thursday update

SHORT TERM: dip then rally, DOW +93

Overnight the Asian markets lost 1.4%. Europe opened lower but finished mixed. US index futures were lower, then higher overnight. At 8:30 weekly Jobless claims were reported lower: 336k v 339k, and the CPI was reported higher: +0.1% v +0.3%. The market opened three points above yesterday’s SPX 1829 close. Then it ticked up to SPX 1833 before heading to a lower low at 1825 by 10am. At 10am the Philly FED was reported lower: -6.3 v 9.4, but Leading indicators were reported higher: +0.3% v +01%. Then the market started to rally. Heading into the close the SPX hit 1843, with only a 4 point pullback along the way. Then a late dip ended the session at SPX 1840.

For the day the SPX/DOW were +0.60%, and the NDX/NAZ were +0.60%. Bonds lost 7 ticks, Crude ended flat, Gold rallied $13, and the USD was higher. Medium term support remains at the 1828 and 1779 pivots, with resistance at the 1841 and 1869 pivots. Tomorrow: Existing home sales at 10am, and it is Options expiration Friday.

The market opened higher today, even after some futures selling overnight. Then it dipped two points below yesterday’s SPX 1827 pullback low before entering rally mode for the rest of the day. We now clearly have five waves up from SPX 1738, with either the fifth wave from 1809 extending or the entire rally extending. With today’s rally above the 1841 pivot, as long as the market can hold the +/- 7 point range, it should head towards new highs soon. A break below SPX 1834 would suggest this current advance was a B wave and a slightly lower low (under 1825) should be next. This market continues to track impulsively.

Short term support remains at the 1828 pivot and SPX 1814, with resistance at the 1841 pivot and SPX 1851. Short term momentum has risen from extremely oversold to nearly overbought. The OEW short term charts turned positive again with the rally over 1830, and the reversal level is now SPX 1832. Best to your trading Opex tomorrow!

MEDIUM TERM: uptrend probable

LONG TERM: bull market

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

About tony caldaro

Investor
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90 Responses to thursday update

  1. Tony:
    Thanks for your answer of the earlier question I posed about the test of the 1825 level and my discussion of it with JK1987:

    “The B wave noted in Thursday’s post would be as small b wave for a retest of 1825, or lower, not a Major B wave.”

    Your explanation seemed consistent with the analysis that I posted on Thursday, although, if it hadn’t been, I would have been just as pleased to hear it.

    Of course now have have to worry about whether this rally sustains it’s impulsive nature and breaks through 1851. The strength of the NYSE A-D line gives me encouragement, but today’s hesitant behavior is discouraging.

    • “Of course now have have to worry about whether this rally sustains it’s impulsive nature and breaks through 1851.”

      Should read “Of course now we have to worry about whether this rally sustains it’s impulsive nature and breaks through 1851.”

    • tony caldaro says:

      George,
      Short term this market can do anything.
      It has come a long way without a very meaningful pullback yet.

  2. pcskier says:

    $spx goes lower than 1824, I believe that will be confirmation for the algos that the bounce will be over and liquidation will occur.

  3. JK1987 says:

    I guess SPX 1736 close. 🙂

  4. llerias7 says:

    Overall the market has been FLAT for two months in a row, has not?
    Best position at the moment: cash!

  5. waddaguess says:

    This what i see from 1824.

    1837-1833-184-51840-1846….5 up
    1841-1844-1837…..abc down

    I am in the camp that 1848 was a 1, 1824 a 2. Under 1837 will alter my thinking.

  6. buddyglove says:

    Huge amount of Put options expire worthless today, and smart money pockets the premium…..the market can now go down again imo.

    • perceval7 says:

      Buddy, they take us out at the high at 4? Then dive next week……? BTW – m and t are both big POMO days next week. Maybe they hold us up for the end of month window dressing? Thoughts?

    • simpleiam says:

      “…..the market can now go down again imo.”

      Very possible, Buddy. It likes to do that.

    • pcskier says:

      $spx goes lower than 1824, I believe that will be confirmation for the algos that the bounce will be over and liquidation will occur.

  7. SPX shud jump abt 10 points from this level preferably Monday for the correct set up. Things are ATM not looking good for that set up. I wish some crazy bull just start mopping up all shares…I am praying for some good news on monday…dont know what announcements are scheduled for monday but hope to c some news

  8. blackjak100 says:

    Gold just finished a perfect 78.6% retracement as a double zig zag after a leading diagonal. This is very common retracement after leading diagonal! I’m still short and added just below that. Stop right above today’s high. Hopefully I don’t eat crow here but I think gold goes lower from here.

  9. CygnetNoir says:

    Thanks for the Props, JK198, it’s nice to see that you aren’t only interested in rubbing folks noses in their losers. Good luck on your SP short …

    JK1987 says:
    February 21, 2014 at 11:56 am

    CN Wow … #Timestamp short near the highs and #Timestamp covering near the lows – way to go!

    CygnetNoir says:
    February 21, 2014 at 8:44 am
    Nat gas is cheap short here, imo, stop above this week’s high – they don’t call it “The Widow Maker” for nothing, you know.
    CygnetNoir says:
    February 21, 2014 at 10:50 am
    I’m taking some off down here, Lee, as I never like to give back too much of a windfall.

  10. pcskier says:

    Crux time in few.

  11. gtoptions says:

    Thanks Tony ~ Midwestern Winds are blowing, must be spring. 😉
    SPY ~ RSI & Momentum are there for the breakout. If not we should gap over that pesky resistance.
    GL & Good Weekend all.

  12. purplember says:

    bad existing home sales. news doesn’t matter. market goes UP .

    • tommyboys says:

      Was generally expected. Many actually expected worse. Weather issues combined with reduced supply – which isn’t all bad on it’s own.

      • rc1269 says:

        when is worse than expected allowed to be bad? the two factors you list were well known by all the forecasters when they estimated the number. and it still came in worse than forecast.
        what is the threshold for underperformance when something is finally allowed to be considered bad news? a one, two, three sigma miss?

      • purplember says:

        tommy, it double what they expected. west down 7.3% west not having bad weather. good grief east coast PPL get bad weather and it’s excuse for everything.

      • tommyboys says:

        Purp…it’s been an anomalous year. Talk to anyone in the midwest, east or southeast. I’ve postponed several purchases. I hate to even go outside. I gotta move…

        RC…referring to what they call the “whisper number”… we’re in a bull market. All news is bad in a bear. Right now we have somewhat the opposite imho…

      • simpleiam says:

        tboys, I think purplember makes a very valid point about Housing in The West down twice what was forecasted. As there are Permabears on this blog, so I think you’re possibly a Permabull. No offense meant. I’d rather read optimistic posts than doomsday posts anytime! GL.

  13. JK1987 says:

    Sell SPX 1845, stop 1848.
    Art Cashin well said, failure of the failure.

    In the mean time, sell oil here, stop 104.
    Right shoulder.
    http://stockcharts.com/public/1092905/chartbook/270002637;

    • pcskier says:

      Call of the day for fun, $indu closes today @16073.

      • 777daimon says:

        the call of the day: new highs today!
        3rd and out! 🙂

      • CygnetNoir says:

        JK1987 says:
        February 21, 2014 at 11:00 am

        The call of the day has got to be CN’s short nat gas call

        CygnetNoir says:
        February 21, 2014 at 8:44 am

        Nat gas is cheap short here, imo, stop above this week’s high – they don’t call it “The Widow Maker” for nothing, you know.

      • lunker1 says:

        Call of the day. Kate Upton won’t show up at my doorstep today. She’s too busy.

  14. mjtplayer says:

    The existing home sales data just released was awful, as has been the housing data for the past couple months and the economic data as a whole. The economy has notably slowed since Oct/Nov per the Dec/Jan data, the market at/near highs must mean the market expects the Fed to “taper the taper”. I don’t know why, the Fed has made it clear, tapering will continue. Expect another $10b of taper in 3 weeks, then another $10b in April; I wonder if the market will be caught off-guard by this?

    • torehund says:

      true but this is the bottom of the slowing from october, remember a triple abc down. At bottom you buy, nat gas is telling more of the truth about industrial ramp up emerging.

  15. CygnetNoir says:

    Nat gas is cheap short here, imo, stop above this week’s high – they don’t call it “The Widow Maker” for nothing, you know.

    • 16golfer says:

      Thanks CN! Winter is coming to an end soon, so it makes sense.

      • CygnetNoir says:

        Purely a price action trade on my part golfer – I don’t trade funnymentals, as Ed Seykota called them. I am starting this one as a day trade, and I’ll see where it closes. My stop is in, and if this closes near weekly lows, I’ll carry some short over the weekend. If it closes above the midpoint of today’s range, being nat gas, I”ll likely close out whatever profit I have. New highs for the week and I’ll take my lumps and likewise go home flat.

    • Lee says:

      Nice lil hit CN
      salute !

    • uncle10 says:

      Thanks CN.

    • torehund says:

      CN-its spring soon, and nat is breaking out, who is using this nat gas ? They say there isn’t a better cure for low prices than low prices…and Japan is addicted to it..I am a bull still and even my ch 7 company Norse energy at the otc is going through the roof- up 233 percent. ” When zombies walk what will the alive ones do..”

      • CygnetNoir says:

        I don’t know who’s buying or who’s selling – It was a great day trade opportunity when it got woozy at the week’s highs, and had it closed at or near its lows, it would have been an overnight hold for a possible gap down Monday. Right now, the last three days look more like a bullish consolidation than a bearish reversal.

        Opens and closes, highs and lows – if you take your cues from what price does at these four areas throughout the day, day trading gets real simple. But it sure ain’t easy 😉

      • torehund says:

        CN-if it feels very wrong its possibly right, or very very wrong 🙂

  16. tommyboys says:

    FNMA reports more than $6B profits in Q4 and $84B in 2013. Going forward it’ll be more like $23-$30B/year profits. Trading just under $19B cap. If they’re released at some point it’ll rocket 20 points in a minute. If not they go to zero. Great R/R IMHO…

  17. Lee says:

    Lee says:
    February 21, 2014 at 8:22 am

    Thanks Tony and have a great weekend all and remember to use stops as u can always get back in.

  18. Good morning happy friday. I first off give Caldaro a lot of credit and appreciate that he tries to help navigate us through this market. The reason I have dropped off the EW band wagon is because Elliot purpose was to forcast market trends and market behavior. When you have a market that has no memory from day to day. Back in my day you traded stocks and invested because the stock made sense as a business. Now they mean little. As I remember well Natures laws. the secret of the Universe in 1946 Elliot stated “man is subject to rythmical procedure” this no longer seems to be case with the quants. I think now EW is to vague. Goverments , technology, economies and social sytems have changed and for the most part so has the behavior of people. Markets have evolved but the style of Elliot has not. This is why I give Kudos to Caldaro for being objective with a style of TA that for the most part has all its effectiveness fade away.

  19. lunker1 says:

    Was 1809 four of three and was 1825 four and now we’re in five to make a new high to 1862/76 (pivot range) to complete wave one and wave two would be a .618 retrace down to 1790-1800?

  20. bobhopium says:

    Stock Indices looking weak here and ready to roll over imho…Preparing to short with a view of early Feb lows being deeply tested and maybe exceeded…aimho…GL to us all.

    • magicianme says:

      Hi guys, my first post here.

      bobhopium, I’ve betted before against the bullish trend of the S&P … to my cost. There are several good indications that a reverse in direction should happen today. At least for a bit. The carry trade USDJPY – a pair the S&P is often highly correlated with – has been rocketing today but no sympathetic response in the S&P. That’s weakness. There’s bearish divergence in the weekly and in other charts. We’re very close to the previous all time time but with lower momentum this time. All making a good case for the bears.

      However, the S&P is the S&P. Maybe it’s time to stay out and let it decide direction.

    • tommyboys says:

      Bob…New all time high NYAD yesterday FWIW…

  21. bobhopium says:

    Think Cable just put in a low @16620 area…structure looks good for 16950…Gl to all.

  22. 16golfer says:

    Welcome Maria Castro! You seem very well informed on Gold. Do you have an opinion on the $SPX and Dow? Thanks and Cheers!

  23. 777daimon says:

    “A break below SPX 1834 would suggest this current advance was a B wave and a slightly lower low (under 1825) should be next.”

    Half-way back : 1830 area only (+/- 1,5-2 points) …and that’s it…. after that we will rocket up!
    Shorts beware! Use this area to cover!

    …. a-b-c in a Primary IV ? or even a full “c” in a wave 2 flat under 1825 ?!?!?!?!
    not in my house! :)))

  24. JK1987: Thanks for replying to my comment with Tony’s quote from the Tuesday site. If I had remembered that, I would not have replied to your post with the statement that I made. Thanks also for being honest about your failures as well as your successes. The promotes the integrity of the site.

  25. Hi Tony – Hi everyone!

    A minute wave upwards just completed today: more evident on the DOW 10-15min charts

    This is it:
    – A daily close above today’s high, and I go long to 1950 on SPX
    – Configuration does look bullish on the 60min charts
    – Contrarian play: I am short with the STOP at the recent high

  26. torehund says:

    http://www.investing.com/etfs/market-vectors-coal?cid=44516

    From 50 to 18, looks like a complex abc down that consist of 3 separate waves. And if it stops here a higher low too ! What a grueling downturn, hope coal follows the softs.

    • torehund says:

      Coal is like a man in the deep trench…you aren’t afraid of falling when you are there..what concerns you is to be buried alive. Thats coal mining today, and many comps are near BK as the lows are tested !

  27. RDC says:

    Thank you, Tony!
    Gold/Miners’ bulls are in full control.

    • torehund says:

      RDC: Atna rescorces made a higher high from last pop 6 months ago intraday whilst GLD broke a previous high. Should be some upside the next days.
      Some dollar strength the last days that might wane. Still sure gold looks ugly long term but that doesn’t hinder us from trading it.

    • tony caldaro says:

      got the gold uptrend at their back

    • blackjak100 says:

      I might be wrong, but I’m short gold at these levels. Why? The drop from $1332-$1308 looks like a leading diagonal followed by a deep abc retrace which is very common after a leading diagonal. However, needs to be confirmed quickly with a drop towards $1290. Sustained trade above $1327 and I’m out.

      I do think we see $1400, but only after we test 50 Dma first around $1250

      • RDC says:

        I think we will see gold $1500 by summer. Junior Gold miners are the best play in this rally.

      • Maria Castro says:

        Yeah I just don’t see any reason why Gold would stop here. It makes much more sense that it would test the $1350-60 area which it should by next week. Seasonality is still strong until March 1st http://www.signalfinancialgroup.com/seasonal/SeasonalGC.php

        Also the Miners were very strong today. The $HUI made new 2014 highs today. I highly doubt Gold stops here. Interestingly enough and not mentioned here at all is the fact that the miners seems to be in the middle of a C in a extended flat. Typically the 3rd wave of C(which we are in now) retraces around .786 of B. That would put the $HUI at 260 minimum. Gold going to 1350-60 should provide the strength to do so.

        I’ve learned many times not to short when seasonality doesn’t match and right now is too early. End of next week or first week of March should be short-able.

        Cheers

      • blackjak100 says:

        Maria, thanks for the input. I don’t make the waves, the market does. This is what I’m trading off of and this is what I see. It looks like we just completed a perfect ABC from $1182-$1332 where A=C in a fib 34 days. Gold is up 12.5% off the low in less than 7 weeks….not sustainable!

        I might be wrong, but just telling you what I see since this an EW/OEW site.

      • Maria Castro says:

        Got it Blackjak. Understand 100%. Everything is subjective so all is up to the observer.

        I’ll say this though. Aside from Elliot wave, Gold in the past does typically retest previous highs(i.e 1350/60 and 1434) before going lower. So that’s also another reason to expect 1350-60. Today may have been the decider however in it going lower. It held the 200ma nicely and bounced all the while the miners made new 2014 highs. As as sustainability, well we now how that goes. I 100 % agree though that when i does decide to correct it will do so to at least the 50ma or so and then by Late April it will complete at 1400 and above.

        BTW SLV has a massive GAP that the computers wold love to fill at 21.50/21.86. that would equal 22.30/22.60 on silver futures. In order for that to happen the complex needs another rally to complete this.

        Good luck,

  28. pcskier says:

    Do you any of you guys use ADX? The red got above the green with $indu daily yesterday, it’s been above on the $indu weekly for a while. If SPX makes a down day tomorrow the red(-di) should cross the green tomorrow also. I will be a nervous bear if $indu closes above 16175 tomorrow.

  29. JK1987 says:

    Tony Thanks
    Yesterday was “it can still turn into a B wave with seven waves up”.

    But today adjusted as “We now clearly have five waves up from SPX 1738,”
    Does that mean time to retire Major B of PRI IV?
    Because 5 waves up from 1738 can not be wave B.

    “it should head towards new highs soon. ”
    I see the same because of the observation of SPY new record high always followed with SPX new record high.
    So I took a large loss on my short position on TSLA, and closed out SPX 1839 short flat.

    • Tony didn’t write “it can still turn into a B wave with seven waves up” on Wed.
      He actually wrote:

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

      You inferred that he meant “B wave” but he did not explicitly say it.
      I wrote a kind of interpretive remark about it yesterday which nobody commented upon. Believing you can accurately categorize what the higher degree wave is by counting the number of lower degree waves seems to me to be a kind of illusion for reasons that I gave in yesterday’s comment. The bottom line is: It depends on how many sub waves you want to include in your count.

      • JK1987 says:

        Tony did not explicitly say it.
        Here is the complete quote from yesterday:
        It was the comment made after SPX hit 1847.5 yesterday.

        tony caldaro says:
        February 19, 2014 at 10:59 am
        JK
        It looks impulsive but,
        1. we have not confirmed an uptrend yet
        2. we have not made a new high yet
        3. the DOW is still lagging quite a bit
        4. it can still turn into a B wave with seven waves up

      • tony caldaro says:

        Hi George,
        JK likes to echo what other people said and when, copy and paste.
        The B wave noted in Thursday’s post would be as small b wave for a retest of 1825, or lower, not a Major B wave.
        The Major B scenario is losing ground as this market continues to impulse: five up to 1848, down to 1825, now up to 1843.
        We have done some additional historical analysis this week, and will present it in the weekend update.
        cheers!

  30. micheletonon68 says:

    Sorry Tony, I did not clearly understand where we are. What are we expecting next, more probable?

    • lunker1 says:

      did you read?

      “We now clearly have five waves up from SPX 1738, with either the fifth wave from 1809 extending or the entire rally extending. With today’s rally above the 1841 pivot, as long as the market can hold the +/- 7 point range, it should head towards new highs soon. A break below SPX 1834 would suggest this current advance was a B wave and a slightly lower low (under 1825) should be next. This market continues to track impulsively.”

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