tuesday update

SHORT TERM: choppy day, DOW -27

Overnight the Asian markets gained 0.4%. Europe opened lower and lost 0.2%. US index futures were lower overnight. At 9am Case-Shiller was reported higher: +13.4% v +13.7%, and the FAHA housing index was reported higher: +0.8% v +0.1%. The market opened two points above yesterday’s SPX 1848 close but immediately started to pullback. At 10am Consumer confidence was reported lower: 78.1 v 80.7, and FED governor Tarullo’s speech was released: http://www.federalreserve.gov/newsevents/speech/tarullo20140225a.htm/. The market had also pulled back to SPX 1840 by 10am, and then started to rally. At 11:30 the market cleared its previous ATH at SPX 1851, hitting 1853, but then started to pullback again. At 2pm: http://www.federalreserve.gov/newsevents/press/bcreg/20140225a.htm. This second pullback hit SPX 1842 around 3:30, then the market bounced into a 1845 close.

For the day the SPX/DOW were -0.15%, and the NDX/NAZ were -0.15%. Bonds gained 12 ticks, Crude slid 85 cents, Gold added $3, and the USD was lower. Medium term support remains at the 1841 and 1828 pivots, with resistance at the 1869 and 1884 pivots. Tomorrow: New home sales at 10am.

The market opened slightly higher today, then resumed yesterday’s afternoon selling. The decline from the noon all time high at SPX 1859 yesterday declined to 1840 by 10am. This decline overlapped the previous rally: SPX 1836-1846. Then after a rally to SPX 1853 by 11:30 today, another pullback followed to SPX 1842. Our nice clean rally from SPX 1738 has now turned quite choppy, and the impulsive pattern is getting quite sloppy. The OEW 1841 pivot range has become a magnet again. The last time the market entered its range, late-December, the SPX vacillated around it for more than three weeks before heading into a correction. This time around, the market has already spent over a week vacillating it. May need a gap up opening to finally clear the pivot and regain upside momentum.

Short term support is at the 1841 and 1828 pivots, with resistance at SPX 1851 and now SPX 1859. Short term momentum hit oversold early today, then spent the rest of the day below neutral. The short term OEW charts turned negative, then positive, and the reversal level is now SPX 1843. Best to your trading this choppy market.

MEDIUM TERM: uptrend probable

LONG TERM: bull market

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

About tony caldaro

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141 Responses to tuesday update

  1. llerias7 says:

    So we are in minor 2 (?a-b-c) of Int.III of major 5 of P3. Good to know…

  2. waddaguess says:

    Thanks for updated chart Tony. Interesting count.

  3. pooch77 says:

    Will this be the 4th day failure of breaking 1850 into close.Not looikng too promishing anymore.

  4. simpleiam says:

    Whoa. Vix ETN’s look to be loading for a drop soon. Could sell off as fast as they load though, so be careful.


  5. H D says:

    SPX has tweezer tops 1852.65 today and reaks like a triangle. an E wave would bring it back to pivot, cheap short against HOD. Just an idea.

  6. CygnetNoir says:

    When I’m bored, sometimes what I do is I find a stock that is near its break out level. And then, when it breaks out, I DON’T buy it. But then I watch it go up all day long without me. At each pause I consider buying the next new high, if it in fact makes one, but then I remeber my discipline, and again I DON’T buy the next new high! The stock then continues higher without me. Then, when I can’t stand it no more, I buy 2000 shares at the market, just as the stock likely has ticked its top for the day.

    You should try it sometime … lots of fun😉

    • 16golfer says:

      Been there…done that CN! I call it the 16golfer indicator. :-))

    • lunker1 says:

      LOL did that the past 2 months with TSLA, CRM, REGN, BIDU, QCOR, YY, VIPS, P, MTH, QIHU, OHRP. I’m telling myself that I was “studying” the charts to watch and learn.😦

      • CygnetNoir says:

        VIPS was the “Gotcha!” today for me – written in my tablet from last night “Buy VIPS $115 on Stop, sell $122 limit.”

        Well, I did something at $122, but it was not selling the longs I did NOT take at $115. You would think after all this time I would not do that anymore … but about once every quarter I seem to decide I need to pay the market another $3000 is “continuing education tuition.”

      • lunker1 says:

        funny thing is when you miss a great trade you think there will never be another one so then you press a make a bad one instead lol.

    • JK1987 says:

      Even more fun but worst is,
      I bought tsla at $128, sold at $200.
      Shorted at $195, stopped out at $210.
      And the watch it to continue to make new high to $265 without me.
      Kicking myself for not letting the profits run and had a loss on the second trade!

      Morgan Stanley has increased its price target on Tesla from $153 to $320. That’s more than twice what it was before.

      • 16golfer says:

        It’s the weather CN. Need to get out on the golf course to give yourself time to clear your mind. Come back a new person/trader. 🙂

    • RDC says:

      “THEY” know who you are so they run until you go away.

    • pooch77 says:

      Been there done it no fun

    • 7dayyss says:

      Looks like everybody had a big smile on there face from identifying with that one! So much for our self discipline! Thanks for the humility check CN.

  7. lunker1 says:

    a very technical mess to run the stops in both directions. yesterday afternoon had an ED that broke out at before end of session. SPX retraced .877 of that ED this AM and then sharply backtested the ED at 1843 in a “race to the dance” with a nearly vertical down line 3rd touch of yesterdays support TL. the pre 10AM hi and low were the D and E wave of a pennant that started yesterday AM at 1840. http://thepatternsite.com/pennants.html actually there was a pennant within a pennant. a larger one started Monday. SPX broke out above the smaller pennant at about 10:25 and then came back to backtest it twice 1849 and 1848. since today’s high the pattern is either a bull flag or a Right-Angled and Descending Broadening Formation. http://thepatternsite.com/rabfd.html the pennant might get a third touch at 1847/48.

  8. llerias7 says:

    Sorry to repeat myself but is the Healthcare-XLV in a major 3 up?
    Certainly the sector is in the tear nowdays…

  9. scottycj1 says:

    Anybody see this ? Ending diagonal in an expanding triangle/”megaphone” pattern
    Next CIT–change in trend due_____

  10. blackjak100 says:

    Maria Castro, I got stopped out of gold but did reshort at $1340 yesterday. So far, it looks like a wise move. Where do you see gold heading for retracement in March?

    • Maria Castro says:

      Hey Blackjack,

      Good move on your part. Gold got to 1345 overnight and that could be good enough for this run. The warning for me was the miners and it’s tired action. I’m completely out as of yesterday morning(long position). Anyway, there is a small possibility that Gold could actually make a higher high(1350ish)to create neg div on the daily chart. So I’ll be looking for that over the next few days. If it can’t do this within a few days then it’s down from here. Ok depending on where the final print of the top is, there should be at least a %.382 fib re-trace from 1181.40 low. Of course a move down to the 50ma would make sense here. I’m looking for a down move to complete around the low 1280ish range for this decline and could get a spike down to 1250. In ew terms that would complete w4, with w5 starting mid-March and ending around late April-Early May.

      Stick with your short and have a mental stop. Then load the boat in March.

      Good luck


  11. waddaguess says:

    Looks like an ending pattern in ES, diagonal. Would explain the chop. Spx not so much. Flip a coin.

  12. JK1987 says:

    Second day with chop city 1840 – 1852, feel like some kind of b wave.

  13. -4 under TL into 10 AM and big ole pop, set ur clocks till it stops working rest of the day is urs.:mrgreen:

    Lee, topstep/pitbull passionate dudes/ I have learned so much from them. I guess I’m not a fan of anybody selling anything about the markets.

    • 10 handles, BTW, today’s set up brings stats to 22:22. How big would you trade?

    • Lee says:

      H D

      These guys sell a service that caters to people who want to feel like they’re getting the inside scoop from the “pros” that only a few have access too.
      Now I would think almost everybody knows now that all of the info supplied is easily obtained on the interwebby thing whether it be from ur paid or free services, the only advantage to being on the floor is you get to eat lunch everyday at some amazing places scattered around in Chicago’s Loop and u don’t have to be at home with the wife or husband, trust me folks.

      • great point Lee I agree

      • H D says:

        $350/month for their chat room. Good thing All Gore invented the web. You can find it all for free.

      • simpleiam says:

        Ok HD, you and Lee have obviously been baiting me, so I’ll bite. The New Member Introductory offer is not $350 for everyone. As a Beginner, I need a bit more help than you sharp, all-knowing guys, so just lay off. I’m not doing anything to insult you in any way. Danny is a supporter of Lyme Disease charities and is my friend of mine. Leave it alone, okay. Thanks!

      • H D says:

        M, I have said nothing negative about Danny. Only the closing imbalance. Relax.

      • simpleiam says:

        HD, you’re giving incorrect info about the chat room. Not everyone pays the same price. You’re the one that seems to need to relax. Whatever… I’ll go elsewhere, for now. Toodles.

      • CygnetNoir says:

        Just another “WTF” moment here at Tony’s lol … thanks for watching🙂

      • uncle10 says:

        there are 1000’s of paid services– some good some bad. Only a few ( that I know of) that are both good and free. Thanks again to Tony and others here for a great place—- for free!!! 😉 btw- EBAY looks to be breaking out of a LONG base. GL to us all. hahaha

      • 16golfer says:

        Hot – Cold……Simple or whatever the flavor of the moment happens to be.

      • lunker1 says:

        Wow everything doesn’t revolve around you hun. Racing Squirrel’s post mentioned the MIM and then Lee commented because he knows Danny from Chicago days. And if you look at HD’s twitter you can see he’s followed and studied TopStep for a long time. Take a step back from the keyboard and breathe easy….this entire topic wasn’t related to you one bit.

      • simpleiam says:

        LOL! Get over it guys. I am.

  14. Don’t short a dull market

  15. oneandonlyuniverse says:

    Morning Tony,
    Gdx has moved 20.18 to 26.95. IF 26.95 was top of A wave, what type of retracement of this bear market rally would you typically expect before moving higher?

  16. 777daimon says:

    and now my last for today 5th message (sorry for being rude regarding your max.3 posts/day here, Tony …. I don’t intend to be rude, I just feel like communicating a lot) here, today:

    Check a) and b) where:
    a. the 1.27 Fibo extension from the year 1994 low
    b. the value reached by the US cash market on February 24, 12.00 EST (US time)
    … now think. It’s the same value, up to the last decimal.
    Can you understand what I’m saying?

  17. Hi Tony!
    Thanks for the update.
    I am looking at the Dow Transport chart. Maybe this chart can be of some help.
    In the DJ transports we have a nice 5 wave structure down from the top. Then follows a 3 wave advance forming a 0,62 retrace B wave. This B wave have now lost upward momentum as shown by yesterdays shooting star and todays bearish engulfing candle.
    The index thus show clear signs of entering a downward C-wave move from this point.

    Best wishes Sverker

  18. CygnetNoir says:

    Hey Uncle … nice call on CPST, by the way.

  19. thecustomer14 says:

    Great post as always, I look forward to learning more from you.

  20. Bears got a big bull sandwich on the close. Yesterday, the bears saw 1 billion to sell on the close, and the index dropped five handles in the final minutes. Today, they were itching for more with 1.4 bil to sell, outside of VZ. Off the open, SPX traded down ten handles before rallying up ten. The lunch hour saw the fade, and by 3:30 pm, we were retesting the morning low and yesterday’s opening low.

    Then, in a mirror image of Monday’s close, late day bulls stepped on the gas, and forced early sellers to buy ’em into the CME close (fifteen minutes after the cash close). At the ES_F settle, we’re up one handle. This is significant: if this holds, we get a gap open above the prior all-time highs at a level close to the highs of today. What looked to be a head-and-shoulders pattern a week ago may turn into an inverse head-and-shoulders.

    From an Elliott Perspective, since 1737, I see 1-2 and 3-4 at 1826-1809 and 1847-1824. Both were around 20 handles and both took place in nine regular trading hours. The current move could be a continuation of a five or a failed five on Friday with an ABC underway.

    From a cycle timing perspective, we’re currently in day fourteen of the rally. To put that into perspective, here are the rally counts since mid-2013:

    A. Jul- 31 days
    B. Sep- 15 days
    C. Oct- 46 days
    D. Dec- 18 days
    E. Feb- 14 days (current)

    On the longer rallies, SPX hit the minor iii in the first fifteen days, with minor iv taking two weeks and retesting the 20 dma. From a chart pattern perspective, they looked like inverse head-and-shoulders with a long sloping right shoulder. Then with a brief refresh at the 20dma (minor iv), we’d get a new high (minor v).

    The daily counts look to be alternating. Where B=D, I am looking for A=C=E. Thus, I’m looking for us to make a right shoulder this week and then slow grind for the next twenty trading days. There are plenty of measured moves to look at, but I think I’ll just go for a decrease in volatility, recent lows in the $VIX have been 12 and we’re currently at 13.67.

    • tony caldaro says:

      Thx RS, a well thought out post

    • Racing squirrel well said and thought out. Anybody who can make sense of the price manipulation and invisible hand of Goverment that create algos mimicking human emotion is a smart man. Great job sir

    • pooch77 says:

      A grind up to March FOMC?

    • Thanks for a great post RS. I’m seeing SPX and DOW in minute i of minor 3, probably micro 4 but starting micro 5. I agree with your time frame of the 20 day grind up. The corrections will be small over the next few weeks. I’m not convinced on the right shoulder idea though. SPX is the only place I see that as possible. There is no right shoulder in the DOW or NDX. Not even a potential for one really. The pullback to the 20 day is coming, but maybe not just yet. First the grind up then the 20 DMA around March expy.

      Gap up then a crushing band crawl upwards at low volatility, VIX under 12 at some point. Bears will be squeezed, or maybe more accurately stretched in the rack until they “confess” and capitulate. All bulls have to do is maintain the breakout level achieved this week and so far they have done so. I’m watching for a strong gap up that will keep going. A morning gap with no significant pullback would ice things pretty well.

      So I agree with your premise, just not the right shoulder of the inverse H&S. If anything last week’s pullback may have been the right shoulder attempt in SPX. If the breakout level fails then your scenario would be more likely than mine. Best of luck to you.

      • If I’m misunderstanding your post in any way please let me know.🙂

      • I think we’re saying the same thing on the gap up to break the triangle consolidation, with a volatility crush to follow.

        As for DOW and NDX, I haven’t been following their charts. I see NDX making new multi-year highs. I have followed the RUT to see them catch up and make a right shoulder/neckline as well. There may be a catch-up trade in the DOW, if we do manage to breakout.

    • 777daimon says:

      ”Then, in a mirror image of Monday’s close, late day bulls stepped on the gas, and forced early sellers to buy ‘em into the CME close (fifteen minutes after the cash close). At the ES_F settle, we’re up one handle. This is significant: if this holds, we get a gap open above the prior all-time highs at a level close to the highs of today.”

      RS, great job!
      At the european session spx 500 already above 1851 (Tony’s R level) and heading to second R level – 1859.
      Yes, we might get a gap and go to the upside at the US market open hours.
      You’re doing a high quality work (also this goes for Tony!) !

      p.s. also if you allow me to add something: from a SPY put/call perspective we’ve had a SPY put/call breach of upper daily BB a few days ago at a ratio of 2.54 (huge puts loading / call dumping), after that the mid- daily BB was checked at 1.54 and yesterday a smaller spike of the SPY puts/call ratio – to 1.93 – done mainly by scared call selling, than strong bearish puts announced for me something: this kind of behaviour bodes well for a trip during the next 2-3-4 weeks to the SPY put/call ratio to the lower daily BB band (subunitarian levels – below 1) = and that for SPX 500 means crawling upside/ and or impulsive upside coming for at least 100-150 points.
      So one of my intruments confirms your views.


      • 777daimon says:

        European session open seems to confirm Ted Wavegenius’ scenario with a rejection at 1854 area and next 1827 area. I hope we won’t see that.
        We will see.

    • Regarding that post cash close ramp job, why did they wait until after the cash market close to do that? The way I see it, it would have been more meaningful if they had done that during the cash market. See comments above regarding how the cash markets closed yesterday and the ‘look’ they now have for the week.
      So, was that futures ramp just post cash close monkey business, stop running, keeping people on the long bus ahead the drop?
      Can’t do any more than read the clues, but those are the questions I’m asking myself.

      • 777daimon says:

        you might have spotted something Bobby, you’re right.
        something not so bullish is boilling now.

      • 777daimon says:

        sorry for the 4th post here:

        Bobby, have something for you:
        smart money exited mostly since mid 2013 until now…
        What’s driving this market?
        Retailers shorting and smart money exiting ….

        Something big is on it’s way.
        Watch also the tightening BB bands on weekly SPX charts = intermediate move next.
        Still can’t determine the orientation (up/down) , but big move coming !!!!

    • very nice RS! about the closing imbalance though. I’ve never seen 1 piece of data hose more traders than that one. It’s winning < 30% since I have been tracking mrtopstep's obnoxious use of it.

      watching our TL from 1817.25 and 10AM GL all.

      • Lee says:

        Hey H D
        RE Top Step
        Good guys but 0 SPUs pit trading experience ,at least in the couple of decades I was there.
        Have a gooden !

      • I prefer to use the closing imbalance as an indicator rather than as a buy/sell signal. On the way up, all we had were buy side imbalances. Then it flipped on Friday, so now we’re getting sell side ones. Thus, I called out Friday as what could be the start of a failed five waver.

    • robnaardin says:

      “From an Elliott Perspective, since 1737, I see 1-2 and 3-4 at 1826-1809 and 1847-1824. Both were around 20 handles and both took place in nine regular trading hours. The current move could be a continuation of a five or a failed five on Friday with an ABC underway.”

      +1 RS

      I see the same wave count too. If 5 is still alive it went off course yesterday morning and is hanging on by it’ fingernails.

  21. CygnetNoir says:

    The price action of Goldman Sachs (GS) viewed on a weekly bar chart has caught my attention: should it close the week below last week’s low, it will have accomplished something technically that it has not done since mid-April 2011: It will fail to test its prior swing high on a recovery rally. Also of note is that this failure is occurring after GS failed to hold the 2011 highs as support after briefly trading above those levels.

    I’m just reporting the news – don’t ask me what to do with it.

    Also a break of 1835 would trigger a 2B top short entry, if you go for that sort of thing. As always, if you’re trading with real money, use stops; or, be like me and trade Pokemon cards. 🙂

  22. waddaguess says:

    Tony. Any chance minor 1 is in at 1859?

  23. rc1269 says:

    Thx Tony. Karate CHOP

    As a total aside, I’ve seen some people who like to post ‘research’ by Fisher on the board. In my experience they are appropriately named – they are always fishing for dollars. But that alone does notnecessarily mean that they are bad or clueless. We actually have lots of other great data points to help us determine that one.
    Take another of their charts on the topic of debt:

    Favorite conclusion #1:”Net public debt is a better measure of countries’ debt levels. It excludes debt held by government agencies, which effectively cancels out.”
    …Actually, no it does not. Take Social Security, for instance, which is the single biggest ‘netted’ line item of intragovernmental debt. The SSA buys UST with funds in trust and from the payments of the interest and maturity on those bonds they pay SS payments. Netting, therefore, completely ignores the liability from the SSA to the American public. You can only net this if you believe that the present value of future SS payments is not an obligation of our government (which may end up being close to the truth some day…). Nonetheless, it is not an obligation that can just be ‘canceled out’ without other economic consequences; in this case that would be cancelling all future SS payments.

    Favorite Conclusion #2:”Debt interest payments make up only 8% of tax revenues the Treasury receives – the US can more than afford its debt.”
    … Now, call me old fashioned but companies, and governments too, don’t pay bills from revenues alone if they want to consider themselves a going concern. Actually, our government runs a deficit, which actually means they cannot afford their debt. So what does it matter if debt payments are only 8% of revenues? Sure that number can go higher, but that just means other expenses have to go down if you want to avoid raising taxes or running permanent deficits. Debt / Revenues is a nonsense measure for a complex economy that has plenty other expenses they will likely pay first if it came to it. And it’s an especially disingenuous comment for a country running a deficit.


    “Recent US data came in strong, helping optimism’s hold.”
    “Yet despite some superficially disappointing metrics…”
    … so, when it’s good data, it’s real. when it’s bad, it’s “superficial.”
    just take a look at the Citi Economic Surprise Index – (it’s now negative)
    so it would seem that the superficially disappointing data prints actually outweigh the real positive ones

    I’m all for research. But – and this is just one man’s opinion – much of what they put out doesn’t meet the standard.
    Sorry Tony for the long post!

    • tony caldaro says:

      As I always tell the students.
      Always check the author’s historical bias.
      Authors are like global warming statisticians, they can skew the numbers how ever they like.

      • tommyboys says:

        RC, knock that chip off your shoulder. Chart speaks for itself – no bias…

    • Young Tom says:

      Fisher Investments is one big marketing blog. Everything is all right and here is why. So can you now give us some capital to manage for you.

    • rc1269 says:

      my comment was related to the multitude of Fisher related links that get posted on here year after year, that’s all. was not a knock at one particular chart, but more the commentary around a chart. sadly, that chart was not allowed to speak for itself. the fact is that all the chart shows is that equities and rates can move in any relative direction at just about any given time. what that tells me is that it’s probably a pointless chart. there are clearly other things going on in the market/economy at those times that are driving moves, and the relationship cannot be simplified down to two factors. yet they still decide to post it and offer the same conclusion the rest of their posts show: “ignore [factor x] because stocks are going higher.” i also noted that 7 of 16 shaded [rising rate] periods in that chart included equity moves that went lower or flat during that time. no mention of something that happened almost 50% of the time? c’mon
      i’m not arguing that stocks can’t go higher. i’m just not a fan of meatless research with an agenda. no chip required

  24. Rancho says:

    Thanks Tony.
    If I am reading the charts correctly, the int i of major 5 started at 1747.xx. And you have marked int ii of major 5 at 1737.xx ( as of now ). Maybe this was explained before and i missed it. But hasn’t int ii entered into int i territory breaking the low ?

  25. Lee says:

    Thanks Tony

    With the exception of one former poster who amazingly has found it’s way back here like Lassie did in the days.
    It was kind of nice today to read these young smart kids thoughts, and your young at heart thoughts on the markets.
    Nothing to see in NG the past couple of days, just a squiggle.😛

  26. bouraq says:

    Bullish channels in charge:

  27. pooch77 says:

    was that it for bears…gap up A.H.,tomorrow will be interesting going into Yellen-thursday

    • That’s what I’m expecting. I see the market as having broken out and holding support. Time is not on the side of the bears here. The more comfortable it gets with the breakout the more likely the market will continue higher. I’m looking for a very strong move later this week – a 3 of 3 of 3 wave to the upside, straight to the top 20,0 bollinger band, which is bending higher already, and then a band crawl higher. I see the same scenario in all major indexes.

    • bonds (TLT) are saying otherwise: minute iv finished and v in progress
      $TNX mimics TLT, but without the minute v breakout
      YEN also mimics bonds, but the signal for v is not there yet either – maybe tomorrow
      but … wave v can end anytime (ie fail)

      • TLT is double bottomed in the last month. Today, it gapped above it’s 200 dma. The Feb 3rd high at 109.34 is also the intersection of the 50 and 200 weekly moving averages.

        $TNX and $SPX have an arithmatic inverse correlation is 0.80. This is another way of saying, they have a directional correlation for long periods until a macro crisis takes place. Over the past decade, $TNX and $SPX have had directional correlation during the following periods:

        Dec 03-Jul 07.. 44 mos
        Nov 07-Nov 08..12 mos
        Mar 09- Apr 10- 13 mos
        Oct 10- Apr 11..05 mos
        Jul 12- Feb 14.. 20 mos

        or 94 of 120 mos (78.3%)

        We’re currently around 2.75%. If we get to the long-term rate of 4.64% on the tens, then the SPX has a long runway ahead.

    • methinks the lady does protest too much

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