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: http://www.federalreserve.gov/newsevents/press/monetary/20140129a.htm.  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

CHARTS: http://stockcharts.com/public/1269446/tenpp

About tony caldaro

Investor
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167 Responses to wednesday update

  1. hucky2 says:

    My guess – average 9% off 1851 = 1684 so low finishing between 1680 & 1699 pivots
    After a b c up to 1810/15 completes, building the right shoulder,
    take about a month of complex a b c’s to reach the low

  2. robnaardin says:

    Tony

    In a p4 correction, is it 5 down or 3 down to complete A?
    I think it’s 5?

    Thanks Rob

  3. bobhopium says:

    Greetings all.
    Here is my trading thoughts, maybe of interest to others.
    Still long from yesterday and tricky knowing where this squeeze will stop, so i’m just trailing up for now. Best guess is targeting the red resistance @1812/14 so face-ripping corrective uptrend to continue for now Imho…Gl to us all.
    S&P march fut hourly.

  4. Price plunge protection team working in full force. as mentioned very little chance of a real sell off or correction. 3 or 4 % a joke.

  5. Kisshu2 says:

    Is the risk reward any good for a day short at 1800? missed long last nite.

    • bobhopium says:

      No.

      • kisshu, Well we could be in a 4th wave ending here at about 1800 and taking a 5th wave down to 1740, so yes it could be a great short, market could crash then it would be a fabulous short. As for a day trade, that’s anybody’s guess. Many feel we are going to 1815 or higher, but many of those expecting this big push up were also holding long at 1850

      • Kisshu2 says:

        thnx bob, admire your work. Have had simillar thoughts to jk entry/exit points past couple days but not in that league yet… (shoestring for now). Wish had connected the dots on early night pounding at 1800 emini 1/28- 1/29. that was my ticket.
        thanks everyone and especially Tony.

      • Kisshu2 says:

        thanx newbie will keep in mind

  6. JK1987 says:

    Tony
    Thanks for the label a of PRI IV.
    Here at EMA(34) resistance, a of b of PRI IV?
    http://stockcharts.com/public/1269446/tenpp

  7. gtoptions says:

    Thanks Tony
    SPY/SPX ~ possible irregular flat 4, nearing .382, with 5 down next? Anyone? Thanks.
    GL

  8. RDC says:

    Keep Super Bowl in mind if you are shorting, markets always rise going into this game.

  9. rc1269 says:

    CN- great trade my man!
    i love it when a plan comes together

  10. Caldaro please clear up my confusion Sir. SPX PRI IV is underway in this case you are expecting the market to correct down ?

  11. JK1987 says:

    Tony
    4th time at 1793+, b wave?
    1793.9
    Got to take that 20 points profits from 1774 for the 3rd 20 points gain for the week on both long and short. Man, I love volatility 🙂
    switch to shorts.

  12. Hi Tony,

    Would 2 to 3 months work for you from a time perspective for P4? Say mid-march expected low?

    And are you thinking double ZZ?

    Thanks.

    Topher

  13. robnaardin says:

    90% sure wave 5 of 5 down truncated and b wave is underway

  14. RDC says:

    Markets will continue to rise into first week of Feb. (401K money will be pouring into markets).
    Money will be coming out of gold and put back in stocks. NATGAS will rise.

  15. tommyboys says:

    Real indecision…(I’m over limit) out…
    http://www.aaii.com/sentimentsurvey

  16. JK1987 says:

    Tony
    With oew Primary count of SPX PRI IV underway (oew top 2 charts)
    If Int. a of PRI IV done at 1770.
    How high int b of PRI IV can rise?
    rc’s baby of 50dma at 1812 a good target?

  17. elmer510 says:

    Thank you for the update,Tony !

    I have one question – how do we confirm SPX has entered Primary 4 – and is still not in Major 5 of Prim; IM 2. Cause I understand we have two possible waves now, and very interesting to know how we can decide which one is correct.

  18. Looks like Major 3 ended at 1850 with that double top and I can count the waves from 1267 Major 2 lows pretty well. We should see 1713 minimal for Major 4 of Primary 3 in February

  19. pooch77 says:

    Bulls=weak

  20. Lee says:

    THX Lunk

    I’m headed to Colorado to do some skiing like R C , anybody want me to pick up anything for them while I’m out there ? ; >p

    Give em heck guys !

    • H D says:

      a neon Coors sign would be awesome. TY enjoy. Telluride?

    • lunker1 says:

      Have fun Lee. Hope you get some fresh powder. And ya kinda like coffee it smells amazing before it’s brewed LOL.

    • You want to come by and say hello? 😀

      Make sure you don’t end up with the moldy ones.

    • rc1269 says:

      lucky duck! our slopes right now are no match for the lovely Colorado fluff. enjoy man and make sure to take plenty of hot cocoa/hot toddy breaks!

    • JK1987 says:

      Welcome to my Colorado ski country!

      DOW is very weak, not likely a start of Int 3 of Tony’s Alternate.
      See you at rc’s baby SPX 1812 – 1814.

    • uncle10 says:

      Fishing in Alaska, Cali for BCS, Palm Springs with the folks, now skiing in CO. Its a tough life Lee but someone has to do it….. 😉

      • 16golfer says:

        You guys can have Colorado & Alaska. I’ll take Palm Springs with the 80 degree temps, lush green grass, swaying palm trees, beautiful flowers and golf courses!

  21. H D says:

    wouldn’t mind seeing our 10AM bots

  22. lunker1 says:

    Also wondering if 1768 was minor 4 of INT 3 and then INT 3 ended at 1848 or 1851 and this decline to 1770 is INT 4….a wave 4 retracing to the previous 4. Then INT 5=1=1872.

  23. It’s good to see SPY over 178.55!

  24. M1 says:

    Here we go. The bulls in charge once again !!
    =)

    • M1 says:

      Tony, would the 50dma or a bit higher be fine for you ?

    • blackjak100 says:

      Not so fast as futures are reversing slightly. However, I believe we see 1765-1768 (neckline) this morning to complete fifth wave ED. This should be followed by a 2 week retrace towards 1820 to form a right shoulder which supports cycle B wave. I know it’s obvious, so traders here say it can’t happen. Well tell me that in July/Aug 2011.

      It looks like there will be +div on Tony’s 60 min chart when this new low happens.

      Just an FYI, I did get crushed being long Apple so it looks like there will be a great shorting opportunity coming up with target sub $300. I did get heavily short gold on Tues so hopefully I will recoup most of the AAPL as it’s crashing today. Target $1200ish as traders pile back into stocks for 2 weeks. This should be followed by a surge towards $1300+ as a third wave unfolds in stocks and traders flee to the metal. Cheers!

      • 16golfer says:

        Blackjack….not sure we will get that 1820. I’m hoping so, but bears might not be given a chance to reload. Much like how it happened on the bull run up. Bears didn’t get chance to cover at lower prices. Market might just give us the “black swan” in February in light of all the action in EM currencies. Two top American Bankers commit suicide in London in 2 days? Where there’s smoke…there’s fire.

      • blackjak100 says:

        we are not going to get the 1765-1768 the way futures surged shortly after my post.

      • tommyboys says:

        Interesting I see AAPL as a generational buy down here at $500. In fact I don’t see AAPL under $470 ever again and I’d buy it all the way down to that area – IF – it moves below $500 at all…time will tell. GL

      • uncle10 says:

        Whoa Tboys!! Never again below $470?…… wow. way to stick your neck out there Tboys. I like the boldness!

      • rc1269 says:

        Hey TB i’ll take the other side of that AAPL trade! i think AAPL gets sub-$400 within 12-18 mos. cheers

      • tommyboys says:

        We’ll see rc – anything can happen – but after this last EPS tank its probably the cheapest Mega Cap tech stock on the exchange and they’re not going anywhere. Sentiment on this company is in the toilet. They may tag their 200 SMA near 480 here – maybe. At this point risk is on the upside imho… as usual time will tell. GLTA

  25. This is going to be another broken/adjusted/manipulated/whatever you want to call it, wave count. Sorry buddy but your as clueless as the rest of us.

  26. Hi Tony

    I’m thinking to invest some money for a bit longer term this year 2014. I know you are positive on miners, shippers and biotech. Are there any specific larger cap stocks you follow which might be starting a wave 3 up? I’m thinking in the case of a correction started – might be good to grab some on a correction low.

    Thank you for everything !

    • tony caldaro says:

      CA
      Do not expect to find some, if any, stocks starting a third wave.
      The bull market is already 5 years old.
      Miners and Biotech still look good.
      Kind of neutral on the shippers now. BDI has taken quite a drop.

      • M1 says:

        Gold, Gold miners, USD ?

      • I see thank you.

        To me I think shippers is just because of the chinese new year starting tomorrow – so that is why BDI has been weak into chinese new year. BDI is violent up and down seems like , so this might just be a correction on BDI before the rally starts ?

        As you say , you dont think bull market done on BDI,, so must be another wave up coming

      • tommyboys says:

        Unless the fall of 2011 is counted as a mini bear…then we’re only 2* years into a bull…

  27. 777daimon says:

    I’m completely bearish ….can’t stand so much red anymore ….
    abandoned all long-time longs and have built a strong short position.
    and I can feel it that I’m not the only one as far I can see ….

  28. NYSA at lower trend line of long term channel that has held price in check since the intermediate ii low in Nov. ’12… Micro-count of NYSE suggests market is now in 5th wave down. Either it -5th wave- has ended in an ED or it may flush quickly below the trendline to run some stops and then quickly reverses back in or it will extend… Hence, I don’t bank on it. GL!!

    http://soulsurferusa.wordpress.com/2014/01/30/nyse-at-key-long-term-support/

    FB: since today’s AH price action required a re-assessment of my latest count it looks like intermediate i and ii of M5 have finished. Gap at open ($60 AH) tomorrow will likely be a classic 3rd (int.med. iii) break-away IMHO. Anticipate, monitor, adjust!

    http://soulsurferusa.wordpress.com/2014/01/30/fb-anticipate-monitor-adjust/

  29. robnaardin says:

    “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.”

    Tony: Clappa my hands,and stompa my feet.

  30. blubrd67 says:

    Tony, I’m a little bit confused here. You said: “Heading into next week keep an eye on these two levels: SPX 1768 and DOW 15,704”
    You removed minor 2 tentative label, but neither SPX nor DOW reached that level… well close. Why can’t we technically still be in minor 2? I understand the chances are slim, but you eliminate any chance for that?

    • wavecounter says:

      I was thinking the same – the Dow came within a few points but did not invalidate the count. Also wave 2 often almost completely retraces the headway made by a wave 1. If we do drop through 15700 then fair enough.

    • tony caldaro says:

      BB
      The Minor 2 wave count was based on the indices remaining in an uptrend.
      I knew the probabilities were high if we got to those levels it would kill the uptrend.
      While the SPX came within 2 points, and the DOW within 5 points, of those levels.
      The downtrend was confirmed, eliminating that count.
      Not convinced we are in PRI IV. Could be just INT ii of Major 5 too.
      Either way we be generally lower for a while.

  31. hucky2 says:

    My predictive model is showing a range between 1755 & 1788 for next week
    & continuing very choppy this week.
    Personally I will bet we don’t close one day before the end of next week below1760
    Anyone want to take me on?

    • No way a 34 point range holds for 7 trading days. If we close above 1781 tomorrow, then Friday should be up to the 1800 level. And then we see what next week brings .Sentiment has definitely changed to bearish, that’s why we go higher. Cn if your out there , you had a possible target of 1872 the other day, it was based on todays close, which didnt happen, curious where you stand now, my max upside today is 1825. Enough to get the bulls and bears both excited before the carpet is pulled out from under both, downs to 1560 to finish pv

    • uncle10 says:

      Sure Hucky! Would love to take that bet with you. How much you want to bet?

    • uncle10 says:

      Too late Hucky, I changed my mind. No bet. Hahahaha

  32. uncle10 says:

    Some nice calls on the miners/gold near the lows. Silver really done nothing. I was thinking it would follow gold but been much weaker the last week or so? Still watching to buy but losing confidence that it is going up.

  33. market update and tactics for thursday (within the remarks’ sect.):
    http://standardpoor.wordpress.com

    we might wanna go easy on the shorts for a few days

  34. mike7x says:

    Thanks Tony. Retest (at least) Oct. ’13 low at 1646.47?

  35. lunker1 says:

    just for fun….
    1. 1770 neckline too obvious
    2. pattern has been C=.62A. bad A traps longs.
    3. Wave A target 1753 (failed Asc Tri 1793 = 20pts)
    4. Creates neckline from 1777 & 1773 to 1753
    5. H&S target 1667
    6. Wave A bounce off the 1343/1643 TL.
    7. Wave B forms RS at 1791 (123.6 of 1576->667)
    8. backtests decending tri TL from Dec/Jan
    9. prevents adding shorts (waiting for 1800s)
    10. C=.62A to complete Major A at 1729
    11. Major B HWB to 1791 (again…see above)
    12. H&S failed? Nope. Major C ahead.
    13. prevents adding shorts (waiting for 1800s)
    Major C =.62A = 1715

    Major C = A = 1668
    H&S target 1667
    23.6% of PRI III = 1668

    Major C = 1.62A = 1592
    38.2% of PRI III = 1554

    • 16golfer says:

      I like it Lunker. Great road map. I had planned to wait for 1815-1828 to reload the short, but may have to rethink that after studying your blueprint.

    • lunker1 says:

      thanks. gotta make an edit. made an error on the failed ascending triangle. it measures 20 pts but needed to measure from the breakdown point of the pattern 1791 – 20 pts = 1771 = today’s low.

      so perhaps this 5th wave down is an ED that already terminated with a truncated E?

      • lunker1 says:

        or this 5th wave is 5 of 3 with wave 4 and 5 to follow.

      • 16golfer says:

        Don’t suppose you can post a chart showing this can you? Aren’t you the fork expert and those things are really pretty.

      • tony caldaro says:

        So perhaps this 5th wave down is an ED that already terminated with a truncated E?
        From 1794: 1775-1787-1770-1783-1771 … perhaps.
        Should the SPX get into the mid-1780’s, then clear 1794, we probably completed Int. A down (PRI IV).
        Or, Minor a down (INT ii).

      • lunker1 says:

        Thx Tony

  36. It appears that the alternative count (DJIA) is that we are in Int 2 of Major 5. Although the predominant count (SPX) states that Primary 3 is in place, Tony uses the tentative green color to label the putative Primary 3 top at 1851 because the alternative count as well as the fact that 1768 has not been breached still leaves some doubt in his mind. JK1987 and others should take cognizance of that fact before they claim that this is the 3rd time he has stated that Primary 3 is complete. I think the action of the next few trading days will determine whether that green color turns to blue.
    I also consider it very notable that the 10-year T-note yield fell 8 basis points to 2.69% on a day when the FOMC announced another $10 billion reduction in QE3. That has bullish implications in my mind because it would seem to show that the T-bond market is not as dependent on Fed purchases as many commentators have led us to believe.

    • Congrats to the Fed on finding a way to keep bond rates low. Make people flee stocks! I thought they were going to use those new My RA’s Obama was touting last night to get the public to help subsidize the debt. They wouldn’t do that now, would they? 😉

  37. 16golfer says:

    Buddyglove….MIL is Mother-in-law. RC called the top when mother-in-law called him to complain about how her friends portfolio’s outperformed her more conservative one last year. He named it the “mother-in-law” indicator.

    • tony caldaro says:

      hahaha he did say it works every time 😉

    • LOL!!! That’s so true golfer! Wow the complacency last month was painful to read every day. Now we get a little fear in the mix again. It’s healthy. Keeps people grounded.
      I agree with Tony that Primary III is in. I don’t see that one more run to higher highs I was looking for to materialize. The tide is going out and the full moons are starting to shine… :-O

      • 16golfer says:

        twosided…yeah that was good wasn’t it? I put my bear suit on at the first of the year and almost got faked out with that 1851 print indicating a breakout of a bull flag. Held my ground and it didn’t take long for the sellers to bring “er” back into the channel. Thought we would get a hanging man for JAN and then went back and looked and noticed that we got it in December. Didn’t have my bifocals on when studying the chart….LOL. Bears might not get the chance to get another good entry if Lunker’s scenario plays out. Reverse of how it was during the bull run.

  38. bouraq says:

    Damages:
    #SPX #FTSE #RUT #DAX #VIX #EEM
    http://www.tradingchannels.co.uk/2014/01/damages.html

  39. blackjak100 says:

    Looks like an ED fifth wave targeting 1765-1768. Ideally, we should see this target met first thing thurs AM. Cycle wave B gaining probability as we have an impulse down. We must take out 1851 on the way up to lessen the probability. It appears the fed wants out of QE before 2015 so this scenario is not far fetched anymore.

    • perversionofthemean says:

      Hi! Being new to EW (but having taken the OEW tutoring), I’m unsure why this might be considered Cycle wave B. Do B waves of this magnitude typically rise 30% above prior highs (apparently P III’s mirror large C’s)? If this is the case, then it seems one must always attempt to side-step a P III top, since it might be a C top, and then one must always buy the end of the first ABC down, as that might be the low of P IV, and not the A of a Cycle C down. Does this seem accurate? Thanks!

  40. waddaguess says:

    Tony,

    Do you see the 1768 area holding for leg 1 down? This market seems lifeless….Thanks.

  41. gary61b says:

    I like that 1750-47 level for Major A bottom. maybe tomorrow or friday , then up for B.

  42. mjtplayer says:

    Thanks Tony!

    “Short-term 5th wave down” – minor 5 of int a?

  43. JK1987 says:

    Tony,
    Alternate become main count.
    oew main minor 2 count is history now.
    oew officail, PRI III is in place now, PRI IV underway.

    third time’s the charm. 🙂
    This is the third time oew claims PRI III top in the last 6 months.

    PRIMARY II was elongated flat for 22% correction.
    PRIMARY IV should be zigzag. zigzag should down more than 22% than the flat? 30%~40%?

    I am still looking for 1814 by end of the week with month end window dressing, holding on to SPX 1774 long.
    Today gained 19 points by covering the shorts from 1793 to 1774. Monday also gained 20 points by taking profits on the long positions from 1773 to 1793.
    Still have my TSLA long at 128, AAPL long at 503.

  44. gtoptions says:

    Thanks Tony
    86 year old Motorola destroyed. Chicago shamed by GOOG. 😦

    • rc1269 says:

      shamed or allowed to survive two years longer…?

      • JK1987 says:

        rc
        kudos to MIL.
        You are the first one called PRI IV.
        Let’s see if your suggestion of PR V in place also good.

        Let’s see your 1812, or my 1814 first. 🙂

      • budfox9450 says:

        Chicago – Motorola, back in the 1970’s.
        A person with 12 years of edcuation could
        easily find work, Work it’s way out of poverty.
        Chicago, was always open for the unemployed
        to be employed….my experience..

      • rc1269 says:

        hey now JK let’s not get ahead of ourselves 🙂
        i was merely teasing out Tony’s feeling on the prospect that PV could be in. that is not my belief, just to be clear. frankly i think we just still have too many MAs pointing upward for that to be the case. at the very least i think we would need to see the MAs at least converging, if not having some shorter period ones already cross the longer (ie, 50/100 or 50/200 cross)
        cheers mate. this should be an interesting year

      • buddyglove says:

        JK. again. Who is MIL please ?

    • Lee says:

      Bud speaks the truth

      Back in the early 70’s my uncle worked there and drove a 1964 Black Ford Falcon with the red interior along with several motorcycles, the 1 st time I ever saw an $100 bill was when he stripped one out to pay for a Home Run Inn pizza on 31 st & Kildare in Little Village Chicago
      He was pulling major chicks man 🙂 my hero til this day.
      See u guys .

      • fionamargaret says:

        ..perhaps instead of just focusing on Technology, we need to redo the US infrastructure – airports, roads, rails etc., which would employ thousands.
        Our kids might just discover the joy of “the road trip” again. Car manufacturers, service industries are you listening? Mr. President?
        All good.

        Thanks Tony.

  45. purplember says:

    Does this mean P3 is done and we’re in P4 ?? sorry I’m novice and need help

  46. kvilia says:

    “Downtrending”! Thank you, Tony. I’m glad my projections finally materialized as it felt like confronting the herd of bulls for the past few weeks 😉

    • robnaardin says:

      Congrats kvilia
      Was fence sitting, leaning bearish until the big down day on EM news. Just the kinda news needed for the 50 dma to take a trip below the 200 dma.

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