tuesday update

SHORT TERM: another bungee day, DOW +89

Overnight the Asian markets lost 0.5%. Europe opened lower and lost 1.1%. US index futures were higher overnight. At 8:15 FED chair Yellen’s speech was released: http://www.federalreserve.gov/newsevents/speech/yellen20140415a.htm. At 8:30 the CPI was reported higher: +0.2% v +0.1%, and the NY FED lower: 1.3 v 5.6. The market opened two points above yesterday’s SPX 1831 close and continued to rally. Before 10am the SPX hit 1844, and then began to pullback. At 10am the NAHB index was reported unchanged at 47. By 10:30 the SPX turned negative hitting 1827. After a bounce to SPX 1834 just past 10:30, the SPX pulled back to 1824 by 11am, bounced to 1832 by 11:30, and then hit 1816 by 1pm. After this stair step down into yesterday’s low the market started to rally. By 3pm the SPX hit 1841, dipped to 1836 just past 3pm, then rallied to 1844 again just before an 1843 close.

For the day the SPX/DOW were +0.60, and the NDX/NAZ were +0.30%. Bonds gained 1 tick, Crude lost 50 cents, Gold dropped $23, and the USD was higher. Medium term support rises to the 1841 and 1828 pivots, with resistance at the 1869 and 1901 pivots. Tomorrow: Housing starts, Building permits and a speech from FED governor Stein at 8:30, Industrial production at 9:15, a speech from FED chair Yellen at 12:30, then the FED’s Beige book at 2pm.

Yesterday the SPX gapped up from 1816 rallied to 1834, dropped to 1816, then closed at 1831. Today the market rallied to 1844, dropped back to 1816, then rallied back to 1844. While all these wild swings were occurring the NDX/NAX were making lower lows for their downtrend. Over the past few weeks, every rally in the SPX/DOW has ended with selling pressure in the NDX/NAZ.

Since the NDX/NAZ have been leading this market lower during their Int. wave four downtrend we decided to take a closer look at the cash NAZ. This downtrend from 4372 has unfolded in a complex a-b-c: wave a 4132, wave b 4286, and wave c 3946 thus far. Fibonacci relationships suggest the following support levels: @ 3925 c = 1.5 a, and @ 3895 c = 1.62 a. The two previous Int. four downtrends, during this bull market, have corrected 9.7% and 13.0%. This translates into the 3950 and 3805 levels. The 3950 level was actually hit today. Should this fail to hold support, then 3925 or 3895 would be next with a worse case level at 3805.

Short term support is at the 1841 and 1828 pivots, with resistance at the 1869 and 1901 pivots. Short term momentum hit overbought early, dropped to neutral, then was rising into the close. The short term OEW charts turned positive, negative, and ended positive again, with the reversal level now SPX 1838. We continue to monitor the NDX/NAZ intraday to get an edge short term. Best to your trading!

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

About tony caldaro

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97 Responses to tuesday update

  1. uncle10 says:

    Nice three day rally up to the 1860 area. Congrats to the buyers. I should have gone long but instead stayed with a small short due to my bias and opinion….. both cost traders money….
    Now looking at my stuff without bias and opinion— Shorting against the 1869 pivot seems the best trade to me. 😉
    Thanks Tony and all.
    Good luck and Everyone have a great Holiday weekend.

  2. RDC says:

    Since everybody is talking about “Ali-Baba” IPO … What happens to market overall if Nasdaq does same what they did to Facebook?

  3. Ok it seems euphoria is back, now its time for a rip your head off WAVE 3 Down targeting below 1800. Enjoy the ride.

  4. budfox9450 says:

    ref Yellan. Not really sure of exactly what she is
    saying, with regard to the lowerin go of QE below
    55 billion. Any thoughts?

    • tony caldaro says:

      no change in schedule
      next meeting April 29-30

    • CygnetNoir says:

      I just wish they would shut her up – I wish we could go back to when we had a Fed chair like Greenspan who spoke twice a year and when he did no one had any idea what he was saying. Ben and Janet are just too much with the jabber jawing in public.

      • magnus1234 says:

        With all respect…look what he did to your country. G was a disaster. He was a US Delphi full of himself that no one understood when he talked including himself.

      • syedsma says:

        “Fed chair like Greenspan who spoke twice a year and when he did no one had any idea what he was saying. ”

        I am glad I am not the only one who could never understand what Greenspan was saying :-). His narrative used to be so difficult to understand that I would bang my head / kick myself for being so “stupid” despite having 21 years of education. Thanks CN for making me feel better now :-).

  5. Only 47 more points for “Snake Oil” target. Someone said “What are the return policy on Snake oil” when I said SPX at 1902. I was wrong with gap up today. Holidays should keep volume low unless some extraordinary event. The surprise this time is going to be on UPSIDE.

    BAH (buy and Hold) not SAF (Sell and Fold).

  6. 20d SMA at 1858 on SPX, will provide R/S for SPX.
    INDU has already surpassed that same SMA (16322 today)
    50d SMAs have provided “launch pad” for both indices today sofar

    Remember that yesterday the COMPQ tagged the 200d SMA and launched. Last time it hit the 200d SMA was last day of december 2012…. Day before the market took off….

    Will monitor the daily AI closely. If today closes around current levels (+/-7) then yesterday’s AI buy-signal has been confirmed, strongly suggesting further upside in the days ahead.

    $NYMO also bottomed at about -50, on monday, which is a level that coincides with (trade-able) bottoms.

  7. John Arella says:

    High pretty well guaranteed but wondering if the top channel will finally be broken, new channel seems to be forming on long term SPX chart.

    Expanding triangle on Dow seems to be confirmed below:

    Things are looking good finally 🙂

    • tommyboys says:

      Wedges are shorter term patterns. IMHO you can’t look for a wedge in a multi-year chart – they’ll never do what they ought to. Long term it’s just a rally in a channel.

  8. mjtplayer says:

    -div on the 60min DOW

  9. mjtplayer says:

    Bulls getting excited again, 3-day rally and through the 1,841 pivot. Would expect this bounce to continue up to the 1,865 – 1,869 area (1,869 pivot, .618 and 2/3 retracement). By that point, a good amount of shorts will have covered, typical heading into a 3-day weekend.

    Volume today is SUPER light, i.e. just an oversold bounce. VIX getting smashed, also typical heading into a 3-day weekend.

    Ideally for the bears, S&P gets up to the 1,869 pivor area on Friday’s close or Monday/Tuesday morning. By that point, the 60-min RSI will be extremely overbought, OPEX and the holiday weekend will be behind us and the shorts will have mostly covered and be ready to re-load.

    A raally up to DOW 16,400 – 16,500 would put-in a clear right shoudler. With the head at the highs and a neckline at 16,030-ish, the downside projection would be at least 15,400 or a test fo the Feb lows. This would mean that Tony’s “E” wave of the ED would truncate – which is possible.

  10. llerias7 says:

    NDX alive and kicking…so…initial move for the (v) of major 3 here!

  11. magnus1234 says:

    The down-channel from 1897-184 is broken on the upside today @ 1848. We will not see any meaningful pull back until 1872-1869 IMHO.

    We have gap fills on /TF and /NQ (almost) and a <-900 $TICK on /ES. This could be a good buying opportunity. Bought some /ES

  12. winslow80 says:

    Even following this morning’s up gap, the CNN Greed/Fear Index is 22 (Extreme Fear).
    SPX formed an ABC terminating at 1814 support. C = A, and completed at the 1.382 extension of A.
    Naz held the confluence of the 200 day ema and the 2012 uptrendline.
    NDX double bottomed at the Feb low.
    DJI completed an ABC at the Feb/Mar lows.
    NYA held 10270 support.
    WLSH held the 2012 uptrendline.
    SPX Daily Full Stochastics 33/19.
    In a bull market. Classic SPX EW consolidation. Oversold. Underloved. Held support.
    Upside target {1.272 (1982 low -2000 high)} = 1947.97
    And if it all falls apart, stopped out on a move below 1814.

  13. JK1987 says:

    Both SPX and DOW rally off the perfect trend line. SPX has rallied 42 handles off the low.
    Int d of the diagonal triangle for SPX and DOW are in place? Or waiting for a pivot to confirm?

  14. rc1269 says:

    good buy QQQ right here. imo

  15. gtoptions says:

    Thanks Tony
    SPY ~ Pre-Market hit 50% swing resistance @ 185.48
    Short term downtrend testing Fib Fan Resistance Zone.
    WR1 @ 186.95 ~ 61.8% @ 186.46

  16. Lee X says:

    Hey everybody,

    Have a safe and restful Holiday where ever you may be .
    And only worry about the person on top of your account statement 😉

  17. jobjas says:

    NDX on its way up to complete M3 , SPX uncertain

    • llerias7 says:

      Good take, jobjas! It is acording Tony idea and it is the most probable outcome in coming weeks to finish P3 in SPX. That is my thinking indeed.

      • jobjas says:

        Sorry that was the result of a really late night analysis after a long day. I looked it up again and NDX has some more downside to go. SPX uncertain.

    • Exactly, Tuesday, tonight, $CPCE at .59 which is neutral. Coming off high reading of .75

      $Trin neutral as well. 1.01

      I don’t recall who said it, I’m thinking it was A.J. Frost ” when the markets enter final fifth of fifth wave, the market will resemble more of casino type of operation” not exact words, but it makes the point.

      Casino, 50/50 odds starts the next trading day, as usually.


  18. bhupal777 says:

    Tony, Thank You. I went short on SPX around noon. I should have remembered 1814 pivot point that you mentioned as a support in your yesterday’s update. And I should have waited for the confirmation to break that pivot point before going short. MAY month PUT options are already down quite a bit. Might close them for a loss by Thursday. Well… lesson learned again… wait for the chart confirmation.

    GDXJ is down. Since it broke 35.71, so no leading diagonal scenario and that was a b-wave rally. That means we are in C wave down and I am short. At least here I waited for confirmation. 🙂

    As I updated here couple of times that I am expecting a massive rally in TWTR but did not expect that it would bounce (11%) so fast. Today went long with June 46 call options. might make it a calendar spread if RSI shows any -ve divergence in coming days as there is a strong resistance between 46 and 47.

    Both GDXJ and TWTR trade setups are charted at.. http://bhupal777blog.wordpress.com/

  19. Mark Twain once said, “Whenever you find yourself on the side of the majority, it’s time to pause and reflect.”

    • tommyboys says:

      …and the majority is definitely bearish. Not a prognosticator out there seeing a big rally over the coming months…

      • blackjak100 says:

        and the majority were bearish during the 167% run-up from 2009. It doesn’t work that way. A lot of people turned bullish and it just kept running higher. IMO, the market is simply trying to shake out the bears before the real fall. The waves are telling us this. Eventually fundamentals matter and that’s exactly what we’re seeing in the NAZ.

      • tommyboys says:

        Fundamentals are fine in most arenas. We’re seeing profit taking and tax selling in momo names as last year’s gains get harvested. Margin calls amplified this providing favorable reentry points. Sharp scary pullbacks are a hallmark in bull markets keeping the wall of worry intact. Likely a more meaningful correction later this year but the Naz has tagged the 200 while the VXN has taken a new high – the worst is likely in for this pullback – PLUS the bulk got bearish quick. Restocking bomb shelters has commenced as super permabears are paraded across media. Varied opine make markets. Time will tell…

      • I agree TB. Big down days on VIX below 20… Hmmmm, Feels more like shaking out the weak hands… 2 yr trend channel still in tact, tommorow will be interesting!!

      • magicianme says:

        Volume yesterday was very high. All through the original drop from 1841 (where I got out of my daytrading long as posted yesterday) the volume fluctuated but the price action was very evidently being led by the Nasdaq (thanks, Tony, I wouldn’t have been watching the Nas if it wasn’t for your observation). All through the drop the S&P kept struggling to go back long but buyers were holding out knowing (probably) that the Nas would pull the S&P down further to give them a better price.

        When the rebound came the volume really took off. Yesterday turned out to be one of the highest volume days so far this year. And it came at the bottom of a cyclical turn in the daily charts. That, to me, is an indication of further bull action to come. I didn’t originally buy into Tony’s predictions for the 1900s. I do now.

        Also of note and supporting the above is that risk-off assets aren’t flashing red …and gold decided yesterday that risk is definitely on. It was one of the largest one-day range/drops in gold price this year. Bonds aren’t so sure.

        Some time ago there was speculation in various blogs that, on average, buying the S&P close and selling the open was a good strategy. I noticed that this works at some times and not others. When it works is when the mood is bullish and there is an overall uptrend in price. Over the last week to ten days buying at the close was often a loser. But it’s changing again signifying, to me, a change in mood.

  20. What can I say the truth hurts doesn’t it!!

  21. ocaj2000 says:


  22. CygnetNoir says:

    Thanks Tony. The best that any of us can do going forward is to bite our collective tongues and ignore the troll(s). There is an obvious feedback loop that satisfies some craving on his/her/their part(s), and our responses may very well be all or part of the attention these poor folks crave.

  23. So let’s see… to summarize, the myriad of EW counts on the SPX aren’t working, so let’s look to the NAZ for the answer. Once again the failure of EW to provide any moneymaking opportunities has come to pass. The curve fitting exercise can’t be made to work so we’ll try to divert our attention to something else. Buy support, sell resistance, make money (aka take money from EW users). Get out while you still can!!

    • mjtplayer says:

      Get lost…..and take your hate with you

      • CygnetNoir says:

        You just gave him exactly what he wants – a reason to stay. And he will continue so long as you and others keep flexing your own internet muscles. Be a better person and ignore them – Please Don’t Feed the Trolls.

      • mjtplayer says:

        Tony can just block him….

      • +1 CN. I agree, just ignore! Nobody likes talking to deaf ears or a vacuum and will move along till they find somebody who will listen, i.e. respond.

        It is easy to bash, and poke holes, it’s much harder to post something constructive for others to find helpful in navigating these markets, I.e. Make some $$$s from it.

  24. Everyone is getting Bullish again, I’M looking for a 50+ point drop on SPX within next 3 trading days.

  25. bouraq says:

    Volatility up direction down:

  26. radrian6 says:

    RUT tested lower today then made a strong bounce into resistance at 1115-20. I have been assuming that the 200-day SMA was providing support near 1107 but another support possibility emerged from the long-term charts. If you consider the move from the November 2012 low to the recent peak of 1212.82 as a major swing, the 23.6% Fib retracement level is 1106.79. The last three daily sessions have produced bottoming tails from the area around 1107 — this could be the influence of the Fib level mentioned above. If my assumption is valid, the 38.2% Fib RL would be 1041.2; 50% would be 988.19; and the 61.8% level would be 935.17. You can correlate the Fib levels above with long-term support near 1039, 1008, and 955.

    For the short term, consider that the RUT 15-min chart has printed the left shoulder and head of a potential Inverse Head-and-Shoulders pattern — if so, the right shoulder would need to retest the 1107 area. If the IHS pattern plays out, the upside target would be near 1150 resistance.

    The analysis above only suggests possibilities for the current behavior of the RUT and there are, of course, other possibilities. Nevertheless, it is clear from the daily charts that the RUT is finding support in the 1107-1095 area while resistance remains at 1115-20, 1130, 1147, and 1165-72. There is also moving average resistance near the prior high of 1160. Keep in mind that tomorrow is the last trading day for April-cycle index options.

  27. I said yesterday, market will open up 1840ish, go to 1846, then to 1824 and close 1840ish. Due to Ukraine, I was off on downside, but rest was ok. Tomorrow, Open same level, high 1849, low 1834, close 1840 (tomorrow closing RED by 5 points). GLTA

    • idal75 says:

      yes you did… congratulations!
      And thursday?

    • magicianme says:

      Shrihas, the intelligent trader who wants recognition for his good calls provides the logic and reasoning behind them. The clueless gambler, who works on the colour of the moon or the amount of poo in his baby’s last nappy change, makes the call without providing any reasoning. And he expects (seeks?) credit for it. Why not explain your logic so we can see you’re the former rather than suspecting you’re the latter? Till then posts like the above simply associate you on the wrong side of the nappy.

      And explain the logic in advance of the price action please i.e. give us your thoughts on future action and WHY you expect such action. (Analysing the past is always easy). Futures are already way past your call of a high of 1849 today – in fact, the LOW is above 1849 – but it’s alright to be wrong. We are all wrong some of the time. Question is – are you wrong because your coin landed on the “other” side? Or is there some intelligent thinking behind the call?

    • RDC says:

      I am waiting for close RED by 5 points…

  28. thanks Tony. seems indeed things are closer to a (trade-able) bottom than top. The AI gave a buy signal today on SPX, (http://soulsurferusa.wordpress.com/2014/04/15/ai-another-buy-signal-will-it-last-longer-than-24h-this-time/) DOW, COMPQ, NDX, NYA, while the COMPQ tagged the 200d sma and bounced off it. Intermediate iv over!?!? Would coincide well with the targets you calculated. TWTR canary in the coal mine?

    • I still think there’s a possibility of Sverker’s count being right. Tony said that kind of subdiv has not occurred in this bull market so far, but that may be a good reason for it to happen now. This is a market that has become especially deceptive, and that would keep EW people bearish while market sneaks higher. Industry rotation will continue, further creating bearish sentiment as previous high flyers fall to earth.

      • I agree, there are MANY possible counts at this moment, several of course more likely then others. It’s assigning probabilities to each count to assess which is most likely. I think Tony’s preferred and alt count are the once with the highest probability, others have less probability. BUT!!, the market may well decide to change that… (sorry for the fuzzy answer… 😉 )

        What I do note is the high level of bearishness while the SPX, for example, was less than 85 points below it’s ATH. That’s only ~4.5%!!! And all I read is 1750, crash channels, 1987 analogy, 10-15% correction coming etc. All I can say is “hmmmmmm…..”

  29. JK1987 says:

    Tony Thanks

    I highly recommend oew Tutorial, I greatly benefit from today’s market operations. 🙂
    Please check if you are an oew student, perfect matched example in Lesson Three, chart #6.

  30. If this thing takes off tomorrow, then I’m inclined to entertain that wave 3 up scenario.

  31. RDC says:

    Thanks Tony. Markets will be up huge tomorrow specially technology stocks.

  32. attitude928 says:

    Thanks Tony. Enjoy the holiday. Looks like the $RUT is heading up now.

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