friday update

SHORT TERM: gap up opening again, DOW +166

Overnight the Asian markets gained 1.2%. European markets opened higher and gained 0.6%. US index futures had a volatile morning after the disappointing Payrolls number was announced: +113k v +74k. Expectations were 150k to 175k. Nevertheless, the market gapped up at the open to SPX 1782, rallied to 1788 in the first few minutes, then began to pullback. At 10:30 the SPX hit 1777, then started moving higher. Heading into the close the SPX hit 1798 and ended the week at 1797.

For the day the SPX/DOW were +1.20%, and the NDX/NAZ were +1.75%. Bonds Gained 10 ticks, Crude rallied $2.15, Gold rose $9, and the USD was lower. Medium term support now rises to the 1779 and 1699 pivots, with resistance at the 1828 and 1840 pivots. Last night the FED reported a decline in the Monetary base: $3.789tn v $3.819tn. Today the WLEI was reported slightly lower: 54.2% v 54.3%.

The market gapped up again at the open today, had its first pullback since Wednesday’s SPX 1738 low, then rallied into the 1790’s hitting our short term target. Quite a rally these past two days: 60 points, with only one 11 point pullback along the way. So far, this does not look like a B wave, it looks too impulsive. Let’s see what arises in our weekly review.

Short term support is now at the 1779 pivot and SPX 1768, with resistance at SPX 1800 and SPX 1814. Short term momentum is extremely overbought. The short term OEW charts remain positive with the reversal level now SPX 1774. Best to your weekend!

MEDIUM TERM: downtrend

LONG TERM: bull market


About tony caldaro

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63 Responses to friday update

  1. wisconsindoctor says:

    Assuming the SPX primary III top was 1850, and major wave A bottomed at 1738, I believe that major wave B topped Friday at 1798, and the major C wave will begin Monday with a bottom of 1625. Thus ending primary IV.

    • 16golfer says:

      This is the camp I’m in too Doctor. Next week should give us the answer. Sec Treas says we have until 2/20 on debt ceiling if it isn’t settled before then, which with the clowns in DC, that is certainly possible.

  2. Making up for past minimal daily posts here, but, Tony, I couldn’t resist wondering why no one posted about the beautiful “W” pattern setup. As perfect a “W” as you can get. Very bullish.$SPX&p=120&yr=0&mn=2&dy=10&id=p11023586663&a=315374993&listNum=7

  3. lunker1 says:

    So is this a B Wave?
    Spring & Summer 2011 there were 2 sharp impulses off of IT lows.

    March/April 2011 – 1st “B Wave” pushed straight to the .941 retrace (A), rolled over down to the .50 (B), but then made a 1.236+ higher high (C). 3 waves ABC up. it was B Wave of an larger expanded flat.

    June-July 2011 – 2nd “B Wave” was a short first wave (A of B), a deep retrace for (B of B) and then impulse up (C of B) to compete a sharp .887 retrace from the prior top. So it was a True B Wave with a nasty C Wave down to follow.

    (May 2010 looks similar to June/July 2011. choppy = corrective)
    (Aug 2007 looks similar to now and March 2011 except the A Wave didn’t get past the .618. impulse must be > .618)

    so if this impulse stay strong past the .618 at 1808 then it looks more like the March/April 2011 expanded flat scenario and the targets would be.
    A=.941 = 1845
    B=.500 = 1794
    C=1.236 = 1878

    this beauty of going long at the B Wave retrace is that is could be Wave 2 which is followed by a strong Wave 3 up.

    A=.941 = 1845 (or wave 1?)
    B=.500 = 1794 (or wave 2?)
    C=1.236 = 1878 (or higher with wave 3?)

  4. JK1987 says:

    Like JK Said
    SSO (SPX) major 5 underway.
    10, 20, 50 EMA bullish cross.
    Target SPX 1911.

    • Have had same count as you, Major 4 from 1850. I’ve been saying Major 3 for several months now here and Tony has been on Major 5, so we will see. That said, 1738 is not even a 23.6% Major 4 if your using 1267-1850 as Major 3…. so it made me scratch my head on Friday.

      Came up with another option, Int 4 of Major 3 was 1738 (50% retrace of 1627-1850 Int 3) and now we are starting Int 5 of Major 3…. to 1875… THEN MAJOR 4

      Otherwise you cant convince me that a 112 point drop is qualifying to work off a 583 points Major 3

  5. robnaardin says:

    Thanks Tony

    The hourly macd since 1737 looks like a rocketship ie no crossovers after 1737. Just keeps on rising.and rising….

    One other point: No major low since 1074 has occurred with a nymo -60 reading. The highest was -95. all the rest were lower.

  6. bhupal777 says:

    Thanks Tony for the update. On a daily chart I clearly see 5 RED waves down from 1851 high. Last 2 days rally seems to be some kind of B wave. Isn’t true that B waves are, most of the times looks impulsive and that’s how it sucks traders into the market. So that it can through off traders with C-wave ruthless destruction. Basing on that analysis I started nibbling few shorts today. Also clearly there is a great resistance at 1840 level. Well Eagerly waiting for the Weekend update.

  7. I see 4 thrusts upwards, equal in size and time: 2 sets of a-b-c => B

    For this to hold true, we shall see a toping here (shows on the hourly)

    Any thoughts Tony?

  8. torehund says:

    Thinking about commodities, what if they all of a sudden have bottomed out, what will then happen to the dollar ??? If the dollar remains firm and commodities rally then the world is in for some unexpected pain, but what if the dollar sinks concurrently with commodities going up not to hurt demand out of non dollar countries ??
    The most unexpected would be for both dollar and commodities to rally together; and if that happens on the base of the US suddenly gaining enormous economical traction, that would suck up every bulkier on the 7 seas…Tracking MACD with a triple abc decline from Oct 2013 until now, and then getting a last oversold bottom we may just have to prepare for some of the scenarios above.
    Its all about China, the bottoming phase has been so long and gruesome that it may end, just here.

    • torehund says:

      YINN has made an (abc or 5 down, with perfect ambivalence) that may be complete, but as always with these 3x products its awfully dangerous if one misses the bottom, better still is to find a small cap that is naturally geared, and sweat it out…

  9. If the 5 year bull market was ready to correct or crash it would happen off a close like today, they shook out week Bears and sucked in Bulls to hold over weekend. Market does not go up almost everyday for years (with a few exceptions) and allow everyone to short or get out at the top. If top is in at 1850 they arent going to make it obvious, I feel like so many are conditioned to an up market when the rug is pulled they are gonna be screwed, especially those playing with their retirement accounts. In my opinion the time to go long was a few years back not up here in the nose bleeds, good luck to all.

  10. POssibly solved the puzzle

    The drop to 1738 is a 38% f ibonacci of 1627-1850. 1627-1850 was 5 waves. This means it was a wave 4 of lesser degree, and not MAJOR 4 as I had thought from 1850

    This would imply a rally to 1875 is in the cards for 5… and that would top Major 3 of Primary 3

    We will know early on Monday/Tuesday if we rally past 1800

  11. jobjas says:

    Expecting a truncated wave 5 – Target 1820’s

  12. TONY, please show your usual unending patience, as I place this in a blog by itself in order to make sure you see this request. LLAP.

    Tony: Would like to suggest that bloggers not be limited to 3 posts on the Friday Update only. The logic is that Friday’s Update is used primarily for only ~16 hours, then your Weekend Update is published, and many comment on that Update, including all day Monday. It might be a workable alternative to let bloggers post freely on Fri. Upd., instead of filling the Weekend Update over the weekend, even before Monday morning arrives.


  13. thanks for the update Tony! As usual the market has become less clear again, after a good clear down trend.. typical.

    These past 2.5 days may very well be wave a of a larger abc, in the form of a 5-3-5 correction?! IF that’s the case and assuming 1798 is the top of a, for simpler counting sake, then we’ve had 60 points up of the 1738 low. One would then expect a ~50% drop for b to 1770 (good S/R area) before wave c adds another ~60 points to 1830s. There are gaps that “need to be filled” at 1828 and 1843… That would completed c.

    Often monday’s are red after a green none-farm payroll Friday.

    An argument for this possible count can be the analog of Primary II: Primary I topped at 1370, (May 2011) then major a down ~110 points to 1258 (June 2011), Major B then rallied back up to 1356 (July 2011). So far we’ve had a ~110 point decline from the 1851 to 1738. The past decline also took 1 month. If we’re now in major b, which if the fractal/analog is correct, it could indeed try to gap fill. B would take another month (February), before c down…

    • bhupal777 says:

      SSA, Great minds think alike. I am on the same page with you. Early next week I am expecting smaller b-wave down. I went short today for the same reason on SPX and XLF for a quick 1 or 2 days trade.

      • + 1, i am just hesitant in shorting a bull market especially on shorter time frames.

        ps: 80/20 rule is now in play, imho, where the trade through 1780 suggest 1820s… that would go well with the major B analog of primary II. but in that case it won’t go straight from here to 1820, we need that retrace first.

    • tony caldaro says:

      Not sure about the 5-3-5, 60 by 60.
      But in regards to Primary II you have read my mind.

      • bhupal777 says:

        Tony, In that case my stops going to be real right on Monday assuming it is not going to gap up.

      • thanks tony, i see where you’re hesitant with the 5-3-5, 60 by 60 call. it’s merely a suggestion. the market should tell us soon enough it’s true intentions: 5 waves up or 3 waves up; that’s all we need to know imho. i may long any OS hourly RSI(5) reading, for a quick scalp, if not i wouldn’t mind sitting this whole up move out to see what the next trading plan will be: 5 waves up then i’ll buy the dip. 3 waves up then i’ll short the top. trading made simple. i like that.

  14. wavecounter says:

    “So far, this does not look like a B wave, it looks too impulsive.” I’ve been waiting for tonight’s review to say the same thing. The Nasdaq has now retraced well over 60% of the whole January sell off in just a few days and it certainly looks like it is an impulsive rally. In fact another rally like today will see a new Nasdaq high. Also the Nasdaq seems to have bounced off the previous wave 4 bottom. Could it be the low is in and we have finished an ABC correction? Volume for NQ futures peaked at the low much the same as the last wave 4 bottom which backs up the case for it being a significant bottom.

    • budfox9450 says:

      well, your about 47 pts from the crest.

      • bhupal777 – thanks so much for your kind words. i am very flattered. it are words like that, that give me the drive and motivation to do what i do and post my few and simple comments here and on my little blog.

        tony – sorry for the 4th reply, but i just had to acknowledge bhupal’s reply. he put a big fat smile on my face. You’re all awesome!! Now let’s all go make some money ya!? ’cause that’s why we do this.

        ps: jedi – right on! work with what works for you. that’s what matters. i totally agree. for me it’s RSI, my SSTO indicator, OEW, Fib’s and MAs that i follow and trade off on. price action trumps everything. what we think and believe price should do is for cocktail party opinions.

    • Wavecounter, you selected THE most important statement in Tony’s daily commentary. Market is a buy IMHO (at least temporarily). Stepped in two days ago. LOTS of stocks on sale and moving averages and MACD’s crossing over to the positive on them. Price is king — watch where it is going. Thanks, Tony!

      -OEW Coffee Club Member

  15. Vulcan traders cautious because the gap from this morning didn’t get filled, therefore, not many longs left on the table. Nonetheless, Live Long And Prosper, Traders, but especially to Tony. A very excellent call, Sir.

  16. ewtoriginal says:

    Hey Spanky, you scared? I ain’t scared Stymie. You scared Stymie ? Na.I ain’t scared neither.There.That settles it. Lets bid the NAZ to the moon again. Roger!

  17. Someone once told me that the market doesn’t crash off of highs, it crashes after a lot downward momentum with a suckers rally before the kaboom!!! All of January is the downdraft, this week is the suckers rally and now comes the kaboom!

    • blackjak100 says:

      The similarity to 1929 is still uncanny! 1929 DJIA rallied for 4 days off its closing low. Today was day 4.

      The comparison has nearly been identical for 6 months. If we don’t drop mon/tues, it can be thrown out

    • bhtrade says:

      This selloff accomplished its objective: washed out some euphoria, created a bunch of despair, and now has many doubters on the way back up. Markets love to climb those walls of worry. Remember: the rally selling crowd of the last 2 days is now 100% underwater, that alone will keep a bid in this market on the 1st dip. Failure to make new highs after that dip could setup a bigger flush, but that’ll take some time.

      • bh, I disagree with your statement – this wash out creating a bunch of despair, and now has many doubters on the way back up, Read the posts on this blog alone and you’ll find many Bulls raring to go! I am also bullish, but not until the gap left from this morning gets filled. LLAP.

      • 777daimon says:

        6% from the all time highs never produces despair!
        Despair appears after more than -20% / -25% …that’s from where (to lower lows) despair appears ….. only a relaxing move lower.
        I would stop being bullish below the line from the 2000 / 2007 peaks (1560-1585 area).
        but I would not be in “crazy” mode…. only careful !
        – 6% NEVER produces despair!

  18. Crazy market, we should have bounced and then headed to 1710-1713 areas for a Major 4

    1738 is really shallow…. this one is a head scratcher no doubt

    • buddyglove says:

      At last we all agree on something………….. 🙂

    • 3x, perhaps it’s not over yet. There are no fat ladies on Vulcan, but the fat ladies of Earth might begin warming their vocal chords by practicing scales quite soon.

      Tony: Would like to suggest that bloggers not be limited to 3 posts on the Friday Update only. The logic is that Friday’s Update is used primarily for only ~16 hours, then your Weekend Update is published, and many comment on that Update, including all day Monday. It might be a workable alternative to let bloggers post freely on Fri. Upd., instead of filling the Weekend Update over the weekend, even before Monday morning arrives.


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