thursday update

SHORT TERM: gap down and decline, DOW -176

Overnight the Asian markets lost 0.8%. Europe opened lower and lost 0.9%. US index futures fell overnight after China announced a contracting PMI. At 8:30 weekly Jobless claims were reported flat: 326k v 326k, then at 9am the FHFA was reported higher: +0.1% v +0.5%. The market gapped down at the open to SPX 1833 and continued to fall. At 10am Leading indicators were reported higher: +0.1% v +0.8%, but Existing home sales were lower: 4.87m v 4.90m. By 11am the SPX reached 1824 and tried to rally. The bounce ended at SPX 1829 around noon, and the market declined even further. At 2pm the SPX hit 1820, then tried to rally again. Heading into the close the SPX hit 1829 and then closed at 1828.

For the day the SPX/DOW were -1.00%, and the NDX/NAZ were -0.50%. Bonds gained 25 ticks, Crude added 55 cents, Gold rallied $25, and the USD was lower. Medium term support drops to the 1779 and 1699 pivots, with resistance now at the 1828 and 1841 pivots. Tomorrow: no economic reports scheduled.

We certainly did not see this coming. The recent rally in the SPX to 1851 was confirmed by the NDX/NAZ, but not the DOW. As it has lagged right after the open on Tuesday. The NDX/NAZ, btw, actually made a higher high yesterday when both the SPX/DOW lagged. However, since the DOW did not participate, for whatever reason, the entire market activity for this month appears to be corrective. It certainly looks that way in the DOW.

If we now step back a bit to the time all indices confirmed a new high we are looking at the end of December at SPX 1849. We can then count an extended complex pullback, somewhat similar in complexity to Minor waves 1 and 2 of Intermediate wave one (Sept.-Oct.). We can then count an a-b-c decline to SPX 1816 (1824-1843-1816), then a rally to SPX 1851, followed by another a-b-c decline to SPX 1820 thus far (1832-1847-1820). This is noted on the SPX hourly chart. So it looks like the market is where is was before the first drop to SPX 1816.

Short term support is now back to SPX 1814 and SPX 1800, with resistance at the 1828 and 1841 pivots. Short term momentum hit extreme oversold levels again, just like it did at the SPX 1816 low. The short term OEW charts turned negative at the open and ended there, with the reversal level now SPX 1837. Best to your trading this volatile market!

MEDIUM TERM: uptrend

LONG TERM: bull market


About tony caldaro

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181 Responses to thursday update

  1. kisshu2 says:

    i didn’t get one lick in… 😦 Tony can the fifth of a fifth be longer than the third of fifth? right now it looks about equal

  2. buddyglove says:

    I expect the wags on Wall st will call today “Red China Friday” or just “Red Friday”

    • oneandonlyuniverse says:

      “Everyone has a plan until they get punched in the mouth”.
      Iron Mike Tyson

      • ewtoriginal says:

        Bears are in white trunks…looking tired…for round upon round.

        Bets that “they” cant wait to buy the dip? Bets that SPX trades 1729? 1680? 1650?
        Should be easy to convince everyone to stay calm for at least another 4%-6%. Margin calls only start at 1650, so if it can stay above that, all’s cool.

  3. JK1987 says:

    Give it one more try for oew minor 2.
    Long SPX 1794.

  4. bobhopium says:

    Gonna try my luck here on Dow…small buy sigs and weekend bear closing. GL to me.

  5. uncle10 says:

    Last Friday was , “the Vix is low its time to go….. this Friday I say, the Vix is high time to buy…..
    Good weekend all!

  6. pooch77 says:

    MACD on daily indu’s pointing straight down,would take one hell of of a move to reverse

  7. hucky2 says:

    Dow will probably take out 15704 before SPX takes out 1768
    1768 looks like good support to me, but the Dow 15704 not so much.
    Any chance we bottom before that?

  8. Heavy vol day, + Div gone, if Bulls can come back from this, it will be very impressive.

    Thanks Tony!

  9. Has anyone considered how smart these wallstreet crooks really are? They had the majority thinking we were gonna fly high into Thursday session, then had many thinking, yesterday was a hiccup and today we would bounce back, because dips always get bought right? Margin is at or near all time highs, since most who were long into Thursday morning , many just said I”ll wait for Friday to bounce back, only problem is as of close of business on Thursday they had a margin call, when you have a margin call , its either sell and get back in the next day or wait it out, so I’m sure many said they will wait it out because the fed wont let the market drop, and now while the market drops lower and lower they are trapped. If they sell now they cant rebuy until monday morning, but than they may miss the big gap up that they think is going to be the big three wave up, when really the 3 wave may never happen . Wallstreet crooks have the majority trapped right here and right now, many are at their mercy, please be aware of where we came from, how fast we went up here and how much even faster we could go down. good luck and god bless.

  10. JK1987 says:

    Confidence on Tony
    Now covered shorts at 1798- from 1807.
    make it a flat day after long position cut at 1814 from 1821.

    tony caldaro says:
    January 24, 2014 at 10:30 am
    +div still there but no bounce yet
    @ 1798 wave C = 1.618 wave A

  11. torehund says:

    Initially I felt struck by panic rushed to nearest town to access internet, digested Tonys firmness on a wave 2 getting just a bit deeper, and digesting evaporated gains, ugh. Then I went through my individual stocks and I just have to admit this 2 down has been working on many of them for quite a while. I am fearing further declines, however I will try sticking to rational behavior, still. I have to admit Bloomberg with quite a bit of intention painted the gray cat with coal tinted paint. Any wave 2 bottom feels terribly ugly, in that respect this surely isn’t disappointing.

    • torehund says:

      Must have looked a bit “verruckt” jumping hastily into a taxi in a town where the dogs always sleeps in the middle of the road. Good weekend to all on board.

      • torehund says:

        Last post for today: Examine your own actions, translate them into the emotions you had when executing them, then you also know what other feels…at that very moment.
        Go use it..

  12. Monday may go down in history as Margin Call Monday

  13. bobhopium says:

    Currently flat myself, and I’ve seen nothing but dead cats all the way down…Well done to all who traded short today.
    My charts are currently suggesting a cluster of reasons for a tradable low @1786/88 (prob early next week) and for my own trading purposes I will be watching for a long setup around that level.
    GL and good weekend to all.

  14. Whos ready for 1770 than a bounce to as high as1830 and then boom shalakalaka boom to 1700???

    • jparkins10 says:

      IMO, we’re nearing the end of minor a of int iv, maybe one more low down to SPX 1787 area, minor b should take SPX up to around 1825, then down in minor c to 1765 area.
      int v completes Primary III at around 1920

  15. Last post but opinion that matter most on this blog is Caldaro’s. So here we go CALDARO in your opinion is this the start of P4?? We await your answer

  16. H D says:

    Tony, the SPX has 5 waves from 1628, How low would DOW need to go to count 16502 as failed 5th?

  17. John Arella says:

    Watch out, long term trend channel hit (long term expanding triangle? on log scale). I would stay away from a long term hold strategy now.

    • chrisk44342 says:

      Ha ha. I knew I would see someone cart this chart out today (again). Top pickers unite! I don’t see anyone circulating the one that failed on the SPX

      • buddyglove says:

        Chrisk…yes so true 🙂

      • John Arella says:

        Hi Chrisk,
        Different indexes have different wave counts so the expanding triangle on the dow which is comprised of only 30 stocks won’t have the same pattern as an index with 500 stocks. Either way channels are important so its something to keep an eye on. Also the fibonacci time sequences are important too:
        1932-1966 34 years
        1966 – 1987 21 years
        1987 – 2000 13 years
        2000 – 2008 8 years a b c of triangle 8 years
        2008 – 2013 5 years d of triangle 5 years
        2013 – 2016 3 years e of triangle? 3 years? abc = de = 8 years for a total of 16 year triangle? Notice the time sequence is taking the shape of a spiral? You decide 🙂

      • chrisk44342 says:

        OK John, I grant you the fib relationships are interesting. I have not seen or considered this analysis and the fact that someone did is insightful. Thank you for sharing. That said, the Dow is a heavily manipulated piece of machinery and is not my preferred way of viewing things. To each his own.

    • chrisk44342 says:

      P.S. it’s also quite possible with a broadening top to only experience a partial decline. This drawn in analysis I have seen time and time again of the market returning to the bottom of the triangle…let’s just say that is not a given by any means. Besides,I know Prechter has to be right sooner or later but I figure my odds are very good as long as I take the opposing view 🙂

      • John Arella says:

        Not following Prechter, so I didn’t know he had similar conclusion. If it is a expanding triangle then the bottom of 5500-6000 would then bring the biggest rally in market history. There was one on the Toronto index that caused the market to double from the top of the expanding triangle in 3 years. Therefore the Dow can be expected to reach at least 33,000 in just a few years once this pattern is over which is a great opportunity to make a lot of money :).

      • John Arella says:

        Also notice that if you take the period of 1932-2000 to be SC3 which is 68 years and you multiply by ,236 Fibonacci you get 16 years which would also bring us to 2016 triangle low to correct the last 68 years.
        1932 – 2000 wave SC3 = 68 years 11722 -32 = 11681
        2000 – 2016 wave SC4 = 16 years 68 x .236 = 16 years
        estimate of low : 11722 (2000 high) – 41 (1932 low) = 11681 x ,5 = 5840
        11722- 5840 = 5882 low in 2016 for SC4

        Just another interesting observation 🙂

  18. Next week FOMC, SPX should give one last down-leg for the day…Sunday evening should be GAP Open at 1812 around.. Around FOMC day, it should be 1820 and that’s the beginning of PANIC..I read people saying “five days drop recovered in one day…” etc..I am saying ” 32 years of rise gone bust in 18 months…” BEN BERNANKE failed to understand 2-3 major MACROECONOMIC variables..In June 2011, When ECRI came up with recession call, they were close to right, BEN first played limited QE game, then he thought, let me play with sentiments by saying “UNLIMITED QE” but that also failed (and was destined to fail) as he failed to take into cognisance 2-3 major MACROECONOMIC variables..

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