Wednesday update

SHORT TERM: higher open new rally highs, DOW +142

For the first three days of the week the Asian markets gained 0.7%, and the European markets gained 0.1%. The SPX has rallied from Friday’s close at 2596 to 2626 today, before closing at 2616. The US market has hit an inflection point. One that determines whether or not this rally is a B wave, or the Christmas low was the end of the bear market.

We’re using five criteria to hopefully determine which is the most probable outcome: size of rally, NDX/NAZ and SPX/DOW wave patterns, rebound percentage from the low, and breadth rise from the low. First, this rally is the largest rally since the bear market began, a positive. Second, the NDX/NAZ look like they have done five waves up from the Christmas low, another positive. Third, the SPX/DOW look like they have done three waves up from the low, a negative so far. Fourth, the largest rebound for B waves, under similar conditions, in the past three decades has been 13%. The rally has already reached 12%, close to turning positive. Fifth, the maximum percentage rise in breath for a B wave has been 25%. Thus far breadth has risen 19%, a negative.

Since we already have two positives, a third would raise the probabilities in favor a new bull market. A fourth would increase those probabilities, and a fifth would almost assure them. Short term support is at the 2594 and 2575 pivots, with resistance at the 2632 and 2656 pivots. Short term momentum ended the day with a negative divergence. Best to your Opex trading!

MEDIUM TERM: downtrend

LONG TERM: downtrend probable


About tony caldaro

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552 Responses to Wednesday update

  1. Bluehorse:
    You couldn’t be more wrong if you tried. The balance of trade account does include services and the use of bootlegged software clearly does decrease the revenue attributed to US trade account. Also, historically countries that habitually run trade deficits suffer a loss in the value of their currency and a concomitant reluctance by other countries to accept their money in exchange for goods and services. In the old days, they would have to ship gold to the other country to make up for deficit in their trade balance or the value of their currency would collapse to the point that they could not important anything at an affordable cost. So the status of the dollar as a reserve currency is very much threatened by a large negative current account balance.
    All the above is just International Economics 100A. it is incredible that the NYT would try to make such a preposterous claim as you say they have.
    On a related subject, the imposition of economic sanctions is driving China and Russia to find alternatives to the dollar as a medium of trade, which actually does threaten the status of the dollar as a reserve currency, If non-Russian Europe wants to reduce sanctions, how does it make sense for the US to want to continue or even increase them? After all, if the Russian Federation is such an imperialist threat, why do their immediate neighbors not feel more endangered. I have even heard that the US wants to impose sanctions on non-Russian Europe for building a natural gas pipeline from Russia. How insane is that?

  2. Mcg:
    I respect the fact that you did a “paper” on the A-D line for GS, but you seem to have missed the fact that the A-D line was a leader throughout the preceding bull market after having been a leader during the previous bear market. Your exception of “except at divergences” gives you cover to underestimate the value A-D line the 90% of the time when the is not creating a clear-cut divergence but is providing valuable leading or confirmatory evidence. Even if the present decline heralds the resumption of the bear market, the A-D line may have given us a useful indication that the remainder of the decline will not be too severe and that anything looking like a firm bottom should be bought aggressively,

    • mcgcapital says:

      Let’s see how things play out from here and if we get a retest, how the A/D line looks at that point and whether the retest holds.

      I appreciate I’m not going to win anyone over on this as people hold their own beliefs on it already. Like I said, it’s not that I don’t see a relationship between the A/D and the market, it’s that I struggle to get to an actionable trading outcome using it that would be any better than just using price.

      Another point on it is that part of the reason it works is that as US economic uncertainty rises, small caps tend to do less well as they’re less liquid and have less stable revenues, so there’s herding into large caps for safety and therefore you tend to get an A/D divergence with that. Then vice versa at bottoms. That’s a sound theory.. I’d say the current market environment here is being driven almost entirely by the Chinese economy not the US. My view is that if they don’t stop the slowdown it will spread to the US economy too. So you kind of have it where domestically focused US stocks can do ok still until it’s apparent that’s what is happening, US data isn’t yet recessionary. So I wouldn’t be surprised to not see the same A/D divergences as prior bears as it’s externally driven for now

  3. fionamargaret says:

    Charts and ideas later….maybe on MLK day.. I am around, but writing…….


    I may sound like a broken record but why focus so much about shorting the U.S market. It’s the only instrument globally that is effectively ring fenced from going down so what is the point. Take China. Whenever there is a bit of positive news on China the U.S market goes up. What do the Chinese indices do at the same time. Absolutely nothing. Zero. Zilch. Don’t you think that if the Chinese news was really the news that investors cared about they would go the source and buy it. Of course they would. But it isn’t. It’s irrelevant. As soon as there is “positive” news on China it’s not investors buying the U.S market. It’s just the team that make sure the U.S market goes up, goes up. Sometimes, rarely, the U.S market will go down but as we saw off the high it’s done so quickly that traders that make it their life’s work to short it are too busy scratching their backsides they miss it anyway. What on earth is the point. If you start your investment career on the premise I will be long of flat the S&P and never short you won’t go far wrong. Every other asset class is free of these restrictions. Where have you made lots of money being short. DAX. CAC. FTSE. HSCEI. MIB NIKKEI SHCOMP OIL POUND EURO etc etc. Where have you made f all unless you picked the high and already it’s evaporating. U.S. The one market that, for whatever reason, is seen as a proxy for how great the country is. No other country cares about what the stock market is doing. Short them.

  5. Jordi G says:

    If he declare the emergency, what do you think? Will be a gap up or gap down, on Monday

  6. Dex T says:


    You got off on many different tangents in your posts below in regards to the tariffs. No need to overcomplicate things.

    The U.S. is in a position to negotiate much better terms with China. We should take advantage of that and simply needed someone willing to go through the arduous task of doing so.

    Trump and his team need to hold fast. As long as they are firm the Chinese will relent, though it will likely take some months of pressure.

    • Re “The U.S. is in a position to negotiate much better terms with China”

      My point is very simple. BECAUSE of how we think and act, we will soon arrive at the point where

      ” China is in a position to negotiate much better terms with the U.S”.

      All the flag-wavers here will have retired or gone to trader-heaven. But the children and grandchildren will have to bear the fruits.

      Every action has an equal and opposite reaction. Whenever we deal with people and negotiate, we have to think of them as much as we think of ourselves. This fosters mutual respect, growth, trust. Any other way brings the usual consequences. [Chinese memories are long too,you know].

      People talk about “loving all others”. What does that really mean if not the above?


    • Scott J says:

      With all respect Dex, I think you dead wrong about China relenting. Xi is in power for very long time and has ultra long-term perspective. As such, there is every reason to think he will wait this out. He will “cooperate”, but his tactics will be to stall and he will only agree to promises that are hard to monitor and enforce. Overall, Xi’s strategy is/will be to wait out Trump’s term and hope to get an easier deal with next POTUS.

      So, if Trump wants to continue with hardball, Trade war will last much longer than months (it’s actually the harder corner for Trump to get out of – with the shutdown, at least has a “National Emergency” option). If Trump wants to end trade war, he will have to cave to Xi. As much as he might want to end trade war to lift the stock market, I am not sure his ego will allow a complete cave. He might make major compromises and not end up getting much and then declaring a victory, but I would not expect much more change than what we got with NAFTA 2.0.

      Lastly, I am somewhat amused by how the current market sentiment seems to be pricing in a significant lessening of trade/tariff concerns. Amazing how fast sentiment can shift from extreme fear to complacency. Just a matter of time before the egg cracks again. Have to think of China talks in Elliott Wave terms. Cycles, waves, degrees, …..

  7. wallstpro says:

    Hi guys. I’m new to board. Thanks Tony for your work and the rest of the folks on this board. I’ve been doing this for 30 years and have made my share of good and bad calls. More good than bad.😉
    I’m surprised no one is seeing this latest rise as a very bearish rising wedge…and we are seriously close to the apex. Over next two -three months I’m targeting 1850 on the S&P before we see a decent rebound from 1850 to 2400 during Summer then all hell breaks loose to the downside this Fall. Good trading All!

    • xEVAx says:

      Hi, here’s some hope and respect for the potential bear…. This wave likely ended today at 2675 (right on those fibs and trendlines Lunker =) if not I cant see higher than 2717, that would make 5 longer than 3…. And 2713-17 is a good fib target for a 5 wave B thats about twice as long as the first one that looks impulsive up as B….. We’re so overbought at Bubble Highs here a wicked Bull Trap, gap down 2-300 scenario isn’t out of the question if were going down in C….

      Above 2720 opens the door to 2731 and extensions, and then it needs close above 2750-2777-2780 for the Venezuela straight UP Gov Gone Wild count…. Cheers =)

    • fionamargaret says:

      Welcome wallstpro, nice to have new blood (not necessarily in the literal sense).
      Now do you know 1850 has already been taken, discarded in favour of brighter lights, but remains as a ghost beckoning us to its darkness, but not while the children are singing….

  8. So tony has a green 2. I shorted the close. Well let’s hope for a wave down next week and see what happens from there. I do feel much better about more short knowing aamichal has tripled down at 2642 though.

    • Please stop posting this crap.
      Do you have any idea how many Americans each year die from illegal opioids?
      Most of that is carried over our southern borders.
      Are you in favor of that continuing ??
      Yes, or No.

      • Tom, you are sadly mistaken and overly simplistic.

        The drugs that come in from Mexico wont be stopped by a Wall.

        If you’ve ever noticed, cocaine seizures at U.S. borders regularly measure in TONS, making it impractical to have individual migrants ferry it across. Drugs are smuggled into the U.S. via LEGAL PORTS OF ENTRY, which allow them to bring in high-value substances that are more easily hidden.

        All the cocaine, fentanyl and methamphetamine…. they cross through formal PORTS because theyre easier to hide in freight comp and assorted vehicles.

        A Wall isn’t going to stop illegal drugs from coming in.

        It’s terribly naïve to think otherwise.

        • tony caldaro says:

          can we drop this subject
          it obviously has no impact on the market
          only far left and far right participants
          the rest of the country, left and right alike, want a compromise and open the gov’t

          • TommyB says:

            TC, please bar these 2 nitwits as well as about 10 others….we don’t care what they at what price they traded and how well they have done! This board was wonderful in the old days where you responded to every question or concern!

      • fotis2 says:

        The opioid crisis is thanks to Purdue Pharma and Oxycontin prescriptions being dished put like candy since the mid 90s

  9. Jack kendo says:

    Tony Thanks.
    Looks like you updated with both SPX DOW Major 2 in place.
    And next would be the most powerful major 3 of primary 3 that even stronger and longer than the Major 1 rally from 2016’s 1810 to 2941?

    daneric also updated bottom is in for wave 4, with new ATH coming.

    I am on the opposite camp, seeing next is the crash wave of 3. And it will be even worst than 1987. count on it!


  10. Hi
    IH&S target close to be reached at ~24830
    it’s probable a retest to falling TL/MA200 maybe after some correction,this would be about 61,8% retrace

    25400 retest was missing after effective rising TL(orange) break,i will not be surprised but would be a bit unexpected if it’s reached or even a pullback (outside of falling TL for a “B” wave or an impulse),not guaranteed(78% retrace)

  11. For those that have some free time over the weekend, here is a terrific primer on understanding trade deficits by Neil Irwin at the NYT:

    It’s too bad that our President doesn’t have a basic understanding of trade deficits…. let alone how getting rid of the trade deficit could very well make America less great…. given the USD as the global reserve currency, economic diplomacy, and something called the Triffin dilemma.

    • Few people know, but citizens in China have huge problems with their Microsoft Windows software. The Chinese have huge security problems with their desktops.
      And that’s because they don’t get the patch upgrades.
      And that’s because the OS software is “bootlegged”.

      Is that covered in the NYT article?

    • From the article:

      “The choice is stark: A country running a trade surplus must either let its currency rise or let money flow back to its trading partners.

      This isn’t just an abstraction. It’s what has happened between the United States and China for the last couple of decades. China has had consistent trade surpluses, but it did not want its currency to rise in a way that would undermine its exporters. So money has flowed from China into the United States — both from the Chinese government’s purchases of United States Treasury bonds and more recently in the form of direct investment from Chinese companies into the United States.”

      • tommyboys says:

        Ha – too funny! Like Obama, Clinton, Bernie, Pelosi, Schumer & Cortez DO understand deficits LOL!

      • quickrick38 says:

        Yes, as a result of their trade surplus, China invests in the US. I hope you don’t think that China owning a good size chunk of the US is good thing? That so called ‘terrific’ article by the New York Times does have some points but it also has some flawed logic. Making bad assumptions always seems to be part of the process of convincing people of anything. Yes, this topic needs to be discussed and argued further. And, since it is a rather complex issue, just arguing from one side or the other won’t accomplish very much. What is needed is a few people with good critical thinking to discuss the pros and cons. Further, economists as a group are not much different than others in that they come with their own set of bias’s. Regardless, you seem to be able to think for yourself and I respect that.

    • valunvstr says:

      Written by the NYT? Well, that’s says it all.

  12. lunker1 says:

    strange ghost print SPY 7:59 and 8:00AM 15K shares both minute. Hit high of 266.55. Never saw one that lasted for two minutes

    • xEVAx says:

      Hi Lunker, it was a weird day, but those “trendlines” don’t look too bad now though, X marks the spot =) If the bull wants to keep going I don’t want to see below 2645 ST, but likely hold support at 2656…. There is nothing bearish looking to me here aside from the fib timing possibly but everything else looks great .) Still in cash and show me mode though….

  13. vivelaamo says:

    No pull back since 4th Jan. you sure this is a bear market guys?

  14. IMO….it is a Bear Market….the End

  15. They ripped it into the close Dow went up 100 points in the last 10 minutes. Wow. You bulls are good. Keep it going

  16. Dex T says:

    Day 28 of the shutdown and Trump is still going strong!!!

    It’s officially a month and no end so far!

  17. Yes we could be on our way down…..but news of tarriffs, govt shutdown over this long weekend would more than likely push us up even farther. Dont know who would want to chance that

    • Dex T says:

      Govt. Shutdown is irrelevant. Govt. has been closed for 28 days and all of the essential employees have been working per normal hours.

      • Dex, the career bureaucrats (who are still at work) are trying their best to make the shutdown relevant. Very few of them wish the current Administration to be successful.

        • Yeah Tom, that must be why GOP Leader Mitch McConnell wouldn’t allow the bi-partisan House bill to keep the Government open, to come up for a vote.

          Brilliant piece of logic.

          • Trump wants the wall built, so that U.S. Citizens are not over-run, aka, an invasion.
            The “bi-Partisan” bill the libs wrote had no provisions to protect U.S citizens.
            So, that bill is dead.

            • More Fake Facts from Tom Fischer.

              A.) The Homeland Security Senate Subcommittee appropriated $21.5 Billion Dollars last year for “Border Security”…. and $21.0 Billion the year before that. That money was approved.

              B.) The reason why McConnell wont put the bi-partisan spending bill to keep the Government open UP FOR A VOTE….. (the bill that McConnell and Dems agreed upon and the one that Trump reneged on) is because McConnell is afraid that it would pass with enough votes to be VETO-PROOF and he doesn’t want Trump to look bad.

              C.) There is no “invasion”.

              Illegal immigrants coming into this country from Mexico is at a 10 year low. In fact, the number of “unauthorized” immigrants living in the USA was lower in 2016 that at any time since 2004. It’s currently at 3.3% of the total U.S. population and down from when this group was 4% in 2007 at the peak.

              Don’t let the FACTS get in the way of your biased narrative Tom.

      • Scott J says:

        If gov shutdown is irrelevant, I guess you are fine with market not getting anymore economic reports and also fine with 1 million contract workers seeking unemployment benefits. Really?

        • There is also a huge surge in contagious diseases, associated with “unscreened” immigrants from South of the border. The service tech for my Lastec now has TB.
          He got it on his service calls to golf courses (Most of his work), “undocumented” workers.
          Hope I didn’t get it from him.
          How about you. Feel lucky?

        • Scott, the irony is that the Farmers and Ranchers that voted for Trump and are part of his “base” are not only getting hurt by Trump’s tariffs…. but now they are getting hammered by the shutdown which has closed the USDA.

          The USDA was supposed to announce “harvest” prices today so that Farmers who took out crop insurance could get paid at the end of the month for their losses.

          But I guess that’s IRRELEVANT too.

        • Dex T says:

          I meant irrelevant in terms of determining market direction., which was what the thread originator was talking about.

      • Yeah . . . the shutdown is totally irrelevant to all of those workers who aren’t getting their paychecks so that they can avoid defaulting on their mortgage or rent or utility bills or credit card payments.

        If this continues for awhile, people will be filing for Bankruptcy.

        But according to you, that’s irrelevant.

  18. Try telling Boeing or Apple that they don’t need China.
    Or U.S. Ranchers and Soybean Farmers.

    4 years ago Apple started selling more iPhones to China than in the U.S.

    And Boeing says that China will be buying $1.1 Trillion in planes over the next 20 years.

  19. Dex T says:

    Lots of optimism about the trade talks but the Chinese only stand to lose here so there is no way they can back down so easily.

    The only way I can see them actually relenting is-

    1) threat of military force

    2) The continuous pressure of even greater tariffs that forces them to break down.

    Aside from that they are making empty promises, in the same way that they have always promised to crack down on intellectual property theft and respond by stealing even more.

    • Dex T says:

      Trump and team need to go through with the schedule 25% tariff increase in March.

      If they back down the Chinese will know they aren’t really serious and not honor any agreements by action even if they do so in word..

      • Silly talk like all the others. Impossible to zero out trade imbalance in 4 years. Impossible to boost by 1 trillion in 4 years let alone 2 that this administration wants. Just a ploy. Does China know for a fact that trump will be gone soon/ you bettcha. Maybe YOU don’t know it. Does it make sense to deliver to a man that is about to be canned? In fact TRUMP has been offered similar promises in past. he rejected because he wants immediate change in China policy to peruse High tech dominance. That is like waiting for the Democrats to take control, gain bi-partisan agreement and then trump reverses his decision. Demands the Wall with nothing in return. Yet people expect this to end soon?

        FACT: Trump is dead to China. Are the Chinese as stupid as the american voter?

        Does anyone here use common sense? Would YOU negotiate in good faith and keep it if you knew that party was gone in months? Inquiring minds want to know. I argued strongly in 2016 on glaring opposing view. I argues in September that a trade war is devastating and long term. Almost ever single blogger told me the market already priced in the small adjustment. The Trader War wasn’t going to put a dent in this economy. So many coincidences that the market came around to my way of thinking.

        Only less than 3 months in this bear? Trade War, government shutdown, and odds on bet that a constitutional crisis is just about here (one to two months tops). Wow, talk about certainty. Markets love certainty and the calm path is already here (lol).

        One tweet drops this sucker. Just one. Hope we get to 2720 mark.

      • fotis2 says:

        Would not surprise if he did not,usual modus operandi by now he says one thing, means another, tweets a third, and then changes his mind.

        • Dex T says:

          Trump is not working on the actual agreement or does much of the actual work.

          The key figures are Mnuchin, Lighthizer and Navarro. Lighthizer and Navarro are strongly pro tariff. Mnuchin is a bit more flexible.

          It’s understandable that everyone wants a quick and favorable deal but it isn’t possible in this case.

          The Chinese have far too much to lose long term and If the Trump admin goes too easy the Chinese won’t take it seriously and ignore it.

    • The official discussion is about 2).
      But 1) is in the background.
      Just like in the old westerns, 6-guns on the poker table here.

      Admiral warns U.S. that China’s navy could sink two aircraft carriers and kill 10,000 sailors
      Caveat, this Admiral teaches Chinese military academy (probably like Annapolis), but he sure shouldn’t be shooting his mouth off.
      In the annals of military history, that borders on an act of war.

      That’s a lot of the reason the market is roaring.
      If Trump can put out this brush fire, huge achievement.

      • All army personnel are rather insane, regardless of country and rank. Their job survival depends on how loudly they scream, and the imagined size of their national flag. The realization that you can kill something but cannot bring it to life simply cannot hit home. I am speaking collectively.

        Now China can “afford” to lose 600 million people and still come out on top. The US cannot afford to lose 300M people. If it does it will not only kill the wall project, it will be making nighty raids to kidnap Mexicans.

        The ultimate resource is people. Hard working people who want opportunity. The ultimate weapon is patience. The ultimate weakness is stupidity. And within it lies greed, lies, impatience, manipulation, etc.

        We have met the enemy and he is us. 🙂

        • I don’t think the enemy is us.

          • tony caldaro says:

            agree the enemy is China Russia Iran and a few other oligarchy’s

          • fionamargaret says:

            This was derived from a quote from Commodore Oliver Hazard Perry in a moment of braggadocio after the Battle of Lake Erie. He said “we have met the enemy and they are ours,” but then the phrase became more introspective, and sums up quite beautifully how my father felt.
            There was the designing of the bomb, but dropping it changed him irrevocably.
            No amount of reasoning that it was an action that had to be taken, he just saw himself in the mirror of self reflection…..we have seen the enemy and he is us.

            • Correct.

              The enemy is us because we have an idea that we are “good” and they are “bad”. This is a function of culture, religion, and ethical inflection. How many here realize that you grew up with a personal God, but your equivalent in the east grew up with an impersonal God. Next, what are the ramifications of that? For starters, your culture allows you to do what your Gods do. So, west of a line (you can figure out where the line is), the story has always been war. We are right and we are fighting this war.

              The better way to solve problems is to first understand who you are calling “bad”, and then to realize that “good” and “bad” are just a manner of thinking.

              Wars, sanctions, tariffs, threats …… this is the way of a terrified group of people who believe they have it good and want to keep it that way. If you have it so good, why has it been going downhill on average for so long? And in time, when we lose, ** OUR own stupid methods will be used against OUR children and grandchildren **. We want that???

              There is always a better way. But it needs depth, patience, brains, maturity, decency, honesty, integrity, vision.

              So who elects people with the above qualities? Please put your hands up so I can count you! 🙂

            • I rarely post, and I posted more than my quota today. I’ll do penance tonight. But today is Friday and the market is closed. Thank God.

              This is for Fiona. Just one verse for fun. No one knows who the singer is. I was told its a pygmy gypsy pianist who escaped from Burundi. Use headphones.


              • fionamargaret says:

                …my very favourite pygmy gypsy…..thank you Joseph …it is late, with wind chill of -45, and you totally warmed my heart…x

  20. Finished for the day and I am bored like most of you. I decided to play around and do something very, very unscientific…(I am comparing /ES to SPX to /VX trading…., in English for fun….so please don’t rip this “analysis” apart. I looked at the /VX from the top Christmas Eve high anchor to today’s low, low anchor.

    This morning, I posted chart #1, the top chart and I gave you my analysis on the chart. Basically $17.73 was my bull/bear line in the sand…bearish for stocks if /VX defends $17.73 and rallies off that level and bullish for stocks if /VX trades and stays below $17.73.

    I just took a print screen of /VX and applied my EW wave analysis to /VX trading. I can count/labeled 5 waves down. Notice that /VX hit a brick wall, as in, it defended it’s 61.8% long at $17.90 and began to rally off this level. Just $0.17 from support !!!!

    Then I drew up a Fibonnaci retracement for /VX and the 50% retracement and the level was $21.16. Looking at this chart, the last time /VX traded to this level was on January 6 and 7, 2019. SPX was trading ballpark around 2530 at that time.

    Therefore, it will interesting to see if /VX trades back up to a 50% retrace at $21.16 and if it does, will SPX be trading around 2530. If you strictly look at SPX from the low to todays high, the 50% retrace isn’t that far off the mark.

  21. Hi,
    in doubt if the pattern is a valid wedge formation(3 points in each closing trendline)

  22. purplember says:

    my 2 concerns: a) still not 5 waves on spx/dow but that could still happen b) i’d feel much better about bull market if we had a double bottom or had retested the low at 2340

  23. lunker1 says:

    SPX 60min 3BR at 2675
    2674 = 23.6% 1810 -> 2941
    2509 = 38.2%

    2668 = 14.6% 667 -> 2941
    2501 = 23.6%

    2668 Daily R2

    2511 = 50% retrace from 2346 low
    2507 = year 2018 closing price

    cluster 2501/2511

  24. torehund says:

    SSEC, from 21 of Jan 2018 there is a valid end count A-intervening abc segment up to a B and then C down to where it bottomed out recently. This bottom could very well hold, preparing for a higher high at 6000, lets see 🙂 Good weekend Tony and all !

    • I don’t know about 6000. But it is going to head up from here fast, is my guess. It will check out the high in the 3000s fairly soon (in market times) and will eventually test the all time highs.

      Whether anybody likes it or not, China is here to stay, and the billions of people there are going to change things for everyone. Get used to the idea, and be prepared to be surprised by how well they do. All the “I’m the top dog” nonsense will have to go. That’s my story and I’m sticking to it. 🙂

      • Dex T says:

        Not contesting China’s existence only the trade deficits and our poorly negotiated trade deals with them The Chinese have made a fortune over the decades from our political ineptness and it’s absurd to let them continue.

        Also, China is dependent on the U.S. and not vice versa. China provides primarily cheap labor.

        So far the news is gossip.

        • Dex,

          If one is honest and goes back far enough in history, one will see that everybody makes a fortune off everybody else. If you pick your favorite time in history (for example, the time you are alive ….. which for some reason all living people like to do :), with it’s attendant bias) you will naturally say “hey, the other guy is screwing me” ….. totally disregarding the fact that people all over the world have been cheated, and the US does nt have clean hands. Now you can believe that, and who is going to quarrel with you? Not me. 🙂

          All the screaming and “we are fair and they are not” is meaningless to me at this point.

          It’s best to just get used to the idea that the entire human race is messed up and we have to work with that. For now that means China will come up on top, no matter how much the US screams. This is my estimation. I have no proof.

          Remember always that cultures are different. How culture A looks at something can be very different from how culture B looks at something. It’s no good to shuffle about saying “hey, we have a bigger army, so our way must be better”. It has never worked in the past, but for given periods.

          • Dex T says:

            In this case they are making a fortune off us because we are letting them. Why continue to do so?

            You seem to be aware of the trade imbalances and intellectual property theft over the years so why turn a blind eye to it when we can actually DO something about it????

            I’m not talking fairness or cultural differences I’m talking about the fortune the U.S. stands to reap if we take action against the Chinese.

            All we need is to show a little backbone and renegotiate better deals that they will be required to honor.

          • Excellent post Oh-Joseph!

            It’s also important to understand that China is undergoing a major transition from export led growth to a model increasingly driven by domestic consumption and services.

            Every day I see the same guy here pounding the table about China and trade deficits… and yet they’ve never once pointed out the “transition” that China is undergoing.

            As far as trade deficits, I personally have a large deficit with Germany given the German sports cars that I own . . . . and I really don’t care.

            Are we supposed to handicap German automakers just because they happen to make a high-quality product?

            That would be absurd.

            • PS. Never mind that Trump doesn’t seem to understand that we are the global leader in SERVICES and enjoy surpluses with many countries that he believes we have trade “deficits” with. All of the “deficits” that he yaps about never include “services”, only manufacturing.

              Trump’s economic knowledge base is horrible. He actually believes that we are “losing” $800 Billion a year on trade… yet a trade deficit is not a scorecard. Any economist worth his degree can tell you that. Perhaps a reporter should ask him someday why it is that our trade deficit only improves…. when our economy tanks. Duh!

              I’m surprised that he hasn’t said that we have a $58 Billion dollar deficit with Mexico and framed it this way…

              “Those losers in Mexico gave us $58 Billion more stuff than we gave them last year. Ha, ha, ha. We’re Winners!”

              • Dex & Co. can and will scream and demand “not to be ripped off”. You can’t chose a point in time and think “I refuse to be ripped off” without undoing all the ripping off you have been doing in one way or another for the past few hundred years.

                Thus, you have a problem that cannot be fixed by demanding fairness. One politician after another will jump into this vacuum and pander to his voting base. If you don’t believe your neighbor when he says he cares about you and will go to great lengths to make your life better, why on earth would you believe a politician who says the same rubbish? What does he want? Simple answer: to rip you off, look good, be re-elected, say “look, I was right, told ya so” etc etc, say “look at those guys, they are bad, we need to go after them” etc etc, make a TON of money off the whole adventure, enjoy a few more bankruptcies, not go to jail, grope a few more people etc etc.

                In the end we have to learn to see through all this nonsense. It’s like a veil that is placed over your head. Take it off!!! The world is hard to see for all of us. Don’t believe what you are being told.

                Take off the veil and do a few cartwheels. When the blood gets to your head, you can think.

                Then pray for Newbie. 🙂 [I just wanted to throw some random activity in at the end].

  25. alexhartley1 says:

    Hi Tony – I note on the GBTC chart you have it as having a confirmed bottomed on the daily but awaiting confirmation on the weekly. Either way likely close to a bottom you think?

  26. S&P 500 A/D line getting pretty close to making a NEW HIGH.

  27. quickrick38 says:

    Three attempts at 2675.88ES. I’d say we’re done here. I’ll still probably wait until Monday to short.

  28. rd3777 says:

    One thing about triangles, they always need to be at a certain place at a certain time. This E wave in a giant expanding triangle is a great example.

  29. Jack kendo says:

    max re-short at SPX 2672, stop 2686 of previous wave b high.


  30. micky says:

    beautiful charts are rare,messy charts aplenty ..pity some experts have been exposed so brutally.That’s the thing with real time,much more difficult than those after the fact trades.

  31. xEVAx says:

    This is SPOOKY, neg divergence and just weird…. BEARS may have there way for a while, very strange…..

  32. Gary Lewis says:

    Considering that today is the January 2019 LEAP expiration day, I’m betting that there will be a turnaround here and some downside action before the day is done.

  33. xEVAx says:

    Out at 2675 =) Ya’ll have a nice weekend =)

  34. sixpack says:

    You do all realize whats at stake here right? If China opens up, then its a new market consisting of 1.4 billion Chinese consumers that american businesses will pursue. Thats 4X more than the US. Could be a new era of sales and earnings growth.

    • Yup, mr. sixpack, the Trump rally.
      That is one of the many facets of this upcoming trade deal.
      Should not be a total shock to anyone.
      And a possibly huge exploding cigar for Speaker Pelosi to suck on.
      We’re going to win so much, you’re going to be sick and tired of winning.
      D.J. Trump
      Dem voters are welcome to climb aboard.

      • sixpack says:

        Yes, it doesn’t seem very smart that the first day she’s in power she goes to the mat with the fuhrer.

        • I think you meant der Furor. 🙂

        • Scott J says:

          Makes total sense. Pelosi is now the bull dog to provoke Trump. He is so impulsive that I bet she can “encourage” him to do lots of stupid antics. Irrational tactics is exactly why I have confidence we will go back below 2400.

          We are just at the beginning stages of seeing how unhinged Trump can really get. Eventually, he will do something (again) that will cause even the most hardcore bulls to scatter; he can’t help himself not do, esp now that he has mostly surrounded himself with yes-men (ex: Tariff man tweet, shutting down gov after congress agrees on gov funding). If it wasn’t going to adversely affect all of our lives, it would be comical.

          I’m still predicting over 2700 before crash to 2500 region, then next crash back to 2300 region. Might take another 3-4+ months to play out. Will depend on how economic data is released (or if it will be released). If no economic reports, then might depend on Q2 earnings.

    • fotis2 says:

      If that happens would a strong Dollar help?

    • Dex T says:

      That’s the idea but it’ll take more negotiation.

      Whatever the Chinese may agree to at this point they will definitely not follow through with.

      U.S. growth is only going to come at Chinese expense and they will keep fighting every step of the way.

  35. lml25 says:

    Anyone shorting,I would recommend not doing so until a)stochastics get below 80 and b)IF SPX gets below 2635 again (or even below 2600).Otherwise,this thing could start riding the upper bb.Much later all.

    • fionamargaret says:

      …good stuff lml…
      …and of course if there is even a whisker of an idea of a NK thaw….wait I hear the bulldozers…(oh no, everything has to have a logo in neon lighting)………xx

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