wednesday update

SHORT TERM: another gap down opening, DOW +14

Overnight the Asian markets lost 0.8%. European markets opened lower and lost 0.7%. US index futures were lower overnight, and at 8:30 the Trade deficit showed some improvement: -$41.5bn v -$44.4bn. The market gapped down at the open to SPX 1913, dipped to 1911 in the first few minutes, then started to rally. The SPX had closed at 1920 yesterday. By 10am the SPX hit 1922, dipped to 1917 just past 10am, then rallied to 1928 by noon. A pullback to SPX 1918 followed by 2pm. Then a bounce to SPX 1923 by 3pm, and a dip to 1920 to end the day.

For the day the SPX/DOW were +0.05%, and the NDX/NAZ were mixed. Bonds gained 4 ticks, Crude lost 40 cents, Gold rallied $19, and the USD was lower. Medium term support remains at the 1901 and 1869 pivots, with resistance at the 1929 and 1956 pivots. Tomorrow: ECB meeting before the open, weekly Jobless claims at 8:30, then Consumer credit at 3pm.

The market gapped down at the open for the second day in a row today. The low, however, was made just minutes into the open at SPX 1911. Then the market had its best rally since the Minor C wave decline began at SPX 1943. We can now count 5 waves down for Minor C for a completed elongated flat Intermediate wave iv: 1926-1936-1914-1923-1911. This decline could also have been a Minute a of Minor C, today’s rally to SPX 1928 Minute b, and Minute c next to complete a zigzag. Today’s range SPX 1911 to 1928 appears to be the key to downtrend over, or continuing a bit more. Should the SPX rally above 1928 we will place an tentative Int. iv label at the 1911 low. Should the SPX drop below 1911 we will place a Minute b label at the 1928 high. With positive divergences just above everywhere we think traders will send the market higher.

Short term support is at SPX 1911 and the 1901 pivot, with resistance at the 1929 pivot and SPX 1943. Short term momentum remained around neutral all day. The short term OEW charts flip-flopped near the highs but ended the day negative with the reversal level now at SPX 1924. Best to your trading!

MEDIUM TERM: downtrend trying to bottom

LONG TERM: bull market

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

About tony caldaro

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218 Responses to wednesday update

  1. CB says:

    Tony, Is it possible to consider the entire move from 1991 to 1911 as a completed 5-wave sequence (A)? $SPX would now retrace in a 3-way-move and then drop in another 5-wave-move to complete this correction? Thanks.

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  2. Markets are most likely, moving higher, as Tony analysis suggest.

    Federal Reserve going to start its engines Thursday and Friday.

    Wed, Aug 06, 2014 Thu, Aug 07, 2014 Outright Treasury Coupon Purchase$1.40 – $1.70 billion
    Thu, Aug 07, 2014 Fri, Aug 08, 2014 Outright Treasury Coupon Purchases $2.05 – $2.50 billion

    Long Starbucks at $76,67 still.. Bollinger bands daily, PPO on daily time frame has produced bullish divergence. Starbucks SBUX ready to rebound.

    Don’t fight the Federal Reserve… Thursday and Friday

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    • lunker1 says:

      hey Amos, no need to constantly promote the stock you’re trading. Its bad form. Share the TA set up and then let it be

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    • pcskier says:

      No disrespect, I think trader are surrendering to the fact that the federal reserve has tapered 65 billion per month and most people think their is only a total of 65 billion left 25 billion aug and sept and 15 billion in oct and than it’s done. That less than one month of original QE 3, if my memory serves me right, when QE 1 and 2 had less than a month of strength left the markets fell like now. Until more QE was announced or hinted to be coming. Maybe the ECB will save the bubble from popping, tomorrow but I think they will have to do more than jawbone.

      Italy is in a recession and draghi is Italian, I assume that thought created a bid today to override the negative MA news.

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  3. XScaler HB says:

    A certain other EW guy everyone on here probably knows has the low of this 4th in the ES window of 1895 to 1910. So far the low is about 1903. My fear is that everyone now is seeing the exact same thing. That’s concerning. I’m wondering if A) most have buy stops at around 1900 and thus won’t go that low (cash), or B) most are trying to time a bottom here but it drops below 1880 to fool ’em all and grab those stops before the run. In that scenario, Tony says we shouldn’t overlap that 1897 area if I’m not mistaken. What happens then?

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    • Apache AH-6 says:

      NDX held the 50 day ema (3849) and the lower daily BB (3850), which dovetails with your fine cycle work, Gerald.

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  4. Tony: Thank you for the excellent update, I am, however, puzzled by this line:
    “We can now count 5 waves down for Minor C for a completed elongated flat Intermediate wave iv: 1926-1936-1914-1923-1911.”
    I believe I have no problem understanding the Minor C wave count, but I am puzzled by the characterization of Int iv as any type of a flat correction. The possible b wave of Int iv (1943) finished way below the start of wave a (1985-1991) so it seems to me it would be a zig-zag.

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    • tony caldaro says:

      1916 then 1911 close enough for gov’t work

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      • Thanks for answering. I guess you were pointing out that the minor c wave was not much below the minor a wave. That is a characteristic of flat a-b-c’s, but I thought that the b wave also had to rise up close to the point where the a-wave started (1990). Instead it only rose to 1943. Any EW people please feel free to comment.

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  5. Greg Polites says:

    Hi Tony; It appears a tale of two triangles has emerged. One includes a larger declining triangle (bullish formation) from the end of July and encompassing most of the recent decline. It appears we could be in the final E leg. The E leg appears to be taking shape as a contracting triangle whose final low is around SP1911. This final E leg target is also the bottom of larger declining triangle plus forms somewhat of a double bottom using yesterday’s lows. These technical combinations plus a positive closing volume suggests one more spike down on thursday then the beginning of a rally. Charts and details at: http://t.co/GTAuhSCpSM

    Cheers, Greg

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    • Apache AH-6 says:

      Excellent contribution. Thanks.

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    • kvilia says:

      Stoch by itself means nothing. On top of that it did not even cross 20. However, I will stick to Tony’s stance on downtrend being over or almost over.

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      • I agree, seems 50-50 either crash or short cover up. When in doubt in a bull market go with up, plus if tony thinks traders will send market higher, thats hard to bet against. Should be an interesting day tomorrow.

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      • Apache AH-6 says:

        There is a four point downtrend line accompanied by bullish divergence within a countertrend ABC in which C = A x 1.272. It is a bullish set-up that can be used proactively or – subsequent to a breakout above the downtrend line – reactively. Low risk. High reward.

        Good chart, XS.

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    • blackjak100 says:

      I don’t follow fib extensions but I’m aware of them. Very interesting the 1.272 ext falls right into the 2019 pivot.

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  6. lunker1 says:

    IWM has a nice clear TL from it’s July 1st high w 3 touches.
    a good market barometer to keep an eye on.
    1. today 3rd touch and fail? (D wave of ED and now down for E?)
    2. breakout, backtest then up?
    3. breakout and run?

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    • cmucha68 says:

      Thanks. Good chart.

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    • kvilia says:

      Not sure I understand – minor 5 target is 2010 with 3 targeted at 1945 and being longest? Am I missing something?

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    • cmucha68 says:

      Jobjas, after reviewing your charts you mention Dow did not complete it’s down move. However, your leg up first points to a Dow about 150 points higher whereas ES mini has a target of 1945 that is 30 points higher from your chart. That is double times the Dow. Quite impossible I think. Do you still see that or is there an error in drawing ? Thanks

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