wednesday update

SHORT TERM: rally continues, DOW +25

Overnight the Asian markets gained 0.5%. Europe opened higher and gained 0.3%. US index futures were higher overnight. At 8:30 the CPI was reported lower: -0.2% v +0.1%. The market opened unchanged at SPX 1999, rallied to 2004 by 10am, then started to drift lower ahead of the FOMC statement. At 10am the NAHB was reported at a 9 year high: 59 v 55. By 1:30 the SPX had hit 1997, and then started to rise. At 2pm the FED released several reports:,, The market responded by initially rising back to SPX 2004, then dropping to 1993, and then rallying to 2008 by 2:30. Normal volatility after a FOMC statement. Then after a dip to SPX 2002 just before 3pm, the market rallied to the all time high at 2011 just past 3pm. Another pullback followed to SPX 2000 by 3:30. Then the market bounced to close at 2002.

For the day the SPX/DOW were +0.15%, and the NDX/NAZ were +0.20%. Bonds lost 10 ticks, Crude dropped 75 cents, Gold slid $14, and the USD was higher. Medium term support remains at the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots. Tomorrow: the ECB concludes its two day meeting, then weekly Jobless claims, Housing starts and Building permits at 8:30. A speech from FED chair Yellen at 8:45. Then the Philly FED at 10am.

We had a quiet opening to the typical volatile FOMC day. At 10am the SPX hit 2004, twenty-six points above Monday’s 1978 low. Then after a small pullback the market hit SPX 2004 again right after the FOMC statement. After that the market had its first notable pullback to SPX 1993. Then the market retested the all time high at SPX 2011, before pulling back again into the close. Several reversals is nothing unusual for an FOMC day. The important day, as we see it, is tomorrow. After traders have had the opportunity to digest whatever news resulted from the FED’s meeting. Counts remain the same.

Short term support is now at SPX 1993 and the 1973 pivot, with resistance still at SPX 2011 and the 2019 pivot. Short term momentum displayed a negative divergence at the SPX 2011 high and pulled back. Best to your trading the ECB day!

MEDIUM TERM: uptrend

LONG TERM: bull market


About tony caldaro

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160 Responses to wednesday update

  1. John B says:

    Budfox, is the BoYu still on a sell?

  2. blackjak100 says:

    Tony or anyone

    How do is top receiving emails when every comment is posted here? I accidentally checked the box yesterday

  3. Gary Lewis says:

    I’ve seen charts similar to today’s market action – in hospital rooms when the patient dies. Come on Bull Market, is this your last gasp?

  4. So far, today looks very promising for the bulls. Not much volume, not volatile, and very range-bound. We also have held the gap so far which is good and yesterday’s volatility hasn’t carried over. The ideal scenario is a stable, calm move up. Up then consolidation, up, consolidation, etc.

    We are in a very tight consolidation zone setting up for a potential move up.

    Long-term outlook: Neutral
    Intermediate-term outlook: Bullish
    Short-term outlook: Bullish

  5. mrgreen2010 says:

    Sitting on my hands….no real advantage from here either way except to buy volatility but that could wait til next week.

  6. If we do not rollover today or tomorrow then they will likely breakthrough and head up to my original target of 11,330 on NYA per a FP I have.

  7. HI,above the blue trendline its a hard area to go higher and reach the theoretical ascending triangle target,thanks

  8. torehund says:

    From tuesday 2 Waves up on the IMW, and then correction an x stuff finishing off the correction, 3 Will he huge, ay come soon.

  9. uncle10 says:

    looks like grains going to spike down on the crop report. maybe a good buy after?

  10. rc1269 says:

    fwiw, most of the stuff i’m seeing is fading the Fed right now except for stox. somebody will have to play catch up with other
    credit also been trading heavy and after a very brief moment of exuberance post-Yellen yesterday, it’s back to soft. risk appetite remains deceptively weak

    • g333e says:

      What makes the weakness in risk appetite so deceptive are the new all time highs in the Dow and SPX.

      • rc1269 says:

        yes sir. it’s that whole, “it’s a market of stocks, not stock market” thingy, as the NYAD is not at highs. and of course the mkts i’m talking about are about 2x the size the equity market. but yeah, cnbc is bullish and spx hits new highs, so we got that going for us. which is nice

      • g333e says:

        No, it’s that whole “With the Wilshire 5000 within just a few points of all time highs, only someone who drinks to wretched excess perceives a lack of risk appetite” thingy.

      • rc1269 says:

        welcome, friend. from what i’ve witnessed, heavy drinkers are typically bigger risk takers, not the opposite
        as for wilshire near all time highs, that’s just groovy, dude. my comment was related to flows, not stock, however. oddly, market tops usually happen highs. which strangely means that risk appetite can in fact dwindle at a time when asset prices are high. but thank you for your well-reasoned and eloquent jab
        i’m over quota so ciao for now

      • g333e says:

        rc1269 says:
        September 18, 2014 at 12:19 pm

        “…market tops usually happen highs. which strangely means that risk appetite can in fact dwindle at a time when asset prices are high…i’m over quota so ciao for now…”

        By definition, in a free auction market the peak in risk appetite coincides with the peak in prices..

        And thank you for the Italian lingo. It is almost like corresponding with Gina Lollabridgida.

      • CB says:

        Interesting comments. Whose risk appetite, one might ask, as it matters a lot. Professional risk managers see risk differently than the investing public. Their risk appetite should decrease when the risk is becoming unacceptably high. The investing public responds to risk manifestation (falling prices) , which is later than when the risk has objectively increased ; When prices turn lower, the public starts feeling some pain & finally perceives the risk which has been present for some time. Due to such time gap in risk perception ,at market peaks the corresponding assets have already been passed on from the professionals to the general public, greed turns quickly into fear. But risk build-up (which professionals measure) occurs earlier than risk manifestation. Two different animals. The vix, btw, isn’t at an all time low now, is it?

      • CB says:

        that gap in perception is also the reason why the general public doesn’t like to buy market lows…because it is fixated on the risk which has already manifested itself..the professionals on the other hand estimate that the risk has been already priced in and therefore they start buying at those lows..

    • CB says:

      Cheers guys! Can we all start drinking to that escalating risk, then =)

  11. selhai says:

    London has just closed in nice shape – absolutely no red on my Watch List! FTSE up about 0.5%.

    BBC just re-confirmed that there will not be any exit polls.

    A full result most likely will not come until around 5.00 am local (midnight EDT), when both Glasgow and Edinburgh are due to declare their results. The two of them make up over 20% of the whole Scottish electorate.

    The market is positioned for a NO vote. Fingers crossed then!

    • pimacanyon says:

      is your 20 % a typo? Surely the 2 largest cities in Scotland make up more than 20 percent of the population, no?

      The rebel in me would love to see a YES vote. However, my market position would not. Money talks, so I will be happy with a NO vote. (traitor!)

      • pimacanyon says:

        I checked on the population and you’re right, those two cities are roughly 20 percent of the population of the country. However, if you include the metro areas of both cities, their population comes to about 40 percent of the population of the country.

      • selhai says:

        Just read your comment. No typo – I double-checked two sources before I posted.

  12. Walter Crane says:

    Getting a little edgy with my short call, heh. Today is the day it has to top if it is for now imo. Gold? There are four or five guys that I know that have access to satellite technology that can tell senior companies exactly where to drill now and where the gold is and how much. Its hurting the price big time. And its killing the little guys who are wondering why they don’t get ANY calls from seniors any more about their little developments. The huge penny gold market is forever gone. And I don’t like using the word forever, EVER.

  13. mjtplayer says:

    Incremental new high on the SPX, joining the DOW; but also with -div on every time frame. Very light volume today and VIX just poked it’s head below 12, but cannot hold. The VIX has not been able to stay below 12 for several months, each time it gets down here it sets up a buy.

  14. berniebaruch says:

    Get the Alibaba payday in a box and wrapped and then the market will rise or fall accordingly.

  15. cina44 says:

    Hi Tony Caldaro,
    Thank you so much for all your daily work that you do. I like to follow your blog very much. I don’t know if you are familiar with ichimokucloud charts, They are strongly suggesting that you should stay far away from the shippers. Including DSX. The Bdi- ichimokucloud chart suggests that this was the top in Bdi and promises lower prices ahead. The chart can be read until march 2015. There will unfortunately not be a PIII for the shippers, I strongly believe so!
    It can be that we now also are witnessing that money will flee out from Europe (Eurozone) in to USA dollar and maybe also into the equities in USA.

  16. onthemoneyuk says:

    Are we about to extend P3 or enter P4?

    There are no certainties of course, but on probabilities, this chart is a clincher:

    • buddyglove says:

      Yes but this time is different……………. 😉

    • Gary Lewis says:

      I was mentioning this. Volatility is at the lowest level since April 2013. The Bollinger Band width illustrates this. So we quickly went from oversold to overbought. Let’s see if the markets respect this.

    • mrgreen2010 says:

      Buying volatilty at this point looks like a no brainer. Bears are almost non-existant. Bulls are sleepwalking through this. I am holding on to my longer term puts as they slowly become lottery tickets. SP 2019-2030 only 1% away from here so they could still pay off. I am just sitting on my hands for now. Might pick up more VIX calls

    • pimacanyon says:

      yes, but there are several points on that chart where the vol is very low and yet SPX did not fall apart, but actually continued rising.

    • g333e says:

      Volatility hit its twenty year low in May.
      And then in July.
      And now again in September.
      Trading this indicator is a proven cure for excessive wealth.

  17. fishonhook says:

    Well Gary you are a brave man to keep the bear flag waving. I was blown out of most of my SDS and MU short yesterday. MU sure did look like a H and S break down/trendline break and back-test. Well another technical failure. Who knows what the count is and what happened to P4 . Luckily we always have an ‘alternate count’ in our back pocket!

  18. mjtplayer says:

    The DOW is sporting -div on all time frames

    The market obviously thinks Scotland will vote no; Cable and FTSE are both higher. Surprised in the markets higher open in the US, given how close and how important this Scotland vote is, the market is very sanguine. DOW at new highs, S&P close, VIX again pushing towards 12; absolutely no fear or concern for stocks, all is well.

  19. oneandonlyuniverse says:

    Good morning Tony,

    Price target for $USD and your best GUESS of timing ?

    om shanti

  20. lunker1 says:

    Double top on the futures I’m cautious here

  21. Hi Tony

    With China starting QE – could be very bullish for shippers out there.

    Do you think DSX has ended wave 2 and could be starting a wave 3 of 3 ?

    Thank you Tony

  22. trondack says:

    According to this chart Fed Funds Rate < inflation rate since 2010. Does this mean that the inflation rate should be -2.0% instead of +2.0%?

  23. Gary Lewis says:

    Despite big inter-day volatility, daily close volatility levels are at their lowest since April 15, 2013. That being said, pre-market SPY levels are in overbought territory. I’m so good at feeding the bulls that I believe that their is a herd of them gathering in my back yard, waiting for their morning meal!

  24. selhai says:

    Mid-morning, the City does not expect a YES result. Cash DOW is around 17209, RBS is up over 1%, Lloyds Bank up about 1% etc etc. It will be a bloodbath tomorrow if the result does go the other way, of course.

  25. new strategy unfolds…mkt. update and strategy for thursday (wihin blog’s comments sect.):

  26. magnus1234 says:

    TLTRO day today. Allotment reported @ 11.15am CET.
    ECB forecast between €450-800Bn in cash for collateral for both auctions (sep 18 and dec 11). Market anticipate take up between €300-350Bn.
    IMHO less take up means less liquidity but also less borrowing demand. A negative for the markets.

    • magnus1234 says:


    • magnus1234 says:

      Last post on TLTRO: “…MNI: analysts had warned that a smaller take up
      could prompt the ECB to buy substantial amounts of ABS and covered bonds when
      they meet Oct3…”
      Dont fight the ECB!

      • rc1269 says:

        the only problem is there isn’t enough ABS in the market to meet the target size buying the ECB wants to do

      • tony caldaro says:

        how much ABS do you think is available?

      • rc1269 says:

        i don’t personally play in the Euro ABS market but everything i’ve heard from the traders that do is they just sort of laugh at the prospect of it. it’s very thin and illiquid market, by fixed income standards.
        i saw data that showed total European issuance of ABS in 2012 at about 250bn EUR, and 2013 was close to 160bn EUR. I think the total market size there is about 1.4 trillion EUR. also, a lot of these securities are sitting untouchable as collateral at banks and insurers, making the actual tradeable market much smaller than the issuance might indicate.
        they would need to first revive the Euro ABS market, which has dwindled since the crisis. only then could they have any hope of buying amounts remotely close to what they want to do. as it stands, they’d essentially be buying almost that entire market.

      • magnus1234 says:

        The key question is how much of the outstanding volumes of loans to NFCs or mortgage loans worth €8 trillion that could be translated into new issuance of RMBS and ABS. The market could be up to a €1 Trillion.

        Read more at Bruegel

      • tony caldaro says:

        then if they are being held as collateral they are very unlikely to be sold to the ECB

      • rc1269 says:

        yes, if they were to successfully revive that market then sure it could be larger. then you have to ask yourself, how to do you magically bring buyers back to a market in which nobody has wanted to participate for a few years? it might be a tough sell politically to have the ECB essentially start funding bespoke deals for the sole purpose of their purchasing. other than that, however, how do you force investors back into a market? the European economy isn’t doing any better, which is the precise reason why the ECB feels the need to do QE, and also why it would be an untenable prospect for investors to arbitrarily get back involved. i think it’s a tough sell

      • magnus1234 says:

        I agree..its a tough sell politically…but I believe the ECB could be the “initial” trigger for that market to revive. Who want to miss a good deal?

  27. good update.

    Basically not much change in Fed policy;The overall path for policy that they’ve been on continues to be a path they are comfortable with, that is flooding FAKE MONEY INTO THE MARKET>

    Check out this scary chart ===>

  28. blackjak100 says:


  29. mjtplayer says:

    Tony – check this out:

    I prefer the Pat’s or Red Sox myself 😉 Wish they made Bruins…

  30. lunker1 says:

    crazy lately! LOL

    • torehund says:

      My list of miseries starting With the Sovereign Debth affair is extended, tere has not been a single positive since that. Now I am surrounded by a volcano in Iceland, and New Nazis in a to be chaotic Sweden (once calmest). Ny own country is in pop the bubble Territory With government overtaxing the overtaxed. Who would NOT be paranoid 🙂

      • Please also dont forget. That are you are also surrounded by Independent Scotland in another 24 hours. This one POSITIVE negates all negatives you listed!!! lol

      • It is a slander to call the Sweden Democrats a neo-Nazi party just because they want a return to sanity on immigration by 3rd world people. Sweden has taken in more than enough refugees. The sensible people in these warring countries need to get together and annihilate the violent lunatics like ISIS, and then learn to share power and privilege with each other.

      • torehund says:

        Georg, I am advertantly calling them a Neo Nazi party, not because of their intention and beliefs which at this point in time makes perfectly sense, are constructive and is justifiable, but because of their timing. Its far too late to demand change when the Whole sosialist state is a ship that has already been sinking for years (not many see this yet).
        30 years ago (at the start of immigration to the Nordic countries), there was ample time to use common sense (limit influx and integrate), and clearly see what would happen in the future ifthe country was to be overwhelmed by immigrants.
        At this time there is an economic downturn Ahead, and absent of any constructive integrational efforts this Will end badly given the current direction of events. NorWay and Swedens currencies are headed towards hyperinflation, not a healthy deflation, In such a grueling scenario blame will to be put on the groups that are thought of as “belonging less”, and a wart called Nazism is created. We are still early in this cycle, and only huge efforts by the politicians, and the population themselves may reverse the process.

    • chrisk44342 says:

      you have excellent taste in music lunker

  31. JD C. says:

    Upper median line on this pitchfork suggests top of PIII soon. These pitchfork lines are like trend lines, just suggesting a top or resistance. Easy trade here, moved my stops to spx 1940 and 1980 areas. I won’t be surprised if price blows on through the top soon, but it’s a pretty sight when price respects the lines, just like trend lines. Thank you Tony for all you do.$SPX&p=W&yr=13&mn=0&dy=0&id=p80480324964&a=299086353&r=1411002016669&cmd=print

  32. mrgreen2010 says:

    Heavy volume on doji day, Looks like a stall. MAX PAIN for QQQ options is now 99.0

  33. Gary Lewis says:

    To El Matador. Nice call on your upside objective. Bot some Oct SPY puts when SPX was at 2007.50 (on your recommendation). Up 25% or so at the moment and I’ve got enough time to outlast this current bull rush. If you ever pass through Chicago, let me know, I’ll buy you a beer, 🙂

    • Gary Lewis says:

      (and I really think that we are at or very close to a top! I haven’t felt this discouraged about my positions (bearish) since the 70s when I stopped looking at the market, called my broker and told him to sell everything. And don’t even call me back with the price confirmations. It was certainly an emotional day and I seldom get emotional anymore over the market.)

    • Thanks Gray, glad to hear you held on tight when it rose above my target price. My ES order was executed at 1999.5 and I’m still currently short. For this particular trade I used the daily BB to set the upside price objective. The daily BB had form a “pinch clamp” and at the time the SPX upper BB was around 2009 and declining so I set a price 1-2pts below the upper BB to make sure the order would get executed. I was expecting the spx rally to be rejected on the first hit of the upper BB and ideally I would expect the lower BB to be tested but lots of forces will be at work tomorrow as it will be very interesting day.

      Gray, I also happen to live in the city and would definitely will like to take you up on the beer offer. Here is my email, , so we can chat off line.

    • Your offer of beer to EL Matador is still valid? 🙂

  34. torehund says:

    If you have Tonys site, Martin Armstrongs blog, a Surfboard and a Fishing rod, you have got brains and fun at very litte cost. You dont need a lot more in life…

  35. CB says:

    thanks Tony. Throw in BOJ’s Kuroda tomorrow as well. Tres Amigos Day.. =)

  36. selhai says:

    Two more polls today – 52/48 and 51/49 – for NO. A few minutes ago, another one 52/48 for NO. We may have seen the last poll before voting kicks off at 2.00 am EDT.

    BBC reporting that there will NOT be any exit polls tomorrow evening. Result due early hours of Friday, local time.

  37. 56rambler says:

    Thank you, Mr Caldaro. Wanted to follow up – you had mentioned in the past that you thought the odds were roughly 50/50 between a P3 extension vs the beginning of a P4 move – are those still the likely probabilities? Or are you leaning more to one outcome?

  38. llerias7 says:

    Tony, It seems that something wrong with $ATG count…does not stop falling wich does not bode well for III wave up!…

  39. gtoptions says:

    Thanks Tony
    High Wave Candles or Long Legged Doji, in the case of the SPY.
    Not necessarily bearish, but a point of indecision or rest.

  40. rabbittrader1 says:

    Or maybe minor 4 followed by failed fifth?. Going for a swim at my Beach Club. Long Island Sound still warm at 72 degrees.

  41. rabbittrader1 says:

    FED is afraid of DEFLATION. As I said before”You cant push on a string” Microsoft, Cisco and others continue to cut jobs. Gold,Silver, Copper, Wheat etc, continue to drop. Dow makes new high,but not S&P. .C wave down next?

  42. tony caldaro says:

    never ventured into candle charts

  43. gasman88 says:

    Are gold and $HUI oversold enough for bounce?

  44. Tony,

    Not sure if you follow candlestick patterns but a close with a “long topping tail” is bearish and “should” indicate a multi-day turn in the market. Same with “long bottoming tails” of course.

    • tommyboys says:

      Well today almost qualifies as a DOJI as the open and close is very close. Long tails in both directions as we’d expect on an FOMC day…

      • joecthetruthteller says:

        Will market historians look back on the $21 billion IPO of Alibaba – the biggest US IPO in history – as signaling the top of the five-year rally for the S&P 500? Only time will tell… note with interest that almost half of Nasdaq stocks (47%) are down 20 % from their peak over the last 12 months.
        40 % of Russell 2000 small cap stocks are in bear territory.

    • mrgreen2010 says:

      To trade a doji, if a trend is suspected to be ended and about to reverse it always best to wait for confirmation (since you are fading the predominant trend) for any trade when the stock or index trades a few ticks below or above the prior days close that would be the entry point with a stop above the prior days high or low.

      • mrgreen2010 says:

        On the QQQ’s that would be an entry to short if itb trades below 99.45 or so with a stop @100.05. If it does not go to 99.45 there is no entry….thats my plan.

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