wednesday update

SHORT TERM: consolidation day, DOW -42

Overnight the Asian markets gained 0.3%. Europe opened lower but finished mixed. US index futures were higher overnight, and the market opened one point above yesterday’s SPX 1912 close. After a dip to SPX 1910 in the opening minutes the market rose to 1914. Then the market pulled back to SPX 1907 by 10:30. After that the market hit SPX 1914 three more times in the afternoon. With the last one around 3:30. The market then pulled back to close at SPX 1910.

For the day the SPX/DOW were -0.20%, and the NDX/NAZ were -0.25%. Bonds gained 17 ticks, Crude slid $1.20, Gold dropped $6, and the USD was higher. Medium term support remains at the 1901 and 1869 pivots, with resistance at the 1929 and 1956 pivots. Tomorrow: Q1 GDP (est. -0.5%) at 8:30 along with weekly Jobless claims. Then Pending home sales at 10am.

The market opened slightly higher today, made a new high at SPX 1914, then pulled back to 1907. After that it climbed back up to SPX 1914 in the afternoon, but kept bouncing off it. It appears that short term trend line is keeping a lid on this rally for now. Q1 GDP first thing tomorrow morning. Could be a market mover. Thus far still three waves up from 1862: 1886-1868-1914. A drop below SPX 1910 should usher in a larger pullback.

Short term support remains at the 1901 pivot and SPX 1891, with resistance at the 1929 and 1956 pivots. Short term momentum continues to display a negative divergence. The short term OEW ended neutral with the reversal level now SPX 1910. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: bull market


About tony caldaro

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125 Responses to wednesday update

  1. Kevin M says:

    I hate admitting it but bravo Tony! I still think it would be foolish buying here. A better buy would be at the end of June for a Mid July top. Certainly though things are getting questionable for the longevity of this bull. The fall period should be an excellent opportunity for shorting.

    BTW if there is an ED and if tony is correct about July maybe we are only in wave 3 to 1930ish (wave 1 finished in March, the start was Feb) and then wave 4 to 1900, then up to 1950-60ish into mid July to finish it. The fall time frame should get the SPX back down to 1750ish.

    Bonds, yield spreads, russell, biotech blow-off etc…..showing warning signs here.


  2. JK1987 says:

    Look, who keep on complaining about this rally from 1862, and keep on calling B wave.

  3. H D says:

    1,909.82 – 1,919.74- Look who showed up, better late than never.

  4. lunker1 says:

    What kept me in the long game was 60 minute RSI5 worked off it’s overbought condition w a move below 50 but yet price didn’t budge much. That’s showing strength.

  5. rc1269 says:

    definitely determined to kiss TC’s trend line at least one more time

  6. mjtplayer says:

    Per the junk bonds and junk spread comments, after reaching the ’04/’07 double-top (inverted) junk spreads, we just recently climbed back to the at area in April, compressing to just 2.43% over Tresuries. Never thought I’d see that level or complacency or euphoria in junk bonds again, but then again I never expected so much Fed/gov’t involvement in markets either.

  7. gtoptions says:

    Thanks Tony
    SPY ~ Breakout finally feeling sticky. It will drop after I post this! LOL
    138.2% ext. 07H/09L @ 192.06 & 150% @ 202
    AAPL ~ Love it!

  8. Libor Val says:

    Hi Tony, SPX certainly looks like some kind of a 3. wave – minor 3? what are your targets – maybe you mentioned it in last updates but I cant recall it, if you could be so kind?

  9. pcskier says:

    $tnx bounce on its downward sloping 200 week average. But it looks only a matter of time before it breaks below. High yield junk bonds seem to be the new $vix or real fear indicator and that is exactly what the central banks are worries about the froth in high yields. The central banks of the world want high yield to roll over but that may take everything else with it.

  10. mjtplayer says:

    Counter-trend rally over in copper? A drop below $3.09 would be a good indication. Copper still has a shot at getting up to $3.25, but so far it’s failed to get through the $3.17- $3.19 resistance area.

    Sell/short copper right here (ETF: JJC) or use FCX with a stop at $36

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  12. gary61b says:

    Lee, did u work on the floor in Chicago?and did u know a Jim Hough? chicago.

  13. Hi Tony

    1: If you like GREK here , then would it not affect positive on shippers ? I think a lot of shippers based in Greece…

    2: Dow Jones still cant break new all time highs with Nasdaq , is this not a bearish sign for markets not following SPX as they should be leading?


    • tony caldaro says:

      Yes, a lot of shippers are based in Greece.
      But a large trading range on the BDI won’t do those stocks much good.
      Was thinking bout that this morning.
      Traders may be following the impulse waves in the SPX/NDX/NAZ, and the diagonal pattern in the DOW.
      Just a thought.

      • It is more because I have some cycles which points that markets topped out early this week and a sharp sell off to start by next week in June….. so I cant see markets go higher from here Tony.

        On your DRYS chart it looks like this could see a large move higher according to your charts , that would mean shippers going higher ?

      • tony caldaro says:

        not confident in the shippers

  14. TY Tony, still learning and struggling with the wave structure. Appreciate the reply. Interesting each low getting the 55 buy program. Above that should escape the sellers. JMHO

  15. rc1269 says:

    AAPL bumping up against some numbers here. prior support trendline now resistance; 76.4% retrace of high to the April ’13 low

  16. pcskier says:

    The yen hit it 200 DMA last week while we were sleeping and got rejected but it is making its move back up to re try. Yen strength is bad for the $indu. I am long the yen. If and when it gets squeezed like UST it has run away legs.

  17. Lee X says:

    Still a nice TL TC

  18. rc1269 says:

    Q1 GDP: how can people blame the ‘weather’ when personal consumption was up 3.1%?
    GDP was hit by investment and exports. that doesn’t sound too weather dependent to me. but i’ll let one of the armchair apologists…err, economists here explain to me why that’s not the case

    • lunker1 says:

      The economy and the stock market are two different things. I find all the economic debates on here funny because they really don’t matter much, but the charts do.

      • Chicken or egg thing, just theories, but if China attacks Japan, then I want to see what your charts say about that

      • lunker1 says:

        I’m not going to worry my life away with but if’s. Crimea was a but if and there’ll be hundreds of more but if’s this year.

      • rc1269 says:

        a wise response to a question not asked. did you believe i was unaware that the two were different things?
        as for the funny economics not mattering, i would have to suggest that is patently incorrect. it might matter little for a day trader. but economic activity ultimately drives all the factors that move asset prices – personal and corporate investment decision, wealth, income, interest rates, monetary policy – everything. and i have trouble believing that literally nothing influences the stock market, not even buying and selling.
        charts don’t exist in a vacuum unless you’re playing a video game

      • lunker1 says:

        I think it’s funny that so much of the discussion is about other topics like the economy, the Fed, politics,. and geopolitical stuff When the most important discussion is how to make money by trading the chart.

      • rc1269 says:

        oddly, Tony finds it worthwhile to always mention precisely those things in his writeups every day. i wonder why that is

    • tommyboys says:

      It was the restocking of inventories that took the heat. Just imagine if it had been a more “normal” winter…?

  19. magicianme says:

    Today’s a good day to go short, IMO.

    As with the H&S I posted about yesterday as it was forming – hope some of you made some money on it – there’s a larger H&S forming that many traders will miss because it’s not a clear shape on their time charts. However, such H&S patterns, found in tick charts and in the indicators themselves, can be even more reliable. This one is supported by my other indicators suggesting buying at this level is very, very weak. Combine that with several low volume days and we’ve got a near perfect storm. We’ve now had four days, excluding the bank holiday, of sub 1M contracts in the futures with low average trade size. That’s very, very rare. It happened on the 23rd of April and again now. The previous time it happened was way back in August 2012.

    I’m expecting a break of yesterday’s low and that’s despite various bullish signals (like today being a huge POMO day, like the drop in risk-off assets e.g. gold etc). As is often the case, the kick-off may come with the release of economic figures. All the talking heads and analysts on CNBC and elsewhere will “wisely” attribute / fit any move to the data released. The pre-news volatility may offer a good opportunity for a limit order to sell as would any negative divergence in any time frame.

    It seems I’m not alone in expecting a bit of a reversal today with bouraq, lunker1 and others possibly leaning that way.

    “…Every time I thought the top of stocks was in, I’ve been wrong and lost…”
    I’m going to disagree with others who’ve posted that this is a smart comment. It’s not. Nobody knows when a top (or bottom) is in. The smart play is to buy into strength and sell into weakness, not trying to call the tops and bottoms of markets and especially not trying to call a top after a very strong trend move.

    • simpleiam says:

      You’re twisting what I said. I trust others can read for themselves. Anytime you want to stop using my posts, you can stop anytime. Hey, magician, can you make yourself disappear?

    • RDC says:

      Agree. Bears are starving and angry 🙂

    • If this awful GDP number doesn’t stop the uptrend, only a blow-off top would… too early to short unless there is evidence of dumping.. Amazing how Tyson news came out the second the GDP numbers did…

      • tommyboys says:

        Negative GDP was widely expected. Backward looking data. Forward should be much stronger and is expected to be.

      • CygnetNoir says:

        Popped in this morning to see what was going on at Tony’s and on reading this GDP news, I thought I’d share this: I had no idea that GDP figures were released this morning, and certainly no idea whether they were “good” or “bad.” I stopped following data releases years ago. They mean nothing to the day trader or even the intermediate swing trader – my swing trades have been in place for days and some for weeks, and today’s news does not affect profit targets or stop loss levels whatsoever. I have my list of stocks to day trade set since last night, with a few additions this morning. While news can and will, of course, move individual stock issues, it does not always move price in the direction one may have expected given the news. And it is really only rarely that one piece of news proves to be a legitimate catalyst to get a MARKET move underway, but the direction of that move was likely already telegraphed by price action itself (and again, it is not always the direction that the news would have one expect, perhaps). My advice to anyone who wants to make $$$ over the long run is to learn to read the waves, not the newspaper. And if you can’t read the waves, then read Tony 🙂 Trade well, and fight nice today!

      • Cygnet, would be nice to get more info on the trend you expect, the stocks you find interesting, etc… Thanks

      • tony caldaro says:

        reason for selloff in March?

      • tommyboys says:

        Profit taking in hyper growth and wildly speculative issues rotating for relative safety. Forward looking to today’s weak GDP possibly? Now look forward again…

      • tommyboys says:

        Doesn’t mean we can’t gap & cra* today however 🙂

      • 1914 has been my 2.618 target for months.. I have several posts on that number… but if we pass it with a good housing numbers then…

    • lunker1 says:

      Didn’t say go short just agreeing with Tony’s weakness thesis and also got a VIX sell signal yesterday but these can be false signals in wave 3s. I’m debating whether or not to lighten up some now (I’m not really much overweight) or just add on the dip. Would expect a backtest of the SPY break out. But it’s not required.

    • uncle10 says:

      magic, you trading the tick chart eh? going for a few points.
      Have a friend that is studying/paper trading and convinced he can make 3 or 4 points averaging 3 times a week. Doesn’t seem to be that hard? haha

    • magicianme says:

      simpleiam, that’s not very mature. I won’t play the bickering game you play with Kevin and others.

      “Bears are starving and angry”
      RDC, I don’t believe there are “bears” or “bulls” trying to push the market down/up, but I like the image this conjures. 🙂

      CygnetNoir, well said!

      uncle10, I do indeed use tick charts though I have an M5, M15, H1 and D1 on a different screen. GL to your friend. It is indeed very possible to make 3-4 points 3 times a week as long as one stays disciplined, focused and careful (stops written in stone!) In this bull market my main profits have been on shorts the last few days. That’s not because I’m “bearish” but because the opportunities for shorts just happened to be clearer (to me) with close stops …and they represented better RR. My target for the day is 4-6 points. I made 4 points on my short just after the open (nice H&S on the tick charts with a neckline starting near yesterday’s close), but after that it’s been frustrating. A short at 1912.50 on ES 06 got taken out for BE. Another short at the same entry point also got taken out for BE. I still think there’s a downside to today’s action, but I’m going to settle for my 4 points and call it a day. Greed = mistakes = Losses. I highly recommend daytraders try multiple TF tick charts to see the action more clearly.

      • uncle10 says:

        I hear you magic. Nothing like hitting the highs and lows….

      • Magicianme – I agree it has been very frustrating to trade these tight flat lined trading ranges lately. I adapted to using the 2 and 5 min charts for scalping 3-4 pt day trades on ES and it has been working out well for me over 2 weeks now. Just wondering what time frame chart have you been using successfully for scalping day trades on low trading ranges like today?

      • magicianme says:

        El Matador, I use multiple tick charts from 500 ticks to 14,400 ticks. On quiet and low range days the 500 tick is the business. When price is going up and stalls – with several bars on the 500 chart hitting the same resistance and bouncing back – I take a short with a 0.25 stop the next time it hits that invisible resistance. Same in reverse if price stalls on the way down. But these trades tend to be good for, on average, only 1-2 pts per trade. The only reason they work is because when price is trying to get past a point and is struggling it takes a step back to pick up some momentum and try again. You’ve got to get out quickly when it takes that step back.

        Care to share how you play the M2 and M5? I used to love the M5 – the chart of choice for Al Brooks, a genius whose tech analysis books I’ve read multiple times.

      • uncle10 says:

        .25? wowza that is indeed tight!! hehehe
        Thanks Tony. sorry another pretty much worthless 3 from me. gd and gl

  20. lunker1 says:

    SPY update
    would expect a backtest into the black line 190.8 or lower
    a close below the blue line 190.2 is bearish
    later peeps 😀

  21. RDC says:

    Thanks Tony.

  22. torehund says:

    bulk update…

  23. Thank you, Tony! Have a nice evening.

  24. pooch77 says:

    Thought the market was forward thinking,so we all know everyone is expecting a negative GDP number due to weather ,whether you agree or not.I see 2nd Q calls of 3-4%,does the market not trade forward?

  25. bouraq says:

    Experimenting with resistances:

  26. ocaj2000 says:


  27. llerias7 says:

    June 5th the european BCE might make an important move…seems to soon for a significant pullback now,

  28. rc1269 says:

    Thanks Tony

    quick poll: anybody at all concerned by the curious move in rates and vix at these seemingly breakout highs…?

    • tommyboys says:

      An interesting take on bonds here. Take it FWIW…not looking for a lambasting 🙂

    • hrmny358 says:

      Very. And the low volume on this move.

      • hrmny358 says:

        Good article, and I somewhat agree. It is hard to see growth developing though with gas, food and rent at current levels. Housing has outpaced incomes IMO, so most of what is left is refi’s. The top 5% can look past it but most can’t. Corporate buybacks and increasing dividends push stocks higher, but they don’t promote growth i.e. HPQ cutting 11k jobs. I can see this market marching higher on buybacks and the chase for yield. The Fed has done a great job in keeping the ball in the air while congress fiddles.
        Back to rates, how will banks fair in the face of a flat curve? I am mixed on the market and am curious to see the reaction to GDP in the morning.

    • simpleiam says:

      Bang Girl (Melissa Lee) says, “How can stocks continue to make all time highs when Fund Mgrs. are liquidating them and buying bonds?”
      Gartman says, “Because there’s lots of liquidity out there; people have money, then, there’s The Fed. Every time I thought the top of stocks was in, I’ve been wrong and lost…”

      The most sensible statement I’ve ever heard come out of Gartman’s mouth!


    • Lee X says:

      Hey R C

      Strong hands at work imho

      • Lee X says:

        Or what Tony just said before me …doh
        How’s the NW treating ya ?

      • rc1269 says:

        you and Tony think alike now and then. and i make note of both

        PNW is rockin my friend. getting 16 hrs of daylight and perfect golf weather. if yer into that kind of thing… 😉

        how strong does one’s hands have to be to get to be in the club? hah

    • lunker1 says:

      hey rc
      why do you say the move in rates is curious? to me it seems like bonds were deeply oversold and couldn’t catch a bid for months and now they are again. and what about the vix and equities? not catching your correlation there. Thx

  29. simpleiam says:

    Thank you, Tony!

  30. JK1987 says:

    Tony Thanks
    “A drop below SPX 1910 should usher in a larger pullback.”
    SPX closed at 1909.78.
    Does that consider “below 1910”, hence a larger pullback is coming? 20 points is larger pullback?

  31. fionamargaret says:

    Thanks Tony.

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