tuesday update

SHORT TERM: gap up opening, DOW +75

Overnight the Asian markets lost 0.1%. Europe opened higher and gained 0.6%. US index futures were lower overnight, and at 8:30 monthly Payrolls were reported lower: 148k v 169k. The market gapped up at the open to SPX 1750, a new high, and continued to rally. The SPX had closed at 1745 yesterday. At 10AM Construction spending was reported higher: +0.6% v +0.6%. The rally continued until 10:30 when the SPX hit 1759. Then there was the first meaningful pullback in a week to SPX 1748 by 11AM. After that the market worked its way higher into the afternoon. Just past 3PM the SPX hit 1758 then pulled back to close at 1755.

For the day the SPX/DOW were +0.50%, and the NDX/NAZ were +0.20%. Bonds gained 23 ticks, Crude lost $.140, Gold rallied $24, and the USD was lower. Medium term support remains at the 1699 and 1680 pivots, with resistance at the 1779 pivot. Tomorrow: Export/Import prices at 8:30 and the FHFA index at 9AM.

The market gapped up at the open today for the third time in the past five trading days. After setting a new all time high at SPX 1759, the market had its first decent pullback since SPX 1696 a week ago. While today’s high could have marked Minor 3 of this Int. iii rally, and the low possibly Minor 4 as well. We would have liked to have seen the market pull back a bit further, i.e. low 1740’s. This is still possible before it makes new highs.

Short term support is at SPX 1730 and the 1699 pivot, with resistance at the 1779 pivot. Short term momentum displayed a negative divergence again at today’s highs, but momentum still ended the day overbought. The short term OEW charts remain positive with the reversal level now SPX 1737. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: bull market

CHARTS: http://stockcharts.com/public/1269446/tenpp

About tony caldaro

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118 Responses to tuesday update

  1. Pingback: October 23, 2013 JK Said | Like Tony Said

  2. pooch77 says:

    Piker,your big down done?? iwm down all of 3 points

    • Hi Pooch, “Big Ups” and “Big Downs” are basically price action behaviors that often indicate a swing high or swing low is in place. Once triggered, the only thing that would make it “done” would be a new closing high (in the case of a big down), strong buying at a support level, or a Big Up indicating the down swing is over and a swing low is potentially in place.

      Once triggered, everything else is noise. You may recall that the 8/28 Big Up which signaled 8/29 di not shoot straight up, and took three or four days to close above the trigger point.

      There was a Big Down that signaled 7/22 and triggered 7/23 that was stopped out 8/1, and then a new Big Down signaled 8/5 and triggered 8/6 for a real nice run into the 8/28 Big Up.

      This is not a 100% winning method. But it is a Lose Small/Win Big method with a better than 88% win rate over a long, long time. But the only way for me to take advantage of that is to get in when the market says to get in, and to stay in until the market says to get out.

  3. hucky2 says:

    A couple of days ago I mentioned the probability if a 20 to 25 point pullback, the question now is – are we done?
    I don’t think so.

  4. mjtplayer says:

    It’s 53 degrees here now, cloudy and windy. At game time it will be about 47 degrees, that’s cold for pitchers to sit in the dugout between innings; we’ll see how it effects them.

    Wainwright has been awesome at home, but not as good on the road and has never pitched at Fenway. The Sox are tough at home, as an opponent there’s nothing like playing at Fenway, the Fenway faithful are a great 10th man🙂

  5. pio27 says:

    does anybody watching the market not expect a even or Positive close today?

  6. JK1987 says:

    With symmetrical diagonal triangle structure, I am guessing SPX to close at 1741. Tomorrow will be followed with a big down day.

  7. torehund says:

    Going a little short the biotech index, difficult With countertrend moves…but may be wortha try here.

  8. jeffbalin says:

    So, Dow still way behind in int 1. When does everything line up again. Seems like at least a couple months

  9. One man asked another “How do you sleep with all that money in the market?”
    The other replied “I sleep like a baby……..I wake up every hour, crying”

  10. Kudos to Tony for “While today’s high could have marked Minor 3 of this Int. iii rally, and the low possibly Minor 4 as well. We would have liked to have seen the market pull back a bit further, i.e. low 1740′s. This is still possible before it makes new highs.” SPX hit 1740.50… so far

  11. bigswingingnick says:

    Hi all…Seeing bullish setup in Dow…spx and ndx not so much…Rotation ?
    Dow day chart suggests were good up to 16650/60 imho.
    Wish all successful trading.

  12. mjtplayer says:

    Hey Tony,

    Game 1 tonight, good luck the ‘Cards, but not too much luck😉

    What do you think about the Dollar here? Looks terrible, 79 on the .DXY the line in the sand?

    The way it’s been trading over the past couple months, maybe we should re-name to the US Peso🙂

  13. 16golfer says:

    We might just retrace all of the move from October 9th?

  14. blackjak100 says:

    Not sure how increasing QE by such a little amount make any difference. It would throw out the cycle wave b scenario for sure.

    • berniebaruch says:

      When will they admit that they can’t influence growth with adding more funds into the system. The system is flooded with money. (check out the equity market). More QE, more funds to the banks, and they buy more bonds. Yada, Yada, Yada. There is no velocity of money and therefore, no significant price inflation as is measured by the government. Of course, since I pay taxes (wait til 2014), tuition, insurance, etc. I would disagree. The only people who have been assisted with QE are those of us with assets.
      The best action would be to devise a public/private infrastructure bank ( a modern day WPA) that would get people to work and increase the velocity of money. Do this, make a few tweaks to the entitlement programs and put an emphasis on the development of more energy resources. Growth will be solidified and then the taper will be a distant memory.
      Of course the downside is that interest rates will be normalized and what til we start paying the true interest bill on 17T USD.

      Campaign donations are greatly appreciated.

  15. manunidhi21 says:

    Namaste Tony !
    No BOT today till 10 :00 am..

  16. 777daimon says:

    A former bank fellow (he works in the Treasury dept at Citi) told me that there’s some internal talks about an adjustment to the FED’s 85 bln/month.
    He can’t tell when it will appear but he’s expecting something like 100-120 bln/month, due to latest political complications.
    treat this as what it is : a rumor!
    but just hide this info in a corner of your mind, never know when it will explain certain developments in the markets.

    • tony caldaro says:

      interesting thanks 007

      • 777daimon says:

        I worked for Citi Romania that was a branch of Citi Dublin. And during my professional experience I’ve made some contacts (online contacts) including with colleagues from Citi US.
        And a guy from Treasury Dept. of Citi US confirmed me that. But he doesn’t know if it’s now in October or in December or next year.
        maybe this info helps you all in a way of another.

        • tony caldaro says:

          Would suggest the FED is considering raising QE depending upon the President/Congress budget agreement early next year (FEB).
          “We may taper by September” (June), “We decided not to taper” (September), “Now we are going to raise instead” (2014?).
          Obviously, some times it is better to say nothing at all.

      • manunidhi21 says:

        Tony !
        but don’t you think Ben will try to increase the rate before he leaves(may be this Oct.)..if not he is also doing what Greenspan did..Print and Burn..

    • 16golfer says:

      Probably won’t happen until it looks like the market is about to crash.

  17. kloutt says:

    channel is being tested in overnight session http://stks.co/qXzv

  18. jaja2121 says:

    Would it be common to end Primary 3 w a failed fifth wave in the dow?

  19. Anonymous says:

    heck of alot of people getting bearish here, however the market took a drink of combination of REDBULL and VIAGRA LIQUID and we shot up higher! No pun intended LOL.

    hourly chart => http://bit.ly/19ZWIOs

    At this rate, people bearish and people going short are only helping us go higher. We will be at 1800 soon on SPX adn what will bears say then?

  20. $SPX $SPY $UVXY $AAPL $NUGT, market update for tuesday (found within blog’s remarks sect.): http://standardpoor.wordpress.com

  21. JK1987 says:

    Tony Thanks

  22. JK1987 says:

    3 OF P3: SPX 1759 (Climax)
    4 OF P3: SPX 1748 (the first meaningful pullback in a week)
    5 OF P3: SPX 1758 (Truncated) – The end of P3.

    P4: 10% – 20% correction.
    P5: SPX 1779

    Phase of P4: bearish, short against 1759

  23. JK1987 says:

    An easy no-brainer sell decision.
    Follow him to sell all stock markets – DOW, SPX, NDX, RUT…

  24. Both Nasdaq 100 and Russell 2000 on Big Down watch for tomorrow – you know the drill: short trigger is break of today’s low, stop loss a close above today’s high, a new high that holds and heads higher takes the Big Down off the table.

    • Thanks Xavier! Watching……

    • 16golfer says:

      Thanks Piker! Do you short on a break or close at or below October 22 low? Futures looking to gap down this morning, but who knows where the day will end with this bi-polar market.

    • Trigger is break of low, stop loss is close above the high. Why sell the break? Because often times the break is the best low risk opportunity, as these trades often (though, as we have seen, not always) take off and do not ever bother with a test of resistance. Why is the stop a close above the high and not a simple break? Because when price does decide to test the high as resistance, it is not unusual for price to make a marginally higher high, but reverse lower and close below the prior high as the down trend resumes.

      The sometimes large stop loss is why I will at times enter the futures overnight, even though the trade cannot trigger until the cash markets open. It is also why I will use options or ETF’s in addition to sutures, because I can increase the trade size without appreciably increasing price risk.

    • bhtrade says:

      Is the SPX setup that failed to trigger yesterday still valid? i.e. if SPX takes out 1740 is “big down” still on the table?

  25. blackjak100 says:

    It is very interesting we are approaching a time & price square-out of 1778 on 11/4. Of course this is very important if you think this is a cycle b wave as an expanded flat. It counts nicely as a 3 wave structure. We know this is not Tony’s view and is not my view, but the square out is worth noting. It’s also worth noting I recently saw a count suggesting Primary I ended at 1230ish in 2010. I have not studied it yet, but it gives a target for Primary III of 1880. My line in the sand for invalidation of a cycle b wave is trade above 1790 which is 123.6% extension from 667.

  26. 5wavemodel says:

    I think that qualifies as a swing and a miss. I feel a little like Big Papi swinging for the fences and coming up empty. A difficult market to call a top in for sure. I think the market is still at a decision point. The trend has definitely been up, but I would be cautious with a move below today’s 1748 low.


  27. Hello all Elliott Wave traders out there,
    I got no response yesterday, so I am posting here again.
    I need your feedback on my analysis on APPL stock.
    Looking at a daily chart, after bullish move started on 04/19/2013 recently it looks more consolidation.

    From 08/19/2013 to 09/16/2013: I see ‘abc’ correction I am counting it as wave A.
    From 09/17/2013 to 09/23/2013: I see 5-3-5 up move counting it as small ‘a’ of B wave
    From 09/23/2013 to 10/08/2013: I see a triangle. I am counting as b-wave of B wave
    From 10/09/2013 to till today: It looks like 5 wave rally to complete c-wave of B wave

    Do you agree that we should see downward C wave to start this week that at least should be 50 points lower to match the Wave A? In fact today it started going down but recovered most of it.

    Appreciate your feedback.

  28. Thank you Tony. Getting closer everyday. I am going to be patient this time until I see the true reversal. Meanwhile enjoying the ride on TLT trade. Do you think rise in bond prices is forewarning upcoming stock market correction.

    Yesterday I have posted my EW analysis on AAPL stock to get fellow members’ feedback and suggestions. If it is not appropriate to post here on individual stocks please let me know. I will stop right now. I was about to re-post it today but thought I would check it with you first,

    • tony caldaro says:

      Bonds were due for a rally.
      But with QE still underway rates will be rising again soon
      Stocks are fine. Most people trade/invest in them

      • Thank You Tony. I am confused with your following statement
        “Bonds were due for a rally. But with QE still underway rates will be rising again soon”.
        I thought QE will keep the rates artificially low. Do you mean QE Taper is underway, so the rates should go up.

        • tony caldaro says:

          If you check a yield chart.
          Whenever a QE is in progress rates rise.
          Sell bonds-Buy stocks
          When QE stops rates decline.
          Sell stocks-Buy bonds
          check it out

      • purplember says:

        rates drop when QE stops. this doesn’t make sense to me conceptually. QE is buying bonds and driving rates lower ?

      • I commented about 3 months ago about the fact that bonds declined and rates rose for most of the period that the 2 previous QE’s were actually underway. But bonds climbed and rates declined in the period after the particular QE ended. So the QE operation must have been what caused that, only with a lagging effect. But what happens when QE just goes on indefinitely, like some economists think it will?

      • Ryan Parker says:

        Herein lies a big dilemma for the big wigs. Obama and Bernanke want a rising stock market. They think it will have a trickle down effect and on the surface it makes the economy look a lot better than it really is. On the other hand if stocks continue to do well and flee Treasuries rates will rise to levels in which the interest on our debt will be unsustainable. Seems to me that the Fed just can’t stop QE or everything will fall apart. On the other hand if they don’t, how does the stock market ever decline again and we also end up in quite a pickle with interest on the debt. The only reason interest on the debt hasn’t been a bigger issue in the past 4 years is because rates have been so low.

  29. purplember says:

    if major 5 of P3 = major 1, then are we looking at apprx 1920’s for S&P to end P3 ??

  30. bigswingingnick says:

    Thanks Tony, and thanks to others for their useful contributions.

  31. "Old fogLEE" says:

    Thanks Tony

    Back in early 2009 if you weren’t bearish some people thought u had ur head in the sand and now if ur not bullish some people assume ur an Elliotts Disciple (no affiliation with the Insane Latin or Satan’s disciples *

  32. jparkins10 says:

    McClellan finished at 199. This level of MS usually results in little upside in the indices the subsequent day.

    • radrian6 says:

      Agree … McClellan rarely moves over 200 and it’s generally a spike. Current reading of 199 is diverging with spike over 245 on September 18. Another sign that we may be close to a correction.

      • jparkins10 says:

        9 readings in the last 2 years over 200, generally a flattish open, 7 had downside from the open averaging 0.8%, 4 had upside from the open averaging 0.5%.
        1 big downside day, 1 big upside day.

  33. radrian6 says:

    Tony, do you have any thoughts on the Dow/SPX outperforming the NDX/RUT? I don’t remember the last time this happened. If the risk appetite is pulling back, we might be closing in on a meaningful top. Let’s keep an eye on the relative performance of the indexes over the next few days.

  34. They ran the stops to the upside, then to the downside, and ran it back up into the close. Europe started in negative territory and built up momentum throughout the overnight. In the morning, what was predicted to be a meaningless jobs number came in under consensus. This said to the market, no taper anytime soon. Europe exploded, the ten year crashed ten BIPS, and the SPU’s gapped up four.

    The momentum built through the opening hour, and we topped ten handles above the open. Then a sell program took down all the Net 2.0 stocks 5% in an hour: Names like FB, P, TSLA were down like bricks. What was up were the laggards who reported underwhelming earnings: HON, IBM, KO, MCD and the big dividend names like JNJ, PFE, and XLU. The SPU’s came in 7 handles, but recovered almost all the gains by the end of the day.

    The name of the game is rotation, as yesterday’s losers become today’s winners, and vice versa. Rotation is bullish. As we eye the top of the trend line at around 1760. It’s tough to mark any waves in this ten-day up move. The largest down move was 1711-1695 for 16 handles over eight hours. If on Wednesday, we can test today’s low, that would be 7 handles over sixteen hours which would be a correction over time and would satisfy the general rule of wave 3-4 being the opposite in structure to 1-2. In short, while Tony is looking for some price action lower to end wave 4, I’d settle for price and time. My chart from Oct 11th is still good for this: https://docs.google.com/file/d/0Bzno9OfM6QP4Sm9UTnM0c2pZd2s/edit?usp=sharing

    For those late to the party, take a look at the third-quarter laggards.

    • +1. don’t forget NFLX which took a 20% reversal day on the head on heavy volume… it hasn’t seen that since it’s uptrend started late last year. signs of nearing top? i for one took profits once again.

  35. bouraq says:

    Welcome to Euphoria: #SPX #FTSE #WTI #AUDUSD #GBPUSD #EURUSD #USDX #GOLD http://www.tradingchannels.co.uk/2013/10/welcome-to-euphoria.html

  36. CB says:

    Thanks Tony!

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