wednesday update

SHORT TERM: market remembers the pullback, DOW -90

Overnight the Asian markets gained 0.1%. Europe opened lower, but gained 0.1% as well. US index futures were lower overnight. At 8:30 Housing starts were reported lower: 888k v 999k, as were Building permits: 937k v 986k, but the PPI was reported higher: +0.2% v +0.4%. The market opened four points below yesterday’s SPX 1841 close, dipped one point lower, then began to rally. Around 10:30 the SPX made a new rally high at 1847, and then began to pullback. At 12:30 the SPX hit 1834, for the first notable pullback since last Thursday. After a rally to SPX 1842 by 2pm the FOMC minutes were released: The market then started to pullback again. Heading into the close the SPX hit 1827, then bounced to close at 1829.

For the day the SPX/DOW were -0.60%, and the NDX/NAZ were -0.75%. Bonds lost 7 ticks, Crude rallied 85 cents, Gold dropped $11, and the USD was higher. Medium term support remains at the 1828 and 1779 pivots, with resistance at the 1841 and 1869 pivots. Tomorrow: weekly Jobless claims and the CPI at 8:30, then the Philly FED and Leading indicators at 10am.

The market opened lower, rallied to a new high, and then pulled back for the rest of the day. The upper range of the OEW pivot did provide resistance, plus weak housing reports and the FOMC minutes provided the rest. We can now count five completed waves up from the SPX 1738 low, and the sixth wave underway: 1788-1777-1827-1809-1848- then 1827 so far. This pullback is the biggest pullback since the rally began. Ideally, if an impulse wave, the SPX should find support around 1809 – the previous 4th wave. If not an impulse wave, and part of a B wave, it may not even overlap 1827 at all. It touched it today.

Short term support is at the 1828 pivot and SPX 1814, with resistance at the 1841 pivot and SPX 1851. Short term momentum ended quite oversold after that negative divergence. The short term OEW charts just turned negative with the reversal level now SPX 1830. Best to your trading!

MEDIUM TERM: uptrend probable

LONG TERM: bull market


About tony caldaro

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127 Responses to wednesday update

  1. Time for this Vulcan to fly off this site at warp speed. Learned a lot from the actual TA information bloggers here and give you great thanks. Wish you all the best. Live Long and Prosper.

  2. The top never looks like the top at the top. Good Luck.

    • bhtrade says:

      Haven’t you been spouting the same permabear talk for ~100 SPX points now? Give it a rest please

    • buddyglove says:

      Imanew +3….very very true comment.

      • Damn…. Buddy Glove agrees with me, there must Be a GOD! Thanks Buddy. BHTrade yep that’s me Perma Bear or you can call me Pappa Bear, or when this Market Nose Dives you can Call Me ” Perma nently Rich” God Bless and Good Luck to all

    • imnewbie I have to tell you this incase you have not noticed. it will take a cataclysmic event to get this market down. And down is a real correction not a 5 or 6 % sell off

    • Kudos to everyone who has a clue to the direction to this market. I surely have no clue. I appreciate the charts and always follow the money. But I’m at a major inflection point. I see how the charts and money can take the sp to 2000. In my opinion it would be a blow of top and anywhere along the way you could get the rug pulled out from beneath you. Stocks trading at 20 times earnings scares the hell out of me. I see the glass half empty, so I am adding to my shorts and will watch it all play out, for all off you that means the Nasdaq goes to 5000 and the sp goes to 2200,

      Hope like hell sp hits 1600 some time this year.

      Good luck guys

  3. uncle10 says:

    CPST looking good here. One one up day soon and it will be on its way to $2 and higher.
    Have a good one!

  4. lunker1 says:

    SPX Big picture – possible V bottom “cup” from 1851 in January to 1848 with a 2 day long handle (bull flag). Broke out of the handle today. Might go back and backtest it before resuming up. Within the handle there was a wedge down starting at 1842. Wedges (diagonals) can spawn deep retraces and we’ve got one going on. SPX retraced almost all of the wedge (so far). The move up from 1825 also formed a wedge that broke down. Perhaps that gets a deep retrace to backtest the bull flag at 1828-1830 or not.

    QQQ – made a perfect 2 day expanding wedge with 2 ABC’s in it to form a larger ABC.

    Impressive rebound.

  5. Before Monday, if market does not boom again then it is in serious trouble..

    I think Monday stock market is going to be should come as a volatile day..if that happens then this rally ends..MONDAY is definitely IMP day for markets.

    However, If it does not react before Tuesday, then we are touching at least 1859.

    Strong rally stopping all of a sudden at 1840ish should come as a good news for bears. Bear market rally have typical characteristics like the one we saw from 1738-1840ish…

    Will LIKELY open SHORT position on Monday.

  6. Have a wager going that this wave from 1737 area up to 1847 will turn out to be ‘fork bottom/fork top’, or a sort of double bottom and double top. Happy that it’s a small wager, but what’s money for anyway. Looking at Tony’s 60 min chart, see the fork at 1737 area & the low just before that it bounced off of? Think that will happen with 1847 & next stopping place at the top before rolling. JMO, if I had to guess right now. LLAP.

    Last post.

  7. Well I must say being short no fun. US markets are amazing nothing matter around. Sitting on my hands getting crushed . I feel like the the NY KNICKS .

    • Yes short squeezing is essential before a HUGE DOWN MOVE, they want all Bears battered, broke, and confused before they drop her. On the other hand, it seems like they’ve had done a great job making Bulls believers.

      • Iamanewbie lets face facts and I say this from a heavy short position the market is not going to make a huge down move. But I do hope your right for once

      • truthtrader, lol, For someone either bear or bull your words “market is not going to make a huge down move” encourages me even more that the market is going to rip peoples heads off. Bubbles pop and bull runs end and nobody rings a bell at the top.

      • oneandonlyuniverse says:

        Hey Newbie,
        I was checking out your post from last week:
        imanewbietrader says:
        February 13, 2014 at 4:38 pm
        As soon as tomorrow, no later than Tuesday some pertinent information is going to be released, that information will be the catalyst for the next move (hint: HUGE DOWN MOVE)

        Just curious, did you think that the USA winning the gold medal in ice dancing was going to start a world war? Since it is Thursday, and this world event was suppose
        to happen ” no later than Tuesday “, I guess we are safe now. Thank god, now I can return all of the canned food and iodine pills I bought last week.

        Keep it freaky and free

      • oneandonlyuniverse, I’m glad your such a big fan, send me your address and I’ll send you my autograph, LOL. My timing was off but you can bet your britches something is brewing, I wouldn’t return the canned food and iodine pills just yet.

  8. JK1987 says:

    Feel like Tony’s 1841 inflection will pass and continue up.
    Took the loss on TSLA short at 210, loss 15 points.
    Covered SPX short at 1839, flat.
    I am wrong means I am wrong, simple as that, not arguing with the market.

    • Even if spx gaps up over 1841 tomorrow’s open, it has to contend with 1851 resistance. This is a strong resist. area right here. LLAP.

    • +1 JK. It takes a strong (wo)man to admit her/his mistake! Move on (and go long!?) and take the next bus is all we can do

      my take on TSLA with today’s price action: : note ii of 3 maybe (ii) instead since the move from what I have labeled as (a) to (b) , may have been 5-waves instead but is a tuff one to count. Regardless, trend is up and that’s what matters.

      • JK1987 says:

        I see your new entry of TSLA at 210 with wave (iii) surging.
        Also your new entry of SSO at 101, about SPX 1838, looking for (iii) surging too?
        Should be profitable trades.
        I believe SPX will make new high above 1851, based on the observation of SPY.
        SOX also new high today.

        • looking for profits as usual 😉

          SSO was late entry due to portfolio reshuffle, may add more later, bought based on the alt “intermediate i and ii” count of Major 5 and Primary III, which -see past weekend update – I translated into a possible PIII peak at SPX ~2100… (gotta put my money where my mouth is 😉 ) hence I see it as a downside risk of 30 points, and an upside reward 300…

  9. mjtplayer says:

    DOW & S&P both at the .618 retracement from yesterday’s high. Also, the SPY 184 strike has large open interest and is acting as a magent into expiration tomorrow. It should be difficult to push up to new highs, likewise it should be difficult to get a sell-off before tomorrow’s close.

  10. all time highs coming up?

  11. manunidhi21 says:

    Namaste Tony!
    “”If not an impulse wave, and part of a B wave, it may not even overlap 1827 at all. “”

    Plz make us learn the OEW rule to that ?
    was 1925 considered an overlap ?

  12. tommyboys says:

    Insiders been net buyers last couple weeks…

  13. tommyboys says:

    No credit stress seen at the Fed…calm in fact.

    • rc1269 says:

      should there be…? last i heard we are full steam ahead, 5 years into this economic recovery. not sure why we should even be contemplating the possibility of credit stress at this point

      • tommyboys says:

        An indicator to watch in being prudent evaluating market conditions. Just because things are rosy on the surface doesn’t mean trouble can’t be brewing underneath. This was the number one issue in ’08 and many fear it’s still THE issue. Looks good right now.

      • tony caldaro says:

        Do not see any credit stress yet either.
        Europe’s CDS, whose credit is far worse than the US, is basically flat line.

  14. JK1987 says:

    Chart of Primary V

    My TSLA 195 short got squeezed hard, but the hope is the day after V.
    Should have listened to bj of the perfect prediction of 220 after earning. I am proud of bj.

  15. torehund says:

    Bulker/China watch out. Thinking a 2000 point retrace in the latter. Will do bulk good. Shpip is rallying, thing the others may follow.

  16. 1825 then 1835, what now ?

    Can we see 1809-1800 today/tomorrow?

    • tony caldaro says:

      If it clears 1841 it probably keeps going
      If not lower lows for the +div
      These are not trading recommendations, just observations.

    • bhtrade says:

      1st down day in 2 weeks, bearish engulfer off the all time high retest. A tiny bit of follow thru today and bears pack it in again. Agree w Tony, < last night's highs sets up a bullish divergence buy. How many times has Friday been down in last several months anyway?

  17. blackjak100 says:

    Tsla right on track – $215 in reg market and $225 AH. Now reversing. If $206 (pre earnings top) breaks, I think you can be short the stock.

  18. mjtplayer says:

    10am POMO ramp right on schedule

  19. xela0 says:

    Looks to me as this move down was 5 waves?

  20. Now under 1826-27, what now, Tony?

  21. uncle10 says:

    Hey Tboys, I am in fannie and freddie with you. What is your price target? Thx.

    FB buying What for 19 Billion? Geez, I remember when a billion was a lot of money! and you had to have real profits to have a billion dollar company. I guess all the rules are different for the “new economy” that is social media. Who remembers new economy vs old economy in the late 90’s?

    • tommyboys says:

      Hard to say. I’m holding based on a feeling the Fed will be forced to let go and stock runs to $10+ next 12-24 months? If this occurs it’ll make it’s big move in a day and could go much higher – 10 bag over time? If it’s not released from conservatorship will go to zero ultimately. Rumor will drive it ’til then. Don’t count on technicals to work for more than intraday with this one…and intraday it’s oversold so watch for it to rally this afternoon – fwiw!

  22. rc1269 says:

    ES all but destined to close that gap from last night? don’t see how that doesn’t get back to 1827 before too long

  23. lunker1 says:

    here’s the IHS.
    RSI5 bottoms out (red line) near the RS area?
    1814 = 60min 89EMA and Daily 13EMA
    1809 = Daily 34EMA
    1808 = the .618
    1806 = Weekly 13EMA

    watching the black resistance TL for clues

    • 16golfer says:

      Lunker, thanks for the charts. Isn’t that head a long way from the left & right shoulder now forming? Not aware of any guideline for distance, but that would be one huge head, distance wise.

  24. Tony – you wrote “If not an impulse wave, and part of a B wave, it may not even overlap 1827 at all. It touched it today.” Excuse my ignorance, but I don’t understand what you mean. Can you please elaborate.
    your confused student 😉

    • rounder1944 says:

      I believe he may mean a gap down

    • I was puzzled by this also. I think he means that the b downward part of an a-b-c upward correction should be fairly shallow because most of the downward price movement takes place in the A and C downward corrective waves of the higher degree A-B-C downward correction. In other words the movement of the correction to the major corrective A wave is mostly up. Whereas if this downdraft is a corrective wave of a larger upward impulse pattern, it would need to go down somewhat more because it is the entire corrective portion of what is mainly an upward price movement. When I speak of 3 wave corrective structures, I am talking about an ideal structure. Tony has pointed out that corrective waves can be 7 wave structures which he calls double zig-zags. If you break the main B upward corrective wave (the upward corrective wave to the A downward corrective wave of higher degree) into it’s component a-b-c waves, you end up with a count of 9 waves. I hope this is a correct explanation.

    • tony caldaro says:

      The SPX could do 7 waves up with no overlaps.
      A higher high would be next.

  25. in the small cap folio: buy out confirmed: Zale and Signet Jewelers (SIG) confirm agreement for Signet to acquire all of the issued and outstanding stock of Zale for $21.00 per share in cash consideration . now show a 441% open profit.on $ZLC, bought at 3.86 on march 5, 2013 – folio of all stocks shortly there after posted on blog. search for it , it is there.

  26. lunker1 says:

    Hey CN thanks for the props on yesterday’s update. It means a lot to me. As well as Lee’s +1. I’ve learned a lot from so many of you and I really appreciate it. In the past I’ve always been one to overthink and over trade the market and would literally drive myself mad at times with obsessive over-study and “trying to get the count right” but I’m finally seeing the forest thru the trees and it seems to be coming together for me lately. Just this week I stumbled on a simple use of trend TL’s for entries and exits, and backtested it and it looks solid, along with using Tony’s count, pivots, RSI5, MACD, etc. So I’ll keep you posted on what I see. Thanks again. GL.

    • robnaardin says:

      Lunker: Here’s what I saw yesterday: The spx backtested the 1343-1560 tl yesterday. Now it’s backtest the fork time.

    • CygnetNoir says:

      Just when you thought no one was paying attention, eh Lunker? 🙂 We’re all in this together, but not everyone here gets that. You do, and I appreciate your shares.

  27. gtoptions says:

    Thanks Tony
    Noticed some interesting symmetry on the SPY chart today.
    Oct 9-22 & Feb 5-19 Similarity (10 bars ~ 11 points ~ Identical amplitude)
    Let see how it plays out. 😉

  28. M1 says:

    spx suggesting this rally from 1737 was a fifth wave of something.
    NAZ suggesting the same.
    dji suggesting this could be only wave a of B.
    and Facebook buying wattsapp for $19B suggesting we are in a bubble.

    • M1 says:

      ..and I am expecting NDX cycle wave 4 (a drop of +27%= below 2700)

      • valunvstr says:

        You’ve been expecting a big drop for 200+ points. Come on already! 27% drops don’t happen with an easy FED, inflation at 2% and reasonable valuations. NEVER! 20%? Maybe but you’re just guessing.

      • M1 says:

        waves and fib relations. Thats all.
        Cycle wave 1, from 2002 low to 2007 highs
        Cycle wave 2, from 2007 highs to 2008 lows (+61.8% retrac/simple zig zag correction)
        Cycle wave 3, from 2008 lows and still unfolding.
        Cycle wave 4, (it should retrace 38.2% of cycle wave 3)
        Now make the numbers and you will find the answer. Thats your homework

  29. pooch77 says:

    Gonna be ugly tomorrow,couldnt take hint from trannies China pmi 7 month low

  30. thanks for the update Tony; nice intra-day reversal for a change. Bears are already growling after 1 red day. Takes a little more than that to become bearish, IMHO.

    Y’day I mentioned “I will be watching TSLA tomorrow. I have a major 3 target in the $209-$218 range… If it gets there intraday tomorrow I’d be cautious, but if AH is blast off anyways then what I thought were minor 3 and 4 were only minute i and ii…” and ” I already sold it last week (risk/reward getting too high IMHO, so I figured I’d be better off putting my money in something else that has a better risk/reward; e.g. SCTY 😉 I know another momo-stock 😉 )”

    well TSLA had a red day and then a blast off AH, so minute i and ii it is, IMHO.

  31. 16golfer says:

    +1 CN

  32. Hi host – hi everyone

    Both DOW + SPX on the daily demonstrated a reversal on the MACD histogram with MACD<0.

    This signals the end of B and beginning of wave C down (or the end of wave 1 up and start of wave 2 down).

    If market closes above the recent highs, then we going higher, if closes below recent low, we are going lower.

    Went short with a stop at the recent high. If stopped out, I will initiate new long targeting 1950 (remember this number from the past?)

  33. Jennifer says:

    U.S. stocks dropped on Fed minutes; Facebook buys WhatsApp for $16!

  34. pcskier says:

    $nikk got rejected at the it’s 20 Day ma. It appears the $indu got rejected at it’s 50 DMA. Next, will the $nikk stay above it’s 200 DMA, If or when the $nikk breaks back below it’s 200 DMA, that should be the tell for what will happens here. We may have clarity tonight. I expect the $nikk to break below it’s 200DMA very soon. It seem like the majority of Tony’s followers here are bullish. In my opinion being long here is like playing a game of chicken. I know the Algos are still squeezing shorts like TSLA tonight, that how they make their bonuses. We have had almost a 5 years bull market run, QE has been the driver. If we are going to have less and less QE in the future; What will reflate the global risk markets to new highs??(please share your opinion) When $indu hit the 200 DMA back in december it bounced with a passion, this time when it went below it’s 200 DMA it stayed there for a couple of days. Momentum is getting weaker. I believe a crash will occur when everyone heads for the exit door at the same time, and i believe that time will be soon. Maybe Monday or Tues??

    • bhtrade says:

      1st down day in 2 weeks and already the talk of crashing from near the highs? Sheesh, some people never learn

      • pcskier says:

        Are you expecting earning growth, revenue growth, spike in home equity loans to boast GDP. What is the catalyst for higher equity prices. Last 2 weeks was the rubber band snapping back. What is going to push the $indu to new high? The trend? The 20 DMA is pointing down, the 50 DMA is rolling over we pierce the 200 and yes SnapBacked to a level in the past we people were too happy to sell into.

      • bhtrade says:

        My point was simply this: playing for a crash from the highs is a sucker play. Markets don’t crash from very overbought, they crash from very oversold (i.e. 2 weeks ago it was ripe). Besides, during bull markets almost all very oversold conditions yield intermediate term lows and that is exactly my expectation for spx 1738. As of now this is nothing more than a *much* needed pullback. And yes, trend alone has taken this market much higher than many thought it ever would.

        One question: if this bull market is supposedly all due to QE and elimination of QE is now a known outcome, does it not concern you as a bear that we are again right near the highs. It would concern me if that was my hypothesis.

      • valunvstr says:


        You bring up GDP as if it has anything to do with equity prices. This is why investors don’t perform well over time. A general misunderstanding of how markets work. With the exception of recessions (and that is still not 100%), there is NO CORRELATION between GDP growth and equity prices. Man o man…

      • pcskier says:

        No i am not worried as a bear now, if the price of $indu stayed above the 50 DMA longer I would of gotten a long term buy signal. But it didn’t, don’t get me wrong once the $indu popped above the 200 Dma i knew the market was going to snap back and rally to at least the 20 DMA once that was cleared the next target was the 50DMA. From my View with $indu it matters that the 20 DMA(pointing down) is below the 50 DMA and that the price of $indu was rejected at the 50DMA. I am looking for a bonfire crash for a number of reasons some are proprietary(as tony calls them), once the probable uptrend is question(today) and ruled out(real soon) basically everyone is going to head for the exit door at the same time and sell orders are going to overwhelm buy orders no bid. This recent rally was fueled by shorts covering initially booking profits and than by getting squeezed. My smart money friends have been selling SPY calls near the peaks and again late last week, but when they get the confirmation signal they will be liquidating positions. As tony has been saying all year $indu is the weak link. All the old smart money guys know everything else will eventually follow the Dow 30. That being said i could just be a;

        I took my wife to the above shows, her first of many, great times

      • pcskier says:

        @Valunstar. No i want a reason why the $Indu will make all time highs again from you bulls. I don’t follow GDP with equities at all. I was just throwing example of what you bulls might be saying as reasons why we would make all time highs again. I believe the only thing that will get the $indu to new all time highs is more QE like 110 billion per month and thats not happening unless we get one nasty correction first!!

  35. mike7x says:

    Thanks Tony. I’m routing for gold. And not only at the Olympics.

  36. Lee says:

    Thanks Tony
    Just wanted to say something then I’m going to take a step back here.
    The minority here wishing others to get clown humped in the markets is a slippery slope and also very bad juju. The gotcha game is one played often on blogs but the guys/gals who really hit the enter button know that trading is hard enough without worrying if the other guy is getting paid or slammed.
    How much does getting calls right on the blogs pay lately anyways ?
    Yours Truly
    Lee “I hate the internet ” Mc Brewski

    • rc1269 says:

      i think it’s $0.13 per post but i’ll have to check
      i prefer my humpings to come from sad clowns, but as you say sometimes we don’t get the choice.
      peace my man. true words

    • Young Tom says:

      It seems I missed your 50th birthday greeting. So happy birthday! Hope you are still a little wet behind the ears. I was when I turned fifty, now that is 1 1/3 decades removed, I still detect a little moisture there. It’s how one stays young and in the game. Yes there is no easy button in this venture.

      • Lee says:

        Hey YT
        You didn’t miss it , someone here assumed it was my B Day and then Tony being a great host wished me Happy B Day so thank you !
        ahhh the internet

    • lunker1 says:

      Lee have a Happy 😉

    • robnaardin says:

      “How much does getting calls right on the blogs pay lately anyways ?”

      I think it’s 2 pennies to piss on.

    • torehund says:

      Nat gass and coffee is speaking Lee, and oil not bad either. Looks inflationary to me…,and be bad to your neighbor, he senses it and becomes better than you 🙂

      • Lee says:

        Hey tore they sure are , not sure about inflation just yet but it’s certainly coming and that’s been the plan all along right ?
        Not sure what u mean about being mean to my neighbor and he becomes better than me?
        Congrats on ur gas and gold 😉

    • tony caldaro says:

      For the life of me I can not understand why some people come here and still think they are posting on a public Yahoo BB.
      We are supposed to be here to help each other, not help our egos.

  37. JK1987 says:

    Tony Thanks
    2 keys as you Said.
    SPX 7 waves can still be B wave.
    DOW seriously lagging (should not because of DOW never truncate).
    And you discounted SPY new record high today.

    bj were right, TSLA 220 after earning, my TSLA shorts got squeezed, hold on to see what happen to this PRI V. Well, just a slice of hair cut of my TSLA long profits from 128 to 200.
    After PRI V, it will be down, that’s what I am betting on.

    I am proud of Lee.
    Envy your turning 50.
    Senior moment.
    JK1987 says:
    February 14, 2014 at 1:07 pm
    To celebrate Lee 50 birthday, let’s do half here at 1839.

    • blackjak100 says:

      Ty JK. however, it would not shock me if it heads lower in the coming weeks. As far as gold, your 137 target looks good just after a decent pullback.

    • CygnetNoir says:

      SPX is all that matters to wave counters – a new all time high in a derivative instrument such as the SPY when unaccompanied by the same in the cash index hardly rises even to the level of white noise, especially when that “new all time high” is by a 1 cent increment.

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