tuesday update

SHORT TERM: choppy pullback day, DOW -70

Overnight the Asian markets gained 0.8%. European markets opened higher and gained 0.5%. US index futures were higher overnight, and at 9am Case-Shiller was reported lower: +9.3% v +10.8%. The market opened three points above yesterday’s SPX 1979 close and continued to move higher. At 10am Consumer confidence was reported at a seven year high: 90.9 v 85.2. Around 10:30 the SPX hit 1985, was slightly overbought, and began to pullback. By 11:30 the SPX had declined to 1974, then rallied to 1982 by 1:30. Another decline followed, taking the SPX to 1970 by the close.

For the day the SPX/DOW were -0.45%, and the NDX/NAZ were -0.15%. Bonds gained 8 ticks, Crude lost 75 cents, Gold slipped $4, and the USD was higher. Medium term support drops to the 1956 and 1929 pivots, with resistance at the 1973 and 2019 pivots. Tomorrow is FOMC day! At 8:15 the ADP index, 8:30 Q2 GDP (est. +3.45%), then at 2pm the FOMC statement.

The market opened higher today, came within 6 points of the all time high, then went into pullback mode for the rest of the day. We entered the week looking at two possibilities: 1. a subdividing Minor 5; and 2. a diagonal Minor 5. The choppy activity on Monday/Tuesday have significantly lowered the likelihood of option #1. That leaves us with the diagonal triangle Minor wave 5, and possibly an ‘e’ wave failure at SPX 1985. If the SPX loses the OEW 1973 pivot range (1966-1980) that might be what just occurred today.

Short term support drops to the 1956 and 1929 pivots, with resistance at the 1973 pivot and SPX 1991. Short term momentum touched overbought in the am then ended the day oversold. The short term OEW charts are back in the flip-flop mode, ended negative, with the reversal level now SPX 1978. Best to your trading the often volatile FOMC day!

MEDIUM TERM: uptrend

LONG TERM: bull market

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

About tony caldaro

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123 Responses to tuesday update

  1. manunidhi21 says:

    Namaste Tony !
    Still a green Int iii. ?
    its below 1956

  2. gtoptions says:

    SPY/SPX ~ 5 Bearish Daily candles in a row! Failure to break higher. All the signs are there for a break lower. GL

  3. pcskier says:


    Inverted cup and handle with high yield JNK. Confirmation to sell equities now.

    • Kevin M says:

      looks like some positive div there,,,,,,i’d be a buyer of jnk

      • pcskier says:

        yeah, you have the positive divergence because JNK is hitting a long term trend line as shown here

        JNK may bounce to it’s 20 DMA which is now below it’s 50 DMA but than the probability is sellers will emerge sending JNK down to it’s 200 in quick order. BUY JNK, but it’s upside looks limited and it’s downside looks great.

  4. ariez5 says:

    On your SPX 60′ chart, could one draw a line from the minor 4 bottom through the ‘b’ label through today’s lows? If you keep the other trend line through ‘a’ and ‘c’ you would see a sort of expanding triangle. Would that be preposterous for a 5th wave?

  5. blackjak100 says:

    Did we just see an x wave complete and now headed lower? Potential DZZ Down to 1940’s?

  6. oneandonlyuniverse says:

    I’m a seller

  7. as long as the bull hold above 1973 minor 5 is still in play and my alternate wedge is in play

  8. gary61b says:

    Bring it on “capitulation”

  9. soulsurfer says:

    SPX road map I posted 1.5 months ago: https://soulsurferusa.files.wordpress.com/2014/06/path-forward.png

    if 1991 was it, or close to, then my road map prediction was pretty correct🙂 Price didn’t hit all the retraces, but the general direction was there. Let’s see if int. med. iv, if that’s what we’re dealing with now, goes down to 1929 pivot, before int. med. v takes it to new ATHs!?!

  10. Ryan Parker says:

    Does anyone actually believe the market can go up from here? Seems as though every prediction I have seen (unsolicited of course) in the past week is that a 10-20% correction is on the way. Just seems as though it would be hard for that to happen with as many people seemingly on their toes right now. Haven’t seen any forecasts for any market upside at all lately.

    My work is mixed. Nasdaq Composite above 4,350 is bullish but Russell 2000 below 1,160 is bearish. SPX and Dow appear to be breaking down and I see plenty of negative divergences but the sentiment already seems quite bearish which would seem to limit the downside from here and support Tony’s count of maybe a 4-5% correction (which freaks everyone out) followed by another high which gets any bear left to throw in the towel completely.

    • uncle10 says:

      Thx. Ryan. Im a short term hack so anything out more than a day or two is past my paygrade, but my med to long term stuff is all still bullish. No big correction in sight for me, but who knows right? just trade em up and down I… cheers.

  11. anybody not expecting a green close today? I mean really I would be shocked to see a big down day

  12. soulsurfer says:

    if 1991 was intermediate iii high than 38.2% retrace of the move from 1814 suggest 1924. and a 23.6% retrace of the 1738 low suggest 1931. Both are nicely within the 1929 OEW pivot

  13. I’ll be going long near tony’s 1956 pivot ….. we will see a decent bounce from they

  14. Multitude of options an hour before the FOMC statement release. Most likely is that wave 1 of larger degree wave 3 down is complete with the market now in sucker rally wave 2. Some smaller degree waves in wave 2 are definitely complete but that does not mean any remaining waves cannot push the market up to challenge the day’s highs. Conversely with the market in a holding pattern for the FOMC statement release I also cannot rule that wave 2 is not complete. We live in interesting times.

    • I wouldn’t go long here for wave 2 up as I don’t see wave 1 down as finished. It needs to hit good support before bouncing back up for wave 2, and I think that’s in the 1950-1955 SPX area. I’d go long there, but otherwise I’ll just be in cash.

      I don’t want to short here either as we could have already ended the wave 1 down as you suggest, but I won’t go long until I see better support. If we get a wild swing at the minutes release hopefully the first move will be down to tag that support. Then rip it back up the rest of the day.

      If not today then the jobs data could spark a gap down to that level, at which point I’d be a buyer into early next week. It’s common for the jobs data day to do the opposite of the open. Meaning that if it gaps up you would sell it as it will fade and drop back down the rest of the day. Or if it gaps down you would buy it as it commonly floats back up the rest of the day.

    • jp7972 says:

      Tonyjordan, love all your analysis. Please keep it coming.

  15. JK1987 says:

    Tony Thanks for updating Int iii label.
    Minor 5 of Int iii done with the diagonal triangle ‘e’ wave failure.

  16. Hmmm … Is Russell carving out double-bottom to begin a “W” pattern up? Time will tell. I’m a buyer if price moves out of this downtrend on chart … else this is just another short opportunity right here at this trendline stop.

  17. pcskier says:

    $indu is really close to being red for the month of June.

  18. I got the ED just getting started
    Minor 4 1956
    A of Triangle 1991
    B of Triangle 1963-60ish (underway but almost complete)
    C, D and E of Triangle TBD.

  19. uncle10 says:

    Thanks Tony.
    Got to love fed days. Don’t forget to take some profits when you have them…..gl all.

  20. Hi Tony

    So I guess we can say markets topped out , what is the move or downside you look for minor 4 ? Or are we talking about int. IV started ?

  21. mjtplayer says:

    Hey Tony,

    With the ED now broken, could int iii FINALLY be in? Say it ain’t so….

  22. JK1987 says:

    Tony Thanks
    Minor 5 of Int iii done with the diagonal triangle ‘e’ wave failure, and we are on Int iv correction?
    Int iv targets 1929 pivot or 1901 pivot?

    • alexhartley1 says:

      I’d expect a bounce before the day is out. Short term downside target around 1950-55 then a move higher to work off oversold.

      I’d expect the C Wave down will begin early August. Turn date around 5th into mid-month at one of your two suggested targets JK.

    • jk your not seeing 1901 just yet. Yellen will not ruin the summer.

    • tony caldaro says:

      That leaves us with the diagonal triangle Minor wave 5, and possibly an ‘e’ wave failure at SPX 1985. If the SPX loses the OEW 1973 pivot range (1966-1980) that might be what just occurred today.
      yes, would think that was it …

  23. When the market looks so bearish you almost don’t want to short it because you know a squeeze is just about ready to happen. It feels like they are letting the bears pile on short here and will trick us all and rally right after Yellen speaks today. Going down into the meeting knowing that FOMC days are in many cases (not always of course) “turn dates” you almost have to think they will do the opposite of what we all expect and rally back up to new highs?

  24. torehund says:

    For buyers of rotten debth the Court ruling of Argentina must feel like a gift….and the US- dollar looks very cheap here.

  25. lunker1 says:

    Potential positive D set up on 60 minutes to watch

  26. RDC says:

    The only direction for Gold is to go Down. Gold miners will be crushed.

    • torehund says:

      I do believe we havent seen the end of the gold decline yet measured in dollar, as I think the latter will appreciate greatly. But in other weak currencies I think gold is near a bottom.

  27. Vix futures not pricing in any chance of a correction in the next 3 months.

  28. blackjak100 says:

    Finally some great news on the economy so the market can correct!

  29. Elliott Wave Forecast July 30, 2014 – $SPX $DJIA $COMPQ – Massive gap up at the open = 2020 S&P? http://stks.co/b0pA5
    July 30, 2014 Positions Update – $AAPL Above B, $YY Above 1.00, $NUGT W3 setup, $TQQQ W3 setup http://stks.co/t0bJj

  30. I-H-S in IBB nearing key test of neckline after forming right shoulder. I see it as having begun a wave 3 of 5 from the move that began in April. The neckline is the pivot.


  31. To El Matatador who yesterday asked about gold. I initially responded by saying gold looked to be starting the final wave 5 down of its prolonged bear market. I’ve now had time to take a closer look at gold and don’t believe wave 5 has started. I now count gold as just starting wave c of c of 4 at yesterday’s low of $1296.00. This will be the final rally of any serious magnitude before senior wave 5 down commences. The sister rally to this one (i.e. a of c of 4) rallied $105.30. This looks good so much so that I’m long a little gold at $1298.30 with a stop at $1295.90.

  32. blackjak100 says:

    more vertical upwards movement in the futures…common theme from 5am-8am CDT

  33. cmucha68 says:

    Thank you both Tony Jordan and El Matador for sharing your thoughts.

  34. MKT. UPDATE FOR TUES AND PLAN FOR WED. (within the blog’s comments sect.): http://standardpoor.wordpress.com

  35. Rais Sone says:

    Hi Tony, in the 60 minute chart, it it possible wave 4 ended where the green ‘b’ is, and wave 5 (about 0.5 of wave 1) of iii at ‘c’, i.e. an orthodox top? The current correction (alternating with your irregular ii) will then take us back to 1920 level.

  36. Pingback: We Report - You Decide

  37. Tuesday’s first decline was wave 1. The nice recovery rally was wave 2 and the larger decline into the close was waves 3, 4 and 5. The 5 waves look pretty much complete. Most importantly this group of waves collectively are only the 1st wave down of a larger degree (c) group of 5 waves. Expect some upside tomorrow for larger degree wave 2 but don’t get too complacent. This will be an up-down-up (abc) correction of what occurred today. Good for intraday traders. Bear in mind wave 3 will follow which will really put the cleaners through complacent longs. The first wave down of the first 5 set of larger degree waves (a) last Thursday measured 99 DOW points. Today’s wave 1 measured 155 DOW points. This is not surprising as this final push down to complete Minor 4 is expected to smash through all recent support levels. My targets remain unchanged at 16700 and 1940. Now go and kiss the wife.

    • History shows that most FOMC days close positive and near the high for the day. I’d estimate that to be 80% of the time. However, in the old days they used too be a “turn day” as well. More recently they haven’t had much effect on a turn up or down but some how I think this time will be different.

      I’m expecting choppy action until the minutes are released between 2pm and 2:30pm. Then I’m expecting a rally into the close with possibly the last 10 minutes seeing the start of the the wave 3 down inside the C wave you spoke of.

      I’m not sure how much of a rally we get but time wise I’m just looking to get short after the FOMC and near the close as that should be the best spot before the next wave down happens. As for the low I see support in the 1930-1940 area, which I think will hold too.

      • what about the 2Q GDP factor?…it’s coming off horrible 1Q GDP, hence, there is no reason why it won’t deliver on the plus side and get the rally rolling early in the day

      • cmucha68 says:

        Hi Leo and Matador: from current closing level today what would you expect to see as a day top tomorrow after FOMC ? My guess is, if not something strange happens over night, that the rally should not go beyond 1980.

      • cmucha, IMO the decline appears to be corrective. Lot of zigzagging over the past several weeks. Once 1981.45 is taken out I would expect a retest of ATH (1988-90ish) or slightly new ATH (1994-96ish).

      • magicianme says:

        El Matador, there’s a larger H&S taking shape with the left shoulder starting an hour after the open on the 18th and with a neckline at yesterday’s low.

        This larger H&S has a smaller probability of playing out (because of the volume patterns along the way and the potential that FOMC has to disrupt normal activity) but if it does the target is circa 1940 on the ES 09/14 either today or tomorrow which would take it below Tony’s 1956 pivot.

        If you look at the rally from the 18th to the 24th, price retraced that to exactly 61.8 on Monday and bounced …but all the bounce did was to take up to the top of a right shoulder (which coincided exactly with 76.4% of the previous retracement) after which we had all the signals for weakness again as per my post yesterday advising everybody to short. The selling at the end of the day yesterday was strong – large average contract size indicating professionals getting out. For earlier in the day today I’m looking for opportunities to short especially if bullish activity on NAS drags a reluctant S&P up on low volume as it seems to be doing now. I need to see a small -ve divergence on low time frames to use as an entry point.

        In favour of your expectation for a rally today is the fact that there’s a +ve divergence on the daily (though, of course, a div isn’t a div till price turns). I see this on both RSI and on my momentum indicator that’s based on volume of activity at bid vs ask. If price decisively crosses the trendline connecting yesterday’s two peaks then you’ve got a better chance for your rally today, IMO.

        Take care.

    • cmucha68 says:

      Thanks Tony, very accurate. When you talk of some upside tomorrow for larger degree would you say SPX up to 1976-1978 area and the down again to today’s low and further down ?

      • Technically speaking larger degree wave 2 has the potential to retrace the entirety of larger degree wave 1. However attempting to be more practical we can observe that the DOW seriously broke down on Tuesday from around the round number 17000 which coincidentally is where a 61.8% fib. retracement would measure. With still nearly 4 hours to go before the New York open this is where I’m currently considering mustering my troops for larger degree wave 3 down. Naturally I’ll have to wait and see as the day’s proceedings unfold before executing. As far as the SPX is concerned it broke down from 1981.70 whereas its 61.8% retracement level sits at 1979.40. Larger degree wave 3 should take us down to around where TC has currently marked in Minor 4 on the 60 minute chart (i.e. 1952.86).

  38. Looks to me like we’ve started that C wave down Tony was talking about. While I expect some bounce tomorrow into the FOMC minutes being released it’s not looking good for the bulls here. I’d think it’s time to short the rip’s and go to cash on the dip’s.

  39. scorp100 says:

    Hello Tony,

    TWTR looking good?

    • that’s an understatement, twtr looking super…..unfortunately I got burned on my puts

      • Yeah, I sold out at 3:59pm for a small gain because it did not take out the top of the horizontal channel, then bingo, at 4:01pm I realized how much money I missed. Would have been the biggest gain of this year and maybe further back for me. Woulda coulda shoulda. If I held on and it dropped 25%, however, I would be in much worse shape. I stick with my system. This is probability based speculation, not gambling.

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