wednesday update

SHORT TERM: volatile FOMC day, DOW -114

Overnight the Asian markets gained 0.1%. Europe opened lower and lost 0.1%. US index futures were higher overnight, but the market opened unchanged at SPX 1872. After a dip to SPX 1870 in the opening minutes, the market entered a 1871-1874 trading range until 2pm. The FED then released the following two statements:, and The market immediately dropped to SPX 1863, bounced back to 1871 by 2:30. Then when FED chair Yellen started the press conference the market dropped to SPX 1850 just past 3pm. After that it rallied to SPX 1864, then dipped to close at 1861.

For the day the SPX/DOW were -0.65%, and the NDX/NAZ were -0.60%. Bonds lost 33 ticks, Crude added 20 cents, Gold dropped $2, and the USD rallied. Medium term support drops back to the 1841 and 1828 pivots, with resistance at the 1869 and 1901 pivots. Tomorrow: weekly Jobless claims at 8:30; then Existing homes sales, the Philly FED and Leading indicators at 10am.

The market opened flat today, bounced back to yesterday’s SPX 1874 high, then waited for the FOMC statement. At SPX 1874 we could squiggle out five waves up from 1840, (which some may count as three), and there is a potential negative head and shoulders (1868-1884-1874) in place. So there is something to satisfy the short term bears and bulls. The pullback today to SPX 1850 (24 points) is three points larger than a 61.8% pullback after a 34 point rally (1840-1874). The rally still looks okay. However, should the market drop below SPX 1840 then we are dealing with a very complex Minor 2, or the uptrend to SPX 1884 is over.

Short term support is at the 1841 and 1828 pivots, with resistance at the 1869 pivot and SPX 1884. Short term momentum ended quite oversold. The short term OEW charts turned negative on the drop below SPX 1865. Best to your trading the day before Options expiration Friday.

MEDIUM TERM: uptrend

LONG TERM: bull market


About tony caldaro

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93 Responses to wednesday update

  1. jeffbalin says:

    Big move coming in one direction or the other not sure which. Wish I knew something about options. Which strategy? ….

    • uncle10 says:

      Hey Jeff. Agree about a big move coming. I think it is down but might be up. Tomorrow should tell the tale. I have calls on VXX ( gives me the right to buy VXX ) which goes up if the market goes down and puts on SPY. If we do get a big move soon buying out of the money options is where you get the most bang for your buck. Gl.

  2. Rates going to go up, buy banks short dividend payers. Seems almost too logical, right? Or maybe it’s just a good idea? That just might be the thing that finally puts a new high in the Dow.

    • magnus1234 says:

      From a broad perspective I agree. I beleive most people does not understand how close to armageddon we were 2008. Hence plenty of scoope left for SPX, DOW, NQ. BondBoys are doomed.

  3. taobh na fothana says:

    “Russia’s credit outlook cut by S&P” Guess they showed them

  4. JK1987 says:

    1873, sweet spot, scale in more shorts.

    • perversionofthemean says:

      Hi JK,
      Wondering why you scaled shorts starting at 61 and going up to 74 yesterday. It appears Tony’s pivots were 69 and 84. I’m a big chicken, and can’t scale multiple ES contracts, and I won’t short at 61 and hold to 74 before needing to get relief from the kitchen heat. Did you use Tony’s pivots at all, or are you using another technique? With talk of iii of 3 of 3, it would seem risky to be shorting. Perhaps you were banking on the fact that there were 3 waves complete since Monday’s open (plus the chop for the end of the 18th and beginning of the 19th).
      Thanks; I’m still trying to figure out how to overlay by 25 years of non-EW techniques with OEW.

  5. Bull Case is the market never goes down. I would say it seems to be good reasoning and works

    • chrisk44342 says:

      Ride the horse until she bucks. It has worked extremely well. I think there’s yet another buck in the works. Just look at all of the shorts that have entered here. Yum yum say the bulls.

    • tommyboys says:

      Love the sarcasm – appears rampant. If so rally will carry on.

  6. tommyboys says:

    Nice benign credit environment at the Fed continues…

  7. uncle10 says:

    Alrighty. I’m all in. Stop above yest. highs SPX. gl all.

  8. CygnetNoir says:

    A near perfect indicator – when long a bull market in a commodity, liquidate your longs once CNBC and Bloomberg start talking about them on an hourly basis. The most recent example is, of course, coffee.

  9. JK1987 says:

    Short right here 1867+, 3 up from 1850 at 61.8%.

    • Good luck, breath numbers, neutral, 50/50 I’m leaning more toward, bulls are in control for at least the rest of the day. Only trade I entered, bought e.I. DuPont de zone ours and Co. At $65.92 closed the trade at $66.05 way too early…

    • SPX 1939.57 low on 3-14-14 has been on upsurge, 21 trading hour was low at 1850.35

      1850.35 is in my opinion, line in the sand now. Given its option expiration week, odds favor upside with $CPOA readings so high. Below, 1850.35 I’m with you on the short side.

      But SPX still can travel higher to say 1886.00


  10. alexhartley1 says:

    Lower high today and yours…..

  11. CygnetNoir says:

    Banking Index at new bull market highs. BAC on the verge of a breakout with next hurdle at $20 or about 13% higher. I’m just saying …

  12. magnus1234 says:

    Added 25% to my longs after the numbers. Im not 100% sure I can see the 5 ups from 1839 but Bonds and USD leads me from here.

  13. simpleiam says:

    Watching XIV for a possible bounce later today or tomorrow. GL All! Simplify!

  14. DJ 30 Index True history!

    American economy: Food stamps vs Current DJ 30 ?

    Great Analysis in my opinion, must read.. GL

  15. simpleiam says:

    I thought this was an interesting article. Agree or disagree, still interesting. Will have to watch the outcome of all this.


  16. I stare at the DIA and SPY and they say “rolling over!” I stare at QQQ and IWM and they tell me “going higher.” Can they both be right?

    Individual stocks also telling conflicting stories. Maybe the most sensible position is not to have one?

    It will be interesting to see if the dividend payers are starting a big leg down on higher rates in 2015 already. XLU got spanked this afternoon. Ouch!

  17. I’d keep it simple folks

    Below 1843 Im out…. in between that and 1884 I’m buying dips and going long various stocks…. and above 1884 Im full in…

    The rest is noise…. because we do not have a CONFIRMED major 3 top at 1884 which was my projection (1875-1884) weeks ago, but below 1843 on a closing basis I will say Major 4 is under way of Primary 3 officially

    Still a good stock pickers market either way… I dont trade the futures

  18. Da Boyz always know where to park price. Just gotta LOL. Do note the MACD — looks ready to roll over.$SPX&p=60&yr=0&mn=6&dy=0&id=p25215815722&a=315374993&listNum=7

  19. simpleiam says:

    Thanks Tony!

    As I’ve maintained all along, The Fed is interested in the BANKS ONLY, and not the markets. Now that the banks are more or less shored up, The Fed will do as they please without respect to what investors want. Benny gave everyone the chance to get their money back and more. The Fed is no longer concerned with us. As soon as traders and investors come to realize this fact (could take months), without ‘buts’ (doubts), we will see the beginning of the bottoming of this Bear. Of course, if rates are raised, I don’t think they’ll stay there for long; at least, not if banks, etc. want us peons to buy homes and cars, etc.


  20. thecustomer14 says:

    Dow daily chart starting to look somewhat similar to this one:

  21. bouraq says:

    Yellen is good for bears:

    • blackjak100 says:

      Are you changing your tune on crude bouraq? You went from being very bearish to ‘I would go long at the lower band’. From an EW perspective, it looks like a simple 2nd wave correction which should end slightly above $100. I’m hoping it completes tomorrow and then declines hard on Friday to complete another red weekly candlestick. I’m looking to reenter short tomorrow above $100.

      • bouraq says:

        Just because I see a long opportunity I would take it just for a short term shot but no I haven’t changed my stance on crude Blackjack. I got out of my shorts at the breakout of the orange channel. I will get on the bear train again the first chance I get.

      • blackjak100 says:

        200 day SMA and 38.2% retracement sit right around $100.25. A perfect spot to go short if it gets there.

    • RDC says:

      Thanks Bouraq.
      I thought Gold will go down then bounce back but looked like Gold was screaming today:
      “I have fallen and I can’t get up” 🙂

      Where do you see Gold to rebound?

  22. bhupal777 says:

    Tony, Thanks for the update. Still looking for 1840 to go short and 1884 to go long on SPX. But my regional bank RF performed very good today. Also started small position in regional bank index KRE. Some June and August PUT options on my short ideas (GM, CELG, WFM) still holding. GL all.

  23. scottycj1 says:

    S&P 500- Closes DN 11.48 – .61 % Wednesday March 19, 2014

    We could be on the precipice of a collapse. I have updated on the NYA chart tonight where I believe we are from an EW point of view. The NYA is all the stocks on the New York Exchange–EW =Elliot Wave. We still have the Dow Theory sell signal which I believe….. I am the only one who’s noticed it. So we are at the beginning of one level of a wave 3 or a c wave of a corrective wave. I believe today was like Jan 23, 2014 or June 19, 2013. The next few days following those dates were very large declines. If we have seen THEE HIGH—we could be on the door step of a collapse. Also there was a mini flash crash today !!!! In a period of a 7 minutes the Dow fell an additional 90 pts from being down 125 pts already…… and then reversed. The SPX added down 16 more points during this time frame. There was some very serious selling going on. On the daily SPX chart I have put a white ellipse where there is serious support. If we violate this in the next few days we could be at 1770 in a flash. Asia, Europe and the futures will tell the story before the open tomorrow. Since we have been short from the highs on the 6-7th of March, the payoff is really starting to kick in. IF we hold the level in the daily chart it could provide a bounce. My outlook says it will likely stop by the next CIT on the 24th.

    Have a great night….stay warm

    • RDC says:

      So you think we will test SPX 666 next few days???

    • tony caldaro says:

      DOW Theory sell signal?

      • scottycj1 says:

        Hey Tony,
        Dow industrials and trans should confirm new highs or lows. The trans have made 2 new highs since the industrials made their high 12-31 ……unconfirmed both times by the industrials. Base Dow Theory

    • budfox9450 says:

      I agree, with an SP500 index topping pattern
      forming, as it did in 2006-2007. Per my own
      BoYu indicator, but the pattern may not be
      completely filled out as yet, It is getting there
      though, wating for the Monthly BoYu to go
      to a sell mode for a long time, not so yet.

    • NYA 12.5 trading hour, from the 13 trading hour high. I’m tracking the 5-3 set up.

      Might go short tomorrow.

    • It is not DOW theory sell signal yet. Get it right, it is DOW theory non-confirmation. Both INDU and TRAN will have to close below secodnary highs for DOW theory sell signal to occur..There is diff. between DOW theory sell signal and DOW theory NON confirmation. We have Non confirmation of DOW theory BUY signal.

      I wanted to not post till 25th March..Anyway, this is opportunity to say about my trades.

      1858.1 which was sold when I was sleeping was covered on Sunday evening at 1833.53

      But rowdies from JPM/GS again back stabbed me. When I was sleeping. I put sell order for 1851.2 and it was executed..This is malicious and treacherous plot from likes of NSA,JPM, and GS etc. I found and removed one spy camera from my house. It was found in loft. These guys are stupid, I would not put spy camera in loft..

    • There has been no Dow Theory sell signal. Only a non-confirmation of new highs by the Transports on the part of the Industrials. That is only the initial condition which can lead to a sell signal.

      • tuamotu says:

        Step No. 1: Both the Dow Jones Industrial Average and the Dow Jones Transportation Average must undergo a “significant” correction from joint new highs.

        •Step No. 2: In their subsequent “significant” rally attempt following that correction, either one or both of these Dow averages must fail to rise above their pre-correction highs.

        •Step No. 3: Both averages must then drop below their respective correction lows

        Still waiting for Step 3 …

    • RDC says:

      Thanks Scotty. Nice Call. DOW Theory Sell is working.

  24. CygnetNoir says:

    Dow is still operating under Uncle’s Big Down call ’til it closes above 16460 or issues a Big Up (although trade back above 16360 would make my knees weak and my shorts rip). I’ll be keeping my eyes on the man called U.N.C.L.E. 🙂

    Thanks Tony!

  25. Hi Tony

    I know we are viewing this differently, so I apologize in advance. For me, the big picture is that the uptrend ended at the recent highs. Having said that, I only look at things short term, so it does not really matter to me, and I value your opinion greatly!

    Today, wave B finished and we also completed wave-1 down of C.

    If close below 1850 on the hourly $SPX chart, I will ride the market down in a total of 5 waves. Judging from wave-1 down, today, wave-3 down should be distinctly impulsive. I will be targeting 1750.

    On the bigger picture, as I believe we are in wave IV, I think we will enter a period of extended chop, up-down 100-150 points at a time, a few times. I recall that you previously depicted the market of 2004 as such example in one of your weekend presentations, which is what I am also thinking.

    If by any chance we have experienced a giant A-B-C correction like some big bears are describing, then we are in for a treat! That is why I find comfort in short term.

  26. Vix closed at 15.12 today, major sell signal based on Head and Shoulder pattern. 12-26-13 Head 1-28-14 21 trading days wave 4 2-14-14 14.22 right shoulder, 21 trading day cycle from right shoulder failed to produce lower reading, 3-18-14 reading 15.47

    Today’s 15.12 close along with Elliott Wave Oscillator -1.23 reading to today’s + .38 reading, major signal of head and shoulder pattern on Vix has the potential of reaching 31.25

    First of trading on Wednesday, monitor breath numbers.

    Today’s breath number extremely negative, 3 to 1 in favor of decliners.

    GL. Might go short in few days..

  27. bobhopium says:

    Thanks Tony….Interesting moves in the $ pairs today, maybe we are close to the Dollar low you have been so patiently waiting for GL.

  28. JK1987 says:

    Tony Thanks
    I think today’s damage at 1850 has put iii of 3 of 3 in jeopardy.

    jedi, Thanks for your reply yesterday, I value your input very highly.

    I covered all my shorts at 1855 with nice profits, from 1861, 1867, 1872, 1874.

    JK1987 says:
    March 19, 2014 at 2:10 pm
    Here is 1855, don’t feel like iii of 3 of 3.

    JK1987 says:
    March 19, 2014 at 9:16 am
    1874, cheap short, added.

    JK1987 says:
    March 18, 2014 at 2:42 pm
    still hold scaled shorts from 1861, 1867, 1872.

  29. thanks tony, I figured it be either or today, so I closed my shorter term SSO position at ~SPX 1872s today, which I am happy I did, and had a finger on the buy trigger for a big spike up. That didn’t happen obviously, so now I am letting the market decide which way it is over the next 2 days before taking another index-related ETF position, which I view as: >1874 Long. <1840/34 Short.

  30. .-.. . . says:

    Thanks Tony

  31. radrian6 says:

    RUT has once again pulled back from contact with the weekly upper Bollinger Band. If the downside persists and the indices move into a more complex correction, potential targets are the daily lower BB near 1160 and rising, the 13-week MA near 1162 and rising, and the weekly BB midline near 1149 and rising. Natural chart support and Fib retracement levels correlate well at 1163 (38% retracement) and at 1148 (50% retracement).

  32. uncle10 says:

    Thanks Tony.
    Hope everyone is strapped in. Things are getting interesting. Today helped in confirming a nice move down soon. gl all.

  33. mike7x says:

    Thanks Tony. Six months here…six months there. After a year, whatcha’ got? Grrrr…

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