tuesday update

SHORT TERM: gap up opening, DOW -6

Overnight the Asian markets lost 1.0%. Europe opened lower but gained 0.2%. US index futures were higher overnight, and the market gapped up to SPX 1883 at the open. The SPX had closed at 1875 yesterday. In the opening minutes the SPX hit 1890, then dropped to 1876 by 10am. After that it went into rally mode. The SPX then made a choppy move to 1899 by noon: 1885-1878-1890-1885-1899. Then the SPX reversed and started to pullback. At 12:30 it hit SPX 1889, bounced to 1895 just past 1pm, then made a slightly lower low for the downtrend at SPX 1872 just before 3:30. Then the market rallied to SPX 1883 before pulling back to 1878 to end the day.

For the day the SPX/DOW were mixed, and the NDX/NAZ were +0.20%. Bonds gained 11 ticks, Crude dropped $3.85, Gold gained $1, and the USD was higher. Medium term support remains at the 1869 and 1841 pivots, with resistance at the 1901 and 1929 pivots. Tomorrow: Retail sales, the PPI and the NY FED at 8:30, Business inventories at 10am, then the FED’s beige book at 2pm.

The market gapped up at the open today, rallied to SPX 1890, pulled back to 1876, then rallied to 1899. then it did its recently normal afternoon selloff, making a new downtrend low at SPX 1872 by two points. During this mornings rally we posted a tentative Major A green label at the lows. We observed, and posted in the comments last night, that the market was about oversold as it had been during every downtrend of Primary III, and two of the three downtrends of Primary II. Despite the volatile action again today, which should continue throughout Primary IV, the technicals did not display any signs of a further breakdown. Should the SPX lose the 1869 pivot (1862-1876), however, then Major wave A is likely extending. For now we think the OEW 1869 pivot should hold. Short term support is at the 1869 and 1841 pivots, with resistance a the 1901 and 1929 pivots. Short term momentum displays a positive divergence at this afternoon’s low. Best to your trading the Beige book!

MEDIUM TERM: Major A downtrend may be bottoming

LONG TERM: bull market

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

About tony caldaro

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320 Responses to tuesday update

  1. CB says:

    some Bloomberg blurb now about yellen “expressing confidence in expansion” ..in a meeting last week…corrrect me if not exactly the same wording…

    • va89blog says:

      Bernanke was on the tube in June 2008 expressing confidence the economy was on pace to grow north of 2.5% that year. Little did he know we entered a recession six months earlier. Also, wouldn’t the markets crash if a central banker said things looked really bad?

      • perversionofthemean says:

        Central bankers and economists tend to extrapolate current trends. That’s why the future looks so rosy at a market top, and so bleak at a market bottom.

      • CB says:

        they tell you what they want to tell you when they want to tell you ; ) If they let the markets bleed for a couple of weeks and then she says ….(whatever) and the market goes up on that, that’s called central bank’s “credibility.” Bernanke,Greenspan, Yellen have always been very well-informed. Doesn;t mean they have to tell us all they know.
        If I run a public corporation and I claim not to have known what I am supposed to have known and bad things happen as a result, I can be charged will “willful ignorance” and be liable for the damages…but that doesn”t happen at the contral bank level..you can’t prove anything because things are pretty secret… so we can only speculateabout what they all knew in 2008 and how long they knew…it’s complicated, as always… ; )

  2. John B says:

    agreed A went more than enough now lets see a bear squeeze

  3. scottycj1 says:

    The low for the A wave will likely be on _______, thats the next CIT

  4. rabbittrader1 says:

    Well that will teach me to try to pick exact tops and bottoms. One must always give broader ranges and time frames.So I went long the SPX yesterday , (but not options or commodities ). So I KNOW there will be a B wave (paper losses until then ) soon. Any guesses yet on B wave top??

    • reddragonleo says:

      My estimated top is 202.45 SPY (about 2024.50 SPX)… which of course is against any B wave up theory. But SkyNet WILL NOT make it easy to pick the next important top.

      • reddragonleo says:

        Of course that could be the top for Primary Wave 5 up I guess? I have no time frame on that level but I do think it will be hit at some point in the future.

  5. Gary Lewis says:

    ring ring: “Hello, Mr. Smith? This is your broker. Can you please deposit $350,000 in your account by the end of the day to maintain your margin requirement? What? You don’t have any cash? Sorry, we cannot sell your stock, there are no buyers at the moment”

    • rabbittrader1 says:

      Gary, loved your little “joke” about selling into a bear market. Reminds me of the time I was long soybeans with a stop, but I could not get out because the market opened LIMIT DOWN for three days in a row!

    • CB says:

      lol…that’s commodities…equities are more “liquid” right?, so the broker will pay you at least a penny for your SPY

      • perversionofthemean says:

        This is why I don’t understand why traders trade SPY and not the ES. A stop on SPY is meaningless if your brokerage firm will only execute during regular trading hours. Thus, on 9/11/01, ES traders were successful sellers before SPY opened. SPY had to gap down in response. Stops got the open, at best.

      • CB says:

        yes, sometimes they are meaningless…you give someone else the power to rob you, basically….or they can rob you when you use margin also…if I remember correctly, Cramer suggests using stop-limit orders only to avoid getting filled at ridiculous levels

  6. sibyn says:

    Bull now 🙂 >1962

  7. alexhartley1 says:

    If we break 1814 then I think we crash straight down to 1738 for a Major A bottom in the next few days.

  8. Kisshu2 says:

    i see 3 waves down from today with 4 in progress 5th target 1796

  9. Hi Tony!

    The Ending Diagonal in Dow created a lot of damage today.
    At least it gives us a better idea of the ongoing wave count.
    The ED formation shall send Dow falling to the beginning of the A-wave of the formation
    In my view this point is october 2013, ie 14.800 in Dow
    What is your opinion on this?

    Best wishes Sverker

  10. uncle10 says:

    I have a bearish view here on GLD and GDXJ. Price levels that should provide resistance.
    nibbling here long gl

  11. lbhkinqa says:

    Tony, does P4 necessarily have to sub-divide?

  12. fishonhook says:

    What do you all think? DOes this this feel like the end of the up-trend more than a P4?
    Cant believe a bear like me is sitting here with almost no puts waiting for the B wave to reload. Dang that was foolish. At least I wasn’t long.
    In an up-trend you are either out on long. In a downtrend you are either flat or short.

    • blackjak100 says:

      If 1821 is a low and bounce 40-60 pts and then make a lower low, that would be a nice 5 waves down which is a first indication cycle wave b at 2019 complete….chris

      • rc1269 says:

        cycle wave b? assume you are in the camp that the entire rally from march 09 was one big bear mkt b wave? just confirming that’s what you mean. thx

      • blackjak100 says:

        RC, not in that camp since last year and didn’t mean to confuse things because I did. Scratch the cycle wave b comment. I’ll discuss more tonight and I’m just glad 1821 is holding for now.

      • chrisk44342 says:

        He he. I got that one BJ. I totally disagree with you on that front. Let’s just agree to disagree in terms of how far something can go before it’s no longer a B wave. I take it that if we make a new high from here you’ll be willing to concede that this was not a cycle B wave? I was willing to give the cycle B all the way to 1.382 at 1923. When you eclipse it by 100 SPX points that weakens your argument IMO

      • chrisk44342 says:

        One thing I will give the deflation crowd credit for, and it’s not anything technical. It’s that if the Fed is no longer buying, who’s there to buy? No POMO, no inflated stocks. I agree with this but it ignores the other fact. That P5 (yes, I know you favor cycle 2 instead) could be the Fed’s reaction to the very scary P4. If it’s big, it may also lend credence to TC’s potential extended 5th scenario.

    • Gary Lewis says:

      Me too, blew out of all the puts at the end of the day Monday and celebrated. Sure we could have made more, but you know, the market is there pretty much every day. I did some day trades yesterday and did nicely. Today, I’m just watching, waiting to start nibbling.

  13. H D says:

    what a hit! Was it really Sept 19 in 2008 too? Brings back some memories.

    • rc1269 says:

      what about 9/19/08?

      • H D says:

        fell off a cliff the next day! 9/19/14?

      • rc1269 says:

        ah. strange day to chose in comparison otherwise though, no? at that point we were far from the ATH and had complete breakdowns of support levels and weekly MAs. we were under the 50/100/200 weekly MAs at that point. today we’re still 300 spx points above the 200 week MA. so other than the coincidence of having some down-up-down over a few days i don’t really see any significant similarities,. what am i missing?

      • H D says:

        prolly nothing, I think they mess with us in very subtle silly ways. 20(19) on the 19th and look triggered a memory of the 19th in 2008. I’m numbers crazy, admittedly

      • rc1269 says:

        haha i like it. good stuff

  14. FiveStars says:

    Is this Capitulation?

  15. mjtplayer says:

    1,817 would be an exact “10% correction” – maybe that’s the headline CNBC needs to run to get the bulls excited? We rally from that area, everyone will be saying that we’ve finally had the long awaited correction and we’re off to new highs – that would make for a nice B wave, before major C down wipes-out the bulls and dip-buyers, putting in a real and meaningful capitulation low/bottom.

  16. gary61b says:

    spx 1817 looks like a good place to bounce,

  17. buddyglove says:

    Just shakin’ the trees…..

  18. rc1269 says:

    boy people are really starting to freak out about this ebola thing

    • alexhartley1 says:

      I think people should. In the UK airports are often closed around Christmas when we have a few snow storms (nothing like as bad as what you get on the east coast of the US). A one off would be fine but it continually happens. Therefore it terrifies me to imagine how badly the authorities will deal with an infectious disease of this magnitude when it hits and starts spreading.

    • cicelyalaska says:

      This one has the potential to be a game changer. We will know in the next few weeks. I suspect there are secret communications between the feds and drug makers to fast track vaccine testing and production.

      • alexhartley1 says:

        I’d imagine there have been many discussions between governments and drug companies. However it’s not that easy to simply develop a cure. Chucking money at the problem will definitely help but they’ve been working on this horrible virus for a long time already. Ebola being a virus like HIV and the common cold is not easily cured. Some people do survive but there is no 100% effective cure. Alongside that is the fact that governments are not set up to deal with a mass pandemic (this part to a certain extent is understandable – they’re too rare). If it gets out of control then…..

    • magnus1234 says:

      It is silly and stupidity to blame the fall in equites on Ebola. Im not ignorant on ebola but to relate todays fall on it is a media thing. Shame on them

    • rc1269 says:

      hmm.. has anybody here discussed this with any infectious disease experts? my wife is a physician who was worked in sierra lione, nigeria and liberia and other countries with MSF and oddlly enough she is not concerned about an ‘epidemic’ here in the states.
      it is tough to campare outbreaks in African countries with our own as they lack standards of practice around sick and dying people. multitudes more people will die from the flu this year than ebola but we’re not too scared about that.
      who knows, perhaps we’ll all discover there’s more to the story after the fact.

  19. Gary Lewis says:

    anyone puking yet?

    • 56rambler says:

      Thanks, Mr. Caldaro,

      Could this be capitulation? Another in a series of recent 90% down days.

      Also, you removed the tentative “Major A” label from yesterday – I’m unable to see what the count could be now … could you please enlighten? This “feels” impulsive – could we be looking at a 5 wave downtrend instead of the 3 that you expected?

      Thank you!

  20. gtoptions says:

    Thanks Tony
    SPY ~ IntC = IntA * 1.618 @ 182.41

  21. infantguru says:

    The stuff I was looking for, to assume the end of A is appearing on the horizon.
    The sell exhaustion in the form of candlesticks has cropped up on spy/spxl (inverted hammer).
    If we dont exceed the low of today then that should be the low for A.
    We can expect a rally toward the day and have the hammer formation on spx which is fine too.

    Indicators are oversold and my 183.x has been met.
    I have positioned bullishly for B.

  22. ariez5 says:

    Tony, How unusual would it be for a low to occur in a wave of this magnitude without an hourly RSI divergence? Thanks –

  23. CB says:

    any calculation, fib or otherwise, is just that until the Fed lady steps in..1814 for instance sounds possible, sure..We hit the 1814 low when the market was re-testing the Jan high. Now, like Lee mentioned earlier today, we spent approx 3 months this year trading that range 1840-1890 more or less…which brings up this question: how much supply is still there that the big boys want…we have 2 days to find out ..more or less..

  24. the hrly and daily RSI 5 are showing the same oversold conditions as GC did during it recent bottom at 1183

  25. thecustomer14 says:

    This decline is definitely “above average” now per this indicator I posted a few weeks back…

    thecustomer14 says:

    September 25, 2014 at 2:36 pm

    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.

    The big question we’re all trying to answer now is where and when does the B wave start?

  26. 7dayyss says:

    Since small caps lead on the way down, maybe foretelling a bounce up here shortly. Looks like we may be basing at 1050. Might make the move higher after OE. Friday afternoon, Monday higher?

  27. Kisshu2 says:

    1796 – 1814 looks like good fib 1814 is 23%

  28. FiveStars says:

    “A wise man once said; every downfall is another opportunity to get back up and fight.”

  29. perversionofthemean says:

    Regarding the ES best-guess-for-Major A…I’ll throw my (McDonald’s) hat into the ring: 1803 (roughly 1813 SPX when I eyeball it). Why? Because ES 1905 seems to be the geometric mean of 2013 and 1803, and 1905 was the clear line of demarcation with no overlap, once broken. Standard TA.
    That and a nickel will get you…

  30. H D says:

    I’m no seller today, looking up, so I’ll take a minute to discuss wave theory. Not being critical of other’s counts, just my observations for the sake of conversation. Irregular B waves at ATH’s have low probability of success, Maybe 50%. Not a big deal, actually acceptable. The real trouble is they put you buying the dip, the waterfall, the knife when the count is wrong. This is exactly what we want to avoid, the big mistakes. What it creates is an opportunity to accept the most dangerous count. For this reason, as expressed many times here, I do not use B waves at ATH’s.

  31. Gary Lewis says:

    Does the 1837 mark a Fibonnaci extension mark of 1.618?

  32. reddragonleo says:

    Rabbit the situation is worst then you expected it appears. Not likely a strong rally this week from the looks of things (small rally maybe?). I guess all those “put” options bought in the 190 and 195 strike prices back 3 weeks ago really was insiders after all.

    When I spotted it I was very suspicious of it being insiders but I’ve been so programmed to expect the market makers to manipulate the market to make them expire worthless that I ignored the writing on the wall. It very clear now that insiders bought those puts.

    • That is why the mega rich look down their nose at us. They take a 5 million account and with basic management clear a million or so a year and within 5 years daddy’s little darling is worth 20 million with no work no talent and professional help. The struggle is real.

  33. Jordi Güell says:

    Hi cycleanalysis. I’m just curious, if as you say major A ends today or tomorrow, when do you expect a top for major B?how many days will last?

  34. hi tony , my astro says we bottomed today or tomorrow for major a. major b starting next

  35. rc1269 says:

    closing the nibble long at 1860 for a quick 20 pts. not in the habit of giving my trade blotter but since i mentioned my entry i feel like i should mention the exit. europe meltdown has me on edge about major a being over just yet. cheers.

  36. llerias7 says:

    1850…the wave B lanch pad ?

  37. magnus1234 says:

    It seems like Locals/Bears are trying to test the stops. Wouldnt suprise me if we see ESZ4@1811 before we turn (=SPX 1818). Not much accumulated volume below 1830. That could make the Major A. That would be just below 61.8% of PII.

  38. ariez5 says:

    who thinks we test that low before the day is over?

    • blackjak100 says:

      Looking to test and break slightly tomorrow. Looks like we have 3 down and waiting for 3 up to complete today 1878-1887 (typical ED retracement) for wave ii of ED. GL and cheers!

  39. xela0 says:

    Assuming this was Maj. A of P4 (I do, and went long) what would be the expected target given the history of this bull so far? 50% retrace for B or even higher?

  40. mjtplayer says:

    OPEX Friday, heaviest open interest surrounding the 1,900 in the SPX and the adjacent strikes. Just saying, if this morning was some type is capitulation low (major A), then a rally from here could target the 1,900 +/- 10pts by Friday close. int a of major B?

  41. JK1987 says:

    Tony Thanks

    SPX down 9% at 1837.
    9% is a familiar correction number in the past.
    Is it possible that’s all for Primary IV?

  42. sopriscap says:

    Hi Tony,

    Not a regular poster but had a question for you if don’t mind.

    Given the oversold readings etc, and shift in sentiment shown through options for example is it possible that P4 could be a triangle? This being the sharpest leg. Thanks.

  43. John B says:

    worst case been hit more or less,,kinda thought it very unlikely a cuppla days ago lol

  44. amazing 141 pts (near 144 fib) from inter b……bots playing fibonacci

  45. JK1987 says:

    Apparent Major A, or that’s all for Primary IV?

    Anybody all in at 1837.22, or close to the panic bottom? 🙂

  46. gasman88 says:

    Reversal day? Looks like A has completed

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