wednesday update

SHORT TERM: consolidation day, DOW -13

Overnight the Asian markets gained 0.2%. Europe opened higher, but lost 0.5%. US index futures were lower overnight, and the market opened two points below yesterday’s SPX 1880 close. After a short pop to SPX 1880 in the opening minutes the market pulled back to 1874 by 10am. At 10am New home sales were reported lower: 384k v 440k. The market then rallied back to SPX 1880 just before 11am. After that it started to drift lower. Around 3pm the SPX hit 1875, bounced, and then closed at 1875.

For the day the SPX/DOW were -0.15%, and the NDX/NAZ were -0.85%. Bonds gained 10 ticks, Crude slipped 30 cents, Gold dipped $1, and the USD was flat. Medium term support remains at the 1869 and 1841 pivots, with resistance at the 1901 and 1929 pivots. Tomorrow: weekly Jobless claims and Durable goods orders at 8:30.

After a rally from SPX 1816 last week, to 1885 Tuesday, the market had its first notable pullback. This is one of the largest rallies, without a pullback, in quite a long time. As a result of today’s action we placed a Minor wave 1 label on the DOW charts. As for the SPX, it may be a Minute i high, or Minor a. In either of the three scenarios the OEW 1869 pivot range should provide support.

Short term support is at the 1869 and 1841 pivots, with resistance at the 1901 and 1929 pivots. Short term momentum hit oversold today. The short term OEW charts remain positive with the reversal level now SPX 1869. Best to your trading!

MEDIUM TERM: uptrend probable

LONG TERM: bull market


About tony caldaro

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109 Responses to wednesday update

  1. Jedi, i appreciate your posts & insightful commentary, and refreshingly pleasant manner. What’s your stop-loss for your TSLA & NFLX shorts?

    • I most always KISS (keep it simple) and stop loss is a a wee-bit underneath the previous day’s low. Da Boyz like to run the stops, so I make sure I give some wiggle-room. Now, I will also say this, for the FIRST day of a trade I make and the day after), I don’t let myself take more than a 3.5% loss I then expect to start making profits the day after or shortly of my entry. I insist on keeping losses small. Hope this helps.

  2. scottycj1, if I’m reading your charts correctly, looks like the SP500, Naz & AAPL should all turn down soon – is that right? TIA

  3. H D says:

    Did AAPL make new 52 week high? Is the DOW red? Did SPX clear 84?
    We’ll see who is leading what.
    What’s the call if you are an NQ leads believer? I’m curious

  4. Valunvstr,
    Appreciate your posts. You rarely post and as far as I remember you have been bullish and you have turned bearish recently. Please ignore garbage and continue to post. Thanks

  5. uncle10 says:

    Seems like not a bad place to start putting on a short. Some here 1882 and some at 1886 if it gets there. Stop around 1890. CN, Lee, what do you guys think?!?! Thanks.

    • CygnetNoir says:

      As tough a market to read as I can remember, uncle. Lots of momo’s/nasdaq’s had bear flags and many broke down and made new lows or retested old lows today, e.g. FEYE, WDAY, NOW, SPLK. Today may have been the bottom of their corrections. If so, and if AAPL can hold up and trend higher, say toward $600+, then I’d not want to be short. Of course, having said that, I am long a whole bunch of cheap puts bought and paid for with profits from a bunch of previously bought cheap calls that became rather dear. I am flat the futures with no idea which way is what. Good luck!

      • uncle10 says:

        Thanks CN. Buying cheap options is the way to go. And the only way to buy them cheap is when no one wants them….😉 Good luck to you too!

      • 16golfer says:

        I like cheap CN! How far did you go out with them?

      • pooch77 says:

        Hmm looks like daily charts are about to roll over on iwm ,indu..bradley turndate 27th.

      • CygnetNoir says:

        Unfortunately, uncle, even fewer people want them now than when I bought them lol – If NQ breaks higher out of this little 20 minute consolidation then I think I’ll be stuck with a bunch of worthless paper tomorrow. I guarantee you that every trading room out there on the interwebs got short NFLX, NOW, WDAY, SPLK etc on this little blip down. If they are right, then puts should get some demand, but if they are wrong, a short covering frenzy will take this market to new HOD I would suspect. I’d really like to see a break down here – a real smash😉 AAPL seems to be saying that that is not going to happen today, but who knows?

      • magicianme says:

        uncle, I think we’re in for a few days of weakness. I’m seeing cyclical resistance formed on multiple higher time frames (equivalent to daily, H4). I did post this morning about going short on S&P – and going long on gold just before gold took off on a $30 sprint north and the S&P went south – so it’s been a good day. But while I do respect Tony’s target for the S&P it doesn’t look to me like it’s got a great chance of getting there this week or early next week.

        My trading plan for the next few days is to go short every divergence or momentum peak with a small position and a close stop.

      • CygnetNoir says:

        Hi Golfer, I am always out no farther than 8 weeks, usually within 6 weeks, and very often will be playing the current and next available weeklies. If I am looking at more than a two month swing, I buy the stock or futures.

    • uncle10 says:

      Thanks for your thoughts Magicianme.

  6. blackjak100 says:

    I think gold is an easy long here with this pullback as a b wave just completed at the $1268 low. If an expanded flat is playing out, target is around $1350.

  7. Pixel works Incorporated PXLW $5.48

    Price Percent Oscillator saying something. Will Apple Inc. Buy this company?

    Interesting stock…

  8. Watch FB, gang. It’s all about price. If price can’t giddy-up after this earnings, what is the catalyst to take it higher with a NASDAQ that is still broken … and FB broken (“b” rally now be finishing).

  9. bobhopium says:

    Greetings all.
    Someone yesterday asked me to put my charts up…maybe of use to others.
    I am Bullish but looking for p/back to S&P fut@1860/62—Dow@16320/16340.(currently Short Dow16533) This would bring the bears out calling the right shoulder forming on the dayly, which I believe would be misdirection, and would provide a nice long set-up. Aimho and all subject to change…GLTA.
    S&P fut hourly.
    Dow fut hourly

    • bobhopium says:

      Fixed for broken link above :-

      • berniebaruch says:

        Your analysis may be correct but what most people don’t realize is that Ukraine is much like the old Yugoslavia as it is really two countries that are pushed together. The western side which includes Kiev is much more European than the agrarian eastern side of the country which is pro-Russian. You can even split it into three sections if you accept the heavy Islamic factions of the far southern regions.

        We will wake up at some point in the next six months and the Eastern half will be controlled by Russian or Russian-backed soldiers. I leave it to the experts how that effects the markets.

        I do know this…..the Russians control the gas and if they want to prove a point next fall, those of us that were around in the 70’s know what happens when resources such as these are restricted.

    • tony caldaro says:

      thx BH
      nice charts!

    • rc1269 says:

      thx BH – much appreciated!

  10. 777daimon says:

    what’s happening now is the very definition of a bear trap.
    have red that some are worried that Putin and his army will get into Ukraine and now a lot of declarations are made.
    let me make miyself clear: when it comes to Putin this kind of men don’t do verbal posturing. This kind of people is the action type.
    The fact that now they are blabbering and not sending RIGHT AWAY the russian army in Ukraine is a sign that the risks for military confrontation are low.
    I’ve bought the dip.
    bears, save your furs!🙂

    • mjtplayer says:

      Russia will enter East Ukraine, just a mater of time, the probability is not low…

    • 777 great comment. Its good to have a foreign policy expert on the board

    • tommyboys says:

      777, weren’t you just posting the polar opposite YESTERDAY? Did all of this change overnight for you. Putin was gonna bring down the markets taking over Ukraine…? Gotta question stability here…

      • 777daimon says:

        Tommy, all I said is that if Putin would want to do something it would already have done. They are only speaking and posturing now.
        Market would sell only if the russians make the move.

  11. lunker1 says:

    Perhaps a slightly lower low coming on SPX and INDU to tag the 60 minute MAs or the MAs will catch up to the existing low by EOD To give the virtual touch.

  12. mjtplayer says:

    WOW, what an incredibly disapointing open for the bulls. NAZ just went negative – would never have expected that with AAPL surging. FB opened up $2.30 to $63.60 and within :10min gave it all back, now trading down $1 – yikes.

    Major reverals everywhere, stocks lower, but gold now up $6 after dropping $14 to $1,270

  13. pooch77 says:

    Whoa what happened to smallcaps

  14. rc1269 says:

    as Lee would say – this mkt gives everyone an out. GL

  15. gtoptions says:

    Thanks Tony
    SPY ~ 335 Flat 2?
    Here is the AAPL Chart that Matters.😉

  16. 777daimon says:

    this dip is a very strong buy.
    I would not touch shorts until 1903-1926 area is reached.

    • Please wait, it is definitely going NOT ONLY to 1902 but also to 1928. But bfore, that it touches an important level to south and that is 1806. Unconfirmed reports suggest, PUTIN is holding an ace. America will not go into WAR, John Kerry did say “America is behaving like poor country…”

  17. lunker1 says:

    Yesterday looks like it was wave 4 and now wave 5 targeting the 1901 pivot (starts 1894) Watching for strong neg D on the 60 minute. Target for the wave 2 retrace is around the 1869 pivot. There’s also still the chance that yesterday was 4 of 3 and the next retrace is 4 but the targets are still the same

  18. rc1269 says:

    i don’t know if the market can handle this much good news all at once!

    • magicianme says:

      That’s partly why I’m looking for a point at which to go short today🙂
      I see negative divergences and weakness. I see gold setting up to reverse on the daily and I see strength in other risk-off assets.

      I expect an upthrust in the S&P after the open which should give me an entry.

      • magicianme says:

        There wasn’t much of an upthrust after the open so I managed to get in only on1880 once the decline started, but it’s turning out to be a nice ride.

  19. budfox9450 says:

    Short Term Timing Tool ? The FAGIX
    fund vs the SP500 index. I went a step
    further, and applied what I call the Bressert
    Cycles – another name might be the
    Bressert Double Stochastic. But, it
    appears to work very well – when
    trading the SSO, for example….and
    that’s all for today….3

  20. budfox9450 says:

    DRYS has a very Bullish chart pattern.
    With that said – augars well for DSX
    over the near term…

  21. The Sentiment Trader’s long term indicator has fallen to 50 for the last 2 weeks in a row. That is a neutral reading. Since this indicator should be viewed as a contrarian one, the lower number on the index suggests that a long term top is likely to be further away than when it had a higher reading. In response to valunvstrs comment that all the blogs he reads are bullish, I would say that early last week there was plenty of bearish sentiment to be seen. In a reflection of this year’s price volatility, sentiment also seems to oscillate in bullish and bearish spikes.

  22. over bought, market update for wednesday and trading plan for thursday (within blog’s response section):

  23. valunvstr says:

    This is the first one I’ve seen since 2011. The reason this one will play out is because gdx and tlt have terrific charts at the same the iwm and qqq are topping. That is no coincidence. Gdx has a great ihs and tlt broke out of a flag/consolidation, retested and is moving higher. No way those are bullish and iwm and qqq are forming a hs at the same time and it’s just a confidence. Just saying. Better be nimble because this market will too very soon. It’s funny too because every single blog I follow is bullish. Sport, but too many people on the same side if the trade. Good luck. You’re all going to be wrong.

  24. ariez5 says:

    Thanks for your thoughts on gold on Tuesday’s update. I am not a gold bug, and intermediate term, I do think gold is going lower, towards the cost of production (around $1100-1200). Also you know much more than I about the gold VIX. Is it possible that declining volatility comes from the fact that many of the weak hands have already sold out on gold and the remaining holders do not have to hedge as much? Or is there now a general indifference to gold, which reduces its volatility at each new low (a hallmark of a bottoming market)?
    Short term: I see
    Gold having completed an “abc” B wave since March 14.
    The B wave was close to 50% of the 5-wave A that began in January.
    On Monday, there was a reversal candle in GDX.
    That reversal was on an hourly bullish diveregence at the support level from late Jan. to mid Feb.
    There was follow-through today on pretty good volume.
    To me GDX is a shot worth taking with a stop at Monday’s lows.
    Silver is doing squat, but it did pretty much squat all of Jan-early Feb, too.

    • mjtplayer says:

      Hey Ariez,

      Gold VIX closed at 15.81 today – just 0.16 from a 52 week low – no fear, none, zero.

      Yes, during the largest and sharpest move lower, like a wave 3 of 3 for example, the VIX should register high readings and most likely the highest readings of a decline – like last summer. Yes, VIX readings should also register “lower highs” it did in Dec vs. last summer, 23 vs. 28. That said, lows or bottoms are not made when the VIX is at a 52-week low – like now. Gold stands at an important juncture today. After the weak rally to $1,391 off the Dec low retest, we’ve quickly retraced 50% and with a Fed meeting less than a week away and another $10b of tapering, I would be cautious in long positions.

      Yes, GDX has bounced and everyone is talking about an inverse H&S, but it is still a bear market, pull the chart back to 3yrs and have another look. Better yet, pull-up a 6 or 7yr chart and tell me the GDX doesn’t have a picture-perfect H&S top from late 2009 to late 2012. Head at $65, very clear neckline at $40, shoulders at $55. The downside projection off that pattern is $15 – the 2008 bottom is $16, that’s why I’ve been targeting $15 – $16 in the GDX. This may also coincide with P4 in the general market.

      The GDX could and should rally for a few more days, but a lot of overhead resistance at $25.50 area. I don’t know if gold will rally, it’s holding the $1,280 area so far, but it’s hanging around near the lows and may continue doing so until news moves it up or down – news like the Fed next Wed (lower gold) or Ukraine flare-up (higher gold).

      Here’s one last major problem with gold, it has struggled mightily with the Dollar falling. The Dollar may be holding this 79 area and setting-up to rally up to 81.50 or even 83. If gold can’t sustain rallies during a weak Dollar, what will it do if the Dollar rallies?

      Not a gold bug, but bullish gold long-term on supply-demand fundamentals (rising mining costs and high Asian demand) and hostile gov’t. But until the GLD stops dumping gold on the open market and institutions and hedge funds really cover their short positions, gold continues lower. For the record, I plan to back-up the truck on gold if we get down to my target area of $1,050-ish. Whether it’s THE bottom or just a bottom IDK, but either way I think we rally and test the breakdown area at $1,500 – $1,525 – if this actually occurs, that would be one hell of a rally to ride!

  25. Hi all, been watching SLV get weaker and weaker in recent months. Looks like it can barely rally from support in the low 18’s. If it breaks 17.75 I have no idea where the support level is, you tell me. The current levels were resistance back in 2010, and are now support but there is no conviction at all to send it higher. My guess is a breakdown from 17.75 will go to the 14’s and it won’t take long to get there. That was the last significant resistance level back in 2007.

  26. valunvstr says:

    the left shoulder of qqq and iwm were three weeks. next week will be week three of the right shoulder. it ends for the bulls next week.

    • tommyboys says:

      Most HS patterns have been phonies during this bull. I project no different for this current one – IF it forms. Nothing but a trap.

    • magicianme says:

      tommyboys, the problem with H&S is that people look at price without looking at volume. Traditional thinking on H&S involves looking at both. There are other clues as to what makes a H&S likely to play out, including where it’s occuring. So, for example, traders seeing an inverted H&S at the end of a bull run (and not confirmed by volume in the right places) should have very low expectations of the pattern playing out.

      • valunvstr says:

        exactlt, and this hs is confirmed by volume. both qqq and iwm have no vol to head. strong volume down and none on recent rally to rt shoulder. classic confirmation.

  27. bhupal777 says:

    Thank You Tony. You are spot on projecting the market direction. In both of your counts (DOW and SPX) the market has upside potential.

    Pay day tomorrow on Apple ($AAPL) call options. Just followed the EW count charted below.

      • bhupal777 says:

        Thank you sir. I feel that I would have learned more on EW techniques if I had learned from you in OEW terms. I paid my hard earning money to a teaching (sorry sales) company. They assigned me a trader. Though that trader is a good person but their curriculum did not teach me anything extra that I have already learned from EWP book. I strongly believe I would benefit if I know how to calculate OEW pivot points. Well may be in the future when my account comes out of red.😦

      • tony caldaro says:

        best of luck Bhupal

    • blackjak100 says:

      Great job! I really think this AAPL count has a great fit. It basically says their days are limited with financial engineering. It’s tough to calculate a target since double ZZ’s usually have no fib relationships. However once this third wave of c of Y ends, a target can be figured. $600 looks obvious as of now.

    • perversionofthemean says:

      I gotta wait until the 1st for payday every month. Probably because I don’t know what W and Y waves are yet!

  28. budfox9450 says:

    Silver – Looks like it’s made a (b) wave

  29. Thanks, Tony! Nice evening to you.

  30. bhupal777 says:

    Thanks Tony. As you know I am in the camp of Ending Diagonal, so I am counting it as Wave b of Wave E has started today.

    Pay day tomorrow on Apple ($AAPL) call options. Apart from buying MAY/JUNE 545 calendar spread, I also bought some MAY 535-545 call spreads for $3.50 today and they should be deep in the money when market opens tomorrow. Just followed the EW count charted below.

    FB should be ending v of c of B by Friday around 65 mark and should start it’s downward move.

    TWTR is in wave 2 retracement. When ever that ends monster Wave 3 is going to start.

  31. simpleiam says:

    Thanks Tony. Short and sweet Update helps me catch up from spending so much time in the hospital.

    • tony caldaro says:

      Hope as is well now M-

      • simpleiam says:

        Thanks Tony. Unfortunately, have 6 months of treatment to contend with, w/colostomy bag, as about a foot of my intestine was removed. The positive point in all this is that I can eat nuts and seeds and I’m not banned from eating a piece of pecan pie at T’giving. I can’t urge people enough to get checked for Diverticulosis before it becomes Diverticulitis. Once the inflammation sets in, you’ve got a world of hurt on your hands, not to mention loads of medical bills.

        GL trading to All! Simplify.

      • tony caldaro says:

        Happy to hear you are on the road to recovery M-
        Rest and be well!

  32. rc1269 says:

    Thx Tony

    AAPL financial engineering to the rescue

  33. radrian6 says:

    Today, RUT pulled back from its rally and tested the 1147 support area — we’ll soon see if it holds. Looking at the bigger picture, I see that RUT topped at 1182 on January 22 and since then, we’ve seen a 100-point downtrend to 1083; a 130-point rally to 1213; a choppy 118-point downtrend to 1095 and a recovery to 1158. One conclusion I can draw from all of this is that the RUT isn’t trending any more — it’s now operating in a 130-point range from 1083 to 1213. So, if you haven’t already done so, it’s time to put aside any trend-related targets and focus on the price action within the range.

    Predicting an outcome from this range activity is difficult — I can see a potential Head-and-Shoulders top and I can also see a potential triangle that could break either way. It may take some time for traders to sort out this mess particularly if this range extends into the summer. A conviction break of 1100 will likely continue the downtrend whereas a break above 1170 may fuel a test of the highs but there is a lot of resistance starting at 1094. For now, traders seem content with maintaining the status quo within the range.

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