wednesday update

SHORT TERM: downtrend confirmed, DOW -238

Overnight the Asian markets lost 0.4%. Europe opened lower and lost 1.1%. US index futures were lower overnight, and at 8:15 the ADP index was reported higher: 213k v 204k. The market opened three points below yesterday’s SPX 1972 close, and continued lower. At 10am Construction spending was reported lower: -0.8% v +1.8%, as was ISM manufacturing: 56.6 v 59.0. Just past 10am the SPX hit 1954 and started to rally. The rally lasted until 11am when the SPX hit 1964, and then the market turned lower again. Just past 3pm the SPX hit 1942, rallied to 1951 just before the close, then ended this down day at 1946.

For the day the SPX/DOW were -1.35%, and the NDX/NAZ were -1.60%. Bonds gained 30 ticks, Crude slipped 45 cents, Gold gained $6, and the USD was lower. Medium term support now drops to the 1929 and 1901 pivots, with resistance at the 1956 and 1973 pivots. Tomorrow: the ECB meets, weekly Jobless claims at 8:30, then Factory orders at 10am.

The market opened slightly lower today, then dropped quickly to the OEW 1956 pivot. After a rally to SPX 1964 the market then dropped below the 1956 pivot range (1949-1963). When dropping below the 1956 pivot the SPX also broke the rising support trend line since 2012, and most of Primary III. These factors, plus the downtrend confirmation, raises the probabilities of Primary IV to 75%-25%. The final confirmation would be a drop below SPX 1905. With Primary IV probably underway the following three support levels should be kept in mind in the months ahead: 1738, 1627 and 1560, with SPX 1627 the most likely. Yes, it can go that low. Short term support drops to the 1929 and 1901 pivots, with resistance at the 1956 and 1973 pivots. Short term momentum hit extremely oversold early, then ended quite oversold. Best to your trading !

MEDIUM TERM: downtrend

LONG TERM: bull market


About tony caldaro

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251 Responses to wednesday update

  1. Short SPY at @196.4. Bears need to hold that level around 197 or they are toast. Things seem a bit stretched out here. STop 197.4

  2. Karsten "Cash" Mahlmann says:

    Hey unc,
    October 2, 2014 at 9:49 am
    Hey unc just purchased last 1/3 avg 107.96…also put on tna at 60.68- for 63.80
    bots love trading 88 mil into a valley…good luck

    just sold my runners my last 5k sh tna @ 63.58 avg
    and last 3k sh iwm 109.52.

    I am flat these now. And that’s how i trade- only because you asked.

    peace and good luck

  3. IAWT says:

    I have this a wave 4 low today. Seems no one is any where near the page I am on. Lol. Strong day tomorrow is needed. Good work on the board lately. Cheers.

  4. rabbittrader1 says:

    Temporary “bounce”. over . We will have HARD DOWN tomorrow and into next week to complete “A “WAVE on Oct. 9th at about 1880. .

    • rabbit trade- r with that kind of talk you make me wanna stand up and dance!

    • reddragonleo says:

      I think we have a little more to go Rabbit, but I do agree with your call for next week. I suspect we’ll gap down tomorrow and then rally back up into the close to recapture the 1955-1960 SPX level where they can close out the weekly chart right on the rising trendline of support from the 2011 low.

      That keeps everyone guessing on what will happen next week. A close below that trendline on a weekly candle has never happened since 2011 and I don’t think we’ll see it this week. Then there’s the past statistics showing that the non-farm payroll report day closes positive something like 16/17 times out of the last 22, so I’m thinking you’re getting a little too excited… remember, the turtle wins the race in the end, not the “fast” rabbit. 🙂

  5. Tony,
    I do believe you have this picture painted perfectly. I will be more than happy to buy the frame. I think you have it pegged. Thank you.

  6. gary61b says:

    spx 60 at the 1951 level, possible neckline of a IHS if right shoulder forms. potential of 25 points

  7. tommyboys says:

    RUT up 1.2% ner HOD while big boys flat. Change in personality?

    • mjtplayer says:

      Yup, I mentioned that this morning

    • kvilia says:

      RUT was up in the morning, then it went way down, then up again while big boys are flat. Beaten down heavily, typical volatile motion as a lot of traders get nervous to miss entry point or nervous to hold – noise IMO. Still short and strong.

  8. lunker1 says:

    from 1926

  9. oneandonlyuniverse says:
  10. nickokc says:

    shorts got quite 🙂 it’s ok market goes up and down lol I guess wild swings is traders dream

  11. oneandonlyuniverse says:

    Embedded image permalink

  12. Tony – Is your Daily 13 EMA crossover of the 34 EMA your version of a “Death Cross”….LOL 🙂

  13. JeffMilano says:

    What is 21 and 55 on your chart?
    Is that the number of days? Can this be the start of B wave.

  14. Looks a lot, lot more like 5 waves off the lows than it does 3 waves. Therefore likely to be i of b of C implying a 3 wave pullback here followed by one more 5 wave rally to complete b of C. Just one problem with this scenario … it’s too obvious.

  15. lbhkinqa says:

    How do you reconcile the possible/probable P4 with time and seasonality?
    P2 lasted 5 months so P4 is likely to be months long. This clashes with late November/December year end rally seasonality which is incredibly strong. The only time recently I can recall a down December was 2007 and I don’t think you are arguing that this is a new bear market.
    Tough to argue waves trump seasonality? Is there a chance we still haven’t seen P3 top?

  16. lunker1 says:

    26 + 21fib = 47 ~close
    backtest blue trendline

  17. gasman88 says:

    Hmm, if the old script is still in play then we should see new all time high in about …….. 5 trading days??
    Or is it different this time??

  18. Primary 4 not even close… you’ll see 2213 before we get to any Primary 4.
    Oversold indicators across 8 measures we look at are screaming to buy in fact….

    • lunker1 says:

      on what timeframe(s)?
      how about you share a couple so we’re not blindly following whoever “we” is?

    • lunker1 says:

      the same indicators that had you call Primary 4 in April?

      3x ETF Trader says:
      April 13, 2014 at 11:44 am
      Went back and looked over the bull cycle. I can make a surefire case of the following count
      1- 666-1221
      2- 1221-1010 (38% of 1)
      3- 1010-1897 (161% of 1, believe it or not)
      4- Underway… 38% retrace targets mid 1550’s (Retrace of 3 only)

      IF we work backwards from 1897 we can probably estimate some pivot points

  19. berniebaruch says:

    Fed had to rally market with Obama speaking at Northwestern today on the economy. Rather watch a dog fart.

  20. Exited longs in SPY 200 oct 10 calls at 5.82 for +28% (I botched not unloading at least partial position around the low when they were up 50%, pure greed on my part) and will wait for the short term time frames to work off the oversold conditions. It might not take long. Buy signal just issued on 60 min SPY. We could see a move up to 195-196 that could be reshorted


  21. don’t get too comfort being long for too long ….. watch for this dead cat bounce rally to be reject at the 1956 SPX pivot as we rally in abc fashion for the NFP data tomorrow

    • You may never see 1950 top could already be in and now its time for the boom shalaka laka boom 1910

    • reddragonleo says:

      Totally agree. If they rally up to 1956 by the close today it’s another shorting opportunity in my opinion. The first powerful bounce from any oversold market rarely sticks. It usually is done by SkyNet to squeeze out some bears and trap some bulls. Another “capitulation” move down should follow… which should break the 1905 low slightly before a real bottom appears.

      • gasman88 says:

        imho it can go either way. how many times did the market look vulnerable for a pullback only to get ‘stick saved’ at the most unexpected moment.
        The wild card maybe employment report tomorrow

  22. sibyn says:

    Now 1937,5>1959,3

  23. John B says:

    One possible idea on gold is the down move from ATH is ending with a triangle,A at 1192 July 2013,B at 1420 Aug 3013, etc and busy with E .atm

  24. mjtplayer says:

    Nice 14pt intra-day rally in the SPX, looks like 1,926 = minute a of minor C, currently rallying in minute b?

    Looking for a lower low for minute c of minor C to complete int a, but with hourly -div and closer to the 1,901 pivot range.

  25. gasman88 says:

    Looks like 125 day ma is being defended. This is where the bears were getting killed each time since 2012. Many sectors are way oversold to generate a bounce. Quite possibly the bounce is starting now.

  26. oneandonlyuniverse says:

    Hey Tony,
    Your site is a nice place and there is some good info.
    This will be fun to watch – I think the p4 scenario down 15-20
    has zero shot – we are currently $spx 1937 . It might start from 120-140 pts higher but
    here no way.

    • lunker1 says:

      and why One?
      it would kinda help to know why

      • oneandonlyuniverse says:

        lowest net long exposure hedgies in 14 mos w/ highest protection ratio since oct 98
        Had an event ebola and quite a few hedgies lost billions on fnma
        p/c highest since aug lows
        dsi @15
        no euphoria ( real corrections dont start with all these in place)
        Negativity is off the chart
        the energy space is the only serious pullback in s&p group
        Hedgies will be forced into owning due to under exposure
        i been doing this for 30 yrs and ran over 1 billion bucks / but that is just a sidenote.

        Now fire away and tell me why 15-20% correction will happen ?

        If you would like to place a side bet of 10,50, 100k , i will be happy to do that with you.

      • lunker1 says:

        one, lose the tude and just talk shop. thx for the real answers beyond the original “no way” which is no help

      • oneandonlyuniverse says:

        tell me why it will happen…i just expressed to you why it wont.
        there is no tude, i happen to talk to a lot of smart people on desk, prime brokers,hedgies.
        Fire away and tell me why it is going to happen 15-20 %

    • spr qome says:

      oneandonlyuniverse – QE3 ending? Is it different this time?

  27. Tony!
    Thank you for printing out the ED formation in Dow today!


  28. how high do you guys think we bounce before move towards 1900?

  29. Lee X says:

    Hey RC
    About $33 lower from today’s low with the normal short taint rippers in between

  30. rabbittrader1 says:

    Modifying my forecast of last night: Wave A down (and CYCLE), experiencing some shrinkage. Therefore bottom of wave A should occur October 9 at about 1880. Top of B wave up should occur about Oct. 16th (to possibly as late as the following Monday) at 1960 (approx Bottom of C wave down expected Nov. 26th to Dec 5th at approx. 1640 IMVHO

    • reddragonleo says:

      Now you’re making a lot of sense on your dates (don’t know about the targets though?). I say that because it’s very common to put in a low on the Thursday or Friday the week prior to the monthly option expiration week. So bottoming next Thursday the 9th (or Friday the 10th) lines up with that nicely.

      Then a rally into the third week of October as that’s the monthly option expiration week and it’s bullish I’d estimate 80% of the time. The market maker manipulate it up so they don’t have to pay out the “put” holders on all the various ETF’s. It’s common for them to “pin” the SPY, QQQ, IWM, DIA, etc… at a level where the most puts expire worthless.

      There is a massive about of puts expiring October 17th at the strike price of 190 (590,000 open interest) and 195 (302,000), which I don’t think they want to pay out on. I’d guess they will make sure the market is above 195 SPY by that Friday when they expire.

  31. oneandonlyuniverse says:

    8 billion dollar mutual fund down 9.6% in one day
    a little to much fnma/pref

    Fairholme (FAIRX)  Watchlist
    36.34 Down 3.86(9.60%) Oct 1

  32. astrofibo says:

    SP500 Update…Next Minor Low…

  33. pooch77 says:

    Tony 90/10?

  34. sibyn says:

    1931>1950 now

  35. thecustomer14 says:

    Minimum target met:

    September 25, 2014 at 2:36 pm
    thecustomer14 says:

    “Since the bull market began back in March 2009, there have been 15 instances where the weekly RSI 5 started above 70 and then fell below 50 before bottoming. This is the 15th such instance. In the 14 prior instances, the minimum % decline was 4.3% and the average decline was 8.1%. A 4.3% decline from SPX 2019 would be SPX 1932 and an 8.1% decline would be SPX 1855.”

    Still looking for the 1901 pivot before the end of next week, then an Int b retrace of 50%+.

  36. We are pretty oversold I am looking to cover some shorts now or after one more dip to around SPX 1925.

  37. Caldaro if P$ is confirmed how long do you think it takes to play out?

  38. mjtplayer says:

    Selling TWM here, it’s been a great ride; I’ll take my $7+ in gains and run. The R2K behaved well yesterday, on a relative basis, and is doing so again today. Short-term, small caps are very oversold and lead us lower, they appear to be leading in the bottoming process as well. Will re-load on the TWM after the R2K bounces, perhaps up to the 1,120 – 1,130 area: .382 to .50 retrace range.

    It might be a bit early, but I’d rather be a bit early than a bit late 🙂

  39. oneandonlyuniverse says:

    Hey unc just purchased last 1/3 avg 107.96…also put on tna at 60.68- for 63.80
    bots love trading 88 mil into a valley…good luck

    • uncle10 says:

      hey one thanks for the update. I joined u at 107.5. so u got a stop just in case? thx

      • oneandonlyuniverse says:

        from these levels – not using stop- when its time to go …88 mil shrs bottomed this thing
        on last 3 shots.. i wuld send u a chart , but u probably would not understand

      • uncle10 says:

        haha good one. u mean I may interpret it different? 😉
        Thanks for sharing one. I enjoy your posts.
        I got out but am leaning your way towards a better buy than short. gl

      • oneandonlyuniverse says:

        we def trade a diff style…ng nice trade. i could not pull the short trigger on tues- thurs inj
        days are a spin of the wheel

      • uncle10 says:

        yes everyone has their own style. I try to take and learn what I can from other people that is y I was/am asking how you were playing it. thx. so far so good on nat gas. I like the way it broke up and then stalled and started down. good low risk nice reward spot to take a shot. my copper short looking pretty good. Its been hanging around 3 for a loooong time.

      • oneandonlyuniverse says:

        hey unc
        just scaled /sold 1/3 of each

  40. berniebaruch says:

    Do the shorts have enough juice to convincingly bust through the 120 DMA around 1942 or are we going to have to wait for awhile?

  41. xscaler92646 says:

    I trade cycles, using ew as a “back of mind” reference to make sure I’m aware of everything going on. That said,

  42. @Tony,

    Can you please give me tgt for Crude oil

    It is in wave ‘C’ as per your weekly charts

    pls :)))

  43. Next batter up is the 1929 Pivot (+/-4pts)

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