wednesday update

SHORT TERM: pullbacks but rally continues, DOW +60

Overnight the Asian markets lost 0.1%. Europe opened lower and lost 0.3%. US index futures were lower overnight, and the market opened at SPX 1979. The SPX had closed at 1982 yesterday. Right after the open the market started to rally. With nothing more than two point pullbacks along the way the rally hit a new high at SPX 1986 around 1:30. At 2pm the FED released the FOMC minutes and the market started to pullback: Just past 2pm the market hit SPX 1980, bounced, retested it, and then headed higher. At 3:30 the SPX hit 1989, then dipped to close at 1987.

For the day the SPX/DOW were +0.30%, and the NDX/NAZ were mixed. Bonds lost 11 ticks, Crude added 55 cents, Gold dropped $4, 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 at 8:30, then Existing home sales, the Philly FED and Leading indicators all at 10am.

The market opened five points under yesterday’s SPX 1983 high, then rallied to 1986. After the FOMC minutes were released the market had its largest pullback of the week: six points. It then rallied to SPX 1989 before closing at 1987. Thus far, we have a Minor wave 1 and 2 (1945-1928), an unfinished Minor 3 (1964-1942-1989 so far), during this uptrend. We did get two pullbacks today, but both are not noteworthy.

Short term support is at the 1973 pivot and SPX 1964, with resistance at SPX 1991 and the 2019 pivot. Short term momentum ended the day with a potential negative divergence. The short term OEW charts are still positive with the reversal level now SPX 1981. Best to your trading!

MEDIUM TERM: uptrend confirmation pending

LONG TERM: bull market


About tony caldaro

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128 Responses to wednesday update

  1. manunidhi21 says:

    Hurray..we got that iv in purple 🙂

  2. soulsurfer says:

    comparing the current uptrend with the previous one, from late may to early june, there was a lot of – div on the hourly RSI(5), but the market ignored it. Why? Because it was in a 3rd of a 3rd wave. Same here now: market is in minute iii of minor 3. Strongest wave: market keeps on grinding higher. It will do so to 2000/2002, IMHO. That’s where iii = 1.62x i, measured from ii (1942 + 1.62x 36 = 2000). After that minute iv and v to finish minor 3 at 2014. Why 2014? Because it’s the year 2014…duh… 😉 And because it’s the 2.00x extension of minute i : 1942 + 2.00x 36 = 2014.

    I’ll post an update tonight on where I think primary III will top, as well as where Primary IV will bottom and V will top. It’s so simple one just has to wonder if somebody has pre-programmed the servers…

  3. XScaler HB says:

    From another wave guy:

    “As the market moved higher today, the pattern was quite unclear and overlapping. This is suggestive of a wave (v) in an ending diagonal. And, what we know about those is that they often spike to their highs, followed by a strong reversal.

    Now, while our ideal target region for that high is in the 1998-2004ES region, the question I am grappling with now is if we have seen the highest we will see during regular market hours – with the highs potentially hit overnight or before the market opens, or will we see those highs struck tomorrow during trading hours? I am unable to answer that question.

    However, once we do strike this high for wave (v) of 3 of III, our normal expectation is for a trip back down to the 1.00 extension, in the 1974ES region. Now, since the market has made new all time highs, it is very possible that we do not break down below 1983ES and simply see a high level consolidation, but our standard expectations is that once the 1.618 extension is struck, a 4th wave takes us back to the 1.00 extension, so this is what I will reasonably expect into early next week.

    And, assuming support is held in a 3 wave corrective pullback or wave 4 of III, I will be looking for a rally later this month to the 2012 target (2.00 extension), assuming we do not break down below the 1.00 extension. But, be aware that the potential exists to extend up as high as the 2026 region for the top of wave III, depending on how we set up for this 5th wave of III.

    And, as usual, it will take an impulsive break down below the 1966ES region to get me concerned about this uptrend.”

  4. CygnetNoir says:

    I am mindful also of the fact that the DOW needs to tack on another 80 points to meet it’s own weekly Big Up minimum target. Unless it fails, or price action between the Dow and the SPX were seriously to diverge over the coming minutes and hours, it seems more likely that we see the SPX grind (or spike) higher into the 2000 print than that it reverses before causing cheers on trading floors ’round the world.

  5. manunidhi21 says:

    90 point run with two small

  6. FiveStars says:

    Please think beyond 2000.

  7. ariez5 says:

    Not anything but short-term bearish yet, but this slow grind makes me think, “Escalator up, elevator down.”

    Also, why are financials blasting ahead? Because they anticipate higher rates? All interest rates are DOWN today.

  8. gtoptions says:

    SPY ~ Surpassed my initial target from 191 Swing Low, which was the 199.06 high.
    199.59 ~ 161.8% ext from Minor 2 (hit)
    200.31 ~ 161.8% ext from minute ii. (Possible?)

  9. blackjak100 says:

    Id rather be short gold than long S&P right at this moment. Of course that could change in an hour.

  10. torehund says:

    Laki volcano on Iceland erupetd in 1783 resulting in sulfur poisoning, global cooling and starvation .
    For quite some time I havent seen quakes on iceland, now there is a recorded 4,0 in the centre where Laki is situated also the Ridge inferior to the island has been active for some time.
    Softs could be a hedge for an unlikely repeat, or bulk. I have a max count for BDI making a wave two at between 12000 to 24000(insane count:), so bulk shippers should hedge well too.

  11. CygnetNoir says:

    Lunch hour lull looks like it may end early, new HOD’s likely sooner rather than later today.

    • CygnetNoir says:

      Newbie or would-be day traders of the SP’s look at the pattern of the SPX on, say, a 5 minute chart. Not the timing of it, the pace, the shape of the tape – this is a pattern that plays out very often and it is usually found taking up 1-4 hours anytime between 10:30 AM and 2:30 PM (Today’s started around the 11:15 AM EDT). You have to figure out on your own how you want to trade it (there are as many ways to use the info as there are traders) but it is an oft-repeated pattern and thus it does offer tradable info to you. It doesn’t guarantee anything, but it can help you find spots where you can take what Lee calls “cheap longs,” i.e. spots where your stop loss can be very, very small relative tot he potential profit.

      • CygnetNoir says:

        That should read “NOTE the timing etc…” not “Not” the timing. “NOTE (or better yet, NOTICE) timing of it, the pace, the shape of the tape … “

      • H D says:

        I’m looking at a 10 day hourly, that’s 100 handles at about a 55* angle lower left to upper right. GLWD :mrgreen:

      • A 5 minute chart should only be used as anchor. Trade signals should be generated with a 377 tick chart.

        PS 1.618 of 3 of 3 targets 1995

      • pooch77 says:

        CN thoughts on QQQ’s pretty wesk last two days

      • CygnetNoir says:

        Pooch – consolidating at its highs. Looking for $103 or there abouts in the next few months, but the path it takes is unclear – for that, see Tony 🙂

        Jerry – Personally I think all talk of this or that time frame/tick interval, constant volume bar etc. and so on is purely a personal matter. When I day trade stocks, for example, I don’t use charts at all, just the level 2 book. So, to saya what you said is fairly useless to anyone but you. The point I was making was about a general pattern of market behavior that anyone can observe. The suggestion of the 5 minute chart was simply because that is where I think it is easiest for the amateur to learn to “see” and thus recognize the pattern. In the end, all charts are mere representations of data sets, and you can choose to gather and display the data any way you wish. Some statisticians like pie charts, some like bar charts, others line charts, and still others might find using a Venn diagram most useful. In each case, the same data all showing the same thing but cut into pieces and displayed differently.

      • H D says:

        other types of charts include bubble charts and waterfall charts. It’s true I googled it.

    • CygnetNoir says:

      My geometry teacher says that we have up to 1999 and climbing before that angle becomes problematic – and that level will get higher by the hour. Methinks we have a good chance to see 1999 before the close today. This is a day trade, of course. I took off 25% of my long swing trade at 1991 this morning. Another 25% come off at 1999 (basis SPX cash), and I’ll manage the rest if we go higher.

      • CygnetNoir says:

        However, if SPX fails this test of the morning highs as new support, then failure to get back above the morning high in quick fashion would likely signal that I’m all wet lol 🙂 But any longs entered during lunch should have been entered 2 points lower than the current market, so again, a “cheap long.”

      • CygnetNoir says:

        Big thanks to you Tony – Trading is simple, but it sure ain’t easy … but having your daily commentary sure makes it easier than it would be on my own.

  12. lunker1 says:

    SPX ED starting Wed 1:20PM?

  13. Tony,
    I tried to ask this yesterday but I didn’t ask the question properly. Since the SPX made a marginal new high can Pri.IV start or do the Indices have to do the same before Pri,IV can start? Thank you.

  14. Agreed gold looks weak having now retraced 68.8% of the June/July move from $1,240 to $1,346. However the red flag for the gold bears is the gold miners don’t seem to be buying it. The miners tend to lead the metal. But when we look at the $XAU/GLD for example, it has only retraced 13.7% of the same move. Until $1,240 is taken out to the downside the possibility of one more ramp in the gold price has to remain on the table.

  15. lunker1 says:

    INDU .887 17060 reverse here?

  16. pcskier says:

    Top tick zone, right now for indu

  17. dguer says:

    Hi Tony,
    I see on Gold you have Intermediate ii finished and started into intermediate iii, since we broke below the 1281 int ii does that change the count and continue in the int ii


  18. kvilia says:

    RUT is moving lower second day in a row. Hmm….

  19. It looks to me like the market will put in a new high in DJIA before any significant pullback.

  20. H D says:

    GM all Kudos Tony, CN all. USA! I’ve been out of sync with market this week. Didn’t we rally all week last week ~34 points ? and this week…. spot and stalk. Hasta manana

  21. bossaenovae says:

    Bears might get excited about potential double top at 1991, but wary of IHS forming shoulder opposite 1955.

  22. Lee X says:

    Nice job Tony

  23. gtoptions says:

    Thanks Tony
    Kudos to CN who called the 1991.

  24. manunidhi21 says:

    Namaste Tony !
    why IV not purple ?

  25. scorp100 says:

    Namaste Tony. Do you think GREK has seen low or can go lower again when P4 starts here?

  26. These bulls sure do know how to levitate by all means…the good, the bad and the ugly times….lol

  27. mjtplayer says:

    Anyone still bullish gold? If so, I don’t know why. Lower highs and lower lows, E wave completed in the wave 4 triangle; last support areas are 1,260 area (bottom of the triangle) and 1,240 (June low). But, if 1,260 breaks, turn out the lights in gold. Sub $1,100 gold in the months ahead…

    Short-term, gold is a bit oversold, so it’s going to be a choppy path. But the direction is down – make no mistake

  28. Federal reserve, NOT going to stop stimulus programs !

    It ALL depends on the DATA…trust me, world economies together are running on Central Banks Fiat money supply.

    If anything, Chairman Yellen, will enact new program or extend the current program back $80 billion per month.

    Catch a Wave! Dow going to double in the years ahead..

    Stay with Tonys Analysis, he’s been spot on the $$$$$$

    Go USA!!!!

  29. rc1269 says:

    in the last 24 hours i’ve heard four different people say “there is nothing to bring stocks down right now”
    so i guess that must be true

    • pcskier says:

      Maybe not today, but tomorrow yellen speech will be key. High yield is running in to its previous top. If the grand old lady says she is concern about reach for yield, and she is happy with job growth that could be it.

  30. chicotheman says:

    Minute ii was quick and deep, minute iv will probably chew up more time after the 4 day minute iii, and be shallow – minute iii lower channel line will be above the 38% retrace – so maybe just a test below today’s low before the weekend. Minor 3 high early next week and probably a good shakeout for minor 4 as minor 2 was mild.

    • Very possible, I’m looking at minute 3 ending today. Minute 4 ending tomorrow at 1970-1975 minute 5 ending on Monday around 2000, we shall drink wime from jackson hole, which should, or could give 25 sp points in 2 days. minor 4 ending Tuesday,, it seems to be a volatile day lately,bringing us to 1980. Rally into then3 day holiday we’d, thurs friday. What ever Fridays close is that’s it. Tuesday sept 2 kaboom. I maybe rushing things, but at the end things seem to move faster. Could be until 9-8. Regardless it’s getting close.
      I see lunker, daneric, most people have a target of 2014 -2029. We shall see how it all plays out.

  31. ariez5 says:

    1991 – 1992 is both Minute 3 = 1.38 x Minute 1 AND Minor 3 = 1.6 x Minor 1.
    Also, a tag of the old ATH and a backing off would get all the bears short, calling a double top. The market then might retrace to the 1973 pivot for Minute 4, only to squeeze those bears through Minor 3/Minute 5 and Minor 5 to a new ATH. Just thinking aloud about how the waves might get played out.

  32. Is there any possibility that the last low at 1905 was actually P4 and we are now in P5? Or is that an impossibility?

    • jeff1student says:

      I don’t think so, as P4’s pull back will be much bigger

    • tony caldaro says:

      P4 was only a 4% correction?
      never happened in the history of the stock market

      • jeff1student says:

        Thanks Tony. By pure chance, discovered this wonderful blog just a month ago, still learning. Already put 70% of my money to work. Now I am waiting for the pull back (minute 4 or minor 4) to be 100% invested…..

        One quick question: in terms of the size of the pull back, does minor 4 has to be bigger than minute 4? What will be the better entry point (minute 4 or minor 4)?
        Thank you very much!!!

      • jeff1student says:

        I am sorry if my questions sounds like asking for specific investment advice. Since I am new to the EW theory/practice, my question was intended to seeking the EW general rules. Namaste!

      • tony caldaro says:

        In this bull market 4th waves have been smaller than 2nd waves

    • jeff1student says:

      Got it, thanks Tony. It works perfectly when I back-tested the minor and minute waves nested in the intermediate wave III (from April to July). How wonderful it is !

  33. lunker1 says:

    SPY target met

    Q’s target met

    These two intermediate term measured moves have reached their targets at about the same time so I’m cautious. A 10-20pt pullback is expected for Minute IV and currently the 38.2% is at 1971 but SPX acted in a bullish way by breaking above the 1982/85 area and then backtesting it and going higher. This impulse is acting similar to Micro 3 in May/June with only small pullbacks but it’s even more accelerated and higher above it’s 60min EMAs. But the harder they come, the harder they far. So I’m enjoying the ride but holding on tight because it’s a steep ascent. Perhaps all we’ll see for the next week is slow sideways/up w limited pullbacks until 2012.

    Other clues:
    Micro 1 = 10
    Nano 1 = 9

    The move from 1980 to 1989 could have been a 5=1 to complete Minute 3.

    • lunker1 says:

      post FOMC backtested 1980 (top of 1973) pivot twice. bullish too. not sure if 1973 pivot gets visited again before 2000 which is minute 3 = 1.62 x 1. this would set up a minute 4 38.2% back to 1978 which was today’s low and so perhaps it was micro 4. if so, from today low of 1978 here’s how to get to 2000:

      w1 1978 – 1986 = 8
      w2 1980
      w3 1.62 x 1 = 1993
      w4 1988
      w5 1.62 x 1 = 2001

  34. mjtplayer says:

    Thanks Tony!

    The NAZ traded heavy all day today, it lead us higher, looks be be leading the pullback too. R2K was red all day, that index looks terrible and will be at the top of my list of shorts in the days/weeks ahead.

  35. ariez5 says:

    The market could certainly turn back anywhere. Interesting that with a retouch of the high at SPX 1991, minute iii would be 1.38 x minute 1.

  36. Peter Sliney says:

    A gap up tomorrow. I think this market will give little or no good RRR before we hit 2000.
    A noteworthy pullback to let some late comers on board would be nice. But I wouldn’t hold my breath.

  37. bouraq says:

    Gold broke support:

    • Really like your work…thanks.

    • FiveStars says:

      Thanks Bouraq. So would you go long Gold at 1275?

    • CB says:

      Nice work, Bouraq. Thanks for sharing it. RE: gold…Tom McClellan, who does cycle analysis, mentioned in an interview a couple of weeks ago that, long-term, he expects the Dec 2013 low in gold to be taken out, and it should be a good LT entry point.. It should, more or less, coincide with the expected top in equities that Tony has predicted…

      Thanks Tony,nice work as always.

    • Bouraq – Good call on gold rollover….But if my count is correct, here is how i’m seeing it unfold

      1240 to 1347 was an impulsive 5 waves for Inter I of Major C
      1281 decline was Minor a of Inter ii of Major C
      1324 rally was Minor b of Inter ii of Major C
      at 1259 Minor c = Minor a and hopefully that will complete Inter ii of Major C and get the rally going for Inter iii of Major C

      • torehund says:

        If gold doensnt hold aroung here it Will continue its bearmarket, and probably have a stronger continous decline. Better to wait and see for now.

      • torehund says:

        However if it runs from here strongly, then the complex abc Down from top may be the right count. Inflection point. Remember markt has a tendency to uphold taking a major decision and even if it goes up from here the bear count is still alive until it makes an all time high. If it goes Down thoroughly from here its a bear without any doubt.

      • bouraq says:

        Thanks Matador. I don’t count waves. I just see and trade which suits me much better. I guess I’m the visual type rather than analytical.

    • FiveStars says:

      Nice Call, Bouraq.

  38. That is what I thought , if i’m correct the pullback after FOMC was likely a very short micro iv and then the last move up in micro v (near old all time high resistance) usually we would get a pullback before we go up to new all time highs.

    So if I read it correct today highs could have been minute iii top and minute iv pullback underway into the close today before minute V up to all time highs and further up coming.

    Thank you Tony for everything !

  39. tony caldaro says:

    yes it does, especially with that -div at the close

  40. Hi Tony

    Is it not possible that the pullback today was the micro wave iv pullback and the last move up to 1989-1990 was the micro v to end the minute iii ?

    That means today high could be the high of minute iii before minute iv pullback – does this make sense ?

    Thank you

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