to separate politics from this market as they’re completely intertwined. But the level of bias on both sides is quite strong now. It’s not like Trump has done anything he didn’t campaign on, some is positive for markets and some is negative.

    https://caldaro.wordpress.com/2016/11/08/tuesday-update-567/

    • H D says:

      ahh, the good ole days. I remember catching DSX for a double and got zero replies! There it is in black and white :mrgreen: don’t post any set ups here anymore.
      Now people scalp $0.10 on etf’s and take 50 posts to explain how awesome their method is.

    • soulsurfer says:

      Agree, post 1 thing about trump and you’ll get 100 responses (all opinion). Post 1 thing about the NDX following a picture perfect impulse pattern and you’ll get 10 response if you’re lucky. Opinions don’t pay folks, cold hard facts do.

    • The days following the 2016 election was some of the best money I ever made in the stock market (aside from some wacky bio-tech I once owned)
      I mostly buy 3X etfs.
      When the “Pre” opened at 7:00 am. after Trump’s election, I bought everything I could pay for,.
      Next day or two, Carl Icahn was on CNBC, saying what a crazy opportunity that was to make money. He had bought $1/2 billion or so of SPX futures early am, after Trump was elected.

      You’re a Brit. You just don’t know.
      Go have a pint.

  6. that little 1;35 moving time frame may have pushed it down enough for the bull algos to push it over 2800 into the close.
    sold mu short at 2789 for a 4 point loss. Hold no positions will watch. bears since i sold you could be in good shape
    See ya tomorrow

  7. fxaprendiz says:

    Tomorrow is a Friday 13th… How fitting it would be for a pop and drop. Maybe we’ll have a doji candle tomorrow. Would need confirmation on Monday though. Who in here said the other day that trading was easy? 😉

  8. Page says:

    Once SPX closes above 2800, shorts should stay out of the way and just watch until it hits 2870sh.

  9. see if the 1:35 moving window jacks it more or drops it a little

  10. soulsurfer says:

    Small correction “US is preparing tariffs against China for goods worth an additional $200B”. The total amount of tariffs on this $200B of goods will be about $34B and not go into affect until ~10 months from now but only after industry review, approval, and implementation into the appropriate systems. It is not Trump who makes these decisions, it’s not decided overnight, it’s not a bad thing for the US economy.

    Note that tariffs are a form of protectionism (of internal markets). However, often the tariffs are not said equal. For example the EU is a 17T economy and the US a 20T economy. However, the EU has a 4.29% tariff on transport equipment (China 11.4%…) while the US applies a 3.06% rate. All things equal the EU should -based on simple GDP comparison- apply a 3.65% tariff.

    source: https://www.wto.org/english/res_e/statis_e/statis_bis_e.htm?solution=WTO&path=/Dashboards/MAPS&file=Tariff.wcdf&bookmarkState={%22impl%22:%22client%22,%22params%22:{%22langParam%22:%22en%22}}

    See it as our tax-rate system: the more you earn the higher your tax-rate. But, if you earn 2x as much as your neighbor you shouldn’t be taxed 4x as much. That’s disproportionate and unfair: a bad deal.

    Remember Trump is a business man, a man who makes deals. Good deal, or no deal! This is woven into his administration. Because it’s not Trump who runs the tariffs negotiations, it is his staff of course. He’s merely a spokes person. That said, when the administration sees a bad deal, they will tackle it.

    Unfortunately the tariffs are being blown up by the media (as usual: bad news sells) and by the administration itself as well (considering the “nature of the beast” 😉 ). All in all considering the US is a 20T economy even $200B in additional total tariffs (currently only $34B have gone in effect), is only 1% to the US economy. Thus the “trade-war” is really no big deal and not worthy of the attention it’s getting. There are more pressing issues that should be in the limelight. Not tariffs. Keep that in mind next time the market has a little fit and the algo’s pick up a few words from press-releases and statements that kick in their sell-programs. Look where the markets are now… higher. Only 1 conclusion can thus be drawn: tariffs don’t matter. If they did, we’d be lower today too…

    Trade safe and objectively, don’t let “news” drive your decisions.

    Soul

    • tommyboys says:

      Bang on Soul – we’re gonna be okay 😉

    • let me know 1 deal he has made with a foreign country thus far?
      Canada Mexico North korea, Iran france just 1

    • aahmichael says:

      I have no idea who you are quoting in the first part of your post, However, UBS made a statement yesterday which is directly contrary to whoever you are quoting, and it states that the $200b in new tariffs should be expected to go into effect by the end of September. Furthermore, Trump isn’t a businessman. He’s a reality TV star. Since he’s been President, he hasn’t been a dealmaker, he’s only been a dealbreaker.

      • soulsurfer says:

        It’s NOT $200B in tariffs, it’s $200B worth of goods that will be “tariffed”.

        Check here:
        https://ustr.gov/sites/default/files/301/2018-0026%20China%20FRN%207-10-2018_0.pdf

        The tariffs will not go into effect immediately but will undergo a two-month review process, [the industry review process I mentioned] with hearings Aug. 20-23. After the hearing the tariffs decided upon will have to be implemented into the systems which can take another 6-8 months…

        The $500B in Chinese goods currently (additionally) tariffed resulted in the $34B (my bad, mixed up the number). The currently proposed $200B will amount to $16B in additional tariffs. (see link) totaling the originally proposed $50B in tariffs.

        • aahmichael says:

          Yes, tariffs on $200b worth of goods. My point, though, is that UBS believes that they will go into effect “by the end of September,” not 6 or 8 or 10 months later. It’s also important to note what UBS explained about the fact that the government could have given itself a 360-day window before having to take action, but it chose to do it immediately.

          • aahmichael says:

            The other thing that’s important to note is that just like Trump exempted the 4 Muslim majority nations that the Trump Org does business with from the Travel Ban, he has also exempted Ivanka’s entire line of products that are made in China from the list of goods that will be subject to tariffs…further cementing himself as the most corrupt President in the history of our country.

          • soulsurfer says:

            What UBS believes is one thing, how the process works is something else. If UBS stated its $200B in tariffs then I am doubtful they know what they are talking about.

            • aahmichael says:

              The tariff number was my error. I have faith and knowledge that UBS knows what they’re talking about. You still haven’t said who you were quoting when you wrote this:

              “Small correction “US is preparing tariffs against China for goods worth an additional $200B”. The total amount of tariffs on this $200B of goods will be about $34B and not go into affect until ~10 months from now but only after industry review, approval, and implementation into the appropriate systems.”

      • waterstim says:

        I can smell your Obama narcissism and Trump jealousy as I walk through this Northern Virginia WalMart. You’ve been pretty weak on your market calls here lately. You should tighten up a bit and drop the act of showing everyone how smart you are.

        • If I showed 5 possible counts I would be a genius.

          Pay me 29.99 a month and my preferred count is up, my alt count is down,
          But I’ve been right this entire time lol

    • A lot of this tariff stuff is nonsense, but it is tangled like the type of SNAFU expected from Washington bureaucrats.

      I know of a national furniture manufacturer, previously 100% domestic U.S. production. Pressures from EPA (and others) forced it to move mfging to China.
      Problems is, most of their product line is made from White Oak, and black cherry (indigenous to Eastern U.S.) But in China, there are no such trees trees.

      So … this U.S. company has been shipping tree logs from the Northeast U.S. through the Panama Canal to China , for at least 10 years, make the stuff there, then ship the furniture back, all the while risking damage to the raw materials and finished product by the uncontrolled humidity.

      And the upside is: what ever Global Saving efforts may be been gained by not manufacturing in the U.S. is just transferred to China. Trade winds being what they are, the pollution in China probably gets right back here in a few days

      Only a mad-man would see any wisdom in this.
      I think this is typical of furniture manufacturing in general.
      Probably many other industries as well.

    • The Nazi and KKK are good people. The 8 month old child was taken away FOREVER from their mother by a soulless trump policy that not ONE SINGLE supporter can justify. . Canada can go to HELL! The POPE should just shut up! Wants Putin in G7 today and still loves him over the EU, according to his own words. No EU proposed zero tariff policy on autos because it is not to our benefit. Claims EU has a surplus on trade but it is the other way around. On and on the outrageous lies and nonsensical actions by a madman gets justified. The same people that can’t see a dismantling of our constitution and values develop a silly EW chart that declares we have decades of glorious bull market action to come. I dare all those same people to review their argument in early 2016. You know, before the savior got elected. try to justify your crash scenario then to todays glorious decade long bull run. irrational illogical but acceptable by the very same that condemned our economy to a black hole 2 years ago? Can you comprehend the disparity? Debt out of control in 2016 is puny compared to today. Future debt is accelerating from then.

      Looks like I am once again on the other side of conclusions. we will not only have a bear market in the next 18 months or so, but we will have a once a generation economic malaise lasting decades. What a crazy world we live in. To think the same argument for support of trump over a year later when it’s been proven just how corrupt he is becomes mind boggling in its implication.

      You today accept a president that wants close relations to a ruthless dictator that got caught influencing elections of other nations. Sleep well and by all means don’t question your decision or patriotism. I have got to give up making futile speeches.

      BTW has anyone bothered to look at the results of TRUMPS business deal? With a record like his I would cringle at the expected results here. how many bankruptcies where he got away scot free? Who do you suppose pays this time around?

        • Great retort. One I always expect when confronted with facts. Love your reference to his business acumen. The man and his failures is legendary. he managed to stiff banks, the government with billions of losses while he lived the lifestyle he seems accustomed to. So please by all means use his business experience when describing the assumed outcome for America. Can America declare bankruptcies? how many was it 6? What will LIBOR rates look like? Inflation? Debt structure? How much do we owe today? How much of free money that all trump supporters were complaining about during Obama era mushroom to absurd levels since? I dare anyone that supports trump today to actually answer these specific questions. We are living today in a fairy land where an attack on our nation was perpetrated by Putin and the leader of our nation is doing everything in his power to support all Putin policies. Dismantling our constitution and laws, disband NATO and G7, attack the fabric of our defense against enemies of the state. Shameful times and one that has no answers as to why we let it happen. Mueller, Comey, FBI, international intel, our allies, the pope, war hero’s, are all delegated in the trump world of bad people and institutions that should be destroyed. This at a time when we have concrete evidence of trump administration personnel at the highest levels indicted or cooperating with turning evidence. GOP TODAY tries to play the FOX fake news tune by blaming the very patriots that exposed this. Did anyone bother to look up Strzok career indictments against Russian spies?

          • tommyboys says:

            You’re gonna be OK Holly. No worries. Maybe a little Ativan or Xanax ST if needed.

    • chrisk44342 says:

      Well stated Soul

    • ttsden says:

      Soul , Thanks for insightful comments. Also for an awesome portal.
      Recommended reading.

  11. alexh110 says:

    Went short ES at 2794, now we have hourly -D’s in place on MACD and RSI, and a daily -D on RSI.

  12. cj32 says:

    Cr. to CBZ

  13. GDX bounced today,close to the 10 and 20d ema (22.30), then has slowly pulled back.All the discussions about the markets being on the “up and up” or if news dictates anything is moot to me at this point.The world’s governments took over the markets in 2008-2009.They can’t allow an extended bear market to start again–for “national security” reasons.Pensions,household worth,house values and credit cannot be allowed to decline.It’s all manipulated,from bonds to gold to oil,currencies and equities.When a surprise happens to jolt any of it–like Brexit,Trump winning or trade wars–PPT and ECB is there to clean up the panic with tons of money.Money is moved around by algos–who runs the computers that buy/sell the markets automatically?My guess is–your government.

  14. well bears, capitulate. its over 3100 here we come

    • fxaprendiz says:

      Yes! The market needs all bears capitulating and the bulls to giddily go long to set up the false breakout. -Or bears feigning capitulation with fading longs 😉

  15. phil1247 says:

    last one

    chris
    i am not using es now … too sloppy
    use cash SPX to guide you up to 2808 SPX target going forward

    good luck !

  16. stcoleridge says:

    NDX outperforming the RUT by 150 basis points (sorry 1.5%) today. I thought the RUT was supposed to be a safe haven in a trade war. Clearly no trade war coming Gary.

  17. Bill Manscoe says:

    I’m making a comment on a post of ash Michael from earlier. This is not a slam just another point of view. If you believe what our host here points out about a 34 year commodity cycle of 13 years up and 21 years down and we’re in the down faze then you have to accept that there’s always a reason for down and this is part of it. Also look at the price of Deere stock. Production volumes have gone up immensely in the last few years. Farmers that are good business people are not hurting yet but they will before it’s over. Somebody mentioned a a $200000 combine the other day I about fell out of my chair. How about $500000-$600000 for a combine and $750000 for a cotton picker.

  18. We have a simple wave structure in place that has distinct 3 waves. For there to be 5 we have to break above 2795. if we have a 100 percent retrace at that level and fail we can expect a sizeable drop. The low on 4/3 is some 3 plus months ago consistent with a normal timeline where we reach another reversal point.

    This suggests we will either fail at 2795 in the next few days or hit yet another wave up. if we break above 2795 the trajectory of the past suggests 2820-30 is a logical expectation.

    • ewmarkets says:

      The problem with 3-wave vs 5-wave distinction is that one really does not know until much later. A 3-wave sequence can be counted as A-B-C, with the fourth wave resuming the downtrend. However, it can also be counted as 1-a-b, with the fourth wave being wave c of 2 (which ends the correction).

      • Not using EW terminology. Way too confusing. I use VISUAL standards using the ONE DAY charts. In fact today we have just reached 2797 which would suggest we follow thru on a 5th wave within the 4/3 trend line. I will suggest that we have a clear 5th wave and a length of at least 2820 range to conform to the current structure.

        I would also suggest people abandon the wedge or triangle pattern. There might or might not be other EW patterns that indicate a crash is imminent but regardless I would be looking for exactly that. I would be real surprised if we go thru August without a deep drop.

  19. fxaprendiz says:

    SPX: potential false breakout above 2802 coming between today and next 2 trading days.
    Negative divergences setting up and a bull trap on sight.
    Just raised the SL on my tactical fading long (opened at 2772 and commented on here yesterday) from 2762 to 2770 now for a potential minimal loss.
    Planning on going short on the false breakout using the tactical long as insurance. Dangerous trading both sides until SPX shows its final card but by then it may be too late to get a good entry.
    GL to all, bulls and bears

    • fionamargaret says:

      Is there any possibility of this being a 5 of a 5 of a 5…and just waiting for the turn..
      I just do numbers (which is really EW in a blender).
      And to all the gold folks out there, do not despair…at some point gold and the $US will break up (oh no)…but gold will discover it has a spine….and much higher….
      So UGLD , SPXS, TMF (to 24), TZA,…et al…

      • fxaprendiz says:

        No I don’t think so, Fiona. A sequence of 5s would imply an ending trend already and this bull still has a few years to go.
        Still sees us in a big wave 4 at the moment (Minor wave 4 in EW, Intermediate wave 4 im OEW), which is taking the shape of a double-three, with the flat from January 29 to April 2 the first three subwave, and we still in wave x of the double-three since then. It is this wave x that people want to see as an impulse, your 5 of 5 of 5… But all I can see is a bunch of overlapping waves with sharp pullbacks… Definitely we are still within the correction set since Jan 29 and soon that will cleared out once the second leg down of the double-three gets on its way.

      • fionamargaret says:

        Baron Carrington (not Dynasty) who died a few days ago,established the Fleet Air Arm, with a large presence in my grandfather’s town. He had a bunch of dachshunds which he called “the tubes”
        A lovely man, who thought my number sequencing interesting…he asked if I could do football pools for him…..

  20. alexh110 says:

    Looks like the market wants to grind higher into a negative divergence, before entering a choppy downtrend.

    • fxaprendiz says:

      It is that potential choppy downtrend that will make going short very difficult in days ahead, unless you can and have the time to actively manage your positions

  21. best bull count would be to drop to 2767 and rip 50 points Friday and Monday to end minute 1 also would be a 12 day up cycle. Took a short at 2789. see what happens

  22. stcoleridge says:

    RUT made a fractional new high on Tuesday then reversed. Now the NDX is in spitting distance of making a new high. Just saying.

  23. mcgcapital says:

    Where are people getting this ‘the fed will ease off on rate hikes due to the tariffs’ from? Tariffs are inflationary as the consumer ends up paying more for the same goods, so if anything they mean the fed have to raise more quickly to keep a lid on inflation. And it’s the bad kind of inflation as it’s cost push rather than demand pull…

    As for what bonds do, longer dated yields are a function of expected short rates plus a term premium. So you can’t read much in to what they’re telegraphing in terms of when short rates will rise as sentiment has a big impact on the term premium. In the short run the fed always moves the fed funds rates in line with what the market is ‘telling them to do’, but through forward guidance the fed tell the market way in advance what they’re going to do (not withstanding some data dependency) so it’s more a case that the market knows what the fed will do and react to it, then the fed follow the path that’s already been set out. So in reality it’s the fed that are moving the market first rather than the market dictating to the fed.

    Of course news matters as it makes people buy/sell. But what tends to matter more is the trend. If we take this week’s tariffs news as an example, the market had been trending up in a straight line prior to that. That meant that whatever the news was, it was unlikely we’d collapse straight away from there and there should be no surprises that the market has been making its way back to that from Tuesday. However, there’s a good chance it rejects those highs and sells off and makes fresh lows under yesterday’s. It’s just how markets work… 1. Markets moving in one direction. 2. Something happens to make people want to enter against the trend – this is often news driven initially. 3. Market sells off from a high/rallies off a low. 4. Traders enter in the direction of the original trend and test it. So if we’d been rallying before people buy the dip, if we’d been selling off sellers come in after the initial rally. 5. Market heads back towards previous swing high/low. 6. Failure to make new highs/lows confirms a new trend is in play and the market goes down/up. Alternatively it shrugs off the move and carries on in the initial direction.

    So all in all this makes Tuesday’s high an inflection point. It’s a sell with a stop above type scenario for me. It’s not a case of markets not working/being manipulated or whatever. They’re working completely fine vs how they’ve always worked… it’s people not understanding how they work that’s the problem and that combined with bad risk management is why 90% lose at this game

    • floyd drummer says:

      nice….!

    • The street and all the major brokerage firms thinks a trade war will do minimal harm and until new developments occur or results of trade war are unexpected we can expect this topic to be a non-issue after a one day sell-off. G7, NATO destruction also seems to be a non-issue. China has not responded to the 200 billion additional tariff threats. If/when the EU ramps up their response to trumps threat on Autos I suspect the market will focus on rates, the dollar, and earnings. Don’t yet see the catalyst to derail markets in the immediate future.

    • the fed have to raise more quickly to keep a lid on inflation.

      Respectfully have to disagree with that.
      The FED is a child of the U.S. Congress (Federal Reserve Act of 1913).
      As such, the FED is accountable to them
      (House Banking Committee and Senate Finance Committee).
      And people in Congress have keep getting elected.
      As such, the FED’s “dual mandate” of 1) stable Dollar and 2)solid employment seem like laudable goals. But in practice what counts is GDP and commensurate tax collections.

      So, they FED right now can talk up a great storm, but is really keyed not hitting a recession (as long as no massive bubbles appear).
      That will rule the day.
      My .$.02.

      • mcgcapital says:

        Tom, isn’t the Fed’s mandate to “promote effectively the goals of maximum employment, stable prices, and moderate long term interest rates”. There’s no mention of the dollar there (although the strength of the dollar will be directly related to price stability). So my point is, if inflation goes up on the back of tariffs (which it might not anyway), the Fed will be compelled to control prices via higher rates, unless they see a threat to employment by doing so. The alternative would be to sit through a period of higher inflation on the basis that its transitory and maintain an easy money policy. Not that obvious what exactly they would do in real time, but it’s certainly not deflationary leading to lower rate increases anyway as far as I can see

    • ewmarkets says:

      “Tariffs are inflationary as the consumer ends up paying more for the same goods, so if anything they mean the fed have to raise more quickly to keep a lid on inflation.”–I don’t believe it is that simple. Tariffs on American exports cause demand to go down and therefore price goes down for domestic consumption as well. Since we import more than we export, let’s assume the net impact is high prices considering all exports and imports. Higher prices eat more into consumers’ budget for things they have to buy, leaving them less money to spend on non-essentials, causing prices to go down in those goods. Taking all into account, I don’t see how a trade war can boost inflation.

      • mcgcapital says:

        What you’re describing there is inflation though.. if all countries put tariffs on, then firstly American exports become more expensive overseas. If overseas demand dries up, and companies choose to sell those goods in the american domestic market then prices on those goods will drop in America (that parts deflationary). But as you said, the US imports more than it exports, so if tariffs go up on overseas imports then the consumer either has to 1. buy the same overseas goods at a higher price paying the tariff or 2. Buy a domestically produced substitute. We have to assume that the domestic substitutes are more expensive given the consumer is currently choosing to buy the imports. So either of those options is more costly than the status quo (I.e. inflationary), and since there are more imports than exports the net effect of all tariffs will be inflation all else being equal. It’s the opposite in China as they will have an oversupply of goods domestically which is deflationary given they have a trade surplus.

        But for the US, it’s either going to have a negligible or small impact on inflation and growth so no change to the current outlook for rates. Or it’s going to be inflationary and cause higher rates.

        There’s not really a case for saying it will be deflationary and lead to the fed easing off on rate hikes to me. Unless you go along the lines of tariffs weaken growth significantly so rates don’t rise as quickly as priced, but that probably isn’t a bullish scenario for stocks anyway

    • ttsden says:

      Another astute observer.
      How old are you MCG ? Kudos to you

  24. Lee X says:

    Hey Phil and Aah
    Get a room !

  25. phil1247 says:

    kvilia
    69.27 CL target coming up

  26. Philippe V says:

    So the market is telling us that it doesn’t believe one bit in the possibility of a trade war but on the contrary that it has full faith that Trump’s strategy will eventually bring China to cave in and eventually negotiate a deal highly beneficial for the US. But as the market is schizophrenic it also believes that the risk of a trade war makes the Fed more inclined to slow down or even stop and reverse any rise in interest rates. Win/win way of thinking and as much as it goes against every brain cells I have left (not many I can assure you!), it is just impossible to hold a short position on this market until reason comes back, probably very very far in the future, if ever !

    • phil1247 says:

      philippe

      NEWS does not matter

      the fed does not control rates

      the market will show you in advance what the fed will do
      fed follows rates
      they do not lead

      • aahmichael says:

        Sure. ES fell 30 handles AH on Tuesday the instant the $200B tariff list was announced, but news doesn’t matter. In fact, the only reason the FED meets is to trade stories about their children and grandchildren. Uh huh.

      • tommyboys says:

        Thanks Phil. Dunno why some can’t grasp it. The global bond market DWARFS our Fed. The Fed can only follow this massive global market – cannot lead it – and it will signal well in advance of any undoing. Hard to believe but Prechter actually has a crystal clear chart of this in Concour the Crash, although just gotta match these two charts.

        • phil1247 says:

          yes tommy

          AH would rather cling to market myths
          and drive by looking in the rear view mirror
          he has crashed doing that a couple of times

        • Ashley says:

          One more up, preferably a higher high on neg RSI divergence then we’ll see, I think they need to close at 2810-20 to have a shot at keeping this going…. Problem I see is lets say NDX/COMPQ makes new highs, unless they just keep going up blow off style the correction after a longer 5 up just puts us right back in the range…. Can’t short yet and no way I want to buy but if/when I do you bulls better run for the hills LOL GL

    • Big problem with the position that Chinese are taking is that they say they will tax food imports.
      But China needs the food imports to feed the population.
      The alternative is self-sufficiency (massive infrastructure upgrade).
      That takes a very long time.

      For China to actually block food imports is akin to a person holding his or her breadth.
      ***
      The tariffs that P. Trump is proposing:
      Not a requirement for anybody’s life.
      One proposed tariff would be imposed on Chinese made furniture.
      Can you live without Ikea?

      • tommyboys says:

        Exactly Tom. Tax our soybeans – starve your people. Lotta rhetoric.

        • aahmichael says:

          Soybean prices are back to a 10 yr low. Someone go tell the American farmer who will be harvesting their crop in a few months that this is all part of the negotiating process. In the meantime, China found a different soybean supplier.
          https://www.reuters.com/article/us-usa-soybeans-china/u-s-soybean-exports-scrapped-as-china-shifts-to-brazilian-beans-idUSKCN1IJ2SG

          • aahhMichael,
            very respectfully, ag commodies like “beans” are fungible, like crude oil, maybe more so.
            These are bulk shipments, (huge boatloads of dry grain).

            i.e. Whoever was going to buy those soybeans from Brazil (the ones now being bought by China), that trading partner will now look to buy beans from U.S.

            Unless someone can make a case that world consumption of soybeans is going to decline because of Tariffs, rhetoric like this Reuters blurb, makes no difference.

            My $.02

        • TB, I have actually read that much of the Chinese made furniture is a health risk.
          There is very little real wood in it, many chemical added.
          It “gasses”,
          I wouldn’t have that junk in my house, esp with windows usually closed.
          ***
          I have a second hand story about U.S. furniture make “Stickley”, told to me by a good friend of the Stickelys. How we got to this point of so much stuff being imported seems to belongs in the fiction section of the bookstore. But it really did happen

      • Anne Day says:

        I read that China simply returns tariff back to importers of soybeans. What kind of tariff is that?

        >>NEWS does not matter

        It depends on what kind of news you get. These days we are inundated with fake news, partial truths, anonymous sources.

    • No, the number crunchers made a financial decision that the impact to GDP is minimal. In fact I heard specific estimates based on a full trade war dispute with China. If the EU has the same problem that will obviously throw the whole calculation out. they have justified the market behavior. We shall see if their assumptions hold up.

  27. phil1247 says:

    chris

    ES shorts have been broken

    2810 target on tap while above 2775
    enjoy !

  28. I see the potential of an E wave down and I see the potential of breaking out. Overn2802. Earnings earnings earnings. Forward pe earnings have neen lowered to 16.5. Current 2nd quarter earnings have mostly been raised. Maybe guidence will be more important then actual earnings we shall see. Turn window of July 16th ish is interesting.
    So either we pull back for the E wave soon or we are in micro 5 of minute 1 which should target 2820 ish before a 40 point pull back for minute 2. Then minute 3 takes us to new highs.
    All,of you with convictions on our direction kudos. I find it difficult cause I see both as very possible. Any way good luck all

    • No such thing as a quadruple top.
      going higher.

      ***
      What is difficult to screen out is the constant hand-wringing by anybody who gets in the news.
      The stockmarket is just a reflection of wealth generating capability – the good life.

      I was recently reviewing recent U.S. Military history.
      The tank war of the First Iraqi war (1991) was won in a landslide.
      The U.S. Army tanks all had GPS
      The Iraqi tank commanders had never heard of GPS.
      Which made a huge difference in that battle.

      At the time, one installation of GPS (in one Army tank) was probably worth millions.
      I just bought a refurbished Garmin for a 2017 Honda that I have.
      I paid $50 with shipping including shipping.
      ***
      The increase of wealth all around us is massive.
      Problem is, the naysayers don’t like to admit it.

      • Thanks for your wonderful blog Tony.
        Good luck to all.

      • H D says:

        Hi Tom, I got a little laugh from the wealth increase comment based on buying a refurbished Garmin for a Honda but I hear what your saying. I just had a Garmin echoMAP installed on the boat. Amazing technology for the price.
        Now more importantly about chart patterns. I don’t think it’s best practice to speak in absolutes. “No such thing as quadruple top.”
        I’ll just leave the 2000 top chart here for you to compare to yours.

        • As soon as I put that in, I figured somebody would find a chart like that.

          OK, but any thinking person doesn’t buy a market like that, just because of the massive negative divergences. SPX in 1999 is not really a chart that needs consideration as a buy.

        • Also, in fairness to the FED and their inflation calculations,
          a lot of consumer type stuff has prices just cratering (pretty much anything that Best Buy sells).
          that goes some way to offsetting increased food, fuel, and medical care costs.

      • fxaprendiz says:

        Tom, it can be a false break out, going above 2802 briefly then down again…

    • Also, if your bearish, hard to believe markets can go up tp 3100. Minor 1 was 238
      So assume minor 3 is 12 points greater then minor 1 that’s 2942 for minor 3 a 80-100 point pull back for minor 4 and then 238 up for minor 5 to equal 1 puts you at 3070. Only way is earnings earnings earnings. Close your eyes hold your nose and just buy buy buy I guess and don’t listen to the news. I personally can’t see us going that high. August September October can be scary months. Just rambling now, cause big move coming sooner then later need to be on the right side.

      • Seems the news in play right now is the Tariff talk will force the FED to be more dovish.
        So, SPX is competing against 2.90% ten year and 2.00% three month.
        PEP common pays 3.30% div.,- carbonated sugar water + potato chips.
        Stock still only game in town.
        ***
        If you are nervous, just back off a little on leverage.
        At least wait until the negative edge eases.
        ***

      • fxaprendiz says:

        August may be scary… Then October we’ll have the capitulation move

  29. alexh110 says:

    Possible ES rally above 2795.58 today. But that would likely set up -D’s on daily and hourly oscillators.

  30. vivelaamo says:

    Thanks Tony. Will wait for the below to happen.

    A rally above SPX 2802 would eliminate the Int. wave iv triangle posted on the SPX daily chart too.

  31. torehund says:

    https://www.investing.com/indices/shanghai-composite

    From 26/02- 2018 an abc down, looks finished a week ago or so, just som bottom churn left I suppose. Can Chinas bear market be called over and done with ?

  32. lunker1 says:

    Tony on NYA the LD ended with the June high and the w2 retrace was 66%. Shallow for an LD? so maybe we’re in B of an ABC so that w2 retraces deeper than 66% with C?

    • fionamargaret says:

      You must watch this video….an absolutely thrilling interpretation of Shostakovich’s 2…with Gergiev at the helm…
      Totally fantastic.

  33. phil1247 says:

    chris

    have you given up on gold?
    it had potential but just cant seem to get out of its own way
    long from lows failed again
    there is still no buy yet for me

  34. 123 abc says:

    Thank you Tony for the midweek update; hope you’re coping well amidst the global heatwave.

    SPX

    BTC

  35. vivelaamo says:

    Aahmicheal. A guy that clearly knows his stuff yet is so blinded by his hatred of Trump he not only defends vile hatred he even hopes for the economy of his own country to collapse and the market to crash with it.

    Really sad times.

  36. aahmichael says:

    Problem for Trump: BMW is a major employer in South Carolina. This is currently the most popular article on The Post and Courier website in Charleston, SC:

    “FRANKFURT, Germany — Automaker BMW says it will build more of its popular SUVs overseas to offset the higher cost of sending cars to China due to recently enacted tariffs.

    BMW also said it will raise the price of South Carolina-built vehicles sold in China to help offset that country’s new 40 percent import tax on cars from the U.S., retaliation for higher tariffs on Chinese goods imposed by President Donald Trump.

    The dpa news agency reported that Munich-based BMW said Monday it is “not in a position to completely absorb the tariff increases.”

    BMW builds key SUV models in Spartanburg County, where it employs 10,000 people. Those vehicles are exported to 140 countries, making BMW the largest U.S. auto exporter. Most of the cars made in the Upstate are shipped overseas through the Port of Charleston’s Columbus Street Terminal.

    BMW and Chinese partner Brilliance Automotive Group Holdings signed an agreement Monday to expand their joint venture, the German automaker said in a news release. The deal will boost the number of cars produced annually at two facilities in China to 520,000 by 2019.

    “Our agreement sets a long-term framework for our future in China — a future involving continued investment, further growth and a clear commitment to the development and production of electric vehicles,” BMW CEO Harald Krueger told Bloomberg.

    He has previously said the carmaker is considering delivering other Chinese-made cars outside of the country.

    Trump has imposed tariffs to counter what he says are unfair trading practices that include Chinese requirements that U.S. firms transfer key technology as the price of doing business.”

    • travis01 says:

      Buddy, you don’t know what you are talking about. I live here, do over $30m a year at that site, and was with the company that brought them to SC. They are adding 1000 jobs and investing $600m here for the new X7. They are increasing production in China but that was already in the works for that one model. They can’t continue to pay those high wages and compete with low cost country providers on every model. Read more than this one article.

    • tommyboys says:

      You post leftist propaganda. Trump is negotiating. Don’t be alarmed – everything is going to be fine. Apparently you’d prefer China to keep unfair tariffs on us while stealing our technologies. Someone had to have the stones to step up. It wasn’t your beloved Obummer and no WAY crooked Hilary would have done it – well not without big payments to her “fund”. So you’d prefer your children and grandchildren pay the price. Nice.

      • aahmichael says:

        The Post and Courier is hardly leftist propaganda, It’s the daily newspaper in Charleston, SC. It’s been around since1803. Are you telling me that South Carolina is now a hotbed of leftist activists? Trump may think he’s still negotiating, but the horse has left the barn. Tariffs are in effect now. People all over the country are getting seriously hurt by them now. For example, do you eat lobster? If so, you might have noticed that the price of lobster has crashed. Why is that? It’s because the 4000 lobster fisherman in Maine can no longer ship their lobsters to China. That represents a loss of 25% of their business. So what do they do with all that extra lobster? They slash the prices in order to get rid of it.

        There is no doubt that China has been a big time cheater in trade, however, Trump went after them completely backwards. What he should have done is form a coalition with our Western allies against China. Instead, he did the opposite. He attacked our Western allies, and now THEY have formed a coalition with China against us!!

        • fenster6 says:

          + 100 AAH
          He foolishly attacked Canada and Mexico and Germany, even before China they are all looking to increase their business ties with China

    • Page says:

      Aahmicheal, good post, no nonsense.

  37. aahmichael says:

    UBS: We were wrong.

  38. bouraq says:

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

  39. phil1247 says:

    SPX and CL on its way down

    Reply
    fotis2 says:
    July 11, 2018 at 11:45 am
    But But Phil said CL UP
    >>>>>>>>>>>>>>>>>>>>>>>>

    told ya!
    premarket CL was bullish tue
    gap up to target after the open
    sell at target

    what dont you understand ?
    you snooze you lose

    • aahmichael says:

      Um…not quite. Fotis was probably referring to the following post from yesterday morning. You posted this when CL was trading almost at its dead high of 74.67. It certainly never got close to your target, so you never sold at your target. This trade was a loser.

      phil1247 says:
      July 10, 2018 at 8:21 am
      CL
      76.55 target in sight
      bull above 72.93

      • CampFreddie says:

        aah – Well spotted.

      • chrisk44342 says:

        I have to say, why bother posting this? Phil can defend himself but it’s kind of dumb if you think about it. Every trader uses his or her own discretion when it comes to getting out of the trade. If you are in a position that had minimal risk, and you are near a target worth X times more than the risk was, why not close it? Or if you have other things to do, you close it and move on. Maybe I am missing the point?

        • phil1247 says:

          chris
          we trade on a very short time frame
          AH michael likes to watch huge gains vaporize
          i cant do that
          i take the money and run

        • aahmichael says:

          What’s dumb is to post a target and a stop level, and then claim to ignore both.

        • aahmichael says:

          What’s dumb is for Phil to post a trade recommendation to get long at 74.67, and post a target for the trade at 76.55 with a stop at 72.93… and then claim that he sold when the market hit his target…yet the market never went even 1 tick higher than 74.67. So, anyone dumb enough to follow his recommendation would have lost 1.74 on that trade, while Phil claims to have made money by selling at a price that never existed.

      • phil1247 says:

        wrong again

        only made 1.30 on uwt
        but bot at 42.40 sold at 43.70
        looks like another winner to me 😉

    • fotis2 says:

      Of course you did I actually feel pity for you are the very definition of small man syndrome.

      • phil1247 says:

        too bad you flunked out of DH university
        you might have not lost 70% of your money if
        you actually knew what you were doing

        just flush the rest down the toilet
        thats where its headed anyway

  40. garstall says:

    Thanks for the update, Tony. The voice of reason.

  41. aahmichael says:

    In traditional EW, diagonals come in 2 flavors, contracting and expanding. In a contracting diagonal, the length of wave (i) is longer than wave (iii), and wave (iii) is longer than wave (v). Expanding diagonals are the opposite: (i) is shorter than (iii), and (iii) is shorter than(v). The DOW doesn’t qualify for either of these flavors, because wave (i) is shorter than wave (iii), but (iii) is longer than wave (v).

    • 123 abc says:

      In a Leading Diagonal formation under standard EW theory, wave-i is usually the longest but this is not a strict rule. However, wave-iii cannot be the shortest amongst wave-i and wave-v as a strict rule:

      • aahmichael says:

        None of that contradicts what I said. Whether a LD or an EDT, it has to be either contracting or expanding, and there are specific rules for each, which is what I described, and it’s what invalidates the DOW rally from 4/2 to 6/13 as a diagonal triangle.

  42. Page says:

    Thanks Tony.

  43. Ashley says:

    Thanks Tony, hmnn, dollar dropping and euro up due to a “trade deal” might do it…. I can’t trade trying to speculate on the “news” though, hard enough just watching the charts much less CL and the dollar…. I do like the new DOW count even though I have to seriously question WHY we even bother tracking it anymore considering nearly all the “industrials” are gone but I guess you could say it is a reflection of the current USA economy….

  44. E says:

    I think we just witnessed a 5-3-5 4th wave correction between last night and today. The rally should resume tomorrow and exceed 2800 in the coming days.

  45. jobjas says:

    Each leg of the marked diagonal is clearly 3 waves with clear overlapping a – very unlike leading diagonal . DOW meanwhile seems confusing . NDX in clean wave 4 of a 5 wave impulse

  46. NLH says:

    TONY—I CAN HELP U WITH THE COPD—-REPAIR & RESTORE.

    WARM REGARDS,

    NED

    I DON’T KNOW WHAT TOMORROW BRINGS,

    BUT I KNOW WHO BRINGS TOMORROW!

    Ph: 843-386-3848

  47. Determine the dollars next move and you have the stock market move as well. I see a break above 95 as a breakout event and the start of a nasty drop in stocks. if it falls to 92 or lower we have a stock rally continued. Seems the gyrations in the dollar on a daily basis coincides with the stock market gyrations.

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