wednesday update

SHORT TERM: pullback continues, DOW -66

Last night, after the close, FED chairman Bernanke’s speech was released: Overnight the Asian markets lost 0.4%. Europe opened lower and lost 0.1%. US index futures were lower overnight as well. At 8:30 Retail sales were reported higher: +0.4% v -0.1%, and the CPI was reported lower: -0.1% v +0.2%. The market opened two points above yesterday’s SPX 1788 close and then rallied to 1796 by 10am. At 10am Business inventories were reported higher: +0.6% v +0.3%, but Existing home sales were reported lower: 5.12mn v 5.29mn. The market then started to pullback ahead the of the FOMC minutes. At 2pm: Just after the release the market hit SPX 1783. Then it bounced to 1788 before dropping to 1777 just past 3pm. A small rally into the close ended the day at SPX 1781.

For the day the SPX/DOW were -0.35%, and the NDX/NAZ were -0.30%. Bonds lost 13 ticks, Crude slipped 15 cents, Gold dropped $28 and the USD was higher. Medium term support remains at the 1779 and 1699 pivots, with resistance at the 1828 and 1841 pivots. Tomorrow: weekly Jobless claims and the PPI at 8:30, then Leading indicators and the Philly FED at 10am. There is also a speech from FED governor Powell at 9:45.

The market opened higher today, rallied back to yesterday’s SPX 1796 high, then declined for the rest of the day. Early we had thought Minor 4 had completed at SPX 1785. But that proved to be premature, as this pullback has become more complex than the previous Minor waves during Major wave 5. Thus far, even though this has been the largest pullback since the SPX 1746 low, it looks quite normal. There is no overlap of Minor 1 at SPX 1773, which would suggest a possible fifth wave failure at 1796. Even if there is an overlap, a potential subdivision of Minor 3 is also possible. Only a drop to SPX 1761 would confirm Intermediate wave v has ended.

Short term support remains at the 1779 pivot and SPX 1746, with resistance at SPX 1810 and the 1828 pivot. Short term momentum ended the day quite oversold. The short term OEW charts flip-flopped again today, ending negative, with the reversal level now SPX 1788. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: bull market


About tony caldaro

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126 Responses to wednesday update

  1. jparkins10 says:

    Friday is day 11 of Int v of Major 5, which is equal in time to Int i, and only 3 days less than Int iii

    Since this bull run started in 2009, the only Int v that was NOT the shortest wave in time was Int v, Major 3 of Primary 1.

    This suggests that today, or at most, tomorrow, will record the end of this Primary wave for IWM

  2. Tony, what are the odds in your humble opinion that minor 3 is subdividing? I am asking since IF int. med. v is “supposedly” to go to the 1828 OEW then minor 5 has to be at least 44 points (about equal minor 3). It’s possible of course, but just wondering since 5th of 5th (of a 5th in this case) have often been truncated on the SPX.


    • tony caldaro says:

      no odds, just waiting for a setup short/medium term
      Minor 5 can go anywhere as noted today

      • thanks. personally I have a hard time seeing minor 5 > minor 3, but stranger things have happened (in this QE driven market). It would on the other hand bring everybody to the bull side; which is needed to set up a larger correction. as usual we’ll anticipate, monitor and adjust. for now the 80/20 rule remains in effect IMHO. so the market has some ways still to go.

    • torehund says:

      Soul and others, I am rethinking a bit after the last weeks of happenings. Mostly its because there are good pops on some stocks and some even hold gains and respect (as for now) the newfound resistance. Attempting to be outside of it all and analyzing with lots of skepticism, I can’t deny what I see which is emerging as positive. That said, oil producers are weak and if it doesn’t spread to other sectors it will fuel the economy sort of.
      Through the last months I have had lots of topping patterns to contemplate, and this range was a minimum. I discarded higher counts 2350, and then unpublished counts that makes us dive straight into a major 3 of unheard of proportions straight after 2 waves are finished, just like we now see 2 waves complete on NAS from the 09 bottom. Through the years I have seen the latter on individual stocks going straight up in what would look like a fast 1000 point rise on SPX. Mad-hatterish as it sounds (in the middle of plunge mode) nature and EW has strange ways of giving us relief of any pessimism. Just a thought.

    • If I may respond: Primary waves on Tony’s charts are in blue capitals. this “iii” @ $194 is purple and thus at an intermediate degree.

      Personally, i think we may see a washout to low 100s, even high 90s before int. med v starts… that be where minor 4 bottomed and often a one higher degree 4th wave bottoms around where the one degree lower 4th wave found support. Just my 2c, not trading advice!

    • JK, haven’t update my log yet; but bought another batch at $121 y’day. Average now of $137. I am fine with that.

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