tuesday update

SHORT TERM: FED chair Yellen rally, DOW +193

Overnight the Asian markets gained 1.2%. European markets opened higher and gained 1.4%. US index futures were higher overnight, and FED chair Yellen’s testimony was released: http://www.federalreserve.gov/newsevents/testimony/yellen20140211a.htm. The market opened two points above yesterday’s SPX 1800 close, and then started to rally. At 10am Wholesale inventories were reported higher: +0.3% v +0.5%. The market continued to rally throughout the day, hitting SPX 1824 around 3:30. A pullback to SPX 1818 then occurred just before a 1820 close.

For the day the SPX/DOW were +1.15%, and the NDX/NAZ were +1.05%. Bonds lost 13 ticks, Crude slipped 20 cents, Gold rallied $14, and the USD was flat. Medium term support remains at the 1779 and 1699 pivots, with resistance at the 1828 and 1840 pivots. Tomorrow: the Treasury budget at 2pm.

The market opened just two points above yesterday’s SPX 1800 close, and two point pullbacks are all that occurred until the SPX hit 1824. Around noon the SPX cleared the 1814 level we had been monitoring. This suggests an uptrend is probably underway. But the questions remains; “Is it a B wave of PRI IV, or Intermediate wave iii of Major wave 5 ?”. The fact that the NDX may hit new highs, does not help answer the question. During the SPX/DOW B wave rally of Primary II, the NDX made new highs then as well. Growth led that B wave rally, while the cyclicals lagged. Then they all declined together.

The wave structure from the recent SPX 1738 low is quite simple: 1788-1777-1824 so far. This looks quite impulsive. The next area of resistance is the OEW 1828 pivot, which is also near to an equality of waves relationship: 1738-1788 and 1777-1827. This should be an interesting resistance area. Short term support is now at SPX 1814 and SPX 1800, with resistance the 1828 and 1841 pivots. Short term momentum is about as overbought as it ever gets. The short term OEW charts are still positive with the reversal level now at SPX 1793. Best to your trading!

MEDIUM TERM: probably uptrending again

LONG TERM: bull market

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

About tony caldaro

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119 Responses to tuesday update

  1. waddaguess says:

    So many bears hoping for a crash…the market tells you what you need to know. And I’m not referencing the vix. Looks like a wave 4 here.

    • torehund says:

      ..maybe the dollar will crash, and not the market. In that respect go small-caps to retain and gain on your purchasing power. Or buy some gold.

      • torehund says:

        Dollar has a MACD gap to fill from the beginning of 2011, and MACD is still below ZERO-line, not much good happening to either stocks or currencies down there. For USA its beneficial to trap as many folks as possible with a worthless greenback as they will have less opportunity to flee, or it will be less palatable to do so when you suddenly own the biggest fiat currency there ever was.

  2. gary61b says:

    Bulls, Buyers need to protect the 1812 level on the ES or it could fall to 1800.

  3. As mentioned I went short yesterday. VIX futures telling me 20 bucks coming and 1730 target

  4. lunker1 says:

    SPX uptrend support TL from 1738 broke today and made a low at 1815.97 and then backtested the backside of the TL. using that low as a stop.

    • lunker1 says:

      I’m papertrading a new TL system.

    • lunker1 says:

      15min RSI (5) rolled yesterday/today over showing the weakness.
      if stopped at 1815 would look to reenter long:
      1. on a break above today’s high
      2. or if Pos D on 60 min appears before a new downtrend resistance TL gets established…i.e. trade sideways to work of overbought conditions.

  5. torehund says:

    A scenario of dollar weakness and commodity rally is emerging, the companies both small and the larger ones are in serious trouble, whatever they have done the past couple of years its nearly impossible for the average commodity producer to pass the zero line. Recently James River coal, with more than 2000 employees said they are looking for a buyer as they only feast on a limited credit facility that is nearing its end… Same goes for the bulkers, if these conditions persist. An easy way for the economy to uphold demand and current pricing is to ditch the greenback and lift the commodities out of BK producing territory.

    More about bulk, exemplified by Genco; it has exceptional tech parameters; it lost heaps of RSI lately with very little decline in price, a sure sign of exhaustion emerging among holders.

    My crazy count of usd to nok bottoming at 3,8 to the dollar may just pan out, today its 6,2 nok to the dollar. In such a scenario commodities will retest their highs and then for the decade to come forever fight an ever rising dollar. Lets see where we end, “nobody knows” but we are at a crossroad right here as Tony exemplified in the weekend update.

    And for gold and gold producers such a scenario is pennies from heaven, and a feather in the hat for P Schiff. But…after Schiff comes Prechter..
    If commodities decline from here BKs would underpin the price and if dollar and commodities run together the rest of the world would suffer, so to uphold supply at current cost the dollar just have to back off..

    That means the USD could decline to a fib 0,61 to the NOK to finalize this bull market. At that time one would short the miners in USD currency betting a farm or two 🙂

  6. Good news coming is, it was almost all short covering (for the rally from 1738 to 1826ish) not new buying, Shorting markets (at level of 1790-1800 during last fall to 1738), is encouraging sign that finally many people think that markets will fall. Next three days if SPX remains range bound, then BLACK MONDAY. REALITY WILL SUCK sending SPX down to levels unheard of…

  7. tony caldaro says:

    Please guys/gals keep comments market related.

    • Lee says:

      .” The next area of resistance is the OEW 1828 pivot, which is also near to an equality of waves relationship: 1738-1788 and 1777-1827. This should be an interesting resistance area. ”
      I know u mentioned it today again in response to a symmetry post but I’m just going to bump it just for kicks.
      Thanks TC

  8. Repost of last night and also repost of last Fridays count update. Heading to 1875, then a LIKELY top of Major 3 there…
    3x ETF Trader says:
    February 11, 2014 at 4:20 pm
    30 week MA works again….

    Also last Friday I sent you all this updated wave count, also now working well… 1875 looks like the target, 5 of 5 of Major 3


  9. JK1987 says:

    Is there a wroc buy signal in this rally?

    I asked you the same question from June 1560 rally, you said no.
    Diamond issued 90% upside day buy signal in late June rally.
    He is doing it again.
    Maybe like XYV, this impulsive Intermediate wave iii of Major wave 5 is better for SPX?
    AAPL 539.56, above 539 threshold.

  10. JK1987 says:

    1: 1738-1788: 50 points rally
    2: 1788 – 1777: 11 points dip.
    3: 1777-1827: 50 points Yellen rally
    4: 1826 – 1815: 11 points dip.
    Yellen is coming back tomorrow for another 50 points Yellen rally to 1865?
    If so, oew better pre-emptively adopt Intermediate wave iii of Major wave 5?
    Perfectly symmetrical.

  11. You heard it right here and right now,Wave 2 completed today, wave 3 DOWN coming to 1600 on SPX. The writing is on the wall people, bank holiday coming this weekend??? Good Luck & God Bless.

  12. H D says:

    so we have 2 -11 point dips now? gee thanks market

  13. lunker1 says:

    Contd from below….Ghostine was/is tracking a large ED on ES w .786 target at 1635.


    • H D says:

      ED are made of 3’s and 1-4 overlap. FWIW. otherwise typical impulse in my book. We did see a small terminal pattern SPX 19-17-23-18-26 terminate today and confirm trading below 17.

      • lunker1 says:

        he posted a quote from da ew book that supported his ED call. it’s somewhere on his twittersphere.

  14. llerias7 says:

    Acording my compass we are now in minute iv of minor 1 of Major 5 of P3. What about it?

  15. SSO filled first gap (http://soulsurferusa.files.wordpress.com/2014/02/sso-update-02122014.png) 2nd gap next?

    From a Primary IV count perspective, a zig-zag count seems less likely now, IMHO, since the move up has already surpassed the standard 50-61.8% of a b-wave retrace. The alternative, for a P-IV is therefore a flat correction, which can be either 1) regular: wave b ends about at the level of the beginning of wave a (1851), and wave c ends a slight below the end of wave a (1738); 2) expanded: wave b ends beyond the starting level of wave a, and wave c ends (far) below wave a; 3) or even a running flat, but those are rare: wave b ends above the beginning of wave a, but wave c ends above where wave a ended (very bullish )

    I don’t recall of the top of my head what P-II was, but often 4th and 4th waves alternate.

  16. JK1987 says:

    XLV changed overnight from confirmed Primary V top in Jan to bullish Major 3 underway.
    Quite confusing.

    Maybe SPX will be changed to Intermediate wave iii of Major wave 5 underway?
    Or SPX will stick to Primary IV underway?

    • CygnetNoir says:

      Do you not read Tony’s updates? “If it all sound quite confusing just remember, regardless of the outcome, we are still in a bull market. For now we are leaving the labeling as it pending further market data, especially SPX 1814.”

      • JK1987 says:

        I not only read, but also memorize the update.
        There are 6 SPX options (with both bullish and bearish) in the weekend update, I tabulated them. I am a diligent student.

        Confused with XLV labels, changed from very bearish PRI V in place to very bullish Major 3 underway.

      • Well said CN . not confusing just a bull market and btd

      • mmmiiikkkeee says:

        JK, Perhaps your pointing out the PRI V on XLV looked problematic led to the change along with, of course, yesterday’s market rally.
        I don’t understand the hostile comments you have been getting.

      • CygnetNoir says:

        If you don’t understand, you haven’t been paying attention.

    • 16golfer says:

      That’s what they do at the tops don’t they? V bottom rally and grind out at the top to give big money time to get out.

      • Hey Golfer, unless they got out on the way up, I don’t see how they could get out on low vol since 30 minutes in, today… The grind down seems harmless enough for now, the short term indicators are getting a bit negative, but seem to be calming down… anything can happen on a dime, but so far seems to be setting up another run, at least for a retest…

        I got some longs, with a comfortable stop, but could easily jump ship… waiting for the market to show her hand.

      • 16golfer says:

        Maybe just a few snuck out the door, before someone yells “fire” and they stampede. lol

  17. Agree this might B it for B, if it is a B. All I know is that unless Dji does some serious catching-up, all the other major indexes are going down with it. LLAP.

  18. xela0 says:

    To me this looks as only the 3rd wave completed (1737-1788-1777-1827), slightly less then the 1st.

  19. mjtplayer says:

    This mornings’ high might be it for int b. S&P high is 1,826 – the exact .786 retracement and less than 2 points from the 1,828 pivot. After a pullback to 1,799 area, we’ll see if the market can get over 1,828 or fail and begin int c lower.

  20. Lee says:

    Good ole pivot time.

  21. This is final version again, as my “SPX 1784 Sell and Fold call” failed. Starting today, SPX should see downtrend..1797 is extremely important..if that holds and SPX crosses 1831, then we reach 1924. If 1797 BREAKS, then we are in BEAR market.

  22. tommyboys says:

    Wesbury (Fisher has also stated this)…The entire ’08-’09 crisis was caused by the mark to market accounting rule and wasn’t ‘saved’ by QE or TARP. It was a $500B problem, not small but not large enough in a $15T economy to cause a meltdown.
    (I’d post whole article but too long – read it you can, spells out why you want to be long and we won’t be heading into a new crisis anytime soon.)

    “But instead of fixing the overly rigid accounting rule, the US government invented policies – TARP and QE were the big ones – to fill the hole in bank capital caused by mark-to-market losses. Both TARP and QE started in October 2008 and the stock market promptly plummeted – falling an additional 40%, with financial stocks down significantly more than the market as a whole.
    Only after Barney Frank and the House Banking Committee leaned on the Financial Accounting Standards Board to fix mark-to-market did things turn around. A hearing was announced on March 9, 2009, the exact day the market hit bottom.” Tapering won’t hurt the markets.

  23. elmer510 says:

    I think the development at SPX don’t show any sign of the strongest correction since spring 2012, which should be the case with Primary 4 under way. So the DOW count with IM 3 of major 5 seems more appropriate right now. Which could imply the bullmarket will continue even longer than 2014.

    One question: what if the market is climbing moderately for another 6 months with just smaller pull backs. Is that impossible according to OEW when we are waiting for PRIM IV?

  24. 777daimon says:

    initial target for this up move until a pullback appears: 1852 +/- 5 points.
    3’rd and out! bye!

    • 777daimon says:

      now I saw , it was an error when I wrote the message: the target it’s 1872 +/- 5 points
      p.s. an edit option to the messages would be great!

  25. 777daimon says:

    the manipulators are just lovely !
    they keep this article on the front page for the second day , the article registered a record no. of comments (more than 1950 comments) and a record number of unique visitors!
    do you know what that means, don’t you?
    1929 parallel is over guys.
    ”they” just want to reload the remaining bears to have extra-squeezing fuel for + 2000 points values in spx 500 …

    just my 2 US$cents opinion.
    what is known by ALL (DeMark commented McClellan , Doug Kass – all made the impossible and more to advertise this view – on Bloomberg, on CNBC – in order to destroy it).
    1929 parallel is over guys… just wanted to inform you about that.
    WHAT IS KNOWN BY EVERYONE IS VALUELESS because it’s already embedded in capital market pricing – this is a golden rule in capital markets.

    • 777daimon says:

      one more reason to think that marketwatch and others (Bloomberg, CNBC,others) are professional manipulators :
      whilst marketwatch keeps on the front-page this panic article the main new info was mentioned only once (!) in the latest news feed-roll from the upside of the main page – “House passes clean debt-limit extension ”
      very,very bearish …indeed!

      watch your wallet! Those professional thieves want to scare you and take your money!
      Somebody please call 911 ! 🙂

    • 777, I posted one of those fear articles here yesterday, more as an example for reading, but I think I hit a nerve, so won’t do it again. Eventually, this Bear will bottom, and us pip-squeaks will be hurt. The world will survive and go on. Friend of mine who used to constantly watch soaps says – As the world turns, so goes the days of our lives. LLAP

      • 777daimon says:

        Hey Lieutenenant,
        Didn’t hit any nerve, no problem about it.
        Tony’s blog doesn’t have the media power of bloomberg, cnbc or others (sorry Tony!).
        Here it’s another thing.
        I’m glad when we all share opinions and info sources.
        Thank you! 🙂

  26. market update for tuesday and tomorrow’s plan (within remarks sect.): http://standardpoor.wordpress.com

  27. kvilia says:

    “David Atkinson, 66, is among the pantry regulars who rely on disability benefits. He said he has been unable to work since his wife died about five years ago, leaving him with crippling depression. They had been living in North Carolina when she passed away, after which Atkinson returned to his hometown of New York, where he knew he could navigate the local welfare system well enough to survive.”
    What I can say – David Atkins is stupid enough to believe 535 people would decide he’d be getting a free food.
    I’m very often depressed to the point that I’d rather quit, so is my wife. Why? Because we were not born to money, and it’s tough out there. Difference between me and David Atkinson? I’m not stupid.
    I am not going to apologize either. In the country where I’m from, people were lucky not to be jailed 50 years ago. Or even 20 years ago. Or even 3 months ago. They were lucky to be alive.

  28. lunker1 says:

    Today’s high perfect touch at the 1.272 ext of 1576->667 at ~1823.42. Ghostine’s chart. SPX topped just above the PRZ and now backtesting the bottom of it before heading back down?

    • Lee says:

      Thanks Lunk , very interesting and some nice observations last week also.

    • mharrison60 says:

      Lunker, how does Peter’s count fit with the options on Tony’s charts? Has Peter indicated how far he expects to see the next move down?

      • jparkins10 says:

        Ghostine has SPX 1826.68 (78.6%) and 1837.97 (88.6%) as targets for this wave.
        He hasn’t posted a pullback target recently, but has stated he sees a significant pullback coming.

      • jparkins10 says:

        Peter Schweizer does some interesting harmonics, here’s his latest SPX view:
        The 2 Peter’s interact a fair bit (they seem to respect each others view)

      • jparkins10 says:

        Interestingly, McCullough has the largest net short position I’ve seen in the 18 months I’ve been following him.

      • blackjak100 says:

        I like 1838 for the target for Minor 2 up. However, we must see a pullback into the 1780’s for this to work. Then, we can have C=A*.618. This target works perfectly with a pullback to 1785 which is nearly 40 pts from here. We must see downward momentum increase starting today!

  29. bhtrade says:

    20 day ES volume profile looks like we need some churn in the 1800-1823 area. Fell like a rock thru the area on the way down and should fill in some respectable volume in that range prior to making its next major move. There’s another volume hole 1750-1765 area but I suspect that one will have to wait awhile.

  30. CygnetNoir says:

    This is what happens when 535 people who each receive nearly 200K/year in public welfare payments are allowed to determine what is a reasonable amount of hunger with respect to others:


    Every town and every city in country of the world has hungry people, many of whom are children. There is a church, a pantry, and shelter in each of those places that are trying to help. If you have the means, seek them out and give just a little, as every little bit helps.

    • 16golfer says:

      The $200K is just a drop in the bucket as they are bought & paid for by special interests groups with compensation in other ways. We couldn’t possibly expect them to live on $200K now could we? And…….how many days and hours do they have to work each year for that $200K? Epitome of STS…..

    • mmmiiikkkeee says:

      While I appreciate the second paragraph CN, I have difficulty with the first. Regular House and Senate members make $174K /year. I put most of the blame on the administration.

      • CygnetNoir says:

        I won’t belabor the point, but add in pensions and healthcare and housing allowance and each of those folks receives in excess of 300K per annum, and that doesn’t count the salaries and benefits which are paid the the employees each is allowed to hire to do the very work these people were elected to do.

        BTW, 174k as a base salary and then they there is additional pay for “leadership” positions and committee assignments,

        My point is that these people really need to reconfigure the way they look at the payments they receive directly from the US Treasury, and stop thinking they are the only ones entitled.

        Now, go trade something, will you!? 🙂

    • uncle10 says:

      Agree CN.

      • mmmiiikkkeee says:

        just because your post is generally correct and your heart is in the right place doesn’t allow false statements to be true.
        There is no extra salary for committee assignments; they get a $3K tax deduction for housing. 3,4 or 5 out of the 535 get extra for leadership positions ( not important enough to find out; less than 1% of them in any case)
        My main point was the lack of food stamp money was more on Obama than on Congress yet you don’t even mention him. See the link I provided above in which he praises the bill so highly.

      • CygnetNoir says:

        1) Congress holds the purse strings, not the President.

        2) 174K/year + pension + health insurance = 200K+ total comp. That is a fact.

      • 16golfer says:

        Also, 50% of Congress are millionaires. Sure their palms were greased enough to help them get there.

  31. waddaguess says:

    Thanks for the input TC. Always appreciated. Cheers.

  32. bhupal777 says:

    Tony, Thanks for the update. It does look like Int. wave iii.

  33. M1 says:

    …and we had the expected strong rally. 650 dow points in four days. No complaints. No surprise at all. Actually, the dji underperfomed badly.
    I feel only a few short positions may still alive, so the market could be ready to resume this choppy downtrend. .
    Not expecting spx or dow to hit new highs in the short term.
    Thanks, Tony

  34. blackjak100 says:

    We all know the wave from 1737 is impulsive and looks to me like a complete 5 waves now. However, I can’t get away from the speed of the decline. Last I checked a ZZ is a 5-3-5 structure and 2nd waves can correct very deeply.

    If this is a ZZ 2nd wave, I need to see a retrace down to a min of 1790 and then C=.618*A = 1843 for top of 2nd wave. This would be a classic 2nd wave in the QE era before rug is pulled out.

  35. thanks Tony! with everyday that passes the bear case (primary IV) seems to become less likely IMHO. It’s been a while since we’ve seen a straight wave up like this with barely any overlap. there are still gaps at 1828 and 1843… NYMO today looks good; of the 35+ stocks I track, only 6 were red, and of all of these many are not even close to peaking (e.g. FB, NFLX, SCTY, TSLA, GOOG, GMCR, DAL, SBUX, AMZN, etc etc) to name a few high, and well-known, fliers) which adds to the legitimacy of the current strong move off the 1738 low. It surely has all the hallmarks of a 3rd wave we’re in IMHO. If not, this B-wave surely does it’s work in fooling people, but then again; where’s the overlap? where’s the abc in this B-wave?

    • tony caldaro says:

      no overlaps, why it looks impulsive

    • Young Tom says:

      Look to 2011, SPX recovery was short of its high, NDX hit a new high, then they both rolled over. These B waves are tricky. You can be right, or I can be right. Time will tell, best to have stops in both directions. A lot of stocks that I track, not the high cap, high flyers, but mid to small looked dismal today. Saw a lot of institutional selling, big blocks on the close that were trapped during the day and couldn’t get a good bid to sell into.

      • Thanks Tom, yes I have been referring to the 2011 Primary I and II analogy (fractal) for quite some time now. I am just not sure if it will play out that way; it’s just almost too obvious IMHO. Having stops in place is always prudent, regardless of count, TI, TA etc. Always protect profits and always watch your wallet! For now IMHO, it’s a bull market until proven otherwise. Time will indeed; and we’re both wrong until proven right 😉 GL!!

  36. tony caldaro says:

    February 11, 2014 at 2:33 pm

    A trend confirmation is a lagging indicator.
    That is why we try to call the trend reversals as they are occurring.
    Rather than wait for a confirmation.
    We started writing about the monetary base and its impact on the market in 2011.

    I understand monetary base and impact. I was unaware your trend confirmation is a lagging indicator I was thinking it was a contrarian indicator LOL . Caldaro always a pleasure

  37. 30 week MA works again….

    Also last Friday I sent you all this updated wave count, also now working well… 1875 looks like the target, 5 of 5 of Major 3

  38. JK1987 says:

    Major 5 of Primary V completion with truncation at pivot at the pink timeline.

    Fully shorted.

  39. rc1269 says:

    Thanks Tony. it’s as clear as mud

    we hit my bounce range today, plus some. while i’d love to feel comfortable with the ‘set it n’ forget it scenario’ – 1950s by late april – i’m still a little unsettled by all the overlapping in the Dow since all the way back from May of last year.

    closed out my trading long today and will likely sit it out until we either hit new highs or break below 15,500.

    cheers hombre and thanks for putting up with all our yapping!

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