thursday update

SHORT TERM: another choppy day, DOW -42

Overnight the Asian markets lost 0.5%. Europe opened lower and lost 0.7%. US index futures were higher overnight, and at 8:30 weekly Jobless claims were reported lower: 366K vs 368K. The market opened one point below yesterday’s SPX 1512 close. In the first first few minutes it bounced to yesterday’s 1513 high, then started to pullback. Also at 9:30 FED governor Stein’s speech was released: The pullback continued, seemingly following the decline in the Euro, until 11:00 when the SPX hit 1498. Then after a momentary bounce to SPX 1503 the market made its low for the day at 1498 around noon. After that it started to rally. At 3:00 Consumer credit was reported lower: $14.6 bln vs $16.0 bln. The rally continued into a SPX 1509 close.

For the day the SPX/DOW were -0.25%, and the NDX/NAX were mixed. Bonds gained 2 ticks, Crude lost 80 cents, Gold slipped $6, and the USD was higher. Medium term support remains at the 1499 and 1440 pivots, with resistance at the 1523 and 1552 pivots. Tomorrow: the Trade deficit at 8:30, then Wholesale inventories at 10:00.

The market opened slightly lower today, bounced a bit, then took out yesterday’s low on its way to SPX 1498. Then to keep everyone guessing it rallied again. If we look back just seven trading days ago, when the uptrend initially hit SPX 1510, we observe quite a choppy pattern. A drop to SPX 1497, rise to 1514, drop to 1495, rise to 1515, and drop to today’s 1498. Slightly higher highs, then finding support between 1495-1498. Buyers under 1500 keeping this pullback afloat? Despite this choppy activity we continue to keep the count as posted on the SPX: Minor 3 @ 1514, Minute A @ 1495, Minute B @ 1515, and Minute C underway.

Short term support remains at the 1499 pivot and SPX 1471/75, with resistance at the 1523 and 1552 pivots. Short term momentum hit oversold today, then bounced back above neutral. The short term OEW charts dropped to negative, then positive, as the market vacillated below and above SPX 1504. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: bull market


About tony caldaro

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134 Responses to thursday update

  1. torehund says:

    From jan30 to feb 5 I see a large ABC. Then a rollover and quickly up into a smaller abc, then rollover and up again until todays action with multiple self similar small abc patterns that constitutes a miniature of the previous to ABCs.
    After ABCs to infinity or( flat 8) one would expect a large gap up to commence, maybe Monday. Just a thought. The fractals of lesser size will not be discernible.

  2. pbnj123 says:

    Thank you for the update on the SPX 60 minute chart Tony.

  3. radrian6 says:

    FWIW, SPX is forming a flat consolidation just above the 1515 breakout area which, to me, impiles upside continuation. If SPX does continue higher, I don’t know what that means for the bigger picture and for the current 60-min count. I still feel there is some possibility that Minor 3 is still in process and the 1516-1530 target area is being tested. If we’re in Minor 4, this could be Minute b and Minute c will soon follow. Tony’s expectation for Minor 4 is a correction into the 1480s, possibly the 1470s — right now, it’s a bit difficult for me to visualize this maket going lower but we’ll see what happens.

    • tjhere says:

      Afternoon, If you track JNK &/or HYG in relationship to SPX/SPY.. Ck out charting the Mrkt Symbol Bars with a JNK.IV line. The ETF NAV is up dated every 12 seconds (I think that is the requirement). A chart cross of the “retail” mrkt price vs “institutional trader” price can be an interesting indicator for tracking equities via High Yield pricing. Worked well in the summer of 2011 volatility. I also use a dual MACDs both for in same chart pane. Dual ratio with IEF : JNK and IEF.IV : JNK.IV (IEF has similar beta but approx. inverse correlation) and a MACD of the ratios can confirm change of trend. Risk on Risk off type measure. Tracks the equity markets pretty well using bond pricing similar to Terry Laundry’s T-Theory confidence index using FAGIX:VUSTX. Just FYI I waste a lot of time playing with charts. Best regards & Have a great wkend!

      • Hi tjhere,
        Thank you.
        Can you post some of your charts and can you comment on the SPY JNK divergence?
        Thank you.

      • tjhere says:

        Probably cannot post charts. Wirehouse firewalls can be very picky. Use ThomsonOne with a Bloomberg available in the office. Build charts that monitor asset classes: equity indexes, high yield, treasury and hard assets. Then drill down to sectors, various fixed income, commodity ETFs etc. Using price and ratios with the typical EMAs, RSI 5 & 13, MACD Momemtum and Money Flow etc to find out “Who’s winning”. Not rocket science but it works.

      • tjhere says:

        PS The fact that JNK is trading/charting below the JNK.IV NAV price is not a good sign for those holding long equity positions but money is starting to pour out of treasuries so the view is murky. Just about the time I get the QE effect figured out the Berank will have moved on. I don’t try to beat the mrkt, just get as much of the upside as possible while minimizing downside capture. The latter can be more important over the long term, assuming you can manage to make gains from time to time.

  4. H D says:

    asteroid 2012 DA14 will sweep very close to Earth on February 15, 2013

    • mokiepon says:

      Really? How close? I have a few people I work with I’d like to throw into the air and see if they can’t hitch a ride and get out of my solar system! M

    • CB says:

      oh shoot, HD,so the ‘event” won’t be as epic as it could be, huh?….anyways, for a moment there 5 min chart seemed to be responding to that breaking news..which would be incredibly awesome for lots of us here…

      Btw.,guys/gals…for those who may be new here, there is only one HD here, and tha’st the the guy who posts those awesome charts(and more) for us and you see him right here in that equallly awesome avatar.

  5. Ronin I3 says:

    I am I-3!

    Not Ronini, Roni, Ron, nor R3…

  6. thehomelessdaytrader says:

    It is one thing when the market doesn’t impulse … it can’t all be easy money. But a pulse would be nice …

    • Tom Green says:


      Glad you showed up. Question for you.
      1) b extending
      2) iii extending
      3) v starting
      Plus we entered the 1523 pivot


      • thehomelessdaytrader says:


        I’m afraid you are mistaken. I am thehomelessdaytrader, sometimes known as “THDT.” “HD”, on the other hand, is another cat entirely.

      • Tom Green says:

        Ok HD, not THD

        Put it this way, you just hit it in the water, are you going to take a mulligan?

        Or do you score best on par 3’s or par 5’s

        Have a great weekend, looks like a high tomorrow of 75.
        As Bing Crosby would say, right down the middle.

    • mokiepon says:

      Hi THDT! Look at it this way… If you don’t have a pulse, then you don’t need money anymore. (Just ignore my dark-sided humor; it’s been a jungle of a week.) M

  7. ronini3 says:

    Broadening top..HD called it!

  8. sirrobbie says:

    Tony, how do you feel about AAPL’s move today/yesterday?


  9. kvilia says:

    Since approximately 1/28 all indices have been putting in negative divergence. Isn’t it a concern for those who expect higher numbers before any significant (30-40 points) pullback?

  10. tommyboys says:

    ECRI WLI Rises

    A measure of future U.S. economic growth rose modestly last week, while the annualized growth rate improved to a fresh high of more than 2-1/2-years, a research group said on Friday.

    The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index rose to 130.2 in the week ended Feb 1 from 129.6 the previous week. That was originally reported as 129.7.
    The index’s annualized growth rate climbed to 8.9 percent from 8.2 percent a week earlier. It was the highest level since May 2010.

  11. andysingal says:

    went short with SPXu at the highs of the day

  12. HumbLEEd says:

    Pivot time… Tony made a change on the SPX 60 min but its not 3 being ext.
    GL guys

    • mokiepon says:

      The top of 4b!!! Oh, lovely. I suppose I’ll learn by doing and making many mistakes. M

    • HumbLEEd says:

      I’m headed to Ponce de León’s old hood.
      U won’t have me to kick around here for a while ;P
      Thanks T later boys and girls

      • CB says:

        A nice change of scenery, Lee! U were due 🙂 Enjoy, it will do you a world of good. The boys & girls here will miss you, so remember to let us know how it’s going once in a while, OK? Bye !

  13. rc1269 says:

    man, this market has gotten so boring

  14. mokiepon says:

    Another day, awaiting wave 4 to finish doing it’s thing. M

  15. from blog comments,wednesday,after session close, 2013/02/06
    short term indicators/systems:

    eliott PSTT: remains on buy signal.
    qqq indicator: +8, up form +6, remains on buy signal.
    smart money indicator: -10 , remains on sell signal.
    feb. monthly 2faced longs +0.68% profit today.
    feb. monthly 2faced shorts 0.40% loss today.
    weekly 2faced longs , original algorithm +1.14% today
    weekly 2faced shorts with etfs, original algorithm, +0.52% profit today
    daily longs from monday if left open returned more than +.02% today, they consist of :
    bsx, alim, mntx,snss, uis.
    still working on fine tuning the algo for both the weekly and daily 2faced systems as you can tell.

    spy +0.07%.

    long term crash indicator remains at +5. a rare -10 signals a 2008 type of crash; a -10 occurs less than 1% at end of week readings.

    tna 76.20 not reached again during the remainder of session, no short trade. still 99% cash except for spy puts.

    stock watch:
    long breakouts:kerx, sgmo, isis mcbc, svu, cndo,ctcm.
    shortbreakouts: mflix, fbc, sanm, fbc, iag, osis.
    draw a trendline and buy and short the breakouts, it’s that easy.

  16. ronini3 says:

    Black gold looks interesting. Not ripe yet, but getting there.

  17. Tony, Just new poster. Your wave 4 cannot go past wave 1 high (1423). Why are you expecting 1480 ish and not lower?

  18. ruudboy99 says:

    (really appreciative of your work Tony, i had not realised you made as many intra-day and EOD comments.)

  19. Mark Stone says:

    Tony – love your work and learn lot’s from it. So thanks! Question – your count from 2009… the major wave 1 is longer than the 3 and 5 – am i interpreting this correctly and if i am, wave 1 can’t be longer as stated in the rules?
    Some are calling for this whole leg up since 09 to be a leading diagonal and/or a ‘1’ with the coming ‘2’ in the pipeline – ie. a drop stopping somewhere along the way towards the 09 lows.
    Please could you comment as I appreciate your opinion… thanks!

    • thehomelessdaytrader says:

      You are confused. Here are the three rules that matter:

      Rule 1) Wave 2 cannot retrace more than 100% of Wave 1;

      Rule 2) Wave 3 can never be the shortest wave in terms of extent, i.e. price movement. Wave 3 need not be the longest. It merely needs to avoid being the shortest.

      Rule 3) Wave 4 cannot overlap Wave 1.

    • tony caldaro says:

      Hi Mark,
      The rule is wave 3 can not be the shortest.
      The diagonal had its chance, the market broke through it.
      Mar09 was a very significant low. Not likely to be seen again.

      • Mark Stone says:

        OK great, thanks Tony. Appreciate the promt response. Then what about the Elliotticians who are stating that this whole leg is corrective rather than impulsive – and also the ones who state the megaphone pattern. I know there is no magical crystal ball and people will have their interpretations, but who is a guy to believe! Haha. I guess only time will tell 🙂 and that is the nature of markets and trading! Thanks again… keep up the awesome work.

      • Mark Stone says:

        Gotcha – the waves are the waves 🙂 … this is quite a disturbing truth then, as I would logically conclude that you’re expecting massive (hyper?)inflation, especially considering that we are in SC3 (usually the longest wave for equities, right?)!? Given the printing presses are on, I can understand this – how else would the stock market lift off to great heights over the coming years if real growth is apparently benign! And then this begs the question of how the bond market can survive? Am I thinking too much?! The fact that Im using too many ‘?’s probably answers that question! :p

        • tony caldaro says:

          It’s hard to get hyper-inflation in a deflationary secular cycle.
          Even FDR couldn’t get that when he nearly doubled the money supply overnight.
          Once this secular completes real growth will return.
          US will remain a float due to the upcoming USD bull market.

      • mokiepon says:

        Completely agree with Tony. It’s Disinflation/Deflation, not hyperinflation. M

      • Tony this is Joseph. I changed my nickname. When did this current secular cycle started and when do you project will end? I read that after is done we’ll have real growth!

      • Mark Stone says:

        Agree re deflationary secular bear, but that’s what I don’t understand – the secular bear wont allow ‘big’ inflation, but once we are out of it what happens then to all that money sitting around in the banks? The fact that inflation isn’t really showing up (even though I think it is in some areas, eg. my food shopping bill is inching up) would infer that the Fed will keep printing to avoid the banking system from collapsing until the secular bear ends and all the stuff on the bank balance sheets is inflated. Right? If that is the case, can we still have a USD bull? I guess that depends on the EUR, JPY and the GBP and who expands their balance sheets quickest? … and then re the gold bugs – their call for a rise in gold is justified and this would be a large wave 4 consolidation for them in Gold/Silver? Then (!) … when the market is higher as in your wave count, we STILL haven’t gone through a period of deleveraging so I can’t think how real growth will return? I know it will one day, just how do we get there if we keep going higher? Technical analysis and fundamental analysis at least used to be somewhat connected with some correlations one could work off… all seems confusing and disconnected now! That’s fine because the count is the count :p but trying to understand it is hard. It seems to me the only reason the market is rising is due to the printing of money. I’m beginning to give up making sense of it all! Thanks Tony 🙂

        • tony caldaro says:

          Let’s just say we were first to implement liquidty programs and the first to shut them down.
          While, possibly others are still printing away.
          Bernanke’s term ends this year, the next Fed chairman may not be so liquidity friendly.
          Banks are sitting on excess reserves collecting interest risk free.
          As long as they collect interest that money goes nowhere.

      • Mark Stone says:

        Cheers Tony… I don’t wish to go on but you provide a different perspective and it makes me think and challenge what i think i know – so again – thanks. Hopefully, others are finding it useful!
        I still can’t understand how we’ll get through it all without a purge at some point down the line, but tis the central banks vs nature I guess for the time being – or so I’ve read!
        What seems crazy to me is that as you say the banks are collecting interest, risk free. Apparently, the fed prints a bunch of money, dishes it out to the banks who then deposit it back at the fed and earn interest! Basically. That is a free lunch and I was told there are no free lunches! Seems like the banks are seriously being propped up.
        If the liquidity tap is turned off (you mention they are no longer on, but QE is still on i thought?) what will the banks do then with all the cash?
        I do agree we’re going higher with equities, but that has implications for the bond market given their mostly negative correlation? From my understanding, your bond chart count means bonds are heading lower? I’m not too good when it comes to interpreting correction counts. Will the fed allow yields to rise? How will they afford the interest payments if they do, esp if liquidity is turned off? If they want to suppress the yield they have to print more to buy bonds? Will the next fed chair have a choice in policy?!
        All these questions and ive probably only scratched the surface… this is my last post (for the time being! haha) – will give you a break :p. Enjoy your weekend T.

        • tony caldaro says:

          Excess reserves:

          No free lunches except for the banks. Indeed they are being propped up!
          The FED then can keep the excess reserves, in reserve, by offering higher rates to the banks.
          Or, can lower the rates to zero, forcing the banks to deploy their reserves into the economy.
          If rates are rising with an $85bln/month QE 3 how can the FED stop them? They can’t.
          The FED has nearly three trillion in interest bearing debt. They are collecting interest from the government.
          They can just pass that interest along to the banks. Think the FED paid $85 bln back to the Treasury in 2012.
          Usually the FED chair, vice chair and NY FED make policy. The rest just follow.

      • torehund says:

        lol, lots of magaphones on market oracle these days…Just seeing the site may induce depression.

      • Mark Stone says:

        Cheers T… all quite incestuous with the FED, Treasury and banks it seems! That graph is just scary.

  20. radrian6 says:

    This is just speculation on my part but SPX might be forming a diamond continuation pattern on the hourly chart — if so, 1495 must hold. If SPX drops below 1495, we may see the expanded flat.

  21. mokiepon says:

    Thank you, Tony! M

  22. timing101 says:

    Thanks Tony. The $SPX chart is messy. But the $INDU 60 minute chart is a thing of beauty. Lower highs and lower lows since 14019.78; is that the textbook definition of a downtrend?
    Now, watch them gap it over 14020 tomorrow. 🙂

  23. Tony, thanks for the prompt update! Could the low of today been C? We’d then have a regular zigzag where A=B=C? This afternoon rally would than have been part of 1 at some degree of Minor 5. Any way, with the market whipsawing as it is it is almost as sure as can be that this is/was a 4th wave. IMHO, from a more classic TA point of view, the what is also called “backing and filling” around the 1500-1510 level is not bear friendly and may be forming a ~50 point bull flag pattern. Where the flag is the current 4th wave and the pole is the previous 3 wave in January (from ~1460-1510). This would suggest a ~50 point upside, to 1550s, and be perfectly in line with your Minor 5 target.

    • andysingal says:

      went long at 1499, lets see how this ends until then long SPY

      • same here, went long at 1500 (sso, $67). Regardless if it wants to go lower, it’s save to say the market is/was in a 4th wave and will resolve higher sooner or later. So, the risk/reward from going long at ~1500 is say 15:50 (low of minor 4 to ~1485ish : minor 5 peaking at 1550). So if you’re willing to take some downside ST, you’ll be rewarded IT.

        Btw, that’s a 1:3.3 ratio; pretty good actually.

      • thehomelessdaytrader says:

        All Tony means, I would think, is that if we saw 1514 was indeed the minor 3 high, then minor 4 must retrace back to at least 1480’s. If the market instead rallies to new highs from here, then minor 3 is extending, and we have not yet seem the minor 4 low.

        Personally, if we could get this thing to close down just one day on its lows, anywhere near 1488-92, I’d be willing to take any subsequent positive price action as a buy signal.

    • tony caldaro says:

      The market has still not dropped sufficiently to make that call.
      The SPX still needs to get into the 1480’s, at least.

    • torehund says:

      I see lots of double ABCs in individuals stocks (recently) in which the last abc is flatter and more drawn out (negative force dwindles). A curious observation is that company specific news doesnt affect teh major plan of a stock, in one segment stocks trade in a way they always meet, regardless. Urre has got a dilution on its way and was also RS recently, still the image of anouther stock USU and URRE is identical. In tank on a long chart VCCLF and FRO have finally converged perfectly after 10 years of waiting. Other paired stocks is Alimera and pSivida.
      So each stock has a universal plan that seems unalterable and it pops above or below this plan, bended and twisted, but in the end these swings doesnt change anything.

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