friday update

SHORT TERM: market opens lower then bounces back, DOW -5

Overnight the Asian markets lost 0.4%. Europe opened lower and lost 0.2%. US index futures were lower overnight and the market opened three points below Thursday’s SPX 1689 close. In the opening minutes the market dipped to SPX 1684, then started to drift higher. With only a three point pullback after the open the market ended the week at SPX 1692.

For the day the SPX/DOW were mixed, and the NDX/NAZ were -0.85%. Bonds gained 12 ticks, Crude rose 35 cents, Gold rallied $11, and the USD was lower. Medium term support remains at the 1680 and 1628 pivots, with resistance at the 1699 and 1779 pivots. Last night the FED reported a decline in the M1 multiplier: 0.770 vs 0.784. Today the WLEI was reported lower: 54.5% vs 54.6%.

The market opened lower today, pulled back to SPX 1684, then drifted back up for the rest of the day. During the pullback we posted a green tentative Int. v/Major 3 label at SPX 1693. Then added a comment on the blog. If the SPX exceeds 1693 Minor 3 continues, if not, the uptrend is likely over. More on this in the weekend update.

Short term support is at the 1680 pivot then SPX 1658-1667, with resistance at the 1699 and 1779 pivots. Short term momentum dropped below neutral during today’s pullback then ended overbought. The short term OEW charts remain positive with the reversal level now SPX 1675. Best to your weekend!

MEDIUM TERM: uptrend

LONG TERM: bull market


About tony caldaro

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76 Responses to friday update

  1. Thanks for the update Tony! May i ask a personal/trading question. What wave-degree do you trade? Minute, minor, int. med? Etc? Or just trade good set-ups (e.g. day trading?). I understand if it is a hard question to answer.

  2. Tony wrote that either minor 5 was over or, if 1693 were exceeded, we were still in minor 3. When were we in minor 5? It seems as though minor 5 maybe over before we knew we were even in it.

  3. $UVXY $NUGT $SPX $SPY $TNA “The Kinky Afro” roadmap for monday:

  4. locanbbs says:

    Dear Tony and Guys,

    GOLD (and SILVER, too, but a little behind) is preparing for a MAJOR BREAKOUT! – See my newest charts:

    The Blog is just beginning in English: (Sorry for the German menu-titles::haven’t had time to get rid of them all yet!)

    All the best and a relaxing weekend to you all!

  5. M1 says:

    Tony, I am very curious abt the next move of NDX. Honestly I don’t like that wedge you are seeing and neither want to hear abt a possible ending diagonal.
    Do you think it could be at an Inflection point ?

  6. twosidedtape1 says:

    Getting away from the SPX chatter for awhile, what are the implications of the Nasdaq gap down today? Perhaps we can take a broader market cue from it’s behavior?

  7. pio27 says:

    Here is my 2 cents for what its worth.
    I am new to EW but I will tell you that MR C has nailed this market. I personally think market should not be where it is and I am sure there are a few others. But Mr C has made me a believer in EW. My friend today told me Ben Bernanke is more powerful than GOD. Maybe that’s a market top sign.

  8. bouraq says:

    Post on Gold, Euro, Cable and Aussie short term outlook. I will post on the long term outlook at the weekend.

  9. Once again, thank you, Tony. Looking forward to my weekend update fix — so interesting!! Have yourself a nice weekend.

  10. gokalg says:

    I have traded both VXX and UVXY both iin past extensively. Bottom line seems to be that long positions in these assets lose money most of the time. The reason being contango. RC’s post is right about this. But the way you are using against your SPX long is not bad. You should keep small position and do not panic. I think even next week itself could bring you some profit or break even.
    Another way to play tese is with options spread. today I took a credit spread weekly put 15.5/16p for next week. And 15.5/16c debit spread in VXX when VXX was trading at 16.11.

    • prechterized says:

      It’s not contango. It’s the volatility decay inherent in all leveraged ETFs. They’ll effectively all work toward $0 due to the natural volatility of financial markets. The only way these gain value in the longer term is during a strong, unrelenting trend. They decay badly in almost all other scenarios.

      • twosidedtape1 says:

        VXX is definitely influenced by roll cost, A few people and I on the Yahoo board a couple years ago calculated the cost and it pretty much worked out to the penny. The secret to making money long VXX is to only do it when the first several months or so are all in backwardation. Backwardation works in reverse and pumps VXX higher because or a gain in value from the roll. What we found was if the first two months only are in backwardation it won’t work. You need at least 3, preferably more. The futures flatten out as the market gets wobbly then the backwardation starts. Vix futures are in contango far more often than not so VXX will lose money over time. The options unfortunately have huge premium to reflect this and pretty much rot for trading.

  11. Bears beware, another point on SPX and Tony will desert you guys!

  12. davidmlamos says:

    To Tony and Enzo:

  13. Just a newbie but the over bullish sentiment smells of a top, the only thing needed is a catalyst during non trading hours, many are looking for 1700, 1740. Lets be real we could have very well completed int 3 today and int 4 could push this market down like no other starting Monday. I want everyone to succeed but step back for a second and look at the big picture. Well im just anewbie so whatever.

    • dully noted and agreed! Now is not the time to be complacent; as the easy money has been made IMHO.

      • mkmason2013 says:

        soul gets the gold star. Have a great weekend, soul. M

      • thanks MKM! I think we all deserve a gold star!

      • jackkendo1987 says:

        gold star?
        But gold is in the bear market.

      • mkmason2013 says:

        soul, I agree, all deserve a star. M

      • radrian6 says:

        Keep in mind that topping is a process, particularly with a high-degree wave. As Newbie pointed out, there could be an after-hour event that triggers a selloff. However, from a purely technical perspective, I don’t see much that signals a major top. Both the large caps (SPX) and small caps (RUT) are in tight, sideways consolidations. Tops are typically signaled by volatility and by large daily price changes — we are experiencing neither of these conditions.

        Granted, we are overbought in all conventional time frames but barring a black swan event in the near future, the indexes are unlikely to stage an immediate collapse.

      • fionamargaret says:

        Well Newbie, I think we have done well under Tony’s tutelage. Animal spirits abound as we help each other as well.
        I think (no waves) Wednesday and Thursday will have an upward bias – now that leaves Monday, Tuesday and Friday if we are going to go down.
        As Tony would say ‘we are at an inflection point”.

        Stay safe everyone and enjoy. Remember the only worthwhile things are old dogs, children and watermelon wine.

        Thanks Tony.

      • timing101 says:

        Thanks Fiona!
        I think my parents wore the grooves off their Tom T. Hall 33 1/3 LP, listening to that song.
        Thanks Tony. Amazing work that you do.

    • Actually it’s been well established that we are in at least minor wave 3 of int 5. tony was talking about minor 5 of int 5 possibly being complete, which would also mean the end of major 3. the guys who replied below know that very well.

      • fionamargaret says:

        George, I always enjoy your input.
        I think quite a few of us have gone to cash, and are waiting and watching.

        I don’t do waves, but find it only helps my own format.

      • mkmason2013 says:

        Hi fionamargaret. Hope we get some direction soon. Which means we might have to wait a while longer, as everyone is anxious for the same thing; where the markets are going. M

  14. rc1269 says:

    thanks TC. next week might be interesting

  15. thanks tony! looking forward to your weekend update. Kinda fun to watch & learn now with hardly any chips on the table after selling my longs y’day!

    got hammered on AMD this morning (a 10% profit y’day turned into a 5% loss today…) oh well can’t win them all…

    • fionamargaret says:

      Sorry about your AMD Soul – read Armstrong I just submitted – lots of chances again according to him.
      Makes my possibility of 20,000 seem quite inadequate.
      Keep the faith!

  16. UVXY crying for help.

  17. jackkendo1987 says:

    “During the pullback we posted a green tentative Int. v/Major 3 label at SPX 1693. Then added a comment on the blog. If the SPX exceeds 1693 Minor 3 continues”

    SPY 169.40 new high should mean Minor 3 continues.
    1707 for 1699 pivot.
    or 1740 for 5=1.

  18. gtoptions says:

    Thanks Tony & OEW Team
    Enjoy the weekend all.

  19. mike7x says:

    Thanks Tony! Enjoy your weekend also…”If the SPX exceeds 1693 Minor 3 continues, if not, the uptrend is likely over. More on this in the weekend update.”

    This is like a TV cliff-hanger. Stay tuned. 😉

    • hucky2 says:

      The fact that the recent low has held up for several days now increases the probability of more upside next week. IMHO

  20. jackkendo1987 says:

    Tony Thanks.
    SPY 169.40 now, above yesterday. “3” not complete.
    wave nine for 1706 (1699 pivot).
    or 5=1: 1740
    I am 300% SPX long, with uvxy 42.75 for protection.

  21. mkmason2013 says:

    Thanks Tony! Anxiously awaiting tomorrow mornings read w/coffee. M

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