tuesday update

SHORT TERM: gap up opening, DOW +72

Overnight the Asian markets lost 2.4%. Europe opened lower and lost 0.2%. US index futures were higher overnight, and the market gapped up to SPX 1750 at the open. The SPX had closed at 1742 yesterday. In the first half hour of trading the SPX hit 1752, dipped to 1745, then bounced to 1754 by 10am. At 10am Factory orders were reported lower: -1.5% v +1.8%. Then after a pullback to SPX 1748 by 11am, the market rallied to 1759 by 1pm. After that the market became choppy SPX: 1751 at 2pm, 1757 at 3pm, 1750 at 3:30, then 1757  again just before the 1755 close.

For the day the SPX/DOW were +0.60%, and the NDX/NAZ were +0.85%. Bonds lost 8 ticks, Crude rose 90 cents, Gold dipped $3, and the USD was higher. Medium term support remains at the 1699 and 1680 pivots, with resistance at the 1779 and 1828 pivots. Tomorrow: the ADP index at 8:15, ISM services at 10am, and congressional testimony by FED governor Tarullo, on the Volcker rule, also at 10am.

After hitting SPX 1740 yesterday, getting extremely oversold, and closing at 1742. The market gapped up today in what appears to be a 4th wave of the decline from SPX 1799: 1772-1794-1740-1759 so far. The 4th wave, and 5th wave for that matter, during the SPX 1851 to 1770 decline took a while to unfold as they were both triangles. The market may have just entered another one of those choppy periods. The last one took several days to unfold. Right now were are using SPX 1759 as the potential high of this fourth wave. A fifth wave, to lower lows, will eventually follow.

Short term support is at SPX 1746 and the 1699 pivot, with resistance at SPX 1768 and the 1779 pivot. Short term momentum hit neutral today from extremely oversold. The short term OEW charts remain negative with the reversal level now SPX 1771. Best to your trading!

MEDIUM TERM: downtrend

LONG TERM: bull market

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

About tony caldaro

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139 Responses to tuesday update

  1. What’s happening everybody, I have not been reading the blog as I have been focusing on buying this minor bit of profit taking., Still very hard find companies cheap,. I still think the market is overbought and stock are way to high, But I am Buying because I believe BOJ nor the FED is going anywhere in the end.
    I seen Demark interview. He is a brilliant man prob the best in the business but has been wrong just as much as any EW person because the FED has been in the game.

    • rc1269 says:

      ahh welcome back good sir. glad to hear from you again. curious to hear if your view on vix futures has been altered at all?
      best of luck

      • RC always willing to share my opinion with you. VIX futures in slight backwardation but telling you this is not the BIG wave 4 correction. I mean we are where we were mid DEC before the year end ramp for no reason. Its just everybody wants to go up everyday. I would love to short this market and have tom demark be right and go down 40%. but not going to happen with Central banks and the FED

      • rc1269 says:

        fair enough Truth. best of luck to you either way my man. i say it’s shame we can’t all win at this game. cheers!

  2. uncle10 says:

    Gave up on gdx and gld. keeping a few cheap calls on silver. Have a goodin.

  3. ko68 says:

    Tony with int A tentative labeling

  4. bobhopium says:

    Todays rally has missed it’s chance and seeing rounded top in 2min imho…reversing short again now…Gl to all.

  5. hucky2 says:

    Today is one of the 3 highest POMO days for the month, what will it take to produce a bounce?
    New lows ahead!

  6. lunker1 says:

    todays low bounced off the rising TL from June & Sept.
    similar to the August low bounce off the Nov 2012 & June 2013 TL.

  7. StemSki says:

    Could this be a 4th wave expanded flat instead of a 5th wave into new lows??


  8. H D says:

    16 handles round tripper in 3 hours? its’a one’a spicy meatball

  9. blackjak100 says:

    Fifth waves can either be impulses or ED. Needs to head lower fast for either scenario. Trade above 1759 suggests bottom is in. However, there still was not much fear if this was the bottom for i/A.

    • blackjak100 says:

      Looking closer an ED so far looks good. Wave 1 looks best as a 3 and if wave 2 ends here it too looks like a 3. It meets requirements so far but needs to head lower now.

    • It would be most logical if there were one more wave down to 1730 area, but markets don’t always seem logical. LLAP

  10. mjtplayer says:

    Nice intra-day rally off the low this moriing, helped by double POMO today (only double-day in Feb), combining for $3.35 – $4.15b today. Next heavy POMO day is Tuesday Feb 18th, then Thursday Feb 27th.


  11. llerias7 says:

    Any chance of wave A low being put today?

    • Start to looks like it IMHO. + div on hourly and daily RSI(5), as well as on hourly MACD. Unless this is still part of the 4th wave, it could have been a truncated 5th on the DOW

      • Needs to clear 1578 of yesterday, could be triangle for the rest of the day

      • mjtplayer says:

        Dow made a lower low yesterday, S&P just playing catch-up today? The entire move could also be a 4th wave triangle: S&P 1,759 – 1,737 – rallying in C now? A move above 1,759 negates the triangle and moves the odds towards minute wave 5 of minor C of int a down completed.

  12. CygnetNoir says:

    DJ-30 Bed of Roses
    I said before that there was not much hope between 15700 and 14800 or so … this here really is what little hope is left, I would think.

    I’m long, short, and flat – good luck to all!

  13. bobhopium says:

    Hey all.
    Flat myself now as mkt is catching a few bids now and i’m seeing a few buy sigs, plus the market is itching to snap higher and send the shorts running for cover. Could see one more “blink and you’ll miss it” low and that would get me long. aimho…Gl to us all.

  14. Ryan Parker says:

    1700-1730 on the SPX looks like a good target for a bottom. From 1700 a 50% retrace would take the SPX back up to the breakdown point of 1775. 15,080 on the Dow also looks interesting. If the market doesn’t put in a bottom tomorrow my best guess is Monday. $XJY should top between here and 101 on this leg up which should set the stage for a rally. JMO.

  15. gary61b says:

    1730 is the line in the sand on the ES, below that should fall nicely, or stays above and that could be in for a. This of course is my opinion. ( es-spx is running a spread of around 5 points)

  16. Remember that “Fat finger gold” day? that was the bottom, after taking a ton of shares, after the stops hit… Every “fat finger day” has been a major turning point in the market…

  17. Milen Kolev says:

    Hello everyone, I am not sure about my wave count is the propper one, but have new suggestion here: http://oneelliottwavetrader.blogspot.com/

    • H D says:

      nice, I somewhat agree with the 1.618 ext longs. I guess we need to see the retracement of this decline for clues. If it appears corrective/choppy we can take the most probable count that Tony is sharing

      • Milen Kolev says:

        Sure, watching and not acting is taking a position also.Regards

      • H D says:

        watching? no fun in that :mrgreen: I think you can have more success with the short term EW pattern. LT EW, sure anything is possible. I would want to see it impulse through 1779 pivot and 1800 to consider still in 3 up

      • Milen Kolev says:

        In my 8 years experience as a trader I learned one important lesson – C wave of the zig- zag NEVER lets you down. I trade zig- zags very successfull only, whatever it is – C wave of zig-zag or 3th wave.

      • MK, Hmm, I really think we have several failed Cs in the past year or so, I could be wrong though…

  18. H D says:

    “Right now were are using SPX 1759 as the potential high of this fourth wave. A fifth wave, to lower lows, will eventually follow.” Very nice Tony!

    you guys reading the updates?

  19. rc1269 says:

    Tony – wave 5 in?

  20. Lee says:

    It’s tough enough trading this stuff with wanting others to be proven wrong IMHO
    I learned to trade Happy many years ago and it paid off 😉
    Ltr guys

    • H D says:

      +1 u keep this up and someone will create a blog likeleesaid.wordpress.com

    • Yes that’s so true. The secret to trading well is simple really, just take trades with a positive expectation and give up the need to be right on any particular trade. It’s also much less stressful and leaves mental energy available for other pursuits, like reading the complete works of H.P. Lovecraft.

      “At the Mountains of Madness” is a masterpiece or gothic science fiction. He was far ahead of his time. 🙂

  21. ewtoriginal says:

    There are a bunch of really nice guys who regularly show up on CNBC, usually bullish out of their minds, who now see a “healthy” correction down to 1700 or maybe even, god forbid, 1550, before the market tests (lol) the 1950-2000 spx level in 2014. If the low level of the correction is only 1730, it will result in a nice 12% rally to get up to 1950. If it got down to 1650, the rally to require to 1950 would be about 18%, not bad. If the “correction” fell to 1550, as a recent guest just mentioned, before rallying back to the 2000 spx level he sees being reached in 2014( as does 85% of high quality WS strategists), that would be a handsome gain of 30% if you are just patient enough to hold off all your new buying until then. Of course, thats with new money, not the currently invested funds which started pouring in around 1650 last year,on average. So, I would like to wish all those nice guys and their clients good luck. There is at least of 50/50 of achieving those expectations.

  22. kvilia says:

    Things start looking interesting here, Interest rates dip. I’m afraid the so-called economic recovery is so fragile that it won’t take much for a set back in this environment. As soon as Fed hinted it is stepping down, all the hell is breaking loose. Could it be P IV? I have a feeling we may even have failed P V after that.

  23. rc1269 says:

    Bloomberg reports “Inverse VIX Fund Gets Record Cash on Calm Market Bet”

    what are the chances that so many retail vol traders get this one right. institutional vol wagers are made directly in derivs mkts. just sayin

  24. alexhartley1 says:

    The Dow is currently holding strong support at 15350. I think this holds for now (on a close) and we see a push higher into expiry week.

    Having said that I won’t be buying the market merely waiting to short just in case we get a waterfall decline.


  25. uncle10 says:

    Morn, Silver and gold looking good this AM. Nice when a plan comes together and works.

  26. rc1269 says:

    Feb. 5 (Bloomberg) — Technical analyst Tom DeMark says on CNBC that next two to three days are “critical.”
    • If stocks fall today and open lower and trade lower tomorrow, stocks are likely to continue falling no matter what the news is Friday
    • If stocks unravel, S&P 500 may fall to 1100
    • S&P may see 60% drop

    glad he put that out there; now we can pretty much eliminate any chance of that one happening

    • 16golfer says:

      40% drop to 1100

    • blackjak100 says:

      If 1850 was a cycle B wave, 1100 is only a little more than halfway for the expected C wave to end below 666.

      • hate to discount any theory entirely, always worth keeping your mind open. You could make an argument for a 3-3-5 rally from the 1074 lows… to the 1850 highs. You can also make the case that 666-1370 and 1074-1850 are fairly close in wave length.

        So we should at least give it SOME consideration. Its not my view. My view is we are in Major 4 of Primary 3, and my views have not changed in 5-6 months really… major 3 to 1829 was my target, we went a bit over… now 1713 on the shallow end for Major 4, 1628 on LOW end…

        but…. I for one appreciate BJ giving some things to look at

  27. robnaardin says:

    Re Gold Since the bear market rally this summer, I see 4 of a 5 possible 5 down with a big juicy divergence in the weekly macd.

    • robnaardin says:

      The angle of the dangle and the motion of the ocean of gold’s current wave looks like a 4 to me too.

  28. 777daimon says:

    funny computer glitch …. nya closed at …4 ! :)))))))))))))
    *observed by the keystone speculator blogger!

  29. thanks for the update tony! DOW counts nice and clean IMHO:


    If today was 4 of c down, then 5 of c should target 15250 +/- 25 based on the 1.764-2.000x Fib extension of 1 of c, measured from 2 of c (green labeling). Note that 3 of c almost hit the standard 1.618x extension. So far so good. No idea what that would translate in for the SPX, maybe mid-1730s though 5th waves at several degrees and in both up and down direction have been more failures then not on the SPX…

    This should then conclude this part of the correction and a more serious bounce may be in order, IMHO. Assuming a regular zigzag, then 50-61.8% retrace could happen. That be ~16,000 for the DOW.

    We’ll see.

  30. lunker1 says:

    open space until 1771/72?

    A = 81pts
    B = 1799
    1793 = 60min 89EMA
    1791 = 1.236 ext 1576->667 (resistance)
    1791 = Weekly 13EMA
    1791 = Daily 13EMA
    1772-1786 Pivot
    1771 = 60min 34EMA
    1749 = C=.62A
    1737 = P3 14.6% retrace (support for A of C?)
    1735 = Weekly 34EMA (support for A of C?)
    1718 = C=A
    1709 = 1.146 ext 1576->667 (should get tested)
    1708 = 200DMA
    1692-1706 Pivot
    1691 = H&S Target
    1687 = C=1.38A
    1687 = Weekly BB
    1673-1687 Pivot
    1676 = 250DMA
    1668 = C=1.62A
    1667 = P3 23.6 retrace
    1658 = 1.09 ext 1576->667

  31. mjtplayer says:

    v = I at 1,730
    C = A at 1,720
    200-day EMA at 1,710

    One more poke lower in wave 5 of c to finish the first leg down; S&P target 1,710 – 1,730 area

  32. fionamargaret says:

    Thanks Tony.

    I saw the headline “the Japanese prepared to buy ETF’s to defend their market at 14000” on Bloomberg, early this am.
    http://www.zerohedge.com/news/2014-02-03/japanese-stocks-freefall-topix-plunges-almost-5-4-month-lows….seems I was not the only one to notice!

  33. waddaguess says:


    A more accurate count if you ask me. NYA chart, page 9 of TC’s line up.

    9718 is my target for this decline. Then new highs…. Close enough with yesterdays low. Maybe one last sell. You never really know….GL all.

  34. bouraq says:

    Sweet sugar 2.0:

  35. M1 says:

    How are you counting this first abc wave down from 1851 ? Interm wave A or major wave A ?

  36. kvilia says:

    You, people, need to read weekend update. Again.

  37. llerias7 says:

    Where should be found the bottom of this A? 1720´s or next the 200dma, 1710´s?

  38. lunker1 says:

    Your blog needs to explain that are all Tony’s OEW charts since people on this site are confusing his charts for being your work as budfox did today with the links you’re posting here to your blog. Also why are you posting so many chart links to yuor blog when Tony’s charts are already here on his blog? We can read the charts and see the counts ourselves.

    • mmmiiikkkeee says:

      Tony takes care of the administrative tasks at his site himself. I often disagree with his decisions or, more importantly, with the patience he shows toward posters who annoy me.
      I have shown the respect I have for Tony by not commenting about administrative matters until today.
      I would appreciate it if you would communicate directly to Tony either by his e-mail address or even here by asking him if he is aware of the actions of posters who you feel are a menace.
      IOW lunker, mind your own business and let Tony settle such matters himself.
      btw you are so aggressive in your above post that if I were JK I would ignore you.

  39. ko68 says:

    Thanks Tony
    Dummy question, but isnt IT possible and an option with only three waves down?

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  41. vorfahrt says:

    Tony; thanks for your continued guidance. Would you expect a P IV low rather around the 4 low of 1627ish or the IV low of 1561ish? – Thanks, Joe

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