tuesday update

SHORT TERM: gap down opening again, DOW -118

Overnight the Asian markets lost 0.8%. Europe opened lower and lost 1.4%. US index futures were lower overnight, and the market gapped down at the open to SPX 1972. The market had closed at SPX 1978 yesterday. The market continued to decline, with 3 and 4 point bounces, until it hit SPX 1959 around 12:30. Then it tried to rally. Around 1:30 the SPX hit 1968, then pulled back again. At 3pm Consumer credit reportedly increased at a lower rate: +$19.6bn v +$26.8bn. Also at 3pm the SPX hit 1963, then it bounced to close at 1964.

For the day the SPX/DOW were -0.70%, and the NDX/NAZ were -1.25%. Bonds gained 12 ticks, Crude was flat, Gold was flat, and the USD was lower. Medium term support drops to the 1956 and 1929 pivots, with resistance at the 1973 and 2019 pivots. Tomorrow: the FOMC minutes at 2pm.

The market gapped down at the open today for the second day in a row. After 10am the SPX dropped below the 1973 pivot range, on its way to the 1956 pivot range. Around 11:30 the SPX dropped below 1962, suggesting the uptrend had ended at 1986. We posted a green Int. iii label, see yesterday’s update, on the hourly chart. Around 12:30 the SPX hit its low for the day at 1959, and started to rally from an extremely oversold condition. While it does look like this week has started the Int. wave iv downtrend. The market needs to drop below the SPX 1959 low next, to continue the downside momentum.

Short term support is at the 1956 and 1929 pivots, with resistance at the 1973 pivot and SPX 1986. Short term momentum hit extremely oversold by midday then bounced. Short term OEW charts remain negative with the reversal level now SPX 1969. Best to your trading tomorrow’s Minutes!

MEDIUM TERM: uptrend may have topped

LONG TERM: bull market

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

About tony caldaro

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112 Responses to tuesday update

  1. Hi Tony,
    I noticed my posts were missing. I hope I didn’t offend you in any way. I feel my ideas are far fetched some times and you have a wonderful way of putting them in to check. I do think we have started Int 4. From all the indications as you mentioned in today’s update. It has been so long since we have had a down trend that it has become hard to imagine. Thank you again

  2. H D says:

    BOTs wouldn’t let it rally more than 10 today. C iv down IMFO

  3. Ok. I’ll throw it out there, perhaps we saw the top of the bull market in RUT in the last few days? Anyone? It really struggled to barely put in a slightly higher high. Reminds me oh so much of 2007. Anyone want to put odds on it?

    Actually I’m seeing the SPX pullback here as probably a headfake with the next one being the real deal Primary IV top, but the last RUT top being the big one. No big rush to short here really. Cheers to all!

  4. wildmick says:

    hello tony caldaro!

    could it be that this pullback is a straight abc? I mean, these little 6 pointers as you say are noise and when you leave them out theres very little division in the waves, I think.

    what am I missing here? other than brains and a match to light my cigar?! thanks for everything.

  5. H D says:

    chity bank took 300B $ in bail out and now pays a fine, only 7B$, for all the criminal crap they did. It really psses me off! I’m all credit unions now. Move your money out of the big banks.

  6. rc1269 says:

    ever the watchful Fed
    “we are concerned about low volatility and complacency. Market participants are not factoring in sufficient uncertainty.”
    ahhh heck, who cares. regardless of everything we see and hear, “…monetary policy needs to continue to promote the favorable financial conditions required to support the economic expansion.”

    if we took away their PhDs and set this story to a different context, i can only imagine how idiotic everyone would think they are.

  7. cmucha68 says:

    I have observed for some time know this blog with all that different counts. I am not a fan of it and I am much more successful with intuitive trading. All this major, primary, minute, micro, nano, Chico, tico count makes not much sense. The room for interpretation and probabilities is just too high. Just look back: the 1929 in the past weeks was endlessly promoted while the market was clearly going up. Then target to 1989-2019 while the market was effigies overbought. Now after a 2 day pullback again this nonsense about 1901-1929 wethebit is just clear that the market goes up again to test the high. Don’t need to count endless back and forth. It is all visible in the charts. I haven’t met anyone yet who could proof to have made real big profits with EW. And I haven’t heard of any big trader like Steve Cohen or Paul Tudor jones who are using Elliot waves. The best are intuitive traders. So I am done with this blog. And will not participate any longer. But I wish every trader good luck

    • rc1269 says:

      good luck!
      chico waves are my fav

    • H D says:

      oh,,, u were looking for the holy grail. Let us know when you find it :mrgreen:

      • manunidhi21 says:

        Hi trondack,
        he doesn’t discuss trades or portfolio…not all are courteous like Tony.
        my understanding that he will wait for P5 to exit all portfolio..

    • manunidhi21 says:

      Thank Cm..
      its perspective..I know a investor who made 1millions from 40k bcz of his knwldg of EW..not this blog and he doesn’t share his knowledge..

      He is a long term investor..bought everything in march 2009..sold two days back 50 % of his portfolio..he thanks EW..

      • trondack says:

        Does he think we are in the 5th wave or close to the end of the 3rd wave? Thanks manumanunidhi !

      • If he sold 2 days back he’s clearly thinking we are close to the end of Primary Wave 3 up (or at the end already?) and doesn’t want to ride down the 200-400 SPX point move down expected for Primary Wave 4 down. Or he counts it differently?

        Maybe he only see’s Primary Waves A, B, and C and this ends the bull market? Meaning no final Primary Wave 5 up that everyone is expecting? Either way him selling is certainly something the bulls should worry about.

    • Lee X says:

      Adios Chico !

    • lunker1 says:

      Excellent. The drama was really too much.

  8. manunidhi21 says:

    Namaste Tony !
    “Short term OEW charts remain negative with the reversal level now SPX 1969”

    any changes..it was no news as October was already mentioned too..

  9. mjtplayer says:

    On the spike following Fed minutes, the S&P is at 1,972, which is 50% retrace. EOD action and close will be interesting…

  10. H D says:

    mmm, shakenbake. b of B at 1966.33 would take c of B wave up to 1978

  11. soulsurfer says:

    FYI: http://www.marketwatch.com/story/fed-plans-to-end-bond-purchases-in-october-2014-07-09
    What did Tony write in the last weekend update ” A four year Presidential cycle low is due this year, which usually creates the low for the year. The majority of the time they occur in July or October. Since the market still needs an a downtrend (Int. iv), then an uptrend (Int. v), to complete Primary III. It looks like the four year low will occur in the fourth quarter.” Brilliant!!

  12. blackjak100 says:

    It’s looking more like a 3 wave decline the longer it stays here. Technically can still be minute 4 as it did not move into minute i territory.

  13. Dont know why it had to return from 1971.2, As said yesterday, was expecting to turn back from 1972, so put limit order at 1971.4 and it did not take. catn wait for FED, finally, small SHORT at 1969.6

  14. Very tempting to short AA right here, BUT … always safer to wait to take out highest candle and then a follow-through day down.

  15. llerias7 says:

    So the “station” we are now is probably the minute (b) of minor A down of Int. IV…this train should stop at 1900´s or 1920´s…probably one or two weeks ahead…

    • Kevin M says:

      Doubt were done going up considering the Russell and the naz have gaps still unfilled. Also seasonally, mid July is the typical time the market starts going down. This is earnings season and my guess is it will be another record breaker.

      Hard to see a decent decline from here in the face of a strong earnings season. More like late next week we start the real decline.

      I have to say, the wave counts that are displayed at the present time, are alittle suspect. They just didn’t have the right structure. So in the light of this, being overly bearish(now) may not be the correct stance.


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  17. zvyezda says:

    ***IF*** the RUT makes a higher high for the day, consider that we may be going fractal in an ED for the SPX but with RUT failure to make new highs. I mentioned the RUT because the pattern **IF** it happens will be more apparent there.

  18. if it rallies back above today high 1971ish, then this is very likely Minute ii of Minor 5…..that’s what i’m seeing per the subdividing waves

  19. mjtplayer says:

    Nice B wave rally this morning, S&P should take out yesterdays low confirming wave C down to finish minor A

  20. with the S&P off 1% from way over priced levels and VIX at 11.80 it leaves me to believe when the music stops everybody can get out at the same time.

  21. gtoptions says:

    Thanks Tony ~ Your count is impeccable!
    SPY ~ .618 @ 197.33 ~ Hmm! WPP @ 197.34 😉

  22. opader says:

    For what I saw on Mon and Tue, selling is nearly all in future contracts of major indices to hedge against a significant decline. If that’s the case (very likely imo), then I doubt we go below SPX 1950 and very likely SPX rallies to its challenge its ATH and possibly 2000. What this does to minor counts of Int III is beyond me. Would we then conclude that Minor 3 has not finished?

  23. Unfortunately when the major indexes made new highs last Thurs, the A-D line failed to confirm, and that looks like it was the technical tip-off that Int 3 had peaked and Int 4 was starting. I hope that was not the case, but, as Radrian pointed out, the R2K decline looks pretty intense already.

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  25. torehund says:

    Well Brasil lost, and it was more sad than entertaining. Thinking this was the end to misery for the commodities and for emerging markets, it sure made a spectacular bottom. All the emerges have been severely strained by stagflation due to ultralow commodities.
    Funny the greenback has been called a petrodollar, in an age where the US hasn’t produced a lot. Now there is anxiety that the alleged petrodollar will be rendered obsolete.. Well you now have a real petrodollar and it isn’t going away for a long time yet.

  26. pas1968 says:

    Hi Tony,
    What target do you have for Int. wave iv?

  27. pcskier says:

    Lowest short interest since pre crisis… Looks like everyone is on the same side of the boat. Heavy selling post fed minutes tomorrow. the new vice chairperson gives his first speech thurs after market closes, I think he will reaffirm asset bubbles and reaching for yield is a concern to him. Smart money will pay close attention to his every word.

  28. lunker1 says:

    Tony on the Dow you added Int C in green. what’s your target for this count and how/when will you know when which count was correct? thx

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  30. Ryan Parker says:

    Interesting analog here from Jeff Saut. Suggests a pretty good sized decline on the way in the not too distant future followed by another run to new highs. Then another larger decline to come. Comparing the current Dow to the S&P 500 of 1965-1966.

    • A lot of people are calling for a 10 percent sell off. C N mentioned he was buying July and August puts. Weather he did or not I have no idea. But he has made several great calls. When he speaks I listen. It should be interesting. Per ew I believe we can’t drop below 1883. Since it would over lap. That’s approx 6 percent. A 10 percent drop puts us in the 1800 area and messes with everyone’s count. Nice article. Thanks

    • soulsurfer says:

      Thanks for sharing! Good stuff. I am never too sold on temporal analogies since they barely ever repeat exactly (that be too easy 😉 )

    • cmucha68 says:

      Could be. But i also remember how awfully wrong Jeffrey was also in the past. So be careful who you follow.

  31. soulsurfer says:

    Adjusted the micro count to get to 5 waves for a possible minor 5. Note that (micro) (i) is the first green OHLC candle up off the minor 4 low, then (iii) subdivides nicely into 5 nano waves (not shown).


    • perceval7 says:

      Soul, What percentage chance might you put on 1985.6 being Minute i of Minor 5? That would put us in Minute iii tomorrow…. If you think is a possibility, what is the projected wave count and timing to end Minute v of Minor 5 of Int III? Thanks very much for your consideration!!!

      • soulsurfer says:

        Lower probability than minor 5 is in. Let’s do some math: if this was only minute i and ii, then v should ideally be topping at 1.764 to 2.00x i, measured from ii low (assuming that was today) That be 2030-2040. But, I don’t see much in the TIs that suggests minute iii is about to embark soon.

      • I know you asked soul, but that would put us at 2040, and I’m pretty sure that ain’t going to happen. Counts are all messed up. Minor 4 was only 20 points. Minor 5 straight up to 1986. Lots of things in the world going on. I would think caution is advised. Could see 1800 before 2000. Just my opinion.

      • perceval7 says:

        Thanks Soul and Tryingtomakeabuck! Hope we all make lots of bucks!!!

    • Hi Soul!
      We have another fibo level of importance here. That is the fibo extension 2,618 from the january decline (to SPX 1738). According to Boroden we have 3 fibo extension levels of importance after a big retracement:
      Fibo 1,27 = SPX 1884. Busted
      Fibo 1,618 = SPX 1920. Busted
      Fibo 2,618 = SPX 2033.

      We also have a new ascending triangle i Dow since the beginning of june. The goal of this formation is Dow 17.300 which correspond well with SPX 2033 above.

      Best wishes Sverker

  32. What two patterns do you see on this chart? Hint: They are very bullish (and, of course, you all know them). 🙂 Yes, I know this is only a 5-min chart, but patterns are patterns and these two patterns are THE most bullish of patterns.

  33. lunker1 says:

    be careful looking for a lower low with +D

    3rd week of Jan RSI 5 hit 14 at 1820, got a small 8pt bounce and then down 50 big ones.
    that would park us at 1928 😉


  34. JK1987 says:

    Tony Thanks
    Can you believe it?
    Ger 7, Bra 0

  35. ocaj2000 says:

    Thanks Tony. What are the pivot ranges of the 1956 and 1929 pivots ?

  36. radrian6 says:

    Another 15 points off the RUT today and it looks like there is a “serious” correction in process. We will be able to confirm a downtrend after a retracement to a lower high then downside continuation to a lower low.

    So far, RUT has dropped from 1213.55 to 1166.97 (47 points) which is nearly enough for a minor correction but I don’t think this one is over with. I think it is more likely that this is the first wave of a longer, more complex correction.

    In 2014, RUT has become a volatile instrument. RUT started the year with a 100-point correction, then a vertical 130-point rally, followed by a complex 130-point correction and another 130-point rally … and here we are entering another correction.

    The Fib retracement levels are as follows: 1163.5 (38%), 1148.04 (50%), and 1132.58 (61.8%). Natural support areas are 1168.53 (tested today), 1155, and 1145-1138. Anything below 1145-38 will open the door to a serious, serious correction. Retracement targets are tough to call because I have no idea whether the first wave of the correction is complete — however, the open gap near 1187 could be a magnet.

  37. lunker1 says:

    Thanks Tony.

  38. bouraq says:

    Risk off:

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