friday update

SHORT TERM: market gaps down and continues lower, DOW -316
Overnight the Asian markets were lower with the only exception China’s SSEC +1.1%. Europe came in about 1.3% lower and ended their session -1.50%. At 8:30 the core PCE was reported higher than expected at +0.3%, consumer spending was unchanged, and incomes rose 0.4%. The index futures, which were lower most of the night sold off before the opening. At the open the SPX gapped through the EW support pivot at 1364 and 1360, hitting the next EW support pivot at 1344 by 10:30. After several meager attempts to rally the SPX only managed to reach 1345 by 11:30. Even the speech by FED governor Mishkin did little to calm the market: By 1:30 the support at 1344 gave way, and the market headed lower to the next EW pivot at 1327 heading into the close. At the close the SPX/DOW were -2.60%, and the NDX/NAZ were -2.65%. Bonds rallied about 2 points again, Crude lost 95 cents. Gold rose nearly $6.00, and the Euro was lower. Support for the SPX is now at 1327 and then 1316, with resistance at 1344 and then 1364. Short term momentum stayed oversold all day. With today’s break below SPX 1360 it certainly appears the next downtrend in this bear market is underway. Will update all the charts this weekend. Best to yours!
MEDIUM TERM: the next downtrend in this bear market may now be underway
LONG TERM: bear market

About tony caldaro

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9 Responses to friday update

  1. pascal says:

    Hi Tony,
    Absolutely critical here, no person\’s opinion is above critique. However there is no disrepect towards you either felt by myself or implied by my comments.
    I think you label retrospectively and have missed many of the substantial moves. On you turning bullish on Gold, I have been following your blog fairly carefully and never saw you turn bullish with a projected target from the lower bracket. If you did, could you please provide a link to that entry.
    I am not here to put you up on all your tops and bottom calling. But I was providing solid TA in regards to your gold commentary which I believe was honest contribution. I gave 890 and not 880 as a primary trend change, although I did give a figure of 925 as the supported area for gold. So that is a "golden key" zone. For the quick footed trader, one may sell on a break below 920.
    My count shows this move is a mini iii of a 3 which is a strong upward surge not a blowoff but only time will tell and a break of 920 means an exit with profit. Never want to hit or try to pick a top, the idea is to maximise profit and let it ride till one gets a solid signal. Then I\’ll sell weakness. I think you were saying that it\’s hitting a fib level of yours…
    Only time will tell.


  2. tony says:

    Hi Narayana … same answer.
    The SPX is the traders market, but the DOW is the market.
    The DOW did not overlap in the first decline, but overlapped in this rally.
    Hi OZ … of course no one is ever perfect, but facts are facts, if you review the blog.
    When Gold was at $730 in 2006 I anticipated a drop to $540, and went long when it did.
    Then stayed bullish until a potential diagonal triangle was forming in early 2007, and turned negative.
    But when Gold broke out of that triangle to $750 I turned bullish again. Not missing this $200+ move.
    Agree Gold is in a bull market. But even bull market have corrections, like it did in 2006.
    In regard to wave counts for Gold, which is not my primary market. Your trend change level of $880 is a good one.
    However, rather than wait for a $100 drop, I\’ll sell it on any signs of weakness with a stop at the highs.
    As you can see, one can have a discussion on a market without criticizing the other. 


  3. pascal says:

    Gold has risen well over $200US since Tony was repeatedly calling a top. As a percentage that move… well it more than a little significant. Wouldn\’t have liked to see you sell it then, but depends if you \’believed\’ it.
    Gold is in a bull run, period. I know many people who were bullish on the Dow and remained that way for some time.
    Calling tops repeatedly gets tired but at some point they are going to be avoidable right. Gold is approaching the magical 1000US and people are calling a top at that figure. I also find it so arrogant to think that commodities are entirely dependant on the US with population of a staggering 300mil. What is that 5% of the world?
    US was once 50% of the global economy too, nowadays it is probably well under 25% and dropping fast.
    Gold stocks and real gold do not move in direct unison as you can see. One is a business of pulling metal out of the ground the other is the actual metal. Costs are rising for mining and although the product is fetching more the business of extracting it, is that a business with its own operating costs and problems. So it is good to think of gold as the product of the business being conducted.
    At the moment there is zero indication of gold dropping it was well supported at 890-900 levels, USD is dropping and on other currencies it is only slowing climbing. So gold\’s relationship to USD is insignificant. You can chart it on other currencies as well or compare it to oil, or dow relationship. Whatever. There isn\’t a necessary affinity to USD from a fundamental or technical standpoint, so why this mindset persists is beyond me. I laugh when people say it appears like gold is defying gravity when it has a large rise as the USD has a large drop. Surely you\’d think people would see this myth as busted but it still persists. Check out gold\’s trend compared to the JPY or AUD.
    Currencies skew the relationship.
    Gold trend is up. Only when it breaks the 890 supported level can this trend be called changed from a truly technical and EW perspective. But initial supported levels are closer at 925USD our double top that got convincingly broken. If it broke below 925 on the downside then you could say this is a potential sign.
    But all that appears is strength and upward strong continuing upward movement. Sorry but I had to clarify what are real signals before entering into frequently (putting it mildly) incorrect labeling hypothesises.
    For me these levels represent plenty of breathing space before announcing any trend changes.


  4. Nar says:

    In mid-november, you labeled the rally to SPX 1485 as Wave4 even though it overlapped Wave1. How come in that situation it is acceptable for Wave4 to overlap Wave1, while in this situation it is not? Thanks for your comments!


  5. tony says:

    Hi Elam … gold stocks were a bit weak today, but not Gold.
    Waiting for it to display some weakness first, then I\’ll sell it.
    Hi Narayana … I follow the SPX because it\’s the traders index.
    But the DOW is really the market, and it did overlap the November low.
    Hi Kevin … the FED is locked into their surprise, talk, disappoint scenario.
    We had the surprise in January, then the talk in February, expecting them to disappoint in March.
    Commodities have had a great parabolic uptrend:
    Gold from $641 to $979, and the CCI commodity index from 395 to 568 … all in 6 -8 months.
    It\’s certainly time for a correction.


  6. kevin says:

    Ignoring EWT for a moment and just rationalizing what the media attributes the market decline to: 1) Fed fights inflation – if the fed doesn\’t cut rates or raises rates, it\’s bad for economic growth (market drops), but lessens inflation influences (gold drops or stalls).  
    or 2) Fed stimulates the economy w/ lower rates – ST reprieval for the market, but LT bad due to inflation (market drops); gold continues higher along w/ inflation.
    Either way, it appears the market is headed lower; however gold and commodities depend on which path the Fed takes.


  7. Nar says:

    Given that this rally from 1270 didn\’t intersect the "intermediate wave a" at 1406, isn\’t it possible that this upcoming decline could be Wave5 in a decline from 1576? If this was a possibility, the drop from 1396 to 1316 could be counted as Wavei, 1316–>1388 Waveii, and now we\’d be in Waveiii?
    Thanks again,


  8. Nar says:

    How do you reconcile the fact that WaveC in the ABC correction from SPX 1270 does not overtake WaveA? If WaveC falls short of the WaveA high, that woud be an "irregular type 2" correction, which Prechter denounces in his book. Any comments?
    Thanks as always for your insights!


  9. Jenifer says:

    Tony, great special report on Gold. Gold hit your final OEW target today. It was unfazed by a market sell off which looks like no one is willing to sell it. Do you think Gold can exceed your OEW targets? I find it hard to believe gold stocks can stay at these levels if indeed next bear wave has begun.Elam


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