wednesday update

SHORT TERM: FOMC day volatility, DOW -62

Overnight the Asian markets gained 1.2%. Europe opened higher but lost 0.1%. US index futures were higher overnight. At 8:15 the ADP index was reported lower: 130k v 166k, but the CPI was reported higher: +0.2% v +0.1%. The market opened three points above yesterday’s SPX 1772 close, and immediately began to pullback. After hitting SPX 1767 by noon, the market bounced to 1770 by 1PM, then pulled back to 1766 just before the FOMC at 2PM: Then the market gyrated between SPX 1764 and 1770 for a few minutes before breaking to 1757 by 2:30. After a rally to SPX 1766 by 3:30 the market pulled back to close at 1763.

For the day the SPX/DOW were -0.45%, and the NDX/NAZ were -0.40%. Bonds lost 8 ticks, Crude dropped $1.50, Gold slipped $2, and the USD was higher. Medium term support remains at the 1699 and 1680 pivots, with resistance at the 1779 pivot. Tomorrow: weekly Jobless claims, Personal income/spending and the PCE at 8:30. Then Chicago PMI at 9:45.

The market opened at an all time high today in both the SPX and DOW. But then immediately began to pullback ahead of the FOMC statement. After the statement was released at 2PM the market gyrated, then broke to SPX 1757. Today’s decline from SPX 1775 to 1757 is the largest decline, by one point, since this recent rally began in early October at SPX 1646. Usually when the market makes its largest pullback, after a five wave advance, there is more to come on the downside.

With the market closing at SPX 1763 it is not too far away from making a new high, nor making lower lows. A rally above 1775 suggests the rally continues. A drop below SPX 1757 would suggest the pullback could reach the low 1740’s, break through 1730, or go even lower. The SPX has completed the minimum required to end this rally. And the DOW has done enough to end its uptrend. The next day or so should be the tell.

Short term support is at SPX 1757 and SPX 1730, with resistance at the 1779 pivot and SPX 1804. Short term momentum was quite overbought this AM then dropped to slightly oversold. The short term OEW charts turned negative for the first time since SPX 1670. But then flipped positive again in the last hour of trading. The reversal level is now SPX 1761. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: bull market


About tony caldaro

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144 Responses to wednesday update

  1. hucky2 says:

    So was that a sucker rally for most of today?

  2. bobhopium says:

    A bearish structure on Dow future, but I want to see that neck line go before I bet the ranch.

  3. gary61b says:

    Anyone here of israel attack on Syria?

  4. "Old fogLEE" says:

    futures back to the FOMC scene of the crime ..If u like a cheap short it’s come in for ya..IMHO

  5. Wow, Facebook has been thrown around like a rag-doll. It’s amazing to see over $10 billion dollars in trades bounce like a yo-yo.
    Quite frustrating too. I wanted to buy the thing at the 50 DMA, but the market made it very difficult to do so.

  6. gary61b says:

    The dow (YM) futures 60 min chart is showing what the bulls are trying to hold, (15483).

  7. torehund says:

    Lots of indexes saying something their own way, make a summary of it all and short the weakest sectors. The more hopium there is/overvalued, the faster they will enjoy the 4 th wave Down.

    • torehund says:

      dull, more dull, very very dull, extremely extremely dull….then shortable.
      Sellers are few, and reluctant for now, however buyers will be hard to find once holders looses their patience, just a thought.

  8. "Old fogLEE" says:

    There is a risk of loss in futures, forex and options trading. There is risk of loss trading futures, forex and options online. Please trade with capital you can afford to lose. Past performance is not necessarily indicative of future results,,, that said if ur bearish sell the rally

    • bobhopium says:

      Very good advice… and i must make one of those natty little back slapping devices for my missus….I am fed up doing it for her every time she coughs.

  9. lunker1 says:

    Have seen many C=.62A lately = 1755 so I guess it’s possible but it seems really short timewise

  10. H D says:

    1764 again? trick or treat? GL

  11. jparkins10 says:

    IWM has had close to 3% correction whilst SPY is barely over 1%.
    The IWM correction is of sufficient size to look like Int IV, the SPY, not.
    If that’s it, what does everyone make of it?

  12. 1756.64 is below 1757.

    “A drop below SPX 1757 would suggest the pullback could reach the low 1740′s, break through 1730, or go even lower. “

  13. bobhopium says:

    What I’m looking at…Perhaps it is useful to others….GL to us all.
    Dow hourly

  14. mjtplayer says:

    Hey Tony,

    Hats-off to the Cardinals for a well played series, all 5 games were very close heading into last night. Exciting win for the Sox, especially with the Boston Marathon bombings in April giving extra motivation and incentive. Many things went right all season, it’s almost as if it were meant to be.

    Tired and a bit hungover today, but who cares, the Sox won the WS! Parade Sat, 8th championship parade in 12 years here in Beantown – incredible (3 Super Bowls, 3 World Series, 1 NBA & 1 Stanley Cup). Been to all but 2, will be there on Sat!!

  15. 777daimon says:

    on another blog I saw a few minutes ago a guy that said that SPX 500 could fall only in one day (today) to 1712 in cash …just like that! Cause it’s Halloween🙂 …. and because ma200 on 4 h chart it’s there🙂 …
    crazy persons … I can’t see….just can’t see how this market can fall.
    maybe I’m wrong… but even Tony is saying that after this small 4’th wave another 5th wave to the upside is due to higher highs (ending thus the primary 3, according to Tony’s opinion).
    so… where’s the Halloween in this market? no Halloween for good guys, maybe for bears! :D!

    • torehund says:

      As many debth laden Companies are eyeing rate hikes further Down the line, Capital rises may increase, thus making Capital more precious. That leads to increasing interest rates before it actually happens.

    • RDC says:

      Books are closed at end of Oct. so today is it … and Halloween is delayed for 1 more day

  16. tony caldaro says:

    Congrats to the Red Sox
    The best team won!

  17. 777daimon says:

    First move after FED announcement is often the wrong one as orientation … I was afraid before FOMC announcement that it will just boom to the upside on the non-taper of QE – it might have signaled a top.
    But this down move – after FED announcement and right at the end of the month (so before the first days of next month November) is relaxing to me.
    2 resistences that have to draw attention: 1805 and after that 1826-1835.

    • 777daimon says:

      oh….one more thing for the late bears ….. primary 3 (being by itself primary 3 – THE STRONGEST WAVE TO THE UPSIDE!) might be 1.618* primary 1 …. and that would be more than 2050 points on SPX!
      so this scare-crow level (1779) where primary 1 = primary 3 when it will be taken to the upside what the bears will then say ?!?!?!?!

      • perversionofthemean says:

        I’m treating the entire ’00-’13 period as a range with a measured-move target MUCH higher. Effectively, this would make the New Year’s breakout the *beginning* of the repeat of the ’09 lows to the ’12 highs gains. This is not EW — just basic technical analysis. It works throughout so many time frames, but with crazy retracements that allow for re-tests of breakout levels. If it happened now, it would be a 20% hit to the average aggressive-growth portfolio. Unfortunately for me, whereas I usually just buy the breakout and hold until my target is hit, I kept getting caught up in the M4 and P IV frenzy here. Every sniffle meant black plague, so I held back. If P IV does unfold, and I get another chance to buy lower, I’ll be grateful. Additional evidence that it might be at hand comes from the Investment Advisor’s sentiment released Wednesday. Fewest bears since the 2011 peak preceding a 20% hit. Then, there were only 2% more bulls than now.

      • bobhopium says:

        777 and p of the m…I also see the ultra bullish setups you both describe but am I remain open to Tonys 2014 bear count as well…Gl to us all.

  18. I realized that I posted my 100th update on my site exactly when P-I = P-III on the SPX. Coincidence????😉

    • On your site, I left following message and is awaiting moderation,

      Nice trading log.
      You out of sso on Oct 29, good timing.
      You had 22 trades in Oct, much more than Aug + Sep together.
      Some shares entered much much lower (FB, GOOG, NLFX …). Would be much better if held longer.
      Still good tradings.

      • JK, see my post on my site! Yes, holding longer would have been much better, but I am not yet comfortable with holding longs through down trends, especially also since we’re nearing the end of the road here for many tickers (e.g. they’re in primary Vs or M5s etc…) I am have now two very LT positions: JCP and CLF.

      • soul, I left 2 more very important market catalysts on your site.
        Here, I am limited to 3 posts per day. done.

  19. lunker1 says:

    Good series guys. Hope the Cards get it next year.

  20. Piker,
    Is your spx target 1612 or 1712. Could you please clarify.
    Thank you.

  21. 5wavemodel says:

    If today’s low holds, I am looking for one more move higher to complete the sequence from 1646.47. This has a minimum target of 1779. That would be quite fitting imho.


  22. i don’t think that IF FB opens up 17% the market will pop too… it’s just one ticker…
    I actually have FB’s top in at the recent ATH as it was exactly the 2.14x extension of the 17.55 low in 2012 to the 32.21 high in 2013, measured from the following 22.67 low…

    it is possible PIII is in, trade below 1646 will confirm that 1775 was PIII (since in an ED iv can’t go below ii). but then the advance from 1627 was 3 waves and that simple doesn’t rhyme with the current count (i/ii/iii or a/b/c count) as even EDs are 5-waves… so I expect a retrace for iv/d, then advance for v/e. new highs are not necessary though…

  23. The market started the day at fresh new all-time highs and then pulled back all day to form a candlestick outside day. At the point of the FOMC announcement, the SPU’s rallied briefly on a bullish no-taper announcement, but the 10-year had already bought the rumor and was busy selling the news. The SPU’s followed suit, and the rout was on. A late-day rally ensued, where the buy-side MOC volume kept building but ended at a modest 300 mil.

    On the Weekend Update, I noted two things:

    ‘The SPX party continues until the DOW hits an all-time high. The SPX breakout point 1759 will need a test, and I think it happens with a first-touch rejection of the DOW high.’ Tuesday afternoon and this morning, the DOW hit an all-time high and was sold down to the SPX ascending triangle breakout level.

    With regards to the ten-year, I commented on Sunday, ‘There’s an FOMC meeting this week. I’d look for a bit of the sell-on-the-news play if there are any late-to-the-party players out there.’ We did that too, and ended three BIPs up.

    So what’s next? It’s a tug-of-war now between traders who want to sell the rally and under-performing Fund Managers who have until the end-of-Nov to make their bonus pool and/or save their jobs. The Weekend Update chart has some landing zones for a potential pullback. Its timing band for the wave crest is the end of this week.

    Tomorrow should see weakness early. Today saw a test of the top of micro wave 3, while tomorrow should see a test of the micro wave 4 around the low 50’s/mid-40’s. If a parallel structure is the May 22nd top, We’ll see one more test higher to the edge of the ascending triangle. The bulls have two more chances to make a base-on-base atop the ascending wedge. The beginning of the month (Friday) or Monday should be mutual fund in-flow days. However the big catalyst is next Friday’s Jobs number.

    The weekend update chart:

    • Good work. Thanks a lot, son.

    • radrian6 says:

      Mr. Squirrel,
      Please consider updating your chart — the date in the upper left corner reads Oct. 25. Also, the trendline drawn at the top of your ascending wedge is subjective and some would argue that it is not properly drawn. I use a semi-log chart and a 1-standard deviation regression channel for SPX. From my perspective, the rising wedge broke on October 18 and SPX ran up and just tagged the upper regression line — this looks like an intermediate top to me. My analysis method is also subjective and is no more correct than yours — technical analysis offers few absolutes.

      • radrian6 says:

        Sorry RS … I see that you refer to your chart as a weekend update chart so there is no reason to expect daily updates. Out of curiosity, why are you updating a daily chart once per week … why not use a weekly chart?

      • There is merit in looking at the StDev and how far and long we spend above the moving averages. However, the chart shown is a cycle chart and requires granularity. The labels count the days in an advance, and thus, it is a daily chart.

      • radrian6 says:

        Got it … thanks RS.

  24. Mr. C, long time listener first time caller. Does this major 5 require a 5 wave intermediate structure? Could this just be , perhaps, an intermediate 4 down?

  25. Big Downs set up across the board – DJ-30, SP-500, NDX, RUT – trigger for a short sale would be a break of today’s lows. No sure things, folks, just the probabilities of possibilities. Cash SPX target 1612 … but remember, this is a bull market, and as such Big Down targets tend NOT to be completed except in the case of Primary and Major waves.

    • 5wavemodel says:

      Thanks PX. I hope you got a round in today.

      • I did indeed, Steve. My golfing this week has been like Thorogood’s drinking … “I golf alone.”
        The upshot is that I can do a morning round and walk it. During the season every course I play is “carts only before 1Pm” or “No walking before 5 PM.” It is a different experience when you walk the course.

      • lunker1 says:

        CN, the life of a northern golfer eh? I grew up in New Hampshire and all my golf I played growing up was walking. My favorite time was the last hour or two of the day. I’d frequently have the course to myself. It was me and nature. Racing to hit those last shots and putts as it got darker and darker. That was my church.

      • I hear you Lunker. I often take my children with me for late summer 6 PM tee times. We are very often the only group in sight, though not always the only ones on the course. We don’t always finish the whole round because we sometimes pause to watch an unusual bird, and grazing ground hog, a stunning sunset, or merely to sit beneath a willow by pond or brook. I’ll sometimes grab just one club, two if I bring my putter, and head out by myself, unencumbered from the weight of my bag and full set. Those walking rounds, whether with my kids or just and a golf club are the ones I most enjoy.

    • mike7x says:

      Did the DOW & RUT begin Primary 4 today? Hmmm…

      • radrian6 says:

        Hello Mike,
        With regard to the RUT, it is unlikely that it started Primary iv — it still appears to be on count with SPX so I am expecting no more than a trip down to the weekly middle Bollinger Band which is near 1050 and rising or the daily lower Bollinger Band which is near 1045 and rising. The next uptrend should be Int. v — same as SPX.

    • 7dayyss says:

      Thanks Piker/Tony!

    • berniebaruch says:

      Come South to Atlanta. I need a game.

    • 16golfer says:

      Piker….good to see that you like to walk & play too. I have had a Kangaroo Caddy and been walking for 20 years on my home course. Have found that I play much better when I walk too, as I have time to think about the next shot. Hate to play on brown grass , though, so I may have to fit in a trip to Palm Desert this winter. Hit “em” long & straight!

      • I love to walk the course, golfer. Sometimes I’ll carry just one club, and often I’ll have a half-set or less in a sunday bag. Yes, more time to think about the next shot, more time to enjoy nature, and there is something to be said for walking the 3 or 4 miles most course cover from first tee to final green.

      • 16golfer says:

        Nothing better than being on a beautiful golf course and enjoying GOD’s creation, while hitting that little white ball around. Special way to spend quality time with your children.

    • Tokyo Jo says:

      NDX big down just triggered

  26. bobhopium says:

    Thanks Tony…I know nothing about baseball but it is cool too see a man with a great lifelong passion in his life that gives him such Joy.

    • tony caldaro says:

      Like football too =)

    • tommyboys says:

      That weekly Dow chart you posted yesterday is a bit concerning as it appears as a large expanding triangle with resistance dead ahead at 16000ish. What are your thoughts on this?

      • bobhopium says:

        Tommy…Yes..It is a very bearish structure, but I try to remain open minded on these things and let the market decide how important it is. What the Dow does if and when it gets there and if a bearish wave count is aligned it will give us a clue…Gl to us all.

  27. kloutt says:

    RUT looks like a clean 5legger

  28. Hi Tony
    If today was end of wave iii – does it mean we got wave iv and v left before Primary wave III ends ?

  29. radrian6 says:

    Hello Tony and all,
    The RUT broke support at 1105 but recovered at 1104 so I’m not convinced of anything yet. If the bears have RUT below 1105 at the end of the week, I will be more impressed. In the meantime, the Fed will continue QE because it’s working so well for the economy. 😉

    • mike7x says:

      Hey Radrian, the RUT has led the way higher most of the year, consistently making new highs first. It will probably lead the way lower and fall the deepest. The next downturn for the DOW (and RUT) may be Primary 4. Underway now? And. If Tony is correct and this bull market ends in 1Q14 then QE may continue indefinitely, as the loss of wealth effect (among other things) in the next bear cycle may cause a recession. The Fed and Janet are trapped.

      • radrian6 says:

        If so, keep an eye on RUT as it descends. 1087 has not been tested and if it breaks, watch 1064, 1038, and 1008. If this is Int. iv, as I suspect, RUT should go no lower than 1038. Also watch the daily lower Bollinger Band and the weekly middle Bollinger Band for support.

    • aultraman says:

      RUT held below 1105 today. The last 5 mins of trading of the day was wild! Wonder if it’s down again for RUT on Friday?

  30. Thanks Tony. What an OEW pivot target you had 1779. Right on the money. Kudos sir.

  31. kloutt says:

    i put the curse of the bambino back on the bosox ! especially big papi = double whammi !!!

    here is my count on the spx 1min

    need that big red candle for 3 of 3…. maybe gap down overnight

  32. TommyB says:

    I see a no hitter by Wacha tonight!
    From Virginia, GO CARDS!!!

  33. jparkins10 says:

    For my clarification Tony, when you say:

    ‘The SPX has completed the minimum required to end this rally. And the DOW has done enough to end its uptrend. The next day or so should be the tell.”

    Are you referring to Major V possibly being finished, and possibly starting Primary 4? TIA.

    • tony caldaro says:

      While SPX looks like it just completed a third wave iii/c.
      Today’s high may be all of the uptrend, can not be totally certain considering the sloppy pattern.
      The DOW is much clearer. The next downtrend will be Primary IV

  34. mjtplayer says:

    Thanks Tony! Big game tonight, Boston is excited!! The local media buzz is on the tight security announced: no foot traffic around Fenway after the 7th inning stretch!! If the Sox win, BPD doesn’t want large crowds gathering around the Park, especially after game 7 of the ’04 ACLS fiasco where a young girl died and this spring with the Marathon bombings. BPD on high alert and taking no chances…

    In other news, POTUS is here speaking at historic Faneuil Hall, trying to re-pitch Obamacare – but nobody cares b/c game 6 is a few hours away!

    • tony caldaro says:

      Hmmm POTUS in Boston?
      Have not seen him anywhere near in St. Louis.
      Is Obamacare starting with the bloody sock?

    • Young Tom says:

      Ah Faneuil Hall, what a great place. Back in the early eighties was involved in the real estate deal that did the total renovation of Faneuil Hall, a historic renovation project. To bad POTUS has to sludge thru there.

      • mjtplayer says:

        All the politicians want to speak there, long history and it makes them feel important.

        The Faneuil Hall/Quincy Market area is fun, vibrant and full of tourists in the daytime; but a rough bar scene late night – especially Union St. Spent many late nights in that area, been in several fights too, even got sucker punched a couple times. Not a place for tourists late night, better off in Copley/midtown, North-End, South-End or Fenway.

  35. Tony Thanks
    oew has 1775 as iii/c.
    oew is looking for iv/d, and v/e above 1775 to complete P3?

    • tony caldaro says:

      That is what is posted on the charts
      While SPX looks like it just completed a third wave iii/c.
      Today’s high may be all of the uptrend, can not be totally certain considering the sloppy pattern.
      The DOW is much clearer. The next downtrend will be Primary IV

  36. "Old fogLEE" says:

    Thanks T

  37. Thanks Tony, look at FB fly!!!

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