wednesday update

SHORT TERM: gap up opening, DOW +206

Overnight the Asian markets lost 0.1%. Europe opened lower but gained 0.2%. US index futures were higher overnight, and the market gapped up at the open to SPX 1707 and continued to rally. The SPX had closed at 1698 yesterday. At 10:00 the NAHB housing index was reported lower: 55 v 58. The rally continued until about 11:30 when the SPX hit 1722, and then it started to pullback. At 2PM the FED released the Beige book: Around 2:30 the SPX hit 1715, and then turned higher to end the day at 1722.

For the day the SPX/DOW were +1.35%, and the NDX/NAZ were +1.15%. Bonds gained 14 ticks, Crude rose $1.00, Gold slipped $1, and the USD was lower. Medium term support rises to the 1699 and 1680 pivots, with resistance at the 1779 pivot. Tomorrow we may/may not get reports on the following: weekly Jobless claims, Housing starts and Building permits at 8:30; Industrial production at 9:15; and the Philly FED at 10AM.

The market gapped up at the open on word that a Senate deal to re-open the gov’t and extend the debt ceiling for a few months was done. The rally took the SPX to within 8 points of its 1730 all time high, new highs in the NDX/NAZ, but the DOW is still about 300 points shy of its high. During the taper/no-taper event in mid-September, the markets rallied for two weeks ahead of the event, spiked on the no-taper news, then made an uptrend high the next day. Currently, the market has rallied for a week heading into the temporary gov’t deal day, spiked today, with the vote tonight. Until the DOW clears its 15,710 high we are maintaining the Int. b wave of Major a of Primary IV count.

Short term support is at the 1699 and 1680 pivots, with resistance at SPX 1730 and the 1779 pivot. Short term momentum hit slightly overbought today, then backed off. The short term OEW charts remain positive with the reversal level now SPX 1703. Best to your trading!

MEDIUM TERM: DOW downtrend, SPX/NDX/NAZ uptrend

LONG TERM: bull market


About tony caldaro

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142 Responses to wednesday update

  1. In honor of SPX 1730 … 🙂

  2. Hi Tony, Did you eliminate the recent comment list on purpose? It helps us watch for new comments……… Just wondering. TIA

  3. Hey,
    Does anyone see an ending diagonal here in the Nasdaq?

  4. uncle10 says:

    Long the market here is tough. If you make another 25 SPX points from here, well done! Really seems like picking up pennies in front of …… to me but who knows. I am well posted out, so ya’ll have a great one and good luck!!!
    Thanks all.

  5. Lee Bagger says:

    Hey Tony

    This is so much fun it should be illegal.
    SPX …My timing is in good shape now if I could only get the direction part down.
    Thank goodness for Oil and Gold or else I’d be hawking a newsletter here for income.

    99% Just this one time as a favor to Santa

    Cmon u ole Red Birds get er done

    • Hi Lee, Better to say and be wrong than be shy and say nothing at all.

      The 2nd best bumper sticker I have ever seen: “Speak your mind even if your voice is shaking.”

    • tony caldaro says:

      This is quite unusual activity
      DOW reversing trends every month while SPX/NDX keep going higher
      Almost like Big Papi hitting a grand slam off the closer, and the manager taking the blame =)
      But in the end, everything aligns, including the stars if it’s Cards v Tigers

    • Thank you Lee for the tip on Oil and recently Gold. Turned out profitable if one try to find a decent entry. Can’t say for SPX though but that wasn’t a tip, was it? 🙂

  6. pbnj123 says:

    I recall you mentioning something a while back about primary v being one straight shot to complete the entire uptrend – with all of the divergences what are the odds we get a failed primary fifth?
    Just wondering
    Thank you

  7. JK P4 20% Crash Down says:

    “Short term, with resistance at SPX 1730 ”
    Now Short double top 1729.25 with 1731 stop.

  8. negative divergence, No MORE!

  9. waddaguess says:


    Spx looks like impulse no? Wrapping up a 5th at current. Thanks.

    • waddaguess says:

      Or do you see 3 up wrapping up 5th of c at current? Or none of the above?

    • IMHO it’s working on a 3rd wave. likely int. med. iii of Major 5. Hard to tell if it’s in minor 3 of iii of 5. SPXs ATH about to be taken out today IMHO, it is already taken out on the NYA; IMHO this can’t be a b-wave anymore, unless now the NYA, SPX, and DOW are also diverging in count. But me don’t think so. DOW has some catching up to do.

      • JK P4 20% Crash Down says:

        Why can’t be a b-wave anymore?
        Still can be b-wave for both SPX and DOW.
        SPX still is below 1729.86.

      • jparkins10 says:

        SSU, you’d have to think that counts works for RUT, the intra-day strength is stunning.

        • it works for SPX, DOW, and NYA. Sticking with it until proven otherwise.

          Just look at the daily MACD: buy-cross above the 0-line: bullish. Price no through upper BB-line: bullish. BBs starting to expand: bullish

          new ATH: bullish.

          most stocks I tracked just completed a 4th wave at a sign. degree (e.g. GOOG finished primary IV last week), now most are in 5th waves. Remember that the market peaks when most stocks peak… so logically we haven’t seen PIII yet.


    • tony caldaro says:

      yes, but still could be an abc from 1646

      • manunidhi21 says:

        lf i assume today high as int b(seeing the dow)..
        then a=b and a=c so it will fun to watch if this works

  10. mjtplayer says:

    In surfing the blog universe this morning, sentiment is incredibly bullish – very hard to find anyone hanging-on to the bearish case. VIX getting crushed, again.

  11. H D says:

    GM all, UVXY…. you can always buy it cheaper.

    If they clear DT trade, some symmetry SPX 1747-49

  12. scorp100 says:

    Namaste Tony. Could you please share your view on GMCR, when you have a chance? Thank you.

  13. 777daimon says:

    if spx gets over 1752 you know what’s next, don’t you?
    it’s 1900+ until Christmas.
    just wanted to remind you that.

  14. Hey all, am trying to decide if GDX has finally held a bottom marking the end of it’s long down trend. Tony’s count shows that it’s pretty darn close. Anyone have some thoughts on it’s recent double bottom in the 22’s?

  15. torehund says:

    lighter then light and no Bounce on the once that have started to fall, omnious. But waiting a bit With any bearish bet.

  16. scottycj1 says:

    Next Change in Trend (CIT)

    Oct 22nd

  17. SPX count…

    Thanks, Mr. Caldaro for this site…

  18. lunker1 says:

    double top on SPY so far

  19. rc1269 says:

    just about every asset class being bought today

  20. lunker1 says:

    See 60min 34EMA SPX INDU

    • The President is going to talk, I bet he will be talking about creating jobs and spending on infrastructure. I know it sounds like a four letter word to some people, but the markets should like it. entitlements and tax revenue and tax code and job creation should be on every American’s mind. Other countries are running us down!

      Enough with Politics please.

  21. This move up could possibly be peaking at October FOMC at around 1745 – 1753.

  22. mjtplayer says:

    The Dollar is having a bad day, expectations are for more QE, no tapering in the near future due to DC shenanigans and Yellen hand-off in Jan. 79 in the .DXY is very important…

  23. llerias7 says:

    Tony, I see from your charts that waves already labeled and seems OK, but…if by chance we get above 1730/40? All of it should be relabeled, having to consider we are still in 5-V?

  24. manunidhi21 says:

    Namaste Tony!

    I have never seen such a big negative div. in Spx weekly from a long time..
    should weekly RSI be given any importance ?

  25. gtoptions says:

    SPX ~ There is a short term trend line from the low, break of that and watch the lower pivots. Simple as that. JMO

  26. lunker1 says:

    PX what levels you watching today? Thx

    • 1711 – 1709 SPX … will probably wait to see what market is doing and where it is in relation to that level 30 – 60 minutes after the open. However, I will also say that a very large percentage of my trades get done during the first 30 – 60 seconds, especially if something obvious is happening.

      I think if we get above yesterday’s high at 1721, then 1730 is likely a “gimme,” and 1750 nearly as likely, but not quite. This would be because of the extreme upward coiling of the last 4 trading days – typically wedging higher along the lows and wedging higher on the highs is BEARISH, and even the institutional traders will react to a break of yesterday’s low. When the expected does not occur and the unexpected does, then money pours in on the side of the unexpected, making it more vigorous than, at the risk of redundancy, “expected.”

      Do not confuse “wedging” with a “wedge” or “ending diagonal.”

  27. torehund says:

    exciting With that 70 hit on the rsi weekly divergence, if it can not penetrate and swirls below 50 for a while there could be a decent downturn to reap.

    • 16golfer says:

      Do I dare hope that we have an island reversal with this gap down this morning?

      • It might be a reversal, but an “island” reversal refers to a situation where there is a gap higher, then entire range of that day (the “island”) is above the range of the prior day, and then there is a gap below the low of the “island” day with the range of the reversal day completely below the low of the island day. I assume you are referring to the indices, and not an individual stock or ETF.

      • And the “island” need not be one day … it can take several days. The key is that there is an unfilled gap and that price makes very little if any further progress away from that gap before gapping back below it.

      • 16golfer says:

        Good Morning Piker….after reading a little more on these patterns, I noticed that. What about a “bearish abandoned baby”?

      • Don’t fall for it, this is the OPEX week, they sold a ton of options, now it’s time to render worthless.. it will adjust this week, and go higher next week, my only flaw with this theory is HD’s Full moon thingy happens this weekend.

      • You got me golfer … “a bearish abandoned baby”? Whatever it refers to, the name is just too sad for me … 😦

        What I would be looking at is that the ESZ managed to close at its highs, more or less, on 10/11 and 10/12, keeping faith with the cash markets on those days. However, yesterday, the futures closed over four points lower with the cash markets closing at their respective highs. What does that mean? Well, it might not mean anything, or it may mean that pros were getting less enthusiastic about the prospects for this rally to continue without at least a pullback, if not something more, or that pros were anxious to increase their hedges going into the overnight. It is a tell of sorts, but all it is telling us at the moment with any certainty is that we should pay attention and interpret what happens next in light of that divergence.

      • 16golfer says:

        Piker….I know I don’t like the title “bearish abandoned baby” either and not sure why they couldn’t have come up with a better name. I noticed that a lot of trades were going off at the bid yesterday which I thought was probably the smart money sneaking out. Thank you so much for your input and I will be watching for clues from you.

      • gor1llas says:

        Ironically I took the CMT level 1 exam today and the “abandoned baby bottom” was on the test. Pretty sure I got it right because I passed 🙂
        Thank you Tony and all contributors for sharing your knowledge on this awesome blog!

  28. wits2013 says:

    Thanks for that link M1,incredible forecast of TC.So now its relatively small stuff till this bull ends.Valunvstr,sounds like you have made a better call at the time??

  29. The Largest Corporate Spinoff in 1980 (VLO)

  30. 16golfer says:

    Tony…I just read your bullish July 9, 2010 update. In it you indicated the bull to last an average of 3 years to 2012. Did the 2011 big correction change your count and have you had another long term bullish update since that time that I can reference? In looking at the charts, the bull market from 2002 lasted 5 years and the one ongoing appears to be going 5 years. Has this changed the 3 yr average bull market landscape?

  31. hucky2 says:

    Futures are down a bit – maybe they are going to sell the news!

  32. Anonymous says:

    When fear and panic become the PERFECT buying opportunity.

    Read here =>

    about how smart money was buying, while other novice traders were panicing a week ago. Guess who won….the smart money! big time.

  33. it seems to me that the market has fallen back into the pattern which has been the essence of this entire bull market since 2009. It likes weak economic data to insure the continuation of QE, but it also likes moderate growth sufficient to keep earnings in a rising trend. Too much economic strength would threaten the continuation of QE, but severe weakness would diminish corporate profits. I have posted before about low interest rates working their magic by increasing the present value of future earnings. When 10 year interest rates rose more than a point from their nearly all-time lows last year, I was worried that this dynamic might stop working. So far rates, although higher than last year, are still in an historically low range, so that prime mover is still there
    From my reading and listening I have concluded that most analysts/economists emphasize the effect of copious liquidity much more than the effect of low 10 year rates on the discounted present value of companies. I would like to find a good discussion on the relative importance of these two related factors.

  34. pio27 says:

    Mr C
    Thank you very much for your help and service here. I want to wish all the members of this blog the absolute best. This blog is like a family and except for my poor decisions in which i lost money i enjoyed every comment and daily interaction. But OEW is just not for me. I am obviously not smart enough to use it. Good luck everybody.

    • M1 says:

      I suggest you to read this special report posted more than 3 years ago. Then think again abt OEW.

      • pio27 says:

        Thanks m1. I did not knock OEW. I simply implied i personally did not have success with it. In my opinion it’s so obvious that the market is no longer based on fundamentals and technicals. IBM had big miss, earnings in general have been terrible and oh yes the country is broke. But the market is at highs. So I think instead of charts, fundamentals or OEW it makes more sense just to read the POMO schedule because that’s all that really seems to matter. Again I love the blog and the members everbody is great.

      • Great old post. The secular bear market is a trading range vs. the secular bull market is a long uptrend is one point I wish more people out there investing grasped. The implications are enormous. The public will hate stocks even more after the next bear market and give up on buy and hold just when the best buy and hold entry in a generation will be offered. Mutual funds will actually work again in a few more years, but most people will ignore them until long after.

      • +100! thanks for sharing. i can’t wait for that 18 yr Cycle wave 3. it will be one relentless up wave! retirement should come early. 🙂 though i can’t wait for Cycle wave 2 either, it will be fun to trade, make more money on the short side and load up the boat, throw everything and the kitchen sink at it, and enjoy the 18yr ride.

      • valunvstr says:

        Looks like the post said the bull market would likely end with a triple top near 1550 in 2012 and then enter a 2-3 yr bear market. Ooops.

    • lunker1 says:

      hey pio, the more things change the more things stay the same. when the market starts breaking down come on back.

    • Best to you Pio. Remember what Jesse Livermore said was one of his biggest lessons: “buy and hold in a bull market”. It’s a bull market until it can’t put in a new high. The reasons for the bull market change, but it’s nature really doesn’t – just the reasons. Best of luck to you.

      • pio27 says:

        Thanks TWO. That was my big mistake I thought I was suppose to short the 1560 wave down and got killed. It was a bad call. Hold down the fort . I left lunker in charge.

    • uncle10 says:

      See you tomorrow, Pio. 😉

    • GL Pio. May all your trades go well. Please don’t take any offense, but your remark “I’ll just read the POMO schedule” is and will be the bulls downfall. The FED is not omnipotent. Never was never will, when ALL are onboard the FED train, down she goes.

      twosided: darn right you are. when nobody wants a stock, that’s when you buy! Cycle wave 2 low will be frikin fantastic and I am so glad to be part of this group and OEW, because we’ll nail that one good, and then: KAPOOYA!! The bears will as usual still be looking down, the bulls have all but given up! What a great buy scenario!

  35. And to come to think of people coming with targets as low as in 1400’s the day Tony confirmed a downtrend. Same when futures dipped for all of 5 minutes yesterday. Wow just wow.

    • 16golfer says:

      If we are in PIV, we could still get there. A 15% correction would be 1471… in vicinity of the top of int I of PIII.

  36. radrian6 says:

    Hello Tony and all,
    The SPX daily upper Bollinger Band is currently near 1728 and flat to falling; the weekly upper Bollinger Band is near 1740 and rising. There are also daily and weekly resistance lines in the same area. I wouldn’t be surprised to see a positive reaction from a DC deal that overshoots the daily upper Bollinger Band.

    Also, Tony has mentioned SPX 1730 as resistance and Piker has discussed SPX 1730-1750 as a completion target for this uptrend. There are a lot of good reasons to expect a reversal soon so stay vigilant and patient. Best of luck to you.

  37. bouraq says:

    Not many words more charts: #SPX #DJIA #FTSE #GBPUSD #GOLD #WTI

  38. jobjas says:

    Rising wedge much clearer in nasdaq futures chart

  39. mike7x says:

    Thanks Tony! We’ll see if “they” sell the news in the next few days. And we can look forward to a repeat of this drama within the next 3-4 months. Prologue to an end of the bull? Pun intended. 😉

    • torehund says: least a bend on the road Mike if market doesnt go bananas.

    • radrian6 says:

      Good forward thinking, Mike. Bull market is over 4-1/2 years old and the timing on this potential “kick the can” would be about right.

    • mike7x says:

      Yeah guys, this has been a tough market for sure. Looks like we may gap down at the open,but any rally to ~1730 SPX may be it until Primary V. At this point Tony’s P4 count still fits and makes sense for me. My big question now is how low do we go in a coming downturn (to end P4)? (Me thinks it’s in the “cards” Tony.)

  40. torehund says:

    The decline in gold tells me there are more deflationary forces at play than the stockmarket is pricing in right now. Also some commodities that have performed poorly fora long time continues to plummet (coal). Catching a bear market rally (a trustworthy one) isnt easy, so I dont play until either China goes further Down or contrary establishes a firm uptrend.

  41. valunvstr says:

    Same story, different day…If wedges are legitimate patterns then then the 500 should have to around 1740-1750. Divergences all intact. They can certainly get wiped out but I don’t see how this doesn’t resolve itself to the downside. Still 100% long as I have been for years but looking to take some off and start shorting within 1%-2% more in this move.$SPX&p=W&yr=5&mn=5&dy=0&id=p91543030411&listNum=1&a=306044109

  42. uncle10 says:

    Hate to bet against Piker, but put on a short position near the close. Maybe a little more upside maybe not…. Hoping the infamous “BU” turns into a “BD” soon!! gl all.

  43. JK P4 20% Crash Down says:

    Tony Thanks

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