tuesday update

SHORT TERM: gap down opening, DOW -117

Overnight the Asian markets lost 1.0%. Europe opened lower and lost 1.6%. US index futures were lower overnight. At 9am the FHFA was reported higher: +0.1% v +0.4%, then at 9:25 FED governor Powell’s speech was released: http://www.federalreserve.gov/newsevents/speech/powell20140923a.htm. The market gapped down at the open to SPX 1987, then started to rally. The market had closed at SPX 1994 yesterday. By 10:30 the SPX had closed the gap, hitting 1995, then pulled back to 1988 by 11:30. Another rally failed to generate much interest as the SPX hit 1993 by noon, then pulled back to 1984 by 2:30. Then after rallying to SPX 1989 by 3:30 the market dropped to the low of the day, 1983, and closed there.

For the day the SPX/DOW were -0.65%, and the NDX/NAZ were -0.35%. Bonds gained 9 ticks, Crude rose 60 cents, Gold added $7, and the USD was flat. Medium term support remains at the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots. Tomorrow: New home sales at 10am.

The market gapped down today for the first time during this pullback. After a rally to SPX 1995 the market worked its way lower for the rest of the day. At the low the SPX hit 1983. This represents a 36 point pullback from Friday’s 2019 high. While we noted yesterday this could be a C wave of an irregular Minor 2, we find the type and depth of the decline somewhat disconcerting.

When this uptrend began the SPX rallied from 1905 to 2011, then it pulled back in very choppy, eleven wave action, 33 points to 1978. After the SPX 1978/1979 low the market rallied 40 points to 2019. Now it has pulled back nearly the entire 40 point advance without one notable reversal. This decline has been straight down. Should the SPX lose the 1973 pivot range next, then something larger than just a pullback may be underway. Short term support is the 1973 and 1956 pivots, with resistance at SPX 1995 and the 2019 pivot. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: bull market

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

About tony caldaro

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266 Responses to tuesday update

  1. Time for a short short short dance over night

  2. fishonhook says:

    Put small short on indexes. Why? Hyg coming down again and at juncture. Could be wrong. We could just keep going. That’s why they are small. Today’s low would have been a great switch long with it not making a new low and HYG hitting 200DMA. closed out my shorts there but didn’t have the cojones to buy as I felt the market was heavy. ‘feelings’ and trading are a bad combo 🙂

  3. CB says:

    good advice, HD thanks.

    the scary thing is how ST OB $SPX is ( with -D on 5 min) , so anyone looking for that RS at 2010 may be chasing a ST dream and see a re-test of 1990ish before we test 2000+ again..

  4. rabbittrader1 says:

    looks like .618 Fib, or 2003 and change before resuming P IV. IMHO

  5. Numbers of posts on this blog by any individual are directly proportional to excitement (due to profits) OR frustration (due to losses)

  6. RC,
    Credit and equities are not on the same page again. Which will be right?

    • rc1269 says:

      well, it’s an equity board for the most part so i try to tread carefully. that said, people will be wrong in both bonds and equities, so in my view it’s not about which set of investors is ‘wrong’ or ‘right’ but whether one does well in the sandbox in which they play.
      i will, however, take the liberty of quoting Lee from about a month ago – when he offered something akin to “stick a fork in this market”

      • tony caldaro says:

        But when I offered him a picture, he said it looked like a Cardinal.
        And they made the playoffs =)
        Nice rally today, but the line in the sand appears to have been made.

      • rc1269 says:

        haha true, Tony. now let’s see if they can seal the deal, like this mkt. 😉

      • I have an interest in both and obviously one effects the other (sometimes?) Tony, has done a tremendous job keeping the group on the right side of the trade but I am also having a tough time at ignoring the carefree mentality and signs everywhere. I am really ready to see Pri IV so I can feel better about loading up but again, I’m probably not the only one. Thanks for the reply.

  7. H D says:

    1996 SPX was that level, HWB stretching it. Now that we r here and key reversals it feels terrible. I’m ready to be wrong and move on if necessary. That’s how this works. GL all.

  8. purplember says:

    I went long this morning so this B**** should be crashing any time now

  9. nickokc says:

    markets goes up and down but man shorts can be annoying sometimes people yesterday were calling for S&P down to 1950!! based on what ” your feeling’ or some awesome indicator we were extremely oversold now I think we are overbought I think waves won’t work going forward because volatility is back ” mark my world” QE going away and rates will creep up

  10. llerias7 says:

    For several reasons/sources of info I am still looking for Tony´s target of 2070/85…probably at the end of October (b4 mid-t elections)…So the extension for Int. V is alive and well !…

  11. selhai says:

    All you bears are betting against Tony’s green ‘2’. Good luck with that one.You’re treating Rabbit as if he’s The Pied Piper – at least that’s what it looks like to me!

  12. oneandonlyuniverse says:

    $ibb ripping – would not be acting this well if we are in correction mode. these are still cheap historically. Can easily trade 315-320

    Here’s to Rabbit , who has yet to get on the right side- keep being you bro.

    • ~~~~~~~~~~~~~~~ says:

      If the market hold these levels, there will an SPX VIX buy signal and a MACD Histogram daily buy signal. The Dow Theory buy signal is intact, and $NYAD is confirming. Naz and NDX held minimal retracements.

      This is merely a shallow pullback within a powerful uptrend during a secular bull market.

    • 16golfer says:

      Oneandonly…..$IBB looks to only be retesting it’s high from beginning of September. What concerns me is the monthly negative divergence on the RSI.

      • oneandonlyuniverse says:

        ok.. it’s a new high… like the housing stocks in 05 ….they had a 20% correction from parabolic levels then a 60% run ..that get ibb to 215-230 level.. yep its a bubble – not a time to be short

  13. I think today low ended minute wave ii and minute iii has started. Looking for further rally later this week toward the old 2020 highs.

  14. oneandonlyuniverse says:

    Just paid $88 for 1st purchase BABA for …” 8 ” i China for all you number guy’s

  15. gtoptions says:

    Thanks Tony
    High probability this was Minor 2 expanded flat
    SPY ~ C = 138.2% of A
    SPX ~ C = 123.6% of A

  16. rabbittrader1 says:

    Move of Fib. .386 to 1993.08 was all we get on this upside correction. P IV Continues. IMHO

    • blackjak100 says:

      You’re funny rabbit. A decline that took 4-5 days and you’re saying the correction lasted a few hrs??? Normally don’t work that way. Besides the .382 retracement is 1994. Early indication is the first five of a zigzag is complete so we could trade back down to 1986ish before resuming higher 👍

      • mjtplayer says:

        Agree blackjak, we pullback to the low-mid 1,980’s in wave b than rally up to the high 1,990’s/2,000 area tomorrow and into Friday.

        After this bounce, next stop is the 1,950 area to test the uptrend line from Feb and to complete minor A down.

      • drwarmington says:

        What is the normal fib retrace of b in an a,b,c zig zag? Thanks

      • blackjak100 says:

        38.2%-76.8% in a ZZ – b waves are the hardest structures to analyze and trade.

    • selhai says:

      If Minor 3 is now underway, then around 2045 would be about right, IMO. But good luck.

    • Respectfully I disagree. Technical Analysis tells be the short term charts are too oversold now. And a “Bull Flag” pattern is forming now while the shorts pile on at this resistance level. This indicates another move higher today.

  17. wildmick says:

    nice 10 pointer there. cya

  18. well, short term still open possibilities. Would i be correct to say, if we trade below 1973 P4 has begun. Since we now should be in minor three of some degree moving higher. Or even if we close above 2000 today or tomorrow if 1991 is broken P4 is underway? Otherwise new highs P3 extends.


  19. mjtplayer says:

    Would expect the rally to continue into tomorrow and possibly Friday. One can count 5-down from 2,019 to 1,978, now rallying in wave a. After a b wave pullback, I’d expect the bounce to end in the high 1,990’s or 2,000 area.

    Oversold conditions on the hourly RSI are gone. Oscillators need at least 2 days of consolidation/rallying and preferably 3 or 4 days. Keep in mind that Tuesday is end of quarter, bias is higher or at least holding-up the market into Tuesday’s close.

  20. Increased my QQQ calls from yday’s close when we cracked the downward trendline in SPY. Still not a big position but good enough for me. I’m expecting at min 50-66% retrace of recent down move then will re-assess how the indicators look.


  21. nickokc says:

    as always market give Shorts false hope then BAM

  22. rc1269 says:

    everybody is now bullish/looking for the bounce again it seems. tag the 1978 and they just make it that easy for us.
    on another note, credit market still feels sick and getting sicker. dealers are bloated and won’t bid on anything. quotes are a joke as the goalpost gets moved wildly if you actually try to get somebody to stand up to a level. case in point: this morning i tried selling a block of some higher beta bonds and showed to 12 dealers in comp, all of which [allegedly] made markets in it; i got 10 “pass” and two throwaway bids that were each a good 3 points below their quoted market. that’s bond *points*, not basis points. ie, about 75bp differential from quote to execution on this bond. not… strong

    • wildmick says:

      rc1269 some of the guys over on my regular bog (blog, old joke) were saying the same thing as you are. need to be careful here.

    • RC,
      I agree that is going to be fuglier when real sellers in credit land start wanting out or even worse are forced out. We sold a large load of BBB to As in late May and bids stood strong and the same bonds now are shunned? Do you think Dodd Frank has much to do with this or something more sinister? Thanks

      • rc1269 says:

        Dodd Frank hasn’t helped,that is for certain. but mostly I just think it’s guys getting nervous. everything has a cycle in the mkts, and like equities this one in credit has been long and strong. feels more like we’re reaching a point of compensation indifference where institutions are reluctant to put that incremental $ at risk

      • I know we are. Thanks RC.

    • magnus1234 says:

      I dont know which market you trade in…but I can tell you that the Bunds-BOBL-Schatz market has been a joke since the last ECB meeting. So credit markets R not happy.

      • Magnus,
        We don’t do a whole lot of trading but we will trade large ranges in credit and treasuries. Obviously it happened last year in May but recently credit is trading different from last year from our experience.

    • tony caldaro says:

      Essentially no bids from 12 market makers?
      Sounds like a Bond bear market =)

  23. Tony as both Dow Jones and NDX held recent lows I believe that this was all of minute ii and minute iii just started.

  24. SPX: with today’s price action, there is a Big Up set up daya in the works. If you can’t see it, I can’t help you.

  25. Looks like we are going to bounce for a day or two. I wouldn’t short this today as we need a positive close I think, which means it could (should) continue into tomorrow as well. So for now I think the selling is over for a few days but should return later this week and into early next week.

  26. buddyglove says:

    Seeing good bullish setups again, but they flushed my last one down the toilet in closing trading yesterday. I need to see a bit more now. Glta.

  27. Tony

    I think we can stick a fork and mark minute ii lows at today lows.

    Thank you

  28. alexhartley1 says:

    Hi Tony – Has that green 2 just appeared on your daily chart? A=C for an irregular flat?

  29. oneandonlyuniverse says:

    Amount of portfolio protection at record levels( corrections NEVER occur when PM’s are this hedged, combined w/indexers cleaning up books gets a relief to $spx 2027 minimum to 2057. Protection unwinds as prices move up. Yet , another squeeze and yes that is where you put em out.- $BABA will trade above the high

  30. Lee X says:

    Pivot to pivot ..have a gooden

  31. llerias7 says:

    Entering in a red zone…critical! Bellow 1970´s P3 game is over! I got caught in a long position so just waiting for a bounce to “dismiss”…

    • fishonhook says:

      It is closer than any more downside on the S and P and 2 will have overlapped 1 . is that allowed in OEW.
      I am short and have my buy stops in for a rebound in case Tony’s count is right

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