friday update

SHORT TERM: gap up opening, DOW +28

Overnight the Asian markets gained 1.1%. Europe opened higher and gained 0.8%. US index futures were higher overnight, and the market gapped up to SPX 1738 at the opening. The SPX had closed at 1733 yesterday. The market continued to rise until it hit SPX 1740 by 10AM. Then after a small pullback to SPX 1736 by 10:30, the market continued its rise to all time new highs. Around 2:30 the SPX hit 1745, dipped in the closing hour, and then ended the week at 1745.

For the day the SPX/DOW were +0.40%, and the NDX/NAZ were +1.45%. Bonds lost 3 ticks, Crude added 25 cents, Gold slipped $4, and the USD was flat. Medium term support remains at the 1699 and 1680 pivots, with resistance at the 1779 pivot. Last night the FED reported an increase in the Monetary base: $3.625tn v $3.528tn, and an increase in the M1-multiplier: 0.733 v 0.721. Today the WLEI was reported at its lowest level in about one year: 52.8% v 53.8%.

The SPX opened today at all time new highs, pulled back, then went even higher. Meanwhile the lagging DOW is still about 300 points from its all time high. But the DOW does appear to be impulsing, despite earnings misses from some its heavily weighed stocks. After days of deliberation regarding this trifurcation market, we are going to shift probabilities with the three counts posted last weekend. Details in the weekend update.

Short term support is at SPX 1730 and the 1699 pivot, with resistance at the 1779 pivot. Short term momentum stayed overbought all day, and ended the day quite overbought. The short term OEW charts remain positive with the reversal level now SPX 1720. Best to your weekend!

MEDIUM TERM: uptrend

LONG TERM: bull market


About tony caldaro

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38 Responses to friday update

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  3. torehund says:

    Tony or other bloggers With a view on UUP, I Guess a retest of lows(low21) is in the Cards as its now pretty close, but could the ultimate bear dollar bottom be a half year in front of us ? Macd dipped Down a while ago and it doesnt seem to end its belly anytime soon. Or could we see a sudden reversal ?

  4. blackjak100 says:

    Could go much higher! Just depends on how one compares tech bubble to QE bubble. Which is bigger?

  5. jparkins10 says:

    An interesting look at P/E ratio’s for the S&P

    • torehund says:

      Scary, scary chart, make a C and its at pe 5. If we enter a recession even buying a pe 5 Stock may later seem awefully expensive. it will later adjust.
      IBMs collapsing sales is a dire warning, combine that With a monster rally in rates and the dollar and we are back Down where the rally started in 09.

  6. blackjak100 says:

    My bad minor 5 has been 99 pts so an immediate reversal on Monday is needed. So far Int V would be a secondary fib .886*Int I. If 1748 is exceeded, back to the drawing board again.

  7. blackjak100 says:

    I’m sure the weekend update will have the new preferred count as minor 5 of int v of major 3 is underway. However for this to be legit, this needs to reverse pronto as wave 3 was 102 pts. So far wave 5 is 90 pts. If 1757 is exceeded, I have no clue how to count it. First pullback was 83 pts, and second was 73 pts.

    • There are some drawbacks with the major 3 ending diagonal scenario.
      1. It is found on the SPX chart, and not on the Dow. Dow is the bellwether.
      2. An ending diagonal is an extended fith wave. Intermediate 3 was extended, and we are not allowed to have more than one extension during the same major wave.

      I still favour the major 5 wave count presently. Looking forward to a nice bullride well into january.

  8. valunvstr says:

    1+1=2 and 2+2=3 so 3+2=5

  9. valunvstr says:

    Everyone’s ready to go short! What does that tell you? Uhm, don’t yet! So funny, might the divergences lead to a swift 10% correction? YUP! But if it happens from 1780 or 1800 then all that time sitting in cash did no good. Good luck with the shorts…from higher levels.

  10. M1 says:

    While the counts on the dji and spx are quite unclear, NDX count is suggesting a possible top of cycle wave 3.
    2002 lows (795) to 2007 highs (2240) = 1445
    2008 lows (1019) to 2013 highs (3356) = 2337
    2337/1445= 1.6173
    Elliot wave in a perfect approach. (Cycle wave 1 top at 2240, cycle wave 2 low at 1019 and cycle wave 3 unfolding. Cycle wave 3 is already 1.6173 times Cycle wave 1).
    Cycle wave 4 should be next: I would expect a 38.2% Fib retrac of cycle wave 3. That means 893 points or +26% drop, taking NDX down to 2463.
    I guess the dji and spx counts will not survive to this selloff and the supposed primary wave I will be overlapped.

  11. torehund says:

    When the abcs upwards are getting smaller and smaller, and a bigger AbXC can also be constructed its trigger time and I therefore hold onto tonys conservative Count until it With a large safety margin can be abolished. Such a stance will save a 50/50 decision as to where the market is headed.
    On the macro front its the lacking responsiveness of China that is of concern and a China being very supressed. Black swanishly, the 5-7 or so plus 6,5 quakes(the last month alone) is also to be noticed as a possible market destructor.

    • torehund says:

      ..there is a risk we will later laugh or be upset we missed the buying opportunity of a Lifetime. But thats market, thats the Waves. Win, loose and learn…

    • Regarding the black swan or market destructor, looking back at the past bull/bear markets, the thing that took them up also took them down: The Internet boom/bust, the Housing Boom/Bust. Our current bull market is QE led — no other reason for the huge run-up. If history repeats itself (what takes market up/takes it down), end of QE is the downer.

  12. valunvstr says:

    While the divergences are clear, it seems that a rotation is occurring rather than a fundamental breakdown to come in the US markets. EAFE looks very good here. Just broke above it’s 2011 highs. I am selling US in tax deferred account and moving to EAFE like choice as the bearish divergences in US are likely a signal that the US underperforms markets where valuations are better, momentum is stronger and rotation is occurring. Still only about 18% of total invested assets, but still a move I think worth making.

  13. Thanks Tony. Looking forward for your weekend update.
    When it comes to yesterday’s conversation…..By no means I am underestimating the power of EW. As a novice trader I am still trying to learn it. I am not going to abandon EW as my trading tool, in fact I am using it everyday for my trading decisions.

    I apologize for any offensive comments I may have expressed. Finally yes my GOOG options spread was a mega success. Kudos to EW and your teachings through this blog.

    Thank you for your yesterday’s comments.
    tony caldaro says:
    October 18, 2013 at 7:14 am

    Do not see five down for GOOG during that period. Do see a double zigzag.
    People have disliked EW since the late 1980′s and throughout the 1990′s.
    Actually the less people that think it works the better it does.
    EW should be used as a tool in one’s toolbox.
    It is not the Holy Grail some would like it to be.
    OEW tracks the waves perfectly.
    But markets can still be confusing at times until the counts clear.
    For now we are still in a bull market.

  14. Thanks for the update Tony! As usual, I look forward to the weekend update, and how the probabilities on your counts are being changed. Will be interesting!!

  15. radrian6 says:

    Hello Tony and all,
    Tony — please look at this chart and tell me if the count has any merit. If so, RUT could be in Minor 3 of Intermediate V of Major 3 with a projected top near 1140-1150.

    • radrian6 says:

      Sorry — I picked up the count with the Major 2 bottom in November 2012.

    • torehund says:

      Radrian I follow you on the RUT trigger point at 1130 (or therearound), however the market is extremly lightish and its almost as the politicians have made it so intentionally in order to create a monster squeeze or alternatively tank it, both options would not take too much Money to accomplish whatever the FED intentionally wants to accomplish. Somehow one can not, over an extended period of time force the economic system without it “going piggy back on itself”. Decades of hyperinflationary pressure has made too large Bubbles in commody dependent nations, and at the same time been driving overconsumption in the US. A world economy that is “driven” and wildly fluctuates also creates disturbances as we have been withnessing in the middle east.

      Going further into debth is a guaranteed recepie for emormous world scale economical and political disturbances.. I hope nature Selects the only route at this Junction which is to let the deflationary forces come to play and tank the market before it is too late.
      Only way to play it is probably to short it “on the go”.

      • radrian6 says:

        Thank you for your thoughts. I think that regardless of wave counts or any externality, RUT will, at the least, test the area around 1135 and that test will very likely come next week. You can see the pattern formed by the RUT in recent months — after double-testing a new high, it pulls back in a correction of 4.5-6.5%. If this is a completion wave, however, we will see a different result when RUT tests the bottom of the channel.

        RUT generally sends clear-cut signals before breaking down (double tops, H&S patterns) and it has not done that yet. Topping is a process that will play out in any broad index unless, of course, a black-swan event intervenes. As you’ve pointed out, the stage is set for such an event and when it occurs, we must all take the appropriate action.

      • torehund says:

        Agree fully Radrian, and as always the “doesnt feel right” is the right thing to do as a guide and adjunct to the interpretation of the Waves. A falling bounceless market is what I expect when it starts to crumble. I see flatlining smallcaps and some that even are sold Down from severely oversold With good volume. They rise it upslightly before a New round of selling. Lets see.

    • tony caldaro says:

      The R2K has been uptrending since April.
      Nagib has done a good job with it.
      But several counts counts fit

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