friday update

SHORT TERM: SPX makes new high, DOW +61

Overnight the Asian markets lost 1.2%. Europe opened lower but finished mixed. US index futures were higher overnight, and at 8:30 Durable goods orders were reported higher: +3.7% v +0.1%. The market opened four points above yesterday’s SPX 1752 close, and then rose to 1758 by 10AM. At 10AM Consumer sentiment was reported lower: 73.2 v 75.2, and Wholesale inventories were reported higher: +0.5% v +0.1%. The market then pulled back to SPX 1752 by 12:30. For the rest of the afternoon the market drifted higher and heading into the close the SPX hit 1760, and closed there.

For the day the SPX/DOW were +0.40%, and the NDX/NAZ were +0.50%. Bonds gained 6 ticks, Crude rose 85 cents, Gold added $6, and the USD was higher. Medium term support remains at the 1699 and 1680 pivots, with resistance at the 1779 pivot. Last night the FED reported the M1-multiplier hit a new multi-decade low: 0.718 v 0.733. Today the WLEI was also reported lower: 52.0% v 52.8%.

The market opened higher today, came within one point of the SPX 1759 all time high, went into consolidation mode, and then made a new high just before the close. This rally from Wednesday’s SPX 1741 low is Minor 5 of Int. iii/c. It even looks like a fifth wave, as it is drifting higher rather then spiking higher, as we have seen in Minor waves 1 and 3. The FOMC meeting next week could put in the high for this advance from SPX 1646.

Short term support is now at SPX 1759 and 1730, with resistance at the 1779 pivot. Short term momentum remained near overbought for most of the day. The short term OEW charts remain positive with the reversal level now SPX 1748. Best to your weekend!

MEDIUM TERM: uptrend

LONG TERM: bull market


About tony caldaro

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51 Responses to friday update

  1. Can make the case we are finishing up intermediate 5 of Major 3 of Primary 3, and not Major 5 of Primary 3, if anyone wants to see my chart let me know. Essentially intermediate 3 topped at 1687, intermediate 4 at 1627, and we are in a rising and eventual topping ending diagonal for intermediate 5 of major 3. Major 3 began at 1266 and at 161% of Major 1 would be 1829. We may not get that high, but just pointing it out… Primary 3 equaling Primary 1 doesnt really seem to work out right… more likely, major 3 is drawing to a close here soon…


  3. hucky2 says:

    Throwing some probabilities at key levels
    The Spx has only a 16.37% probability of being above 1680 By Nov 1st
    25.54% probability by Nov 8th
    30.21% probability by Nov 15th
    40.36% probability by Dec 20th
    And the probability of being below the 1748 reversal level
    34.23% probability By Nov 1st
    38.79% probability by Nov 8th
    40.63% probability by Nov 15th
    43.53% probability by Dec 20th

    • lunker1 says:

      above 1680 or 1780?
      and how was this calculated?

      • hucky2 says:

        OOps typo, yes 1780
        Option delta is the probability. I just never thought to apply it like this. I thought some others may like the idea.

        • wylliean says:

          Hi Everyone,

          Long time reader – first time poster.

          Firstly, I really appreciate the effort the regulars put in – Tony especially (you must have the patience of a saint).

          Just a tiny thing that I thought that I would point out. Option delta is not the probability of exercise. In most cases the difference between delta and the probability of exercise is ‘as close as makes no difference’ but the two numbers are definitely different. The are only 2 instances when the numbers are the same and that is when either time to expiry is zero or when the volatility is zero. Obviously, when either of these occur – there is no optionality (no option). Also in this case, seeing as the time to expiry in your examples are all very short and vols are not through the roof then the difference would only be in the second or third decimal place.

          The difference is obviously greatest in long date options and in times of market distress when vols are in the stratosphere.

          I do not generally like to nitpick but this little point has sort of become a crusade with me. I deal interbank in the options market and one of our salespeople had this options delta v probability of exercise difference highlighted to her by one of our HF clients. When she came over to the trading desk to check she was mortified to realise that she had misunderstood delta for so long. Therefore, I have been dispatched to clear it up for the sales force.

          Again, I really appreciate this place …… keep it up.

      • hucky2 says:

        Close but not exact – thanks – I will remember that

  4. Jennifer says:

    Thanks Tony,
    Good weekend everyone!

  5. radrian6 says:

    You are expecting a probable end to Int. iii/c of Major 5 next week but have you posted your expectations for Int. iv/d? If I missed it, I’m sorry. Int. ii was a fairly sharp correction that lasted nearly three weeks but you may be looking for something quite different for Int. iv. Maybe you can cover your expectations for Int. iv and Int. v in the weekend report.

  6. kloutt says:

    here is a chart of the NQ i have counted a nice 5 wave move up on a 30min chart ….looks like a wave3 should get everyone’s attention very soon

  7. blackjak100 says:

    S&P up 7+ pts and the NYMO down ever so slightly again. The NYMO reading at the 1730 high was 87. The NYMO reading at 1760 is 45. This is serious divergence with less and less stocks participating. With that said, the market can continue to grind higher just like it did july-nov 2012. What’s interesting is the NYMO peaked just before the last 3 peaks…1687,1710, and 1730. As soon as it started to rollover, we had pullbacks. The same thing is happening right now.$NYMO&p=D&yr=1&mn=10&dy=0&id=p91402129831&a=258288517&listNum=61

  8. torehund says:

    Good weekend to all on Board !

  9. alexh110 says:

    Tony, if int c is targeting 1779, I presume int e would target the next pivot above that?
    Would you then expect Primary V to eventually make a double-top with Primary III?

  10. The comment below was supposed to be a reply to SoulSurfer’s comment to George Schaeffer, but it ended up here instead. It was not directed to Tony C.

  11. Thanks for your explanation. But I kind of think you are making excuses for the posters who essentially are proposing wave 1 = wave 3 scenarios as if they are the most likely, which they are not.

  12. gtoptions says:

    Thanks Tony
    Good Weekend All

  13. CB says:

    Thanks Tony. Have a great weekend!

  14. Eveybody looking for 1780 and 1800… Wow lots of hopium in the air. So everyone assumes they are gonna sell at the top of the wave, if I was wallstreet I would take this complacency and gap futures down to 1700 – 1695 on bs news made up over the weekend. Dont mean to be harsh or rude but cmon guys.. many are becoming overly bullish = hoggish. U know the saying about hogs.. Best of luck to all!

    • tony caldaro says:

      Hard to fight the tape
      Even the BOTs have nearly disappeared

    • fbender7 says:

      I’m looking for a blow off top to end wave iii/c (SPX). As Tony suggested, this wave could end with the FOMC meeting, and my observation is that it could be a blow off top.

      The largest waves of the last 6 months have all ended this way – blow off top, or blow off bottom: Major 3 (blow off top), Major 4 (blow-off bottom), i/a (blow off top), and ii/b (blow off bottom).

      If we follow the current pattern that shows the DOW doesn’t truncate, and the EW rule that the third wave (SPX) cannot be the shortest wave, then this brings the DOW to around 15800 and the SPX to around 1780 for the end of wave iii/c. If either of these target areas are hit by a blow off top, that’s when I’m bailing out of my longs and will anticipate the commencement of wave iv/d.

      Overly bullish? We’re still in a bull market with no end of QE in sight. Don’t fight the Fed, that’s all.

    • bhtrade says:

      And let the bears out of jail prior to a Fed meeting? Keep dreaming.

      • Let the bears out of jail, lol, theres not many bears left.. way more bulls available to crucify than bears. 5 years of straight up in a crappy economy has almost made all bears extinct.

      • tommyboys says:

        Sorry meant to have this down here…

        Except even the bulls don’t believe in the rally. Nobody is actually confident in any of this or that it can continue…time will tell.

  15. Thanks Tony. That is the same 5th wave appearance happened in AAPL and once it is completed it started rolling over today. Monday it will confirm if it is a small correction or next big wave down.
    SPX has the same 5th wave look starting from Wednesday (10/23).

    Patience… patience… patience….. waiting for weekend update. Thanks.

  16. lunker1 says:

    Thanks Tony. Would be great to see the remaining games won on great play instead of errors made.

    5=.5×1=1773 (low end of 1780 pivot)
    5=3=1804 max because 3 can’t be smallest wave
    above 1804=different count

    • tony caldaro says:

      Both teams are fairly good defensively.
      It’s the routine plays that mess them up =)

    • Minor wave 3 of Int 3 was a little longer than minor 1, so minor 3 already can’t be the shortest, regardless of what minor 5 does. Interestingly, minor wave 1 = minor wave 3 almost came true on Int wave 3, thereby validating the posters who think that this is the usual relationship. But it has me wondering if our presumed minor 4 was not just a minute wave low of a minor 3 which is destined to extend.

  17. thanks for the update tony; INDU had a strong close. most TIs suggest indeed higher prices. Probably it will gap over 1760 monday morning and keeps on grinding higher.

  18. The NYMO was about a point lower today, but the derivative NYSI was up 47,continuing an uptrend with wide gaps between points.
    I thought wave 3’s were the most likely to be the longest. These posts about wave 1 =wave 3 being standard strike me as wrong.

    • tony caldaro says:

      Nobody said wave 3 equaling wave 1 is the standard

      • Of course you have not said this, but several of the commenters who frequent this site have been saying it as though it were accepted EW doctrine.

        • tony caldaro says:

          Normally first waves initiate the advance, third waves are the major part of the advance, and fifth waves end it.
          Third waves and C waves are generally the strongest. Generally.

    • hucky2 says:

      Gartley wrote about ab=cd (similar to w1 = w3) and managed to find plenty of evidence to support his theory back then.

    • That is what I thought. I should have made it clearer in my original post whom I was talking about, but I thought it would be remembered that people posting on recent Updates have been proposing wave 1 =- wave 3 scenarios as if they were the usual expectation. Thank you for your clarification and thank you for your ceaseless efforts in analyzing a perplexing market.

      • george, the only firm rule in a normal 5 wave advance (not and ED) is that the 3rd wave cannot be the shortest wave of waves 1, 3 and 5. That’s all there is to it.

        Given that 3rd waves are often the strongest they are therefore often also the longest (both in price and time). Often they then relate to wave 1 as 1.000, 1.238, 1.382, 1.618, etc times the length of wave 1. Key here is the word OFTEN. It’s not a rule. Using these fib extensions can help one to determine price targets realistically. BUT, they are not set in stone, and as usual: anticipate (the projected fib extension), monitor (see if price hits those extension), and adjust (if it doesn’t hit the extensions than reconsider position).

        That’s all there is to it.

      • chrisk44342 says:

        I’d throw in that some people will generically use the term ‘3rd wave’ because they don’t know, under that given scenario, if the resulting wave will be impulsive or corrective in nature. It’s therefore reasonable, under some circumstances, to look for equality in addition to other fib relationships. In this particular situation, that’s not the case.

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