wednesday update

SHORT TERM: consolidation day, DOW -36

Overnight the Asian markets gained 0.4%. Europe opened lower and lost 0.4%. US index futures were relatively flat overnight. At 8:15 the ADP index was reported lower: 139k v 175k. The market opened two points below yesterday’s SPX 1874 record close. In the first few minutes it dipped to SPX 1871, then began to drift higher. At 10am ISM services were reported lower: 51.6 v 54.0. At 11am the SPX hit a new high at 1877 then began to pullback.Β at 2pm the FED released the Beige book. At 2:30 FED chair Yellen’s speech was released: At 3pm the SPX hit 1872, then bounced to close at 1874.Β 

For the day the SPX/DOW were -0.10%, and the NDX/NAZ were +0.15%. Bonds gained 2 ticks, Crude dropped $2.30, Gold added $2, and the USD was lower. Medium term support remains at the 1869 and 1841 pivots, with resistance at the 1901 and 1962 pivots. Tomorrow: weekly Jobless claims at 8:30, then Factory orders at 10am.

After yesterday’s record breaking rally the market took pause today, and consolidated above the OEW 1869 pivot. Keeping with yesterday’s note, we removed the ‘a’ portion of the green ‘a2’ we had posted at the recent SPX 1834 low. Today’s high SPX 1877 cleared the 1869 pivot range, although the market immediately pulled back into it. Nevertheless, it does look like Minor 1 topped at SPX 1868 and Minor 2 bottomed at SPX 1834. Minor 3 should be still underway from that low.

Short term support is at the 1869 pivot and SPX 1859, with resistance at the 1901 and 1962 pivots. Short term momentum dipped below overbought during the day. The short term OEW charts remain positive with the reversal level now SPX 1863. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: bull market


About tony caldaro

This entry was posted in Updates and tagged , , , . Bookmark the permalink.

82 Responses to wednesday update

  1. In a grind up world, what’s better than sell puts and ride it up, and constantly come up with Dooms day scenarios… Free market baby!

  2. CygnetNoir says:

    re: CANN This low float high risk play is down 24.56% on the day and over 14% in the last HOUR. It is currently trading at $36, down from its all time high YESTERDAY of $64.64 …
    I’m not saying you can’t trade it, but you had better trade small, and you had better be able to tuck the ego away and be disciplined enough to take whatever punishment it hands you without asking for more. This is a case of buyer & seller beware …

  3. Caldaro its obvious that there is not to many bearish or willing to bet against this market but would a nasty reversal surprise you?

    • CygnetNoir says:

      au contraire – this market keeps going higher because sooooooo many do keep betting against it. And you know what they say, “He who sells what isn’t his’n must buy it back or go to prison!” πŸ™‚

    • oneandonlyuniverse says:

      we should see a 10 -12 correction starting very soon.

    • tony caldaro says:

      Actually most traders continue to be quite skeptical of this advance

      • CygnetNoir says:

        That’s what I said … but said it in French, so it sounded more sofistikated. πŸ™‚

      • oneandonlyuniverse says:

        the chorus of “melt up phase” of the market is as loud as I have ever heard. The market is going to get hit here. 1713 will get hit and good chance of 1654 (imho)…Iwm 104-6

    • RDC says:

      It will stop going up when you stop shorting πŸ™‚

    • simpleiam says:

      What RDC said, AND, when everyone finally sees The Fed doesn’t care about markets and will not stop the taper regardless of markets reaction. Fed only cares about banks, and will step in only if a ‘bank centric’ slide occurs. Me thinks banks are well shored-up now and Fed won’t let that happen. M

  4. hucky2 says:

    My system shows support next week at 1865 and resistance at 1913
    Right now I’m betting the up trend continues past Tony’s 1901 pivot level
    the 4 billion POMO next Thursday could be the boost over that hurdle. GLTA

  5. Looks like 5 waves up completed off the 1834 low? if so, that be, IMHO, only minute i of minor 3 of intermediate iii of Major 5 of PRI-III !? I am expecting a retrace to the 1869 pivot (upper range) before next move up (which may have been the 1875 low today)!?

    • gary61b says:

      I am with ya on that count, but with the gaps not filled yet, it would seem a little deep for this minute 2 to erase but its possible. rut 1177, ndx 3668, spx 1845.5. Thoughts?

  6. mjtplayer says:

    Wave 3 of 3 of 3?? I don’t think so. Today, we’re on pace for the lightest volume day of 2014, that doesn’t jive with a wave 3 of any degree, especially nested 1,2’s IMO

    • chrisk44342 says:

      Hmm. I’m a little torn on this. We’ve been seeing low volume rallies for a while now. On the other hand, I’m not completely comfortable with Tony’s count. He had minute wave 4 as a running flat, which from a pure EW standpoint (not OEW) is kind of a no-no.

    • RDC says:

      I think it is wave 3 of 3 of 3 of 3 of 3 of 3?

  7. lunker1 says:

    FTEK’s revenue and earnings growth forecasts are meek so why are you so high on the stock?

    • uncle10 says:

      Hey Lunk, I stopped looking at any earnings forecasts for any stock about 15 years ago. I don’t think you can tell anything about a stock and where it is headed based on them. I like the chart.

  8. oneandonlyuniverse says:

    $ibb looks like $xhb 9 yrs ago last week. i see a 10 -12% correction in overall mkt from these levels.

  9. CygnetNoir says:

    Dow 16450 and SP 1881 was all this wave owed us …. anything else is icing on the cake, unless you prefer gravy.

  10. elmer510 says:

    Thanks for the update, Tony !

    What’s your view about shipping now? I remember you were positive, but turned more negative as the BDI kept on falling down to 1088 points.
    But today: Baltic Dry Index (BDI) +89 1480, up another 6%.
    and its getting closer to 40% increase since it made a bottom.
    Any thoughts about this development?

    • tony caldaro says:

      Was very positive, turned neutral, recently been at least positive again.
      See the BDI in a 1000 to 2000 trading range for along period.
      Shippers however are benefiting.

      • elmer510 says:

        Thank you for reply, Tony

        A trading range between 1000 and 2000 should mean there’s room for some more increase.

  11. pcskier says:

    The yen found its support this am. If you want to hedge long equities buy the yen. If you plan on shorting equities in the future waiting for confirmation, buy yen now. Lows of the today great stop loss. $indu still has not made new highs. Looking for indu to close flat or slightly red by end of day. Jeff gundlach weeks ago said when goog rolls it will take the market with it. Keep an eye on goog, and all other other momo stocks they seem to be having problems making new all time highs.

    • simpleiam says:

      Dji playing catch-up the past few sessions, while other majors are either almost flat or down. Today’s market is case and point.

  12. oneandonlyuniverse says:

    Fixin’ to get real ugly

  13. JK1987 says:

    Thanks for the perfect 3 of 3 of 3 up.

  14. mjtplayer says:

    5 waves up from 1,834 – minute i complete?

  15. Ryan Parker says:

    If anyone is looking for a nice chart in the shipping/LNG space take a look at GLNG. Looks pretty ripe to me.

  16. Important info for today is not a wave count . It’s the ECB decision which will cause the market to Ramp.

  17. Hi Tony, I’ve been studying the JCP chart in multiple time frames tonight and I agree with your call of the recent low as being the end of Primary C. I’ve come to the conclusion the market has offered one of it’s rare true opportunities in JCP at these levels. A return to profitability would send the shares skyrocketing to many times the current level of 8.30 in the next couple of years. As a long term trade the risk reward looks fantastic (ie: 75% chance of quadrupling one’s money vs. 25% chance of losing 100% of it, or something similar on the next couple of years). Dillard’s (DDS) comes to mind circa 2009. Maybe JCP wont go from $3 to $90, but it doesn’t have to for it to be a great bet with a very large positive expectation.

    Ok so much for the value investor pitch, where is the stock going? I see $10 as practically a lock in the next few weeks because it is the top of the channel of the last year or so and the top of the last countertrend rally, which would provide some resistance in the short run but also act like a magnet. The stock may pause in this area or test a little higher first. After that the bottom of Primary A of around $14-$15 or so would be the next likely target. In the monthly time frame the stock would be likely to run up to the mid $20’s if the channel is broken to the upside. That would be somewhere between the .50 and .618 retracement levels of the decline of the last 2 years and also the top monthly 20,2 Bollinger band. All the company has to do is continue it’s momentum to recovery and those levels are easily in play over the next year or two. Even if it’s a coin flip whether they recover, it’s a 300% return vs. 100% loss, and I don’t think it’s a 50/50 chance they survive. More like 75 yes/25 no from what I’ve seen. Anyhow, best of luck to all.

    • uncle10 says:

      Hey Two side, or you could just buy FTEK which should double or triple faster than JCP and with much less down side risk…. πŸ˜‰ gl.

    • Opens the possibility to all sorts of intriguing ideas in JCP. For example, January 2015 15/18 vertical call debit spreads are about .25 right now. If the stock gets to the middle of that range of 16.5 anytime from here to then it would be about a 600% gain (value 1.50) vs. the risk of 100% loss. It’s not either or of course as far as the stock price goes in that trade as one could bail a lot earlier or later than 16.50, but the company either survives or it doesn’t, and if it looks like it will survive it’s going higher.

    • hey 2sided! I am with ya on this one. I’ve been tracking and trading JCP already since fall last year (see:, a wheeeeh bit early πŸ˜‰ but it never hurts to track, trade, watch and learn. That’s the nature of this game πŸ˜‰ I think this indeed is a golden opportunity. Seeing it go to $12ish (~200d sma) first since it is trading through $8, which often means the next higher 2; in this case $12 is on tap. I had a cycle low target of $4.77 to be exact. It got to $4.90… Now lets see if we can get 5 waves up first. That be a great start! Note that price broke out a 2yr (!!) falling wedge pattern last week. Had a great bollinger band squeeze on the daily and launched right above it’s 50d SMA in 1 day. If that’s not bullish I don’t know what is…

      ps: What we think/believe about the company’s future survival or not has no meaning; price action is what matters nothing else. Risk/reward ratio here is astronomical, hard to find bets with better odds of winning then this one…

      I think I will post a new update on JCP this weekend, time permitting, it seems warranted.

    • joseph3000 says:

      Twosided, i found this on JCP. Resistance at $8.51 pivot looks like it. I’m looking for dip to buy.

  18. CygnetNoir says:

    This has been some humdinger of a bull market, Tony. And eyeballing the CCI, I think commodities are not quite done with their bull either.

    And remember, folks, bots are people too. πŸ™‚

    • joseph3000 says:

      We have been in a 14 or so years correction. Can this markets keep going higher (long term) like it did in the 80’s 90’s ?

      • It will if the secular bear market is over and the secular bull is in effect, which is looking more and more likely these days.

      • simpleiam says:

        A Secular Bull will not stay alive for long with the lack of Jobs, the lack of revenue and profits that will likely be he outcome of the lack of growth. Deflation has taken hold and eventually investors/traders will figure out there’s nothing more The Fed, or other central banks can do. But they’ll trade it up as long as they can…

      • tommyboys says:

        Have thought this is a secular bull for years and continue to. Believe all the chatter around the Fed and jobs is flawed – there are many multiple variables beyond these and many more important (JMHO – don’t shoot me although I’ll worry when I don’t get lambasted). The deflationary cycle will only last another two years at the outside – if it hasn’t already abated – and for the most part has been mitigated. Cliff Droke has been calling for a crazy 120 year HARD DOWN cycle ending this year (2014) for many years – Dent, Prechter and numerous others notwithstanding. He’s still calling for the back half of the year to be straight down. Many people can’t shake the depression mentality after the ’08-’09 drubbing and this will continue for awhile. Believing in a 120 year cycle is it’s own crazy. Trend is your friend don’t fight it. GLTA…

      • simpleiam says:

        tboys, time will tell. I think it might take longer than others think because of all The Fed activity. And Prech, Dent and others like them have nothing to do with the opinions of some, namely mine. For now, it’s Bull and I play it that way.

  19. blubrd67 says:

    WASHINGTON (MarketWatch) — Richard Fisher, president of the Federal Reserve Bank of Dallas, on Wednesday said he was concerned about “eye-popping levels” of some stock market metrics, and said the central bank has to monitor the signs carefully to make sure another bubble isn’t forming. In his speech in Mexico City, Fisher said some indicators like the price-to-projected forward earnings, price-to-sales ratios and market capitalization as a percentage of GDP, are at levels not seen since the dot-com boom of the late 1990s. He noted that margin debt is pushing up against all-time records. “We must monitor these indicators very carefully so as to ensure that the ghost of ‘irrational exuberance’ does not haunt us again,” Fisher said. While a few Fed officials have mentioned unease about stock prices, Fisher’s comments are the most pointed to date. Fisher did not spare the bond market, saying that narrow spreads between corporate and Treasury debt “reflect lower risk premia on top of already abnormally low nominal yields.” Fisher is a voting member of the Fed’s monetary policy committee this year. He has been a strong opponent of the Fed’s latest round of asset purchases.

  20. mccarthyti says:

    I know this is an EW site, but can we put it in a top and drop 20% over the course of a year. call that the bear market or correction and begin a new bull market? I have a hard time seeing a primary 4 followed by new highs in a so called primary 5. I just think one the selling begins and the uptrends are broken…. buyers will be nowhere to be found. sort of concerning that so many people plan to “buy” the big dip of the coming high.

    • First off Elliot Wave has not been effective and not applicable in this market BUT OEW has been effective because Caldaro has done an amazing job at adjusting rather quickly. To answer your question directly the answer is NO. The reason being is this is a Teflon market that refuses to correct at all. Your buyers are algo programs and the move very fast. The Fed wants higher stock prices and that’s the bottom line. We have not has a real correction in 3 years or more. For as you put it buyers being nowhere to be found is you would need a event so powerful to make people or in this case the machines step aside. So far everything has been thrown at this market I can think of and nothing has stopped it.

    • tony caldaro says:

      1990 (-20.3%) and 1998 (-22.5%) were second and fourth waves during a 13 year bull market.
      Market topped 1.5 years after the 1998 low.

  21. bhupal777 says:

    Thanks Tony. Lot of financials are really strong today. Foretelling about good jobs report?

  22. mharrison60 says:

    Thanks to you and the team for maintaining such a wide range of charts! I plan to educate myself on commodities soon πŸ™‚

    Away from the US equity markets, the FTSE, CAC and MIB look like they should be complete or we are getting into a very stretched and fractal final count eg CAC showing it is in micro C of minor C of Int C of Major C. The FTSE and MIB charts don’t show the micro wave detailed but similarly seem to be in micro waves of the final minors or have (quietly) topped.

    I know you have mentioned before that these markets are probably extending like the US but with the current counts reading right at the end of their Primary waves I hope you will forgive another “are we there yet” question.

    Thank you and I appreciate your time and patience.

  23. bouraq says:

    Crude broke down:

  24. unremarkable day

    wave-1 = wave-5 = 150 points on SPX => 1890

  25. RDC says:

    Thanks Tony.

  26. thanks Tony! Quiet even on your blog today. Barely 60 posts. Must be nice for a change!? Indices flat but most of my positions noticeably green; some +12%. Can’t say I am not liking this market πŸ˜‰

Comments are closed.