wednesday update

SHORT TERM: another gap up opening, DOW +78

Overnight the Asian markets gained 0.5%. Europe opened higher and gained 1.3%. US index futures followed Europe and were higher overnight. At 8:30 the PPI was reported higher: +0.4% v -0.2%, then at 9:15 Industrial production was reported higher: +0.2% v +0.6%. The market gapped up at the open to SPX 1983, ticked up to 1984, then began to pullback. The SPX had closed at 1973 yesterday. At 10am the NAHB was reported higher: 52 v 49. The pullback lasted until 11:30 when the SPX hit 1976, then the market started to rise. At 2pm the FED’s beige book was released: At 2:30 the market hit 1982, then closed there.

For the day the SPX/DOW were +0.45%, and the NDX/NAZ were +0.35%. Bonds gained 1 tick, Crude rose $1.40, Gold added $5, and the USD was higher. Medium term support remains at the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots. Tomorrow: weekly Jobless claims, Housing starts and Building permits at 8:30, then the Philly FED at 10am.

The market gapped up at the open for the second day this week. This gap, like Monday, was also inspired by a rally in Europe. The rally took the market above yesterday’s SPX 1983 high to 1984. Despite the new highs in the DOW, NDX and TRAN, the SPX and NAZ have failed to make new highs. As a result, until they do, we continue to feel this is a B wave rally. The same parameters, noted yesterday, are in play: above 1986 Minor 5, below 1960 Intermediate iv.

Short term support is at the 1973 and 1956 pivots, with resistance at SPX 1986 and the 2019 pivot. Short term momentum ended the day with a negative divergence. The short term OEW charts turned positive early, and the reversal level now SPX 1978. Best to your trading!

MEDIUM TERM: still favoring a downtrend

LONG TERM: bull market


About tony caldaro

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115 Responses to wednesday update

  1. iamwhoiis says:

    Looking for suggestions on a decent trading platform. I’ve been using Fidelity’s “Active Trader Pro” trading platform, or Fidelity’s “interactive chart” for TA and monitoring market movement. I’m completely disgusted with Fidelity. Every time volume heats up in the market, Fidelity’s servers mysteriously become unresponsive – and there you are holding a position with no way to act on it. Not a good deal! I’d really like to know what type of trading platform some of you guys and gals are using?

    • uncle10 says:

      I have been using interactive brokers for about 6 years. They are good. I recommend them to anyone. I also have an account with C. schwab which is pretty good.. 2 choice to IB.

  2. oneandonlyuniverse says:

    Gold stocks are not a hedge – GDX 27 great place to sell

  3. H D says:

    don’t go chasing waterfalls! Tony, great call SPX sticking to the C wave.

  4. Sold $UPRO for 4.4 pts ($17,600 profit) Stop to buy $NUGT at 48.55, $CMG And $AAPL trade update, elliott wave scenarios [Wavegenius]

  5. radrian6 says:

    After RUT broke down the support around 1150, I thought the next logical target would be the 200-day SMA near 1141 and that area is being tested now. I don’t know where the RUT will start retracing some of these losses but I do see the intraday and daily charts quite oversold and the weekly chart is not far behind. In this bull market, weekly RSI(5) has rarely dipped below 30 and those occurrences have resulted in rallies even during downtrends.

    Ultimately, RUT may reach the 1090 area but it may be a choppy ride down from 1140. If RUT continues on a path lower, I suspect the other indexes will pull back in coincidence — it’s unlikely they will stay neutral in a risk-off environment.

    Right now, resistance is gathering in the 1165 area so the bounce, when it comes, may target that area.

    • Thanks for the analysis.

      • radrian6 says:

        Thank you, George. This is a strong downtrend for the RUT but it’s getting overdone for the short term — the daily RSI(5) is below 16 as I write this. When the weekly RSI(5) reaches 30, it might be wise to take profit on RUT-based short positions and prepare for a bounce or reversal.

    • perversionofthemean says:

      I’m not real good with OEW, but I see RUT as having completed a 5-wave “a” down from 1213 to 1150, or 63 points. After a 3-wave “b” up to 1169 to test the underside of the hourly 200-bar exp. mov.avg., if a = c, then it’s targeting 1169 – (1213-1150), or 1106. Given the prior twin bottoms at 1083, “c” could stretch to there, making c = 86 points. There, c is approximately 138% of a.

      • radrian6 says:

        Certainly a possibility … I mentioned the 1090 target because of an awkward-looking H&S top on the 60-min chart that appears to be playing out. For the RUT, the area from 1140 to 1083 is complex and support could emerge anywhere. I agree that RUT is probably in wave 3 of minor C right now so with waves 4 and 5 coming up, we are likely to experience some chop prior to bottoming.

        • perversionofthemean says:

          Thanks; I just need someone to place those 3’s, 4’s, C’s, etc. on a chart *for me* in real-time, because I struggle!
          There is a trendline from the ’09 low up to the ’11 and ’12 lows that will cross at 1107 tomorrow (semi-log). That’s 2.4% lower, and won’t bet on it! It’ll be interesting to see if the year’s lows and the TL are broken, especially if Tony’s 5th-up is still to come.

    • valunvstr says:

      Major fan line support in 1090-1100. 2011-2012 50% fan line. The fan in general has been nails as support and resistance. I wouldn’t think it would hold only because it would be the third test of that area and usually the more an area gets tested the more likely it is to give way, as support or resistance. It is very hard to ignore the fan line though. It has been awesome.

  6. rc1269 says:

    i’m looking at the Dow, NDX and the RTY and feel compelled to entertain the possibility that PIII has or is ending. thoughts?

  7. Tony – I notice that you have drawn a triangle on your chart… Assuming
    Intermediate iii 1986, then triangle count down is as follows;

    A of Triangle 1953
    B of Triangle 1984
    C of Triangle 1966
    D of Triangle … 1983ish? Underway
    E of Triangle….1973ish? TBD

    Is this about right?

  8. I don’t think there is a credible source saying this plane was shot down. market down 60 points not showing much of a reaction kudos to PPT. prayers to the 295 on board that plane .

  9. prob a great time to short the VIX before the feds do at today. chances are it goes lower from here

  10. blackjak100 says:

    Was this drop related to the supposed Malaysia airline crash?

  11. Ryan Parker says:

    @ 17,152 the Dow is 20.8% above its previous peak of 14,198. 14,198 was 20.8% above the previous peak of 11,750.

  12. caldaro should downtrend confirm we looking 1920?

  13. jeffbalin says:

    I honestly think we hit the 2019 pivot, but I have no position because all you guys are short and that scares me too much, darn you people. On the sidelines…..

    • cmucha68 says:

      Nah, down we go from here now. Already started.

      • jeffbalin says:

        That is a nice drop. Either C or just the market getting rocky and volatile as we head towards the end of Int 3, lots of up and down right now. I’m a Bear at heart, just so you know.

    • go to a board where there are all bulls……..bulls far outnumber bears…been that way for some time….despite that we continue to make ATH’s over and over….liquidity drives markets…so as long as its liquid!!!!

  14. manunidhi21 says:

    Namaste Tony !
    “The short term OEW charts turned positive early, and the reversal level now SPX 1978″”

    closing above 1978 or even crossing ?

    • manunidhi21 says:

      U.S -Russia ..
      Israel-Palestine(Hamas) ..(U.S Intervention)
      ISIS caliphate..(U.S intervention)
      U.S-Iran..(nest week deadline)
      Afghanistan election (U.S intervention)

      Still Dow makes high..It looks all are deliberate🙂

    • tony caldaro says:

      those are always intraday

  15. Paulo Pereira says:

    Just to inform that housing starts was good YoY :

    Privately-owned housing starts in June were at a seasonally adjusted annual rate of 893,000. This is 9.3 percent (±10.3%)* below the revised May estimate of 985,000, but is 7.5 percent (±14.4%)* above the June 2013 rate of 831,000.

  16. rc1269 says:

    just wouldn’t be a normal day in the mkts if we didn’t see a little green or at least get back to flat
    how dare people sell. haven’t they heard about Obama’s “economic patriotism” concept?

  17. the big market correction that never comes… reminds me of an old favorite show of mine

  18. torehund says:

    ..did uranium bottom last year ? In about one month the Japanese are starting up a reactor, good News for uranium bulls.

    • cmparis says:

      Hi Torehund
      USU up big today….looks like W3 has started.

      • torehund says:

        cmparis, lol, something big is MAYBE brewing big time. Even at Z-hedge I once read an article of a bull run in uranium. At that time many of the juniors ran 1000 times their original value. Its Worth a small bet Down here on Uranium.
        Safest is the ETF, but for” gamble” Money, juniors may perform well. If it wasnt for more than a year With X-wave terror (see graph) uranium could have been in a bull-phase already. I estimated bottom at that time in 2013. Lets see.

      • cmparis says:

        If this is W3 for USU – Might have more to do with the reorganization of the company and not the overall Uranium market.

  19. Jordi Güell says:

    another ATH for the Dow. This is very frustrating!

  20. CygnetNoir says:

    As goes $SNDK, so shall go the market … sooner or later.

  21. budfox9450 says:

    Low Priced Stocks, that look Interesting.

  22. CygnetNoir says:

    $NEWL will probably be a fun trader now that its float has been reduced to fewer than 3 million shares (did some myself yesterday and it will be on my constant trader list so long as the volume and volatility continue).. But for those who may be drawn to its “investment potential” lol let’s not lose sight of the fact that though it was up over 100% yesterday from a split adjusted $2 and change to a split adjusted $4, it is nonetheless down from its split adjusted all-time high of $5,883,514.50 …. and thata is not a typo – NEWL traded at a split adjusted price of nearly $6,000,000/share. How is that for wealth destruction.

  23. blackjak100 says:

    I saw a short term count that suggests a triangle is underway for Tony’s B wave which would then be an expanded flat int iv targeting a lower low beyond 1944 where A terminated (upper end of 1929 pivot). In other words, we would see a d wave terminate 1964-1966 followed by an e wave to 1973-1975ish to complete the B wave. Based on the futures, it’s tracking perfectly right now. Let’s see how it unfolds.

    It’s not Nate’s triangle as his expects a breakout to the upside. I’m trying to combine EW and OEW into one as best I can.

    • cmucha68 says:

      Fully agree !!

    • chrisk44342 says:

      Hi BJ,
      Not sure it’s possible to combine the two? One thing I give Tony credit for is that his approach removes the predictive pattern approach from the waver’s approach. I personally used to see triangles everywhere before another more experienced trader pointed this out. In following R.N. Elliott’s approach, I would fall victim to anticipating patterns to materialize, when the reality was that we just don’t know. For example, I am short from late yesterday into the open. The old ‘me’ would wait thinking wave C would materialize. The better ‘me’ will take profit on half and see if the other half pays off in C. This isn’t directed at you- really meant to help anyone who trades using EW.

      • blackjak100 says:

        Disagree that you can’t combine them. You can count wave patterns using EW and use OEW pivots for targets. That’s all I really did. With the price action early, the triangle above could be dead and nates triangle still alive. This range will break soon.

    • gary61b says:

      BJ would u have a chart of this B wave triangle handy? Thx

  24. cmucha68 says:

    If futures hold here around these levels I guess one more attempt to the upside later when spx begins but should not exceed the high and then we are done. Perhaps drifting lower after failed on the upside. Otherwise we may go down from here anyway.

  25. Hi Tony,
    Great work. Thank you. I think your call is right on the money. How do I know? After talking to a lot of individual investors I know, many covered their shorts today. IMO, I think we saw capitulation in this market today, including capitulation from myself. Many growth stocks saw key reversals including aapl, goog, Nflx and many solar stocks that I follow, they opened at or close to their highs for the day and closed near their lows. Yes, I think today was finally the right time to short or buy cheap put options. We are going to see a C wave for Int IV, starting from today Wednesday July 16, 2014. The way the market(SPX) opened gaping up as if to break out, but breaks down or sideways at best. Btw your call is not an easy one to make. But, after thinking a lot about it, the smart money was getting out today JMHO.
    Thanks again,

    • soulsurfer says:

      Agree! Futures not so hot right now…
      Regarding short capitulation: recall somebody posting yesterday he/she went short with stop loss above 1982. Market hit 1984 today… Not sure if he/she covered but I think that’s how many must have reasoned: all long, nobody short, down we go!

      Personally I am still holding my half-sized SDS from SPX 1980.


    • cmucha68 says:

      I went short in the Futures from 1972 and added more shorts up to 1976. Let’s see if that plays out.

  26. Bruce Keller says:

    No EW for the RUT? It’s in a rut. Downtrend definitely likely. But I agree it will for for a bigger gain. A longsqueeze, if you will.

  27. rc1269 says:

    thanks TC. things are getting interesting

  28. fionamargaret says:

    Thanks Tony – hope you are keeping well.

    Happy Birthday 16golfer.

    • fionamargaret says:

      …..if you are a Bradley believer

    • 16golfer says:

      Thank you Fiona! Would be a great celebration to have the market hit a high on 7/16 in honor of my b-day. Especially since I’m positioned short and a nice b-day present!🙂

  29. jobjas says:

    NDX target reached – minor 3

  30. soulsurfer says:

    Thanks tony!! Today was a good example of “the market can stay irrational longer than you can stay solvent” !?!?!

  31. torehund says:

    Dendreon (pharmaceutical Company) looking good. As always no recommendation to buy, just for Learning to evaluate differnet and possible end of downturn patterns.

  32. pcskier says:

    Take a look at rsp equal weight sp 500, I think it reflects what is happening right now

  33. pcskier says:

    Thanks tony for blogging

  34. pcskier says:

    High yield continues to roll over and if you look atMACD on the monthly $rut it is getting closer to hooking down. Tsla, mU, nflx and most big beta closed red today AAPL also closed red. The yen just needs to bounce off it 50 and above it 200 DMA and the downturn should be official. Call for tomorrow $rut breaks down with conviction and everything follows.

    • cmucha68 says:

      It has already started in the S&P futures my friend -:) Hope we are done now with the B wave and C is on its way.

    • soulsurfer says:

      Yep, noticing the same in that these momo stocks are lagging. TSLA may be setting up very bearish… Glad I sold my $220s two days ago during the low volume pop to $227ish. It was that lack of volume that didn’t convince me to hold on to them at all…

  35. H D says:

    Thx Tony, EW still tricky this week. For the DOW are you expecting a D/A overlap like a normal EDT 4/1?

  36. mharrison60 says:

    Thank you Tony!

    FTSE, DAX and CAC are looking strong for topped markets. I suppose this is to be expected whilst DOW and S&P have some last oxygen to use up before they too top.

  37. bouraq says:

    Major DOW channel may break up:

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