thursday update

SHORT TERM: new all time highs, DOW +66

Overnight the Asian markets lost 0.5%. Europe opened higher and gained 0.1%. US index futures were higher overnight. At 8:30 Q1 GDP came in less than expected: -1.0% v +0.1%, and weekly Jobless claims were lower: 300k v 326k. The market opened four points above yesterday’s SPX 1910 close, then hit 1916 in the opening minutes. After that it started to pullback. At 10am Pending home sales were reported weaker: +0.4% v +3.4%. The pullback ended at SPX 1910 around 10:30. Then the market started to work its way higher. Heading into the close the SPX hit 1920 and closed there.

For the day the SPX/DOW were +0.45%, and the NDX/NAZ were +0.60%. Bonds lost 6 ticks, Crude gained 80 cents, Gold slipped $3, and the USD was  lower. Medium term support remains at the 1901 and 1869 pivots, with resistance at the 1929 and 1956 pivots. Tomorrow: Personal income/spending and PCE prices at 8:30, then at 9:45 the Chicago PMI followed by Consumer sentiment. Also tomorrow, there is a FED conference starting at 9am.

The market opened higher today, made a new high, pulled back, then made another all time high. We noted yesterday, a pullback below SPX 1910, would probably lead to the largest pullback since the 1886-1868 decline. Yesterday’s close and today’s pullback stopped right at SPX 1910. We continue to see three waves up from SPX 1862: 1886-1868-1920. Our initial uptrend target of the OEW 1929 pivot range appears to be next.

Short term support is at the 1901 pivot and SPX 1891, with resistance at the 1929 and 1956 pivots. Short term momentum ended the day quite overbought. The short term OEW charts, which have been positive since SPX 1877, will turn negative with a drop below 1914. Best to your Friday trading!

MEDIUM TERM: uptrend

LONG TERM: bull market


About tony caldaro

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114 Responses to thursday update

  1. Thanks, Tony! I’m already thinking about your always intelligent weekend analysis with my morning brew. Thank you, sir, for providing me and your bloggers with something to look forward to every day and Saturday weekend. I am grateful to you.

    -OEW Coffee Club Member

  2. pooch77 says:

    Cannot possible see this market going up much futher if small caps continue to lag

    • torehund says:

      NAZ is ahead of the curve, look at weekly macd, iwm is still flat and naz has a hook.

      • pooch77 says:

        Course the daily on the rut is all the way to top without much price movement,better turn Monday,2 hour chart needs to put in a bottom before this gets ugly again.If I waited for the hook on weekly you might be at 117 and I doubt this breaks new high before breaking down,i look for hook on daily

  3. fionamargaret says:

    Thanks Tony and all ……..have a great weekend everyone.

  4. blackjak100 says:

    Look at that reversal in apple!

    • rc1269 says:

      somebody recently mentioned AAPL was bumping against some important lines
      wasn’t me tho – i’m just a troll.
      diving back under my bridge now. cheers

    • gtoptions says:

      The GS upgrade was the sell signal. 😉

      • blackjak100 says:

        Agree…at least played a big part. It was so overextended from all moving averages that I had to try. I did not look at technical at all on this. Also, it was past the 1.618% ext of previous move where moves typically pause or retrace.

      • blackjak100 says:

        Also just pointed out on another forum, $644 was the ‘high before the high’ in Apr 2012. I did not know that, but I nibbled in the high $630’s. I think everything is priced in for the WWDC next week and will drift lower like it normally does during WWDC week.

    • gtoptions says:

      I agree with Jedi. I would not short AAPL. Technically it is beyond the major resistance zone I pointed out on the chart several weeks back. I have an AB=CD target of 680, It may well go back to 700+. Disclosure; I day trade the options, don’t own the stock.
      IMO Tim Cook is on a mission to dispel the Wall Street & CNBC/Bloomberg negativity. They are doing everything right, plus you have the Stock Split issue. Curious that CNBC/Bloomberg are not even discussing this event.
      Be careful & GL

  5. lunker1 says:

    CN, SPX has a rolling open which typically make a longer candle. for this reason do you use the SPY open instead? Thx

  6. Good morning everyone,
    Tony how large of a decline are you expecting from IV? Do you still expect a 10% or greater decline? Thank you.

  7. Lee X says:

    Hey gary,

    Saw the notification today of Jimi Hough’s passing on the CME FB traders group page.
    Says he was a CME member from 1979 -1992 and it sounds like he was already trading other products by the time I started as a local in the S&P pit in 1991.
    Cherish each day if even for a little bit.
    Have a great weekend guys

  8. winslow80 says:

    ISEE All Indices And ETF Only ~ Calls 25,850; Puts 43,086
    CNN/rdc1269 Greed/Fear Index 48 (Neutral)

    Sentiment still conducive to a continued advance.
    1929/pullback/1947/pullback/then we’ll see.
    Way over my limit.
    Perdonami Signore, per favore.

  9. gtoptions says:

    Thanks Tony
    Very good info from BJ, Soul, CN and others.
    Warning! This market ‘may’ go higher than you think, or it ‘may’ not! 😉
    Trade with the trend, which continues to be up.
    GL & GWE to all!

  10. John Arella says:

    Warning Diagonal Triangle and expanding triangle still valid. Until the top channel is broken, it’s still valid.

  11. CygnetNoir says:

    No matter what else you are looking at, if you are an intraday trader, the relevant levels for any particular trading day are always the same – Yesterday’s High, Yesterday’s Low, Yesterday’s Close, and Today’s Open. Pick you favorite stock or index, strike horizontal lines at those levels, and watch how price acts as it trades to, off, and through those levels over the course of two weeks. You WILL discover set-ups that repeat over and over with high odds of letting you out with a profit larger than the few losses you may accumulate. I can’t give them to you – it is a process of self-discovery. They are there. If you watch for them, they will come. Now trade well and fight nice 🙂 Thanks Tony!

  12. Hi Tony

    Is GREK the only ETF/Stock currently which might be about to start a wave 3 of 3 up ? Or do you see any other stocks/ETF which “might” be starting a new wave 3 up in the coming months ?

    Thanks a lot for your work.

  13. $RMTI, $$PEIX $ARTX, mkt. update and plan for friday (within comments sect. of blog):

  14. blackjak100 says:

    The VIX as a market predictor???? This technician thinks so.

    top of ED trendline sits at 1932ish tomorrow. I would expect an overshoot to 1940-1950 as ED’s almost always exhibit.

    • The overshoot of an ED applies only to the ending wave, which this minor wave 3 is not. I think this week’s action has pretty much demolished the ED hypothesis by the fact that a 3rd wave made a new high.

      • blackjak100 says:

        This is the ‘ending wave’ as you call it. iii of c of V. Tony and I have not been on the same page for months which is OK. I see a series of zig zags from 1646, not 5 wave impulsives which is wedging. The ED technically becomes invalidated beyond 1974 as the third wave would be the shortest. However, much past 1960 and I would start to question things.

        So no, it’s not even close to being demolished.

      • BJ: How does the 3rd wave become shorter the farther up it goes (to 1974)?

      • blackjak100 says:

        George, if this fifth wave reaches 1974 it can’t be an ED as the third wave would be the shortest.

        Wave I = 1646-1851 = 205pts
        Wave III = 1737 -1897 = 160pts
        Wave V = 1814-???? But at 1974 would be 160pts which violates the most basic EW rule.

        Make sense? If the ED top trendline sits at 1932ish today, then an overshoot to 1950 is likely as ED’s more commonly overshoot this trendline. This fits perfectly with Fiona’s research suggesting a 90% chance of increased volatility over the next couple of weeks.

      • BJ: This explanation makes sense:

        “George, if this fifth wave reaches 1974 it can’t be an ED as the third wave would be the shortest.”

        But I thought you had previously said this wave was a terminating wave iii of c of (major) v, not a wave v. Here is the excerpt:

        “This is the ‘ending wave’ as you call it. iii of c of V.”

        It seems like you are shifting your description of the count even as you explain it. Maybe you mean “George, if this possible fifth wave reaches 1974 it can’t be an ED as the third wave would be the shortest.” In that case you would be saying that a rise to 1974 would change your count on the current wave from a minor wave iii to a minor wave v.

    • I wouldn’t trust the VIX to predict anything of an immediate nature that’s valuable to traders here, but that’s JMO. Good Trading to All!

      • blackjak100 says:

        I don’t but he was using the trend to warrant caution which is different than using its absolute value.

    • rc1269 says:

      as has been mentioned before, short term vix isn’t very valuable. longer term – as this article notes – the overall trend changes can be telling (ie, no longer making lower lows as the mkt continues to march upward). thx for posting

  15. RDC says:

    Thanks Tony. Time to feed Bears.

  16. pcskier says:

    When I look at $nikk tonight it looks identical to oct 2007. The 20 weekly average is about to cross a flat 50 week moving and the tonight’s nikk is being pushed under its 50 week average and 200 DMA. By the way in 2007 when the $nikk was doing this the Spx was putting in its last high before the bear market .

  17. thanks for the update and all responses tony! tons of good stuff!

    I am stoked to see that the TAs I posted Monday last week have come to fruit. It’s not often one is right, but when one is, the feeling is fantastic. There was for sure a very bullish setup in the indices and they followed through. 🙂

    It was there all along, the Bollinger Bands, the ascending triangle, the AI buy-signal, the “slingshot” MACD set up, and last but not least the OEW count!, all strongly suggesting this would happen. It’s not often that so many TIs, TAs and count line up and point in the same direction: in this case UP. If they do, odds are in your favor to take that trade, and those of you who went long are sitting now already on 40 SPX points gains 🙂

    Now look at the SPX, it counts beautifully: Welcome to the heart of a third wave! Look how the bollinger bands are expanding on the daily chart and even on the weekly chart.

    All TIs show strength, not a sell signal anywhere. Tech is booming again, etc. First target: 1920s (remember the 80/20 rule I mentioned long time ago!? Trade through 1880 suggested 1920s. It took its sweat time for sure, but kapuyah and we’re here!). Then 1942-1952 followed by 1970 and even 2040s. Will it get there? Maybe, let’s not get greedy and take 1 target at the time!

    ps: starting to hear chatter from layman that this market is invisible and will never go down… typical for the end game of a 5th wave… so always protect profits my friends. we’re wrong till the market proofs us right.


    • Congrats to everyone who has been long. You all have read the waves and the direction of the economy much better then I have. I don’t see the economy getting better, but Obviously thats not what matters. Simply follow the waves, per cygnet noir post this morning, or tonys count which has been spot on and i am thankfull for. His daily updates havve been right on over this most difficult time. That being said, with all the high fives and all the bullish targets of 2000-2250 isn’t anyone a little afraid, that this is the time the rug is pulled. The world reducing interst rates is obviously another reason for risk on, but really. Maybe with sp futures down 3 p4 has began. Lol

      • thanks tryingtomakea$.and indeed congrats to everybody. As said, one target at the time. Let’s not get greedy and complacent.

        I’ve learned to not read into futures. I’ve seen them up +10 points over nite only to see a -10 day, and vice versa (i recall in late december 2012 futures were one nite -20, but that never materialized during cash the following day. Cash (market) is always king, futures are in there own little world/count).

        sure a correction has to start somewhere, but the brunt of a correction materializes when the market is already OS, not at moderately OB where it currently is.


      • torehund says:

        Tryingtomakeabuck: Since oct -2013 there hasnt been an Growth, lucidly illustrted by Shang ind and other “emergers”. Still in that time SPX did an upward tilted abc ! The 1000 dollar question now is if Things are to turn up. My thinking is that there will be at least subpar Growth in most markets and that tightnss in supply in shipping will become visible. Sure its nervewrecking but growthwise we are just at first floor or in the basement of a 5 storey tall building

    • Was the : Was the MACD “slingshot” effect the fact that it dipped below it’s MA and less than 2 weeks later popped back above it?

      • george, no; it’s when the black MACD line doesn’t cross the red signal line (not producing a sell signal) while both lines are trending up.

  18. Lee X says:

    It’s very inspiring to read all the posts about how well a lot of posters are doing in the markets recently and the past several decades, but please remember to give back to those less fortunate.
    Thanks Dr. Lee

  19. Jedi, great call on BAC, following your script beautifully these past two weeks, will look to go short around $16.

    Any thoughts on SODA? Seems to have strong support at $35-37. TIA

  20. Simple, it breaks my heart to see anyone exhibit such psychological issues – I encourage you to take a few days off from the blog(s), will likely do you a world of good.

    To all: my prior post stated that I had just gone long at SPX 1865 and was very confident that a bottom had just been put in at 1862, thanks in part to excellent input by Tony, Jedi and a few others… appreciate all the useful posts!

  21. bouraq says:

    Pushing the boundaries:

  22. lunker1 says:

    would expect SPX Daily RSI5 to get to 80-95 in this minute 3 which then can set up -D for minute 5. also the 1.382 ext of 667 -> 1576 = 1923. I treat it like pivot area

  23. simpleiam says:

    “magicianme says:
    May 29, 2014 at 12:02 pm
    …simpleiam, that’s not very mature. I won’t play the bickering game you play with Kevin and others….”

    I noticed that you were careful to be sure that I left the blog before posting this. Braveyouarenot! You don’t know what bickering is. Quit tagging my lines. I could care less about your opinion, so leave mine alone. The only deal I’ll make you is that I’ll scroll on past your posts without comment (or reading), if you’ll do the same with mine. As for my maturity, WHO CARES! I’m here to make money and again, don’t give a flip about your opinion, esp. since I MADE MONEY TODAY! What money did you make? All those bells and whistles you have, and you go short in a 3 of 3 well before the pivot… Smart… I’ve got a few bells and whistles myself. Leave me alone and I won’t bother you.

  24. rc1269 says:

    thanks Tony. adding value everyday. cheers mate

  25. makiori says:

    signs of confirmation for my instinct: 1) a further marginal down push on gold, possibly followed by an intra day rejection. 2) another failed attempt to trade firmly above 102 on $/yen. 3) continue flattening of the yield curve (10yr-2yr) where I think that we have just entered wave C of a long A-B-C correction.

  26. makiori says:

    I have no new chart to post, as every possible chart has already been posted.
    I have no way to predict the future, as I believe no one is gifted with such power (or curse…).
    A methodology (OEW for instance) can be helpful in projecting a plausible outcome, over less plausible ones, based on historical observation of behavioural patterns.
    However I have a survival instinct, that has served me very well to date.
    It kicks in very rarely, but I can clearly feel it as for today close.
    I don’t expect anyone to follow it or even take notice of it, but is the only thing I can share.
    My instinct tells me to get out from the “boat of excitement” where the captains (central banks) are continuously serving free rum , and drinking themselves like never before.
    Hubris kills.
    I am out and short as from tonight and not looking to change my medium term stance for several months.
    I will increase my exposure quite aggressively, if my instinct proves itself right.

  27. Well Neg GDP and we go up. No more bears left. Fed doing its job

  28. winslow80 says:

    As the market rises to new highs, widespread skepticism remains. Irrational despondency::

    ISEE All Indices & ETF Only ~ Calls 60,806 Puts 152,182
    CNN Greed/Fear Index ~ 44 (Fear).

    This is an agonizing slow motion train wreck for the bears.
    It is unlikely to stop until the skeptics surrender to the trend.

    • rc1269 says:

      garbage in, garbage out

      • winslow80 says:

        rc1269 says:
        May 29, 2014 at 5:48 pm
        “garbage in, garbage out”

        There is no need to publish your itinerary.

        1948.52 = 1.618 extension 1814.36-1897.28
        1947.97 = 1.272 extension 101.44-1553.11

      • As long as there isn’t a blow-off top, we should not have a meaningful correction… It’s autopilot now…. shorts are causing this grind to go on…

      • rc1269 says:

        i have no itinerary other than to share opinion and help others, same as you. one of those opinions is that the CNN ‘greed/fear’ index is broken. that opinion happens to be supported by quite a bit of obvious data. nevertheless, you still somehow find value in it, and worse yet, think that re-posting bad data is worthwhile for the rest of us. i am merely trying to help others who might otherwise think that index is robust and meaningful. so… garbage in, garbage out. has nothing to do with you so don’t take it personally. we’re all big kids around here. if i posted garbage i would trust that somebody would call me out on it and i could learn from it and become better at what i do.

      • winslow80 says:

        The Greed/Fear index has been accurate, contemporaneously confirming the lows in SPX at 1814 and RUT at 1082. I mentioned the contrarian bullishness of that negative sentiment at the time, when we first disagreed about whether G/F was a valid indicator. Perhaps our resident archivist JK will document that history for you. Subsequently, G/F readings have been confirmed by put/call ratios, which have independently verified the same phenomenon: that traders are fighting the current trend as it moves higher. It has been reinforced by anecdotal evidence as seen on Twitter, where the advance is being met with a combination of resentment and utter disbelief. The ES poll on has also accurately reflected trader sentiment, and it is aligned with the other indicators that show persistent skepticism of this rally.

        rc1269 says:
        May 29, 2014 at 9:35 pm
        “i am merely trying to help others…”

        I had a similar debate with Prechter many years ago. Stubbornly being wrong is not “helping others”.

      • rc1269 says:

        “Stubbornly being wrong is not “helping others”.”
        couldn’t have described your post any better, thank you.

        let’s rewind here, since memory seems a little hazy – i never disagreed with your call, or the negative sentiment exhibited by other more-robust indicators. indeed that indicator does correctly track and present some useful line items, when looked at independently.
        the issue isn’t whether something happened to be correct in hindsight. as you’ll learn in any intro stats course, correlation is not causation. i pointed out that the indicator being presented for items such as “junk bond risk” were very clearly the opposite of what a correct reading should show. there are countless other data points verifying that. that means… drumroll.. their index is broken. if some or part of their component items are incorrect, which they are, then that’s why you get ‘garbage in’ – the bad data – which gives you ‘garbage out’ – the summary indicator. i’m not sure how else to say it so it makes better sense.

        does that mean the indicator will always be wrong, or never be right? no, of course not. does that mean it’s still bad data? so why not just present the good stuff rather than keep re-posting the aggregation that includes bad data? seems like a simple solution.

        okay this dead horse has been beaten enough. moving on. best of luck. i’ll make sure to let you know if i have any disagreements with any famous and usually wrong technicians; apparently that lends me credibility.

      • winslow80 says:

        rc1269 says:
        May 30, 2014 at 9:35 am
        “Stubbornly being wrong is not “helping others”.”
        couldn’t have described your post any better, thank you.

        The Greed/Fear Index has identified the three most recent stock market lows. Have you? No need to reply. Anyone who has read your commentary knows the answer.

        My fault for allowing myself to be trolled.
        To end on a positive note, I still love you.

  29. ocaj2000 says:

    Guten abend, alles.

  30. tony caldaro says:

    not sure the wave II bottom is in

    • Can a ‘b’ corrective wave really go this high as to bring into question whether we are in minor wave 3 of Int. wave 3 of major wave 5? Having said that, I notice that the “power day” of 1%-2% increases of price indexes across the board with an A-D plurality of 1800+ which I thought should happen in an impulse scenario has not occurred. That together with the non-con of the the DJIA with the DJTA all time highs raises some doubt in my mind about the completion of the Int ii wave as well. If a minor c wave of Int ii starts materializing, it would be nice to see it stop well above 1814. And if that did happen, it seems to me that such action would suggest a higher target in price and a longer duration of Major 5.

  31. Tony about markets…

    It really concerns me that Dow Jones and NDX is not making new highs with SPX, looks like bearish divergence?

    If NDX and Dow Jones in next days does not make new highs , will this be any clue or ?

  32. JK1987 says:

    Tony Thanks,excellent call on a third of third.
    You are the only one across the universe perfectly and correctly called a third of third at 1862 ii bottom, that’s the beauty of oew, it’s objective.
    This a third of third is the most hated by almost everyone, people keep on complaining about this perfect rally “storm”, hence got squeezed.
    Only oew perfectly called it!

    Much more excellent work:
    And even more excellent work at the oew group work, must join!

  33. lunker1 says:

    Yes exactly like a third of a third. Thanks for everything Tony.

  34. Hi Tony

    I need some help on the DRYS chart. If you ignore the BDI index and only focus on the DRYS chart. It looks like it made wave I top and is in a wave II bottom. Where would you estimate wave II bottom to be around 2.5 or maybe wave II bottom is in ? Or any other estimations ? Thank you

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