wednesday update

SHORT TERM: gap down FOMC day, DOW -190

Overnight the Asian markets gained 1.1%. Europe opened higher but lost 0.6%. US index futures were sharply higher last night after Turkey’s central bank raised overnight rates to defend their currency. That enthusiasm dissipated through the night, and futures were heading lower into  the open. The market gapped down at the open to SPX 1779, fell to 1775 in the first few minutes, and then tried to rebound. The market had closed at SPX 1793 yesterday. Just past 10am the SPX hit 1785. It then pulled back to SPX 1777 by 10:30, only to rally to 1787 by noon. After that the SPX drifted lower before the FOMC statement at 2pm:  Just before the press release the SPX was at 1778. Then it swung wildly over the next 15 minutes: 1784, 1777, 1782 and 1770. By 2:30 the SPX had rallied to 1783. But down again it went. At 3:30 the SPX hit 1771, bounced to 1778 in the closing minutes, then dropped to 1774 to end this volatile day.

For the day the SPX/DOW were -1.10%, and the NDX/NAZ were -1.10%. Bonds gained 15 ticks, Crude slipped 10 cents, Gold rallied $15, and the USD was flat. Medium term support drops to the 1699 and 1680 pivots, with resistance now at the 1779 and 1828 pivots. Tomorrow: Q4 GDP (est. +3.0% to +3.6%) and weekly Jobless claims at 8:30, then Pending home sales at 10am.

The market gapped down at the open today for the third time in five trading days. Unlike the series of four gap up openings in early January, when the SPX only gained 11 points. This series of gap down openings have taken the market from SPX 1845 to 1774 today. The low this morning was SPX 1775, from at 1793 close. The market rallied to SPX 1787 during the day, but made lower lows after the FED remained on their QE 3 taper schedule: took another $10bn off to $65bn/month.

As noted in the comment section this morning, the decline from SPX 1851 can now be counted as a 1-2-3, with the 4th wave a triangle: 1794-1779-1794-1785-1794. This would suggest the market is now in a short term 5th wave down from SPX 1794. Also, and probably more important, the SPX/DOW are now both in confirmed downtrends. This eliminates the Minor wave 2 count posted, in favor of the alternate count(s). We will be updating the charts shortly.

Short term support is at the SPX 1768 and SPX 1746, with resistance at the OEW 1779 pivot and SPX 1800. Short term momentum is starting to display a positive divergence. The short term OEW charts are still negative with the reversal level now SPX 1796. Q4 GDP tomorrow, best to your trading!

MEDIUM TERM: downtrending

LONG TERM: bull market


About tony caldaro

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167 Responses to wednesday update

  1. jeffbalin says:

    To me Apple reminds me of Ty Beanie Babies. I was a Beanie Baby Dealer. Back then, it was highly driven by the secondary market. If I was lucky (or skilled), I could go to Hallmark, buy a Beanie for 5.99, and go sell it for $10, 20, $50, even $100+. Then we saw something most of the public didn’t. Ty started flooding the market with Beanies. Big time. Non stop. He was cashing in. We knew, he was going to kill the market. What was amazing was, it took about a year before it really started affecting prices, before the public started noticing a downtrend.

    Now, look at Apple. After 3 years, people in general still don’t notice the downtrend of Apple. What has Apple done since Steve Jobs was lost 3+ years ago? Nothing. This is in no way, shape or form the same company. No more innovations. No more ground breaking product rollouts or upgrades. Yet after 3 years, everyone continues to think that nothing has changed. It’s stock has dropped but still at a lofty $500.

    Look. Every time there is a so called new product rollout, it is not a new product. They do one or more of the following to the already established product line:
    Change the size
    Change the weight
    Offer new colors
    Sharpen the screen
    Put in a faster chip

    That’s pretty much the core of every rollout. The big selling point of the IPhone 5s was that it now comes in gold. That’s wonderful. It took 1 year for them to develop this breakthrough. No one sees a problem here?

    The fact is this. Like Beanie Babies Apple is going downhill, but the market doesn’t seem to notice yet. Apple is horribly off its mission, the core of what made Apple great. Yet 3 years later after Jobs, people still think it’s the same company. The products are still good, and they will still be a viable company. But they will just copy what works for others rather then innovate. If you think you’re going to buy Apple stock at a ‘bargain’ $500 and think there’s going to be a long term profit in there, go take a look at your garage full of beanies and ask yourself again.


  2. CygnetNoir says:

    SPX, NDX, RUT are on full blown Big Ups … only the Dow has yet to trigger.

    Still long since yesterday, and I’ve been buying ES every point up … it’s a wonderful life. Today. Tomorrow I could be in a living h***.


  3. Emotional day!

    Jk1987 12 posts!


  4. M1 says:

    Will the NAZ try to pull back (wave 2) and fill the gap ? (That’s abt 70 points drop !!)
    What do you think, Tony ?


  5. liborval says:

    Hi Tony, couldnt it be as happened often in the past that you confirmed a downtrend and that was a bottom?


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