tuesday update

SHORT TERM: turnaround Tuesday, DOW -138

Overnight the Asian markets gained 0.4%. Europe opened lower and lost 0.4%. US index futures were lower overnight, and the market opened one point below yesterday’s SPX 1885 close. The market continued to pullback until 10:30 when the SPX hit 1877. After a bounce to SPX 1883 the market headed lower again. At 2pm the SPX hit 1868, then rallied to 1876 by 3:30, before ending the day at 1873.

For the day the SPX/DOW were -0.75%, and the NDX/NAZ were -0.55%. Bonds gained 7 ticks, Crude added 40 cents, Gold rose $1, and the USD was higher. Medium term support remains at the 1869 and 1841 pivots, with resistance at the 1901 and 1929 pivots. Tomorrow: a speech from FED chair Yellen at 11:30, then the FOMC minutes at 2pm.

The market opened slightly lower today then accelerated to the downside until around 2pm. Thus far the market has retraced all but six points of the recent SPX 1862-1886 rally. The DOW fully retraced its rally, but the NAZ has retraced only about half. Relative strength appearing in the growth indices. Recent lows have occurred at SPX 1862 and 1860. These levels could be retested again. However, with a positive divergence now appearing in the DOW hourly chart we should see at least a rebound first. Best case, today marks an important low. Not so best case, we retest SPX 1860/1862 again. In either case the uptrend should resume shortly.

Short term support is at the 1869 pivot and SPX 1860, with resistance at SPX 1886 and the 1901 pivot. Short term momentum hit oversold this morning then bounced. The short term OEW charts turned negative at SPX 1880, with the reversal level now at 1876. Best to your trading the FOMC minutes.

MEDIUM TERM: uptrend

LONG TERM: bull market

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

About tony caldaro

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97 Responses to tuesday update

  1. OK, maybe another gap up tomorrow? one can dream…

    Way to go Meryl, She is out of this world!

  2. magicianme says:

    Interesting juncture. I’m flat because I can’t quite put my finger on whether the market is waiting for FOMC to overcome that strong resistance at 1885, or whether it’s going to use FOMC to reverse back down.

    So, yeah, the market may go up or down. Fat lot of good that is!

    But I see an IHS starting from about 15 min past yesterday’s open (clearly visible on tick charts). Neckline would currently be around 1886. However, if we pass that neckline I see a slightly better than 50-50 chance that we won’t hold the rally (unless there’s some major bullish news in the FOMC minutes). Given a neutral FOMC I’m expecting a better chance of a reversal here than a rally despite it being quite late in the day in a market that has a long standing reluctance to make a major direction change in the last 2-3 hours of trading.

  3. hkloon says:

    Tony, what is CFR?

  4. Top is in for the day and for next 15 days. Market should close around 1878ish today. But during the day, it should also touch 1873. There is bit of tolerance there.

    if things happen as above for the day, then tomorrow should be down day touching 1860.

    For last three weeks, if Tuesday was up, Thursday was down and that is what is bugging me about tomorrow’s expected fall, as Tuesday was down this week.

    If above does not happen (fall to 1860 till Friday), then prepare for STOP LOSS at 1908.

  5. blackjak100 says:

    Rut going to lead us lower????

  6. rc1269 says:

    lost post of the day- pretty funny [in a sad way] article in the WSJ today about LBO debt/lending standards. pg A1.

    “Wall Street banks are financing more private-equity takeovers with high levels of debt, despite warnings by regulators to reduce the amount of risky loans they make.

    The Federal Reserve and the Office of the Comptroller of the Currency last year issued guidance urging banks to avoid financing leveraged buyouts in most industries that would put debt on a company of more than six times its earnings before interest, taxes, depreciation and amortization, or Ebitda. The Fed and the OCC also told banks to limit borrowing agreements that stretch out payment timelines or don’t contain lender protections known as covenants.”

    So to be clear: the Fed promotes excess leverage and risk taking through their monetary policy, while simultaneously asking banks/investors not to take such risks. Much like placing a piece of chocolate cake in front of a 5yr old, giving them a fork and saying, “here’s some cake, don’t eat it.” If the Fed were a person, we’d say they are clearly either idiots or just insane. But since they have a bunch of PhDs and flaunt a bunch of charts and data then I guess they must know what they’re doing.

    • Well, What Fed did was to save the world from a disaster, and telling the crooks not to do it again.

      What you are saying is, Banks will not stop risk taking, even though they know what can happen, and you are blaming the Fed for it?

      It’s more like an addict that will shoot up the moment they find some money.

      • rc1269 says:

        How can you give the Fed credit for “saving the world” (which was 5 years ago now, incidentally), while giving them no credit for doing the same thing – with different effect – later on?
        And yes, they are like addicts. And the Fed is both their dealer and the police.

      • Let’s agree to disagree, but it’s not the Fed’s job to be the police… Dealer they are, but other agencies should be policing, if they were not cornered by a bunch of rabid dogs…

      • rc1269 says:

        Actually, it is explicitly their job to be the bank police. May I kindly recommend a review of the Fed’s charter,purposes and responsibilities for some weekend reading.

        • tony caldaro says:

          The FED has two mandates:
          1. full employment, and
          2. control inflation
          Recently, however, they have been forced to add regulating banks and overseeing corporate America.
          Thanks to Dodd-Frank.
          Bernanke, during his tenure, introduced open QE in March 2009 right at the powerful CFR.
          The FED had done QE before, but always secretly.
          For those still living in the last millennium.
          Take notice, the game of capitalism has been changed.

      • So you complain they are the police and the dealer, then you say they should be?

        Fed wants that money back soon, and is telling them not to throw them away. It’s not that hard.. and I exceeded my limit… Have a profitable day.

      • 16golfer says:

        I’d like to see them install bright neon colored lights on the front of the Federal Reserve Banks to mimic the lights you see at the casinos in Vegas. KC could install lights to match the Plaza lighting at Xmas.

      • rc1269 says:

        fwiw, i never said they “should be” the dealer. i just said they were. i think some confusion has led this thread to stray far from the original point of the post, which is: the Fed engages in clearly contradictory activities, and yet often acts surprised when they don’t get just the results they are looking for. that’s all, nothing more. i’ve overstayed my welcome so peace out. -rc

      • Tony wrote “Take notice, the game of capitalism has been changed.” But, I’d like to add that the end result remains the same: making $$$$s and lots of it. 😉

    • tommboy interesting comment yesterday on Karma. The fed is due

      • tommyboys says:

        Yeah due a big thank you for not allowing another ’30s style depression. Most feel that – IF – they saved us, it was 5 long years ago and they shouldn’t be given continued credit and need to change tactics now. This line of thinking is mislead. It could easily take a generation to get things normalized. We in our immediate gratification world following markets tick by tick have no clue and shouldn’t be pretending to. Thank God we live in a time where a Fed exists – especially in a fiat world.

      • Lee X says:

        Take it easy Francis
        You need the tick by tickers to give a bid and an offer when the ” investors” want out .
        There are no Saints in this business… none

      • rc1269 says:

        TB- I guess all those FOMC members who think it’s getting risky keeping the balance sheet this big are also mislead. Clearly your economist chops and credentials trump all those other very learned people out there who question this experiment.
        I’m sure there’s a phrase for when somebody claims to know with certainty the outcome of an experiment before it has been tested, but it escapes me…
        sorry all, i said i would leave. but this is getting downright painful. i think i need to take a few days off from here. okay GL all. thx Tony sorry for the spam.

      • trondack says:

        thetruthtrader1, Here is a satirical look at the Fed and its operations around 2004 – 2012. It basically says, the Fed is the “cause” and “cure”.

      • Lee X says:

        Hey R C ,

        Is this the same TB who posted about an inverse HNS on a 10 minute chart not too long ago ?
        Ahhhh the internet. 😉
        Peace all

      • tommyboys says:

        My name is psycho – “anyone touches my stuff and …”

    • hrmny358 says:

      Good exchange. Is it possible to agree with both of you? Good read if not already red (HA)

  7. rc1269 says:

    so far it sure looks a lot like April 25-28

  8. blackjak100 says:

    Looks like wave ii still ongoing as a double three with target of 1890ish. fed minutes to spark wave iii down???

  9. rc1269 says:

    boy they really wanted to leave nothing to chance on the gap up this am

  10. winslow80 says:

    RUT made it’s momentum low on April 15 at 1096. Twenty four trading days later, it closed yesterday at 1097. Despite ubiquitous commentary about RUT getting crushed, I am interpreting the last five weeks as representing sideways action. The index is in a bull market. It has positive divergence on the daily chart. It has a double bottom, which yesterday was retested with a nominal .618 retracement. And the pessimism is so thick you could cut it with a chainsaw.

    The RUT daily chart features lower highs and lows, so I acknowledge the possibility that the index could get annihilated. Even so, this does not seem to be a textbook low risk/high reward shorting opportunity. No one really knows where the stock market will go, except for God and Janet Yellen (not necessarily in that order). But trading is a discipline involving probability, and in a bull market the current set-up usually leads to higher prices.

    My bullish premise will be confirmed as nothing more than insanely asinine bovine excrement if/when the RUT double bottom fails.

  11. rc1269 says:

    very skittish start to trading in corporates this morning. dealers hesitantly framing quotes unchanged but with no conviction (ie they’ll quote a bond unchanged unless you actually try to hit them, then they will fade on their bid). europe has been a little volatile overnight, both with a couple sovs bouncing around (italy, spain) and names like BNP blowing out (+5-7bp) on their $5bn settlement. starting off with weak #s from TGT isn’t helping. in short, feels like everyone waiting for an obvious green light at this pt.

  12. alexhartley1 says:

    Small b wave bounce in an ongoing C wave down looks like it’s occurring in pre-market this morning on the S&P. It should stretch into the morning session (1876-1880). Then we continue down for the rest of the C wave and what will hopefully be a bottom end of today/tomorrow.

    I’ll be looking for an impulsive move up after that as long as we don’t break 1860 area (not including pre-market futures tomorrow). I think by the end of the week we’re moving on up.

    Thanks Tony.

    • blackjak100 says:

      1877.47 is a very key overlap to my count today as it would imply a 3 wave move from 1886. Need futures to retreat in the next 3 hrs. Wave ii really looks best completed at 1886, but we shall see.

    • Thanks Alex – your roadmap from last week is playing out nicely. I too will go long again at 1860-62 with tight stop like last week. Keep the great posts coming!

  13. torehund says:

    Most of my Stock are plainly exhibiting rangebound choppiness, and at this point in time the bottom of the range is tested. Its always tempting to ascribe these Waves significance, but one has to wait for a range breakout and then start counting. Believe its the same for indexes, when what we are in now is the link piece between two primary Waves. Chop is an important part of the markets attempt to frustrate participants and shake out the lesser comitted players: as indexes cant make a meaninfull Ascension With sellers emerging at every miniscule price hike. They have to give up altogether, its that simple…..

  14. blackjak100 says:

    I still see no reason to be long here as the ED I’ve proposed for 6+ weeks completed @ 1902. I think waves i & ii are complete and we are beginning an extended third wave down where sub minute i should complete tomorrow AM @ 1865ish followed by a retrace. The little retrace last hour of trading should have been a fourth wave and fifth wave started down last 10 min. Sorry folks, 1862 (or neckline of mini H&S in $SPX) is going to hold for at least another day.

    • +1 BJ, the minute ii wave should commence around Yellen speech and minute wave iii will likely commence around the FOMC on a buy the rumor sell the news as tomorrow should be a bigger down day then today.

      • blackjak100 says:

        I think gold finally breaks down out of the 5-6 week triangle as well tomorrow. $1200 could come very fast, but it will be an excellent opportunity to get long for $1400+. I’m short gold & $SPX myself and hope I don’t get double burned.

      • chrisk44342 says:

        agree on gold BJ. On one hand 1181 looks meaningful as a bottom. On the other hand, the chart clearly reflects triangle after an A wave down. in those cases, I go with what the chart says, and it says C wave down after triangle break

    • Planetrader says:

      b100 – there is also the possibility that this is just the “c” wave of the “D” wave of the ED. In fact if this is an ED (and my other studies suggest this more likely), and as pointed out in the weekend update, i am expecting a push up from later this week/early next week into a couple of possible dates out to mid-June for the final leg.

      I am only contemplating the ED as my other studies suggest a more significant peak either end of Week 1 in June or Week 2 and thereafter down for a while, which may not support the third-wave scenario as is the primary count for Tony (I think). Either way, with a bit of luck, an upmove will ensue from later this week and it won’t matter whether it is an ED or a Wave 3 until time is up (and we are hopefully making a dollar or two).

  15. cj32 says:

    Last Tuesday at 1902.17 was the top for Primary III. Expect strong down move in next 2-4 days towards 1810-1818.

  16. pooch77 says:

    Did anyone notice 4 lower highs on rut daily and we turn down?

    • The RUT is in correction mode and has much further to fall as soon as it’s good ‘ole support trend line from 2000 to 2007 high is broke (see red trend line in chart below). Once the aforementioned trend line is knife like butter it will be a wild ride down hill to the orange rising channel or the weekly 200 MA.

      RUT: http://tos.mx/X8gt9k

  17. pooch77 says:

    Was the market front running Yellen,i mean they going to halt taper?? Nah

  18. Thanks, Tony! Have a nice evening

  19. 56rambler says:

    Mr Caldaro,

    You have mentioned 1970-2070 in the past. Is that a target for Primary Wave III or for Primary Wave V?


  20. ocaj2000 says:


  21. bouraq says:

    Bear flags done:

  22. mccarthyti says:

    Instead of looking for the uptrend to resume shortly… why don’t you go back and look at your charts again. Stop trying to force “counts”, just look at them, tell me what you see that leaves you so sure “the uptrend should resume shortly.”

    • tony caldaro says:

      take a look at the DOW count on the daily chart
      not forcing a thing
      we are in an uptrend, until not

      • mccarthyti says:

        my daily dow chart shows a close below the 50dma which is looking flat as a pancake.

      • attitude928 says:

        I agree with you Tony. TNA fingerprinting suggests that today was just a one day pullback. Today’s 28:21:09 print suggest that the upleg resumes tomorrow.

      • blackjak100 says:

        Since when is TNA a market predictor. Isn’t EW hard enough?

      • attitude928 says:

        TNA is a good way to track the $RUT, which certainly represents a fair share of the market. Each day I generate a 3 number fingerprint for TNA based upon about 30 formulas for each of 50 technical indicators. Print specific formulas are then analyzed daily to predict next day TNA close (up or down). I only trade TNA & TZA. I have around 700 successive trading days under my belt. The TNA Printing technique has had it’s triumphs and massive failures. For day to day trading I have found it more predictable than other techniques. EW has been helpful to approach trapped positions. I am thankful for Tony’s great work.

      • dazzling01 says:

        How can someone trade something that is so complicated to explain .. I mean honestly, does it have to be so complicated? Good luck!

      • attitude928, last night you said this “TOMMORROW IS AN UPTHRUST; ”

        What did you mean by it?

      • attitude928 says:

        Here’s an explanation of the failed upthrust formula:
        That’s OK since I wasn’t really expecting one up (upthrust) day followed by another downleg.

  23. thanks for the update tony. Not sure if today counts as a big fat down day, but I’ll take a bite of crow (per my post yesterday). No problem with admitting I misinterpreted the charts yesterday for today’s action. I hope however, my analyses are appreciated. But, I am more focused on longer term than daily ups and downs and even today didn’t produce a sell signal. BB-width on the SPX is still <2… The larger move has thus not presented it self, but +div on hourly DOW duly note 😉 .

    IMHO the ED-formation on the DOW for major 5 is in play, while the NDX/NAZ look more impulsive with the SPX indeed and therefore stuck in 3rd gear… Their's still also an ascending triangle on the NDX and SPX. Not on the DOW anymore, IMHO.


  24. John Arella says:

    My Outlook on short term SPX count

    Scary outlook for SPX diagonal long term wedge

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