Weekend update

REVIEW

Another volatile week. The week started off at SPX 2760, after the best week in 8 years. A gap up opening Monday put the SPX at 2800, and then it started to pullback. On Tuesday the market gapped down at the open and traded down to SPX 2697. Another gap down opening on Thursday took the SPX to 2622 before it started to rebound. After closing at SPX 2696 on Thursday, the market rallied to SPX 2709 on Friday before heading back down again. Another pullback took the SPX to 2623, before it rebounded some into a 2633 close. For the week the SPX/DOW was -4.55%, and the NDX/NAZ was -4.85%. Economic reports for the week were mixed. On the downtick: monthly payrolls, the ADP, factory orders, construction spending, plus the trade deficit increased. On the uptick: ISM manufacturing/services, wholesale inventories, consumer credit, plus weekly jobless claims improved. Next week’s reports will be highlighted by industrial production, the CPI/PPI and retail sales.

LONG TERM: downtrend probable

If life were this simple. Notice the MACD crossover to the downside during the beginning of bear markets. Then back up again during the beginning of bull markets.

At the beginning of the bear market we noted we were expecting either a double zigzag or something more complex. We should have left out the “something more complex”. Because that is exactly what we are dealing with right now. Since the October top the SPX has dropped 300, rallied 200, dropped 200, rallied 200, then dropped 200 again. After the initial drop, just a big trading range between 2600 and 2800. Great for day traders. But not so great for EW technicians trying to uncover an overall pattern. Knowing exactly where one is in a bear market makes it easier to identify its ending.

Longer term nothing has changed. Five Intermediate waves up, with a subdividing third wave, from early 2016 to late 2018 to complete a Major wave 1 bull market. After that a Major wave 2 bear market began. So far, despite all the volatility, the SPX has only lost 11.5% from the high. Year over year, however, the market is about 1% lower. The year started at SPX 2674. The ECRI ticked down a notch.

MEDIUM TERM: downtrend

This bear market started off simple enough: a zigzag down to SPX 2604, then an a-b-c rally to SPX 2815. After that it has been a mess to count: -200, +200, -200, +100, -100. But Friday appears to have cleared it all up. What it looks like we are dealing with is an Intermediate wave A taking the form of a double zigzag. First a Minor A zigzag SPX 2941-2603, then Minor B to SPX 2815, now a Minor C zigzag to SPX 2622 thus far. It’s been quite choppy and volatile just like a bear market.

Since Minor A dropped 337 points, Minor C should have some Fibonacci relationship to A before it ends. We see four possibilities: SPX 2607 (0.618), SPX 2577 (0.707), SPX 2550 (0.786) and SPX 2478 (equal). Two of these four fall within OEW pivots: 2577 and 2478. Too early to tell which is likely to work out. But with all the political problems out there, (US, China, Italy, France, Ukraine and the UK), any of these levels are possible.

SHORT TERM

Trying to track this market with short term waves has been a near impossible task. At times this market just seems to bounce between OEW pivots with no identifiable pattern. Minute wave C, of Minor C, had 7 waves down to SPX 2622, 7 waves up to SPX 2709, and now 5 waves down to SPX 2631, (2643-2665-2623-2650-2631). Another 7 wave pattern in the making? Hopefully we will see the end of this downtrend soon. Then we could get a good counter rally uptrend for a while.

Short term support is at the 2632 and 2594 pivots, with resistance at the 2656 and 2731 pivots. Short term momentum ended the week oversold. Best to your trading!

FOREIGN MARKETS

Asian markets were mostly lower on the week losing 0.9%.

European markets were also mostly lower losing 2.3%.

The DJ World index lost 3.5%, and the NYSE lost 4.1%.

COMMODITIES

Bonds continue to uptrend gaining 1.0% on the week.

Crude appears to be trying to start an uptrend and gained 3.3%.

Gold remains in an uptrend and gained 2.2%.

The USD is still in an uptrend but lost 0.4%.

NEXT WEEK

Tuesday: the PPI. Wednesday: CPI and the budget deficit. Thursday: weekly jobless claims, and export/import prices. Friday: industrial production, capacity utilization, retails sales, and business inventories.

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

About tony caldaro

Investor
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733 Responses to Weekend update

  1. schizo1688 says:

    Nice death spiral to the end…closed right below the pennant..in last 5 min

  2. kvilia says:

    I know this is not what anyone (but Newbie 😉 ) wants to hear but just an opinion:
    http://addictedtoprofits.net/stockchart-of-the-day-s-and-p-and-dow-topping-patterns-and-1962-bear-market/

  3. Page says:

    Continue to stay long, DOW has 1000 points and SPX has about 100 points to climb. 😀

  4. kvilia says:

    Phil,
    Great work with charts. I use DH’s and still compare my and yours. Those who don’t follow DH must be lucky with your generous contribution, which means your time spent away from trading.
    You really don’t have to be right or wrong about market direction with DH method. Example: bought CL after inventory report as it defended hwb long 15 mins after the report. and trailed it until it sold. I could have trailed hwb micro long, too. 2% profit in 1 hour, never mind it crushed the same support I bought later in the afternoon. Very disciplined and technical trading today,
    Cheers!

    • kvilia says:

      Not an advertisement, just feel good that for the first time in many years that I found something that suits my trading expectations and emotional tolerance.
      I really appreciate Tony’s guidance all the time as a big picture.
      Now you can throw stones at me 🙂

      • travis01 says:

        use some his methods but don’t subscribe…is that where you get his charts? worth it?

        • kvilia says:

          travis, this is the best $30 bucks a month I ever paid. I listen to the webinar while working at my desk.
          Actually found that all trading can be done before noon, so I don’t often bother in the afternoon.

    • phil1247 says:

      thanks k
      see… keep time frame short
      smash and grab
      good work!

    • purplember says:

      CL long ? huh. CL is in chop chop mode. it rallied a bit after CL inventory then sold off hard

    • chrisk44342 says:

      That is the most difficult thing to discuss with people are not actual traders. It’s not about being right or wrong, like the nut jobs who frequent here on occasion seem to think. If you are right half the time, and manage your risk/reward properly, you can be quite profitable. DH, or whatever it is you use, keeps that ratio in place. Do algos follow the ratio? Yes, sometimes I think the market clearly follows it. Other times, not at all, and I don’t exert any energy in determining the why or why not because it’s unimportant. The mechanics of why Phil does his thing or why i do mine are not important in the larger scheme of things. The system one uses is only as good as the person monitoring it and their willingness to engage in it completely.

  5. schizo1688 says:

    Christmas polar bears stampede…

  6. Two points.

    1. Simple, self-explanatory geometry. Negotiating the weakest white line. The dotted white and dotted greens are attractors once we clear the white (and I think we will). One section at a time, and we’ll see when we get there.

    2. The China ADRs are a good buy here. I would not cleverly try to short these because they can be widow-makers. They are not great to trade for a buck — that is pointless, no matter how much cheap excitement it gives. These are long-term payoffs because China is not going away. No particular ones but some are: KWEB, BIDU, BABA, TCEHY, YY, MOMO, BZYN, IQ, HUYA, etc.
    I like TCEHY and YY now. But expect volatility.

  7. fxaprendiz says:

    Can’t post charts right now, but last night I studied the changes a bit and some things have changed with the new 2583 low, and some others haven’t.
    The Fibonacci retracements for the counter-trend rally didn’t change much, so the overall 2870-2900 area as a probable target zone is still valid, although now it can be divided into 2 zones, 2870-80 and 2900-10, and now I favor the lower zone by 60% as the final target, over the upper one.
    The most important change is that the lower low restarted the weekly cycle, and this has implications to the number of weeks the rally will last. Even the most bearish weekly cycle has first at least 4 to 8 weeks of upside before rolling over, so this is just getting started… again lol.
    The EW count is now actually two, the older one, in which this upswing would be only part of a B wave, and a new count, with wave B (more like wave X) actually only starting.
    But I’ll try to give more details about the counts and their possible paths once I have a chart ready to post.
    Trade safe.

  8. alexhartley1 says:

    Still heading up into the 18th for now

  9. vivelaamo says:

    Newbies back!! Go long!!!!!

  10. phil1247 says:

    last one

    smaller es series up 85 target hit
    now bullish above 71
    larger target at 2700.5 is still good
    i would make sure i knew where the exit door was around now
    no need to stand in front of it just yet

    • ninjashade314 says:

      Hi Phil,
      If now break below 71 before hitting 2700, is the 2619 target still valid? It looks like a whipsaw land in the 2600s…

      • phil1247 says:

        hi ninja

        2619 is not a target
        ..it is the.618 support of the long that gets you to 2700 target
        so now you have 15 points of reward and 65 points of risk

        it is constantly fluid so now 68 is the point i want to be pushed out the exit
        you could find support before 2619
        but while below 2726 the bears are in control and up is counter trend

        • ninjashade314 says:

          Ah understand, thanks! With the new high at 86 since your post, i would assume the .618 support at 2619 is now at 2622 by my calculation? .500 at 2633. I am slowly trying to learn by the day.
          Btw appreciate your imformative posts & replies a lot!

        • phil1247 says:

          looks like ed with swoosh
          gone

          • hi phil..the ext long broke. What level are you using for your low anchor.DH too conservative?

            • phil1247 says:

              no more longs for me
              its bearish below 75

              • Hi phil…DH for moment had the second set up on his screen and I thought he was too conservative. But he now has both set ups in his analysis. DH just put up 2 50% Longs. The first one is being tested as I write this email Mondays low to today’s high. The second one that DH feels will be trading is Monday’s low at 2583(low anchor) to yesterday’s highs at 2783 (high anchor). That works out to the 50% LONG at 2641 and the 61.8% LONG at 2619.29.

                If we break the first set-up, I will post a chart with commentary for all to review. Thinking out loud for a moment, I am wondering if today’s high completed wave “a” of some degree and this afternoons pullback, wave “b”.

  11. lml25 says:

    Another H&S breakdown reversed–just like Feb 2016.How many fakeouts does this market have?

  12. NEWBIE says:

    Little bit more upside then we going straight down to 2300 on spx.

    http://m.crazyhyena.com/when-motivation-finds-you

  13. fionamargaret says:

    FAZ up to 19 (short banks)
    $SPX down to 2351
    VXX up to 59 (inverse to stocks)
    TVIX up to 100 (inverse to stocks)
    X

  14. schizo1688 says:

    Death box whip-saw 2600-2800 .. going up to 2800 again ..

  15. Since the board is slow, I thought I would mention that tomorrow officially starts rollover week for the futures contract…December contract to the March contract. Some hedge/mutual funds managers sold futures contacts from October to the current….for portfolio insurance. There continues to be a large short interest in the December contract. This week these managers started to buy back the December contract (cover) and some are selling the March contract…so, we have, in a vacuum of news, this back and forth. Currently, only 10% of the December contracts have rolled over.

    “Historically,” Thursday/Friday morning they trade the combined contract and by Friday afternoon, trading volume in the March contract exceeds the December …so we could have increased volatility in the futures market (next 2 days) related to the rollover. The December contract expires next Friday the 21. BTW, next Wednesday, the 19, the FOMC publishes their statement on interest rates/economic outlook.

    • gary61b says:

      ASA, I usually don’t see the current ES contract drop below the new contract daily volume level until Tuesday of the exp. week. but lets see.. But when volume flips, then I flip.

    • aahmichael says:

      How do you know what hedge/mutual fund managers are doing and when they’re doing it? Do they send you copies of their daily statements? I’ve been trading futures for more than 3 decades and have never noticed any increase in volatility from a rollover. Rolling over a position is a wash. It’s a non-event. Perhaps Lee will chime in and share what he has experienced when contracts rollover.

      • aahmichael says:

        By the way, which mutual fund managers are you referring to that use futures to hedge their portfolios?

      • swamper1 says:

        Hi aah, I’m fairly new to options. Was wondering what the max pain is, at what strike price for Spy call options that expire on Oct 21.

      • 1. hi gary…That why I used quotes and the word “historically.” DH updates the volume on both the December and March contract. He quoted the 10% number earlier today. ..which reminded me to send out that rollover post I post often.He will start analyzing/trading the combined contract probably tomorrow/Friday and yes, when the volume is substantial on the March contract he will mention the combined contract but only do the analysis on the march contract..UNLESS the algos are still trading off the December contract for whatever reason.

        2. hi aah….have enjoyed your posts ..like your trading thoughts. I stated in my post, “SOME” hedge fund managers…. Of course I don’t have any data so support a percentage of hedge fund managers that short the /ES for portfolio insurance. If you know of a site that does, I would appreciate your posting it.

        3. swamper1..check out this website for a listed stock http://maximum-pain.com/options/max-pain/

  16. Let me be the first to tell you SPX 2577 gets knocked out before end of year

  17. CampFreddie says:

    Gartman: “We Can Readily Imagine The Dow Trading 1000 Points Higher”
    …You know what to do 😀

  18. phil1247 says:

    es

    72………….. hit
    80…………..hit
    2700.5……. ?

    see ya tomorrow !

  19. purplember says:

    Newbie, please post a dancing bear. i show up daily to blog looking for the bear but nothing for months.

    i hope everything is ok on your end. God bless.

    • allen kimble says:

      Lol…another crash call. Delusion is your best friend my amateur crash caller.

      • jason hardy says:

        Allen,

        Can you take it down from an eight, to say a two?

        Thanks.

      • swamper1 says:

        From reddragon this morning:

        “The criminal cabal (the Clinton’s, Obama’s, Bushes, liberals, etc…) will cause a crash in the market themselves if they get through in jail”,

        Making crash calls based on that stuff?

        Lot’s of smart people here making money trading off of fibs,algo’s and wave pattern’s.

        I refuse to add fortune tellers to the list.

        • fenster6 says:

          I dont usually read red dragon’s posts as he is usually wrong. But you would think he would not want the market to crash if his draft dodging hero is in power. This will just increase the chances of him being indicted and jailed. But who knows how these odd minds work.

        • tony caldaro says:

          congress has meetings, the criminal system has investigations
          in the end nobody goes to jail

  20. allen kimble says:

    Crash callers in disbelief once again. This time the rally will stay. Again, seasonality is the most important factor in trading.

    The trade from here is to short volatility into the second week of Jan. Don’t fall for crash calls.

    No December crash folks

    • travis01 says:

      628 – that’s the current post count…if we all agree to simply quietly acknowledge your call will you just not post the same one every hour or bash someone who calls a short? we got it…you are long…guess what? so am I

  21. floyd drummer says:

    asa

    what does it mean that the”.. 2nd test on the HWB/LIS” is the dangerous one?”

    thx

    • floyd…an example…when an asset rallies off a 50% or 61.8% long but doesn’t complete any target above, just drifts higher and begins to decline again to retest that same 50% or 61.8% long. It fails….trades below that level.

  22. M1 says:

    A break above 2700 will confirm the santa’s 🎅 rally to 2800. A break above 2800 will confirm the rally to the target 2900 👏👏
    A break above 2940 will confirm the bull market is still alive 👊
    At this point only a break below 2583 will invalid the expected rally

  23. fotis2 says:

    Classic 3BR short setup if it triggers tmrw use the HWB to enter Stop above yesterday high/50ma notice how it gives the opportunity to join the in the fun possibly to the HS target 1st Target the 200ma
    A thing of beauty the Market is… poetry in motion when it all comes together…
    https://invst.ly/9hzg3

  24. phil1247 says:

    es
    2672
    2680
    2700.5

  25. quickrick38 says:

    Well, Mr Market hasn’t yet decided on which count he’s going to follow. Hopefully that will sort itself out within the next few days. In the meantime it’s back to just sitting on my hands. 🙂

  26. floyd drummer says:

    phil,

    how ’bout a ZB chart, ….4hr? …thoughts?

    thx
    GL

    • phil1247 says:

      i am getting more aggressive on shorts on… shorts off
      still looking for a spike up later
      look at ZN ..its weaker …canary

      • floyd drummer says:

        i have been watching ZN as well, …and that was also my thoughts.

        also only shorts, …for very short.

        i have the same chart, ..though i did not have a circle at the apex of the triangle, …lots of confluence there: duly noted, …and nicely done!

        i have not trading ZB into/around a FED meeting, …comments/thoughts appreciated?

        thx

        • phil1247 says:

          fed news doesnt alter my trading
          i will stand aside at the fed announcement time
          but after about an hour its back to business
          the market tells the fed what to do
          so i would rather listen to the market than fed speak

      • mm4398 says:

        Agreed on a bond spike up. Occurs on equity top is my guess. That leaves with one to three weeks of downside with 139 as a floor. I like an exit at ~140-08 but will be watching closely below 141.

  27. fxaprendiz says:

    Regarding the rules about maximum number of posts allowed, I’m all for their application to avoid clutter but we also need to be objective and not play favorites. Let’s shed some light on who are the real clutters in here.

    One trading day session (Dec 10, 5:00 PM to Dec 11, 4:50 PM CST)
    Posts: (bloggers with more than 3 posts)
    1. stockop 4 posts
    2. phil1247 4 posts

    Comments: (replies to other posters and self-replies over 5)
    1. phil1247 21 replies
    2. stockop 18 replies
    3. asaraniti 13 replies
    4. fionamargaret 12 replies
    5. chrisk44342 11 replies
    6. HD 8 replies
    7.allen kimble 6 replies
    8. schizo 6 replies

    Crystal clear, and I’m sure nobody of the regulars in here are surprised at the numbers.
    Now, I don’t really care if someone posts +100 replies in here, I’m used now to just skip over most of them. But if someone wants to police the blog, like lunker and others do, they should be fair and consistent and call out ALL the transgressors and not cherry pick. No matter that one or two of them is your buddy, a rule is a rule and if you are going to enforce it, you do it for everyone of for none.
    Now, if you tell me that one of them or several of them have a sort of exception to the rule, can someone explain to me under which conditions you don’t apply the rule? what is the criteria to decide one individual can post +10 replies and the others are chastised? that’s really what I want to know here.

    P.S. this is not an attack on the “clutters”, I am in good terms with most of them, and I value their contributions to the blog and some of them have their own following here (followers who will complain about this post), but I think it needed to be said of the policemen (lunker and company) in here, that they have a double standard when it comes to trying to enforce the number of postings rule.
    RE.P.S. and I know the rule applies to main posts only not the replies, but the second list is to show just how much you can clutter the blog if you just reply nilly-willy all day long.

    • fionamargaret says:

      Poor stockop…he must have posted all of a handful of times in the last year, and he is worth listening to.
      Posts that contain mean jibes at others (basically trolling) should be counted x 2..
      {Lawyers reading the blog just say “nasty piece of work”)…..they are hardened

      Good stuff fx…..x

    • mcgcapital says:

      Personally couldn’t care less how many times someone posts, if someone has something high quality to say 10 times a day let’s hear it. You also can’t disentangle politics completely from what’s going on in the stock market at the moment, so politics posts when done in the right way are relevant. At least all of the above posters are talking about markets on a regular basis. You might not agree with them, and they also might post more often than is strictly necessary, but some of that is called having a personality and interacting with others.

      I think we all know when the spirit of the rules are being broken and it’s for people to self regulate themselves. The 3 post rule is there to stop people dominating and posting worthless nonsense all day… but if someone has something of value to say I’m sure it’s allowed. Likewise with the no politics rule, it’s to stop the bi partisan back and forth… if something political comes up that moves the market I’m sure it’s allowed as long as it’s done in an objective manner. I’d actually trust 90% of people on here to be able to do that. If Tony wanted someone to moderate the blog, he would give them access to do so. The only so called policeman is Lunker and he doesn’t have moderator access so I’ve no idea why he thinks he should be allowed to do it.

      Anyway, I’ve decided I’m not going to bother posting my analysis anymore until Lunker gets banned. Can’t be bothered having to argue back and forth with some nobody sat in his mum’s basement. If enough of us do that then he’ll go away or be forced to leave

      • fxaprendiz says:

        Mmh let’s see… Either good quality analysis from a thoughtful member, or harassing and selective pestering from another one… So difficult a choice.

      • CampFreddie says:

        mcgcap – You are a valid poster here and will be missed. Please would you reconsider your stance, and perhaps take a short break with a view to returning in the new year ?

      • Don’t get distracted by a nobody, you are for sure a valued poster. If Tony gives him more power the blog will be left with DH shills and the naive bunch following them. Also I don’t believe there is anybody who has something “high quality” to say 10 times in a day.

    • purplember says:

      i’ll put these posters on the naughty list…..not likely to get a xmas gift

  28. stockop says:

    https://www.politico.com/story/2018/12/11/trump-huawei-china-trade-deal-meng-wanzhou-1058722

    “President Donald Trump said on Tuesday that he reserved the right to weigh in on the Justice Department’s case against a top executive in a Chinese technology company, if it would help him close a trade deal with Beijing or would serve other American national security interests.”

    still think it will be used as an excuse if we do go down by the morning. hard for me to believe those futures gaps (especially the massive one on NQ) don’t get filled. fully expect a more explicit response from Trump if the media jumps on it being the cause of the market moving down. futures looking pretty darn bullish if its not an ABC. I see inverse H&S across the board. abnormally low volume tonight (even for the Nikkei futures) and i have no idea what that means.

    odd piece of information for those who don’t entirely believe in coincidences: i will be on a plane tomorrow morning. most people will probably believe this is stupid, but last August (the second) I was in the same boat. i rarely travel by plane (maybe once a year, sometimes twice) and was short the market. my flight was delayed and the market was down, just like I thought it would be, and by the time my flight landed at 10:30 we had rallied and my huge profit had evaporated. lot of things wrong with this situation: flight being delayed 2 hours, poor risk management (not having trades set to sell at open), and not cutting my trades when “I just needed them to retest the open”, all this after being given a second chance to take gains. (also note: this is why i pay more attention to futures now. the C wave barely broke below wave A on the cash. the picture was much clearer in the futures that day). odd coincidence to say the least as I am by no means a permabear. sometimes too bullish for my own good. needless to say I will be buying the crappy in flight wifi tomorrow. probably a completely pointless story to share, but the scenarios are eerily similar to me.

    keep up the good posting everyone. truly appreciative of everything you do Tony and the commentors who share their thoughts and market views. looking for market to hit 2530 to finish up c of A. so many bears it feels like this should be the entire bear market. however, my fundamental side can’t ignore everything going on so I think Tony’s count of a B wave higher is very likely and is what I will be following. if we hit the 2530 (ES) watermark I will cover like a mad man and start going long. above yesterdays highs and I will be out, too. posting too much which means some kind of inflection point is coming one way or another. going to go back to the usual and just be a lurker. feeling some bad juju as if I am jinxing myself. GLTA and i hope we all make money!

    • fionamargaret says:


      • fionamargaret says:

        If you delve into the background of Alfred Brendel, basically self-taught, but “that is all he was good at” and Bill Evans, classically trained, but veered off on his own path, (and what a joy for us he did), then you can understand the real stories are not in books but living their lives amongst us….x

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