wednesday update

SHORT TERM: lower open but rally continues, DOW +136

Overnight the Asian markets ended +0.1%. Europe opened lower but gained 0.3%. US index futures were lower overnight, and the market opened two points below yesterday’s SPX 1684 close. In the opening minutes the market ticked up to SPX 1683 then began to pullback. At 10:00 Wholesale inventories were reported higher: +0.1% vs -0.2%. Around 10:30 the market hit SPX 1679 and then began to rally. The rally lasted until 2:00 when the SPX hit 1688. Then after a pullback to SPX 1685 by 3:00, the market closed at 1689.

For the day the SPX/DOW were +0.60%, and the NDX/NAZ were -0.15%. Bonds gained 16 ticks, Crude added 35 cents, Gold ended flat, and the USD was lower. Medium term support remains at the 1680 and 1628 pivots, with resistance at the 1699 and 1762 pivots. Tomorrow: weekly Jobless claims plus Export/Import prices at 8:30, then the Budget deficit at 2:00.

The market opened slightly lower today, dipped a few points, and then broke through the OEW 1680 pivot range. Clearly this was more than expected for an Intermediate wave B rally. As noted yesterday, we now have to consider the recent downtrend of 5.7% in the DOW may have been all of Major wave 4. Previous DOW Major wave corrections have been 6.7% through 14.6%. So this does appear to be a bit short. But the weekly RSI did get sufficiently oversold, the daily RSI is quite overbought for a B wave, and the daily MACD has made a positive crossover. We posted this count on the DOW charts, while maintaining the Int. B count on the SPX charts. Since both counts are equally probable at this time we have an inflection point.

Short term support remains at the 1680 pivot and SPX 1658-1667, with resistance at the 1699 pivot and SPX 1710. Short term momentum continues to display a negative divergence. The short term OEW charts remain positive with the reversal level now SPX 1665. Best to your trading!

MEDIUM TERM: downtrend inflection point

LONG TERM: bull market


About tony caldaro

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282 Responses to wednesday update

  1. This looks very similar to B on June 17, 2013.

  2. H D says:

    not even comfortable saying 3 waves back to 1680 pivot😯

  3. Tony,
    Do you think the dollar bottomed today or do you think it needs one more quick push down?

  4. on the daily chart, SPX cash price pierced the upper BB. Either it will move on higher showing strength or a move back to the mid-band (20d sma, now @ 1655 ) is likely on tap.

  5. bhtrade says:

    Per Rob Hanna of quantifiable edges: a down close today isn’t near as bearish as one might think.

  6. pbnj123 says:

    I know this might just be spitting into the wind – but is it possible we have an ending diagonal “from” the gap up on September 10th? or do gaps not figure in them and therefore is null?

  7. Adv-Dec= -812 for DJI -9.31, bad breadth indeed!

  8. torehund says:

    ECTE-there are some more or less well founded thoughts around a possible buy out from a Chinese Company, it is rising pretty steadily. Just sharing some infoaround one of my Dangerous nano caps.

  9. jackkendo1987 says:

    SPX uptrend confirmed today?
    DOW downtrend?

  10. Potential right shoulder of head and shoulders here on SPX.

  11. lunker1 says:

    so why did SPX stop at 1690?

  12. blackjak100 says:

    Bears last hope is 1682 was 4 of C With 5 of C underway of an odd looking 3-3-5. Target 1692-1700.

  13. StemSki says:

    Everything I feel hinges on whether the decline from 1709 to 1627 was a 5-wave decline or a double zigzag. I strongly feel its a 5-wave decline (and Tony has his 60 min chart labeled as such), so that means that the most likely scenario is that this B-wave will terminate south of 1709 and then the C-wave will unfold. My advice to all is never try to front run a move. Going short before seeing 3 complete waves on a 1-hour or 2-hour chart is high risk particularly if the market is going up after a steep decline. These types of rallies usually retrace at least 50% of the previous move,
    In the current example:
    1709 to 1627: 82 point decline
    I would always wait until at least 1668 to short. At 1668, the move up still was strong (in the middle of a 3rd wave up), so I have waited.

    Looks like we are in a 4th wave from 1640 now, so another high and I will look at shorting

    Here is the 60 min chart that I use of trading (not investing).

    NOT TRADING ADVICE by the way

  14. bhtrade says:

    Dow just had its biggest dip to buy this week. Will they buy it? Does today end in y?

  15. uncle10 says:

    Its been a tough week for me. If you trade they happen. If you can stay in the game, learn, find an “edge”( being here, open, and paying attention- I believe you have more than one already), be disciplined and have good money management— you can be successful. Very.

    Have a good one.

  16. mjtplayer says:


    As we potentially begin int c down from this mornings’ high of S&P 1,690 will you be updating your target of 1,540 since int b went 20pts further than expected? int a down to 1,627 or 82pts, int b up to 1,690 – within 1 pt of a .786 retracement (1,691), if int c = 1.618 expansion of int a that would be 132pts, bringing us down to 1,558 (the June lows are 1,560) and totaling a 9% pullback from the high – in line with prior wave 4’s.

  17. rc1269 says:

    Verizon bond deal top…?

  18. H D says:

    what, 5 point PB? don’t go chasing waterfalls ™👿 it’s been a tough week.

    • uncle10 says:

      It does fell like a waterfall when you have a big short on. lol. prolly should cut it back to a normal size pos.

  19. manunidhi21 says:

    Tony !
    a move of 585 points in DOW is really commendable in 10 days when Fed meeting is around 17th.

  20. daking66 says:

    TSLA setting to go up higher…”yes virginia there is a santa claus”

    lots of shorts in a stock can set a record in any wave count higher…is there infinity waves higher??? ill let the shorts answer that

    • tony caldaro says:

      we got your point
      enough with the momentum stocks already

      • daking66 says:

        its one thing buying TSLA at the breakout of big base (earnings) 41.70s. its another holding the stock. But yet so many investors of EVERY methodology (fundamental, EW, swing, etc) continue to try to fade the stock. thats just not how the market works — (fear and greed)

        its a lesson to everyone including newbie EW traders to pay attention to price action and the trend. so many subconsciously (out of fear) use a methodology to justify their bad habit of selling 52 week high and buying 52 week lows (learned thru tv or from bad money managers)

        thats why momentum is not a bad word. its what you want if you are on the right side of the trade. no sense taking the bus when the train is available.

        TSLA is a testament that no count matters when you have pain and greed coexisting.

    • mjtplayer says:

      TSLA will be one of the best shorts during the next bear market, along with LNKD, NGLX, YELP & FB; just not yet….

      The best 2 shorts will be TSLA & NFLX imo.

      • daking66 says:

        thats why i love you. i am sure you said the same at 100 TSLA and 150 NFLX

      • daking66 says:

        i hope you dont run out of money by the time the next “bear mkt” start.

      • mjtplayer says:

        You don’t short momentum stocks until the broader market tops. Based on your attitude, I’m guessing you weren’t trading in the 90’s and early 00’s. I didn’t have the balls to short them, but I wasn’t stupid enough to buy them either.

        Downside target of TSLA is $40, NFLX $50’s.

      • daking66 says:

        what makes you think i cant recognize a bear mkt and what makes you think i dont short during a bear market. i am a breakout trader and a trend trader after that.

        i understand the basics of investing — recognizing bull and bear markets and stocks.

      • daking66 says:

        btw, it never dawn upon me to put a target on starts. who am i to say TSLA should be 40 ( i bought 41.70s) or 100 or 200 or 1000.

        did you put a target on GOOG when it ran up from 100 to 740+ or AAPL from 10 to 700+

        this is the stock “market” where buyers and sellers determine the prices. so i will let the market participants tell me when to exit TSLA as they did with AAPL and GOOG.

  21. daking66 says:

    i see alot of bull market charts. unless we see distribution buy any dip. shorts have longs’ backs. bears really need a weekly close below 169.07 SPY and later DISTRIBUTION otherwise shorts will be tripping over each other trying to cover

    SMH setting up for breakout…ARMH a semi stock is forming a base … strong likelihood of breakout after putting in a bull flag/handle

  22. Leetired says:

    That was a nice call on Gold my man !
    3 waves up in SPX this morn on the 1 second chart ?😉
    Be civil to each other and Trade like warrior poets .

  23. mjtplayer says:


    If the int b and int c to come are still relevant, it looks like:

    ABCDE up to S&P 1,660 for minor A, 1,640 for minor B and I see 5 minute waves to complete minor C/int b. Only thing missing is a turn lower to confirm….

    New highs on NAZ & NAZ 100, but those 2 indices look at have their own count anyway that’s trailing the others – finishing minor 5 of int 3 of major 3. No new highs on: S&P, DJI, DJT, R2K or NYX.

    Given how overbought we are, don’t see anything yet to change from the int b of major 4 count with int c to come, not till one of the major indicies makes a new high.

  24. We should be looking at us being in 5 of Major 3 still, target 1829… it fits… Int 4 was 1560 38% retrace.
    1710 was wave 1 of Int 5 of Major 3
    1627 was 2
    now its 3…

    • Cliff Uzan says:

      This makes sense. This appears to be the correct count.

    • I don’t get it, sorry, IMHO if we go above 1709, then we are on Major 5 to finish PIII… too long for a major 3 to extend this long… we should all trust our own instinct a little more.

      Syria talks will break down or will drag on for a very long time. Congress is about to start a long debate on the budget, and obamacare defunding will be a big war that WILL NOT go anywhere… these two are a couple of weeks away, so should be enough time to finish major 5… OR we should roll over now….. MHO

    • Erka11 says:

      Nice try but your Major 1 has only 3 waves up ! Where is the impulse 5 waves up ?

      • lets just watch and see. We need to close over 1692 for this to be potentially valid which is what I wrote to my followers this morning…. I just posted the chart to THINK about it… ALWAYS keep an open mind with E waves… just ask Tony…

      • Erka11 says:

        there is a very wide gap between open mind and breaking major EW rules when counting waves, wouldn’t you agree ?

  25. oneandonlyuniverse says:

    Contrary ????? Comical-Absolutely

  26. daking66 says:

    XLE energy tested the pivot and reversed higher
    XHB…in the middle of multi month base. i got a feeling housing is about to start another leg up later.
    GLD…weekly chart not very impressive …lack of institutional participation
    FEZ/IEV europe….moving to new highs
    SMH semis…setting up for a breakout

    really the only thing bearish…is XLF financials are lagging which is not insignificant

    Leadership stocks acting very well.

    SODA breaks above early pivot on volume

  27. mjtplayer says:

    – All open gaps have now been filled

    The DJI closed its open gap from 8/14 on this mornings open, the S&P closed the small open gap from the open and the NAZ just closed its open gap from 2 days ago.

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