friday update

SHORT TERM: gap up opening rebound, DOW +123

Overnight the Asian markets lost 0.3%. European markets opened lower, but closed +0.1%. US index futures made lower lows, but then rallied higher overnight. The market gapped up at the open to SPX 1963 and continued to rally. At 10am Consumer sentiment was reported lower: 81.3 v 82.5, and Leading indicators were reported higher: +0.3% v +0.5%. The rally continued until 3:30 when the SPX hit 1980. Then a dip ended the week at SPX 1978.

For the day the SPX/DOW were +0.85%, and the NDX/NAZ were +1.60%. Bonds lost 3 ticks, Crude slipped 40 cents, Gold dropped $10, and the USD was flat. Medium term support rises to the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots. Today the WLEI was reported lower: 54.2% v 54.4%.

The market gapped up today and continued to rally into the afternoon as if yesterday did not occur. If the Malaysian airliner was not shot down, and Israeli ground forces did not go into Gaza, then today was not options expiration Friday. The point: the crescendo of negative market sentiment yesterday afternoon, was probably reversed due to options expiration. Monday is another day. Thus far it looks like we had a Minor a to SPX 1953, a Minor b to SPX 1984, and now a Minor c underway. Expected the 1973 pivot range to hold today’s rally, which it did. Also expect Minor c to resume next week.

Short term support is at the 1973 and 1956 pivots, with resistance at SPX 1986 and the 2019 pivot. Short term momentum reversed from extremely oversold yesterday to overbought today. The short term OEW charts turned positive with the reversal level now SPX 1973. Best to your weekend!

MEDIUM TERM: downtrend probably underway

LONG TERM: bull market


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56 Responses to friday update

  1. valunvstr says:

    I’m sorry but can this look any more similar? Now, I’m not saying a 20%+ decline is on the way but I find it hard to believe that more meaningful weakness is not ahead.

  2. cmucha68 says:

    Yes Jedi. The weekend updates are the best. Love them.

  3. cmucha68 says:

    But wait: Ted’s Thursday announced short term target of SPX 2100 in his audio blog will come into play now. How could I forget. So there is hope on the trading front.

  4. Thanks, Tony! Tomorrow is another Tony Weekend Commentary Day! Cool! Have a nice weekend Tony and all.

    -OEW Coffee Club Member

  5. cmucha68 says:

    Wonder what happened to Bouraq’s short entry at his orange line hit as he mentioned “Buy the dips…not”. His charts have been always quite accurate except ….this time. Hmmm pity.

  6. LOL … Expected this, expected that, and now expect something else. Let’s see how EW expectations will be met next week…”not”. Support resistance newbies beware EW loses again.

  7. cmucha68 says:

    Still my unresolved question in my mind for some days now: will we still see the long awaited move down to the 1901-1929 still in July before it goes higher, possibly beyond 2000-2019 into late August to finish Primary 4 and major 5 ? Any thoughts on this from somebody ?

    • soulsurfer says:

      intermediate iv and v of major 5 of primary III first, then Primary IV followed by V to finish this bull. int. med. iv to 1929ish, v to 2020ish?

  8. cmucha68 says:

    Hi Tony, thank you for your thoughts again. If I do identify it correctly on your chart, you labeled the low of yesterday as minute a. So if the high at 1980 of today stays there and the market turns. down again on Monday would you label that top of today as minute b then ? If so, Does it mean that the next move down would not only be minor c but also minute c and how low could that go roughly ? Next: what a about intermediary iv, has it ended with the low yesterday and we are, although minor c down expected, in intermediary v already on it’s way to new all time highs, especially in SPX ? I suppose you clarify that in you weekend update. Have a great weekend !

  9. blackjak100 says:

    Thanks Tony! I think you said it best. However, I’ve seen 2 counts that suggest an e wave completed yesterday in an int iv triangle. I’ve seen a count that suggests a d wave completed in a triangle and we still have the e wave to go. I’ve also seen another count that suggest a complex expanded flat B wave is underway targeting 1990 to be followed by C wave to complete int iv. All I know is I’ve taken it in the shorts this week by making some classic stupid trading mistakes I normally don’t make. I’m still solvent and will remain that way, but it’s been tough.

    The one certain thing is this market is overvalued on many different levels. I think it’s going to be very hard to keep everyone from not hitting the exit at the same time.


    • perversionofthemean says:

      How many are already in cash? I’ve sat in cash and missed this last leg up. I’m hoping it will come in, but I live a death of “one-day corrections”. (Again, it’s an issue having a day job! Increasingly, I’m becoming convinced that if I can ever get in on a low wave count in P 5, I’ll sit tight through the sub-wave corrections and let the dominant wave reassert itself.)
      I suspect the grinding dichotomy of SPX up and RUT down will moderate the eject-button panic when III ends. Of course, could 5 of 5 extend, and suck guys like me in finally? I’ve watched the sentiment/margin/short-interest/etc. ratios get disrespected/disregarded, and it’s clear that they won’t matter until 5 of 5 of 5 of 5 of III ends. Unless it truncates. Oh the indigestion!

      • cmucha68 says:

        Hold tight and don’t give up. Your big day will come !

      • soulsurfer says:

        I am 50% cash on index related tickers, and holding a 50% position of SDS bought @SPX 1980.


        • perversionofthemean says:

          SS, please help me out. The monthly SPX chart shows that P III took 9 years to unfold. Even major 5 took YEARS. How can our current P III be done so quickly?

          I have fib targets significantly higher than here (unbelievable by most, as they’re based on *percentages*, not *points*, but they WORKED for calling the top of DELL, QCOM, the ’00 peak, and even the GE low ’09 — among hundreds of other examples). No doubt, we could have a deep correction now, but I can’t see how P III could be over so soon, especially as P III of SC 3. Thoughts? (I’m a 22-year technician successful with pivots and target prices, but relatively little confidence in wave counting, despite Tony’s course.)

    • soulsurfer says:

      4th waves are inherently tuff nuts to crack uhhh count and mostly go sideways… hence the many different counts out there. I think today surprised many!

    • tony caldaro says:

      Options expiration thursday the market tanks, geopolitically getting many bearish.
      Options expiration Friday the market totally reverses like nothing occurred.
      Sorry you got caught in that nonsense.
      Int. iv can not be done until a downtrend is confirmed.

  10. torehund says:

    Just a final note: Interesting U-turn in Australia where the environmental effects of fossil fuel is downplayed. Government changes the policy not for the best of mankind but according to which policy yields the most in taxe revenues. So in a time when commodities are near breakeven there is tax burden on consuming them, contrary when the price of commodities like coal appreciates it becomes more favorable to enjoy the tax reveues from Companies extracting it. I think you will see this shift in policy also in the US when coal and nat gas finally becomes so expensive that the government can extract tax Revenues form the Companies. Liek they say “greed and toxic fumes its all Ours” (Uncle Sam or papa Aussie, or miss Norway)

    • torehund says:

      On more point; in the period from 1920 to 1925 thee was a real estate bubble in Florida until a severe storm hit. You may see a repeat of this as Foreign Capital scoops up. Another resultant issue of Foreign Investment in US is inflation and some Growth that should at some point drive the dollar. Growth and inflation will also rise commodity prices helping Russia and Brasil/Norway, and cause more deflationary pressure in the middle east and most of Europe. An already volatile middle east where a large part of wages already goes to buying Food will then be bushed further toward the abyss of starvation, palgues and regional wars. However a climate change in the middle east (driest in 100 years, cant get worse) may hopefully compensate partly..

      • torehund says:

        And a high dollar/low yen, higher nat gas/coal/China recouping will make Abe in Japan go Nuclear..The price of Uranium may be bottoming out.

    • soulsurfer says:

      yup, and when the carbon tax law was revoked it actually snowed a little in Melbourne… They may need all the CO2 they can get 😉

      closer to home; most of the USofA is experiencing temperatures that resemble October… Loving sunny California I must admit 😉

  11. johnjo12 says:

    The Dow overnight was a lot lower @16905 than the cash market got to today . It seems quite common in b waves that you get these big divergences. But the cash market always seems to test this level within a day or two. So am expecting market to head down to this level early next week.

  12. soulsurfer says:

    re: Malaysian airline tragedy
    The plane had many AIDS researchers going to a conference in Melbourne including Dutchman and leading AIDS researcher Joep Lange (some say he was close to finding a cure).
    And to underscore Tony’s comment “If the Malaysian airliner was not shot down, and Israeli ground forces did not go into Gaza, then today was not options expiration Friday. ” Marketwatch is running a similar story:
    Note the last sentence “When a market that, by a growing number of accounts, is overheated keeps right on burning, that’s a signal that the market has lost touch with reality.”

  13. soulsurfer says:

    thanks Tony!!

    Like I said earlier this week “the market can stay irrational longer can than you can stay solvent”. Crazy indeed.

  14. radrian6 says:

    The RUT rally surprised me a bit today — I was expecting a mild downside reaction. The rally stalled near the 50-day SMA which is just overhead near 1153. On the 60-min chart, the RUT stopped at the 13-hour EMA and the neckline of a strange-looking H&S pattern. If the RUT continues to rally, there is more resistance starting at 1154 and continuing up to 1169. If the RUT resumes the downside, the 200-day SMA is near 1141 and there’s complex support in the zone from 1135 to 1083.

    If the H&S top plays out, the target would be near 1090 which is close to the weekly lower Bollinger Band and a semi-log, longer-term trend line. As stated yesterday, I think that if this correction reaches 1090, RUT will at least bounce off that area and sustain a decent rally.

    In response to a member question from yesterday, Tony responded that he felt it was possible that the RUT bull market high was in. I suppose RUT could now be in a bear market but consider the huge cup-with handle pattern on the RUT monthly chart. The left rim of the cup printed in mid 2007; the right rim in April-May of 2011. The handle started with the primary correction that took place over the summer of 2011 and the whole pattern broke up in January 2013. The upside target of this pattern is near 1390. I’m not making a call — I mention the possibility because the RUT has done a good job of filling its upside targets during the course of this bull market. 1390 is a long way from today’s close and this bull market is getting old so I think it’s a long shot. If the RUT starts making new highs later this year, it may be a consideration.

    • kkandru12 says:


      Great points. My best take is RUT has to test 1170 and make a call whether to go up/down.
      This’s based on IWM 112 level (VWAP) checking to see 117 and make a call from there.

      SPX has way up to go till 2200 based on below FIB’s From SPX 1725 level , counting 5 waves up.
      1 – 1850
      2.- 1815
      3 – 2010 ( 1.618 FIB)
      4 – 1952 ( most likely)
      5 – 2210 +

      So RUT should see higher levels eventually. A test of 1090 is a big Q and looks like that doesn’t happen with current market trend.


      • radrian6 says:

        Thanks, K. RUT has been struggling in this moody environment but has managed to hold its ground when necessary. Advancing to new highs is another matter — if it’s going to happen, I suspect RUT will need more time to consolidate energy for a breakout.

    • Ryan Parker says:

      R2k had 4 unfilled gaps down since the beginning of the month coming into today so to say it was oversold would be an understatement. 3 gaps down is generally enough to get at least a countertrend rally going and fill the last gap at some point. The question now becomes whether it has enough gas to close the gap at 1,174? I’ll have to take a closer look at things over the weekend to answer that question.

    • Speaking of cup-with-handle, see below (posted this a couple of days ago). The handle is bouncing right off 61.8% retracement. It’s bullish until it’s not — as unbelievable as this market has been.$RUT&p=120&yr=0&mn=6&dy=0&id=p92031872280&a=355347127&listNum=7

      • valunvstr says:

        Not a cup and handle. The handle cannot retrace the bottom to top of the cup to the magnitude that it did. Also, volume in the handle should decline not increase. Patterns need volume confirmations and need to meet certain criteria. Rut does not fit cup and handle formation for several reasons

  15. gtoptions says:

    Thanks Tony
    Thoughts & Prayer to those affected by the senseless & tragic inhumanity.

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