wednesday update

SHORT TERM: gap down opening then volatility, DOW -173

Overnight the Asian markets actually gained 0.4%. Europe opened lower and lost 3.1%. US index futures were sharply lower overnight. At 8:30 Retail sales were reported lower: -0.3% v +0.6%, the NY FED reported lower: 6.2 v 27.5, and the PPI was lower: -0.1% v 0.0%. The market gapped down at the opening to SPX 1856, and continued down to 1837 in the opening minutes. After that it rallied to SPX 1867 by 10am. At 10am Business inventories were reported higher: +0.2% v +0.4%. The market then pulled back to SPX 1851 by 10:30, rallied to 1862 by 11am, and then headed lower again. At 11am the Treasury reported another surplus: +$105.8bn v +$75.1bn. Then the market dropped to the low of the day at SPX 1821 by 1:30. The market then rallied to SPX 1835 just before 2pm, dipped to 1826 at 2pm, and then rallied higher after the FED’s Beige book was released: Just before 3pm the SPX hit 1855, pulled by to 1843 by 3:30, then rallied to 1869 during the last half hour. This was followed by a pullback to SPX 1860 then a bounce to close at 1862.

For the day the SPX/DOW were -0.95%, and the NDX/NAZ were -0.45%. Bonds rallied 25 ticks after being up nearly 90 ticks, Crude lost 25 cents, Gold added $5, and the USD was lower. Medium term support drops to the 1841 and 1828 pivots, with resistance at the 1869 and 1901 pivots. Tomorrow: weekly Jobless claims at 8:30, Industrial production at 9:15 (est. +0.5%), then the Philly FED and the NAHB at 10am.

The market gapped down at the open today, breaking through the OEW 1869 pivot, forcing us to remove that tentative green Major A label. After a drop to SPX 1837, the OEW 1841 pivot, the market rallied to 1867, the OEW 1869 pivot. The next series of declines took the SPX to 1821, the OEW 1828 pivot, which was followed by a strong counter rally back to SPX 1869, the 1869 pivot. This certainly was a wild day, which became even wilder after the Beige book was released. Kind of reminds me of the market’s reaction to the FOMC minutes last Wednesday.

Technically this was the most volatile day we have seen since 2011. Also at the lows the SPX was down 9.01% for the largest correction since mid-2012. While this afternoon’s rally was encouraging, five waves up to SPX 1869, we are not convinced of a Major wave A low at SPX 1821 just yet. There was a lot of damage done today to the technicals we are tracking. However, if the market can make it to the 1901 pivot again the downtrend low may be in. Short term support is at the 1841 and 1828 pivots, with resistance at the 1869 and 1901 pivots. Short term momentum rose to just above neutral from extremely oversold. Best to your trading this volatile market!

MEDIUM TERM: Major A downtrend

LONG TERM: bull market but Primary IV underway


About tony caldaro

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266 Responses to wednesday update

  1. kvilia says:

    Irrational exuberance – that is what I stand by. However this has nothing to do with where market goes. Not stupid any more and really listening to what Tony has to say. Yes, I’ve been following this board for 3 years now and lost my savings just because I was bearish. I’ve been fighting Tony, Fed, and the whole world. I am still bearish long term but that has to happen at some point, or as Tony says after Major 5 is done.
    To summarize, I’m trying to make sense of Major 4, and so far I’ve been deciphering Tony’s probabilities quite well. Long for B up, already up 5% on DXRLX and looking forward to close soon – B is not the one to make money. I am waiting for C. Made 15% on A, now thinking to repeat it on C if I time it right. One more time – in the past I would win some and lose more. Just by being here, learning from Tony’s updates, and finally accepting the fact that chart lines and technicals on their own mean nothing (Hey, just ask Buddy to show the chart he was flashing 4 days ago and trying to go long), I made 20% during the last month or so. Tell that to the fund managers.

  2. DJ-30 is boring me to tears with this pathetic little 276 point range … though I do see buyers. Everywhere.

  3. gary61b says:

    Tony, on the 60 minute charts history beyond what u show, what is the % of major waves showing deviation(+/-) before they reverse direction? Thanks Tony

  4. mrgreen2010 says:

    GPRO long set-up. Option chain looks favorable to 80… taking stab at calls.

  5. Might I suggest an alternate count.
    From the Sept 18 high the SPX has done and A B 1 2 3 and it is doing a small wave 4 now…
    Just my 2 cents worth…

  6. lunker1 says:

    1876-21=1855 hit 1856.87
    double zz down
    13 up is 1870
    21 up is 1878 = gap fill

  7. reddragonleo says:

    SPY 60 minute chart with volume marked indicates another lower low coming soon:

  8. QE from Average Joe’s point of view

  9. johnnymagicmoney says:

    hey lunk I am confused…………………first you say 1883, then you say the top of the pivot is 1876, then you say major A is done ……….do you think there is another wave down before A is done or A is done and we head higher here into B

    • lunker1 says:

      1876 and 1883 are simply calc numbers I’m watching. 1876 had double importance as noted below. per post on my blog the Dow forks seem to indicate the down move is done (major A) and now I’m watching for a possible nested 1,2’s from 1921 and might be in w2 of 3 now. feel free to comment on my blog so not clogging up Tony’s. thx.

  10. lunker1 says:

    these links are driving me crazy
    it cannot be this hard to cut and paste! lol

    • H D says:

      I don’t think u have enough data points for either fork but that 55 point rally to 1976 pivot max is dead on (B). That’s the bullish above bearish below.

      • lunker1 says:

        the red set has a perfect 4 points. the first 3 were drawn at least 3 days ago and are textbook. high, low, higher high and then the 4th touch hit perfectly on the lower red. it doesn’t get any better than that. so INDU has completed the move of the red set and has since bounced. the green set is drawn again with textbook 3 point low, high and lower low. now need to see what price does at the lines.

    • Lunk,
      I must be doing something wrong. I cant see the chart? Thanks

    • Used my other computer and it worked perfectly. Our compliance software blocked it. LOL. Thanks

  11. blackjak100 says:

    I have wave IV complete at 1876 as a DZZ if my count is correct – checked 5 min chart, but that doesn’t mean anything. Need to see confirmation now.

  12. johnnymagicmoney says:

    yeah look at RUT’s lows Monday through Wens 4 tests and basically held breaking out short term now and extremely strong on a relative basis to the majors ……………..that does seem telling for a B start ………………maybe one more flush and one more test (which would probably bring SPY to new lows if it did) …………..who knows

  13. kvilia says:

    What drop? Missed by a day but still second day up on RUT. Even XIV is right where I bough it day before yesterday. Ready for a bounce. BTW, have been following RUT for a couple of years – almost as a rule it leads the change of direction before general market turn around.
    A lot of happy campers here – will never get tired of saying “Thank you, Tony.”

  14. johnnymagicmoney says:

    got greedy…….. once it sold off again put in another long just sold out again with a 20 handle on spx – just sold …………… hey dick trader that’s what professionals do

  15. mrgreen2010 says:

    And we are green…put writers(banks) never lose. 1900 spx by friday and da boyz job will be complete. Added DEC CMG puts ..earnings Monday, a small side bet on the weekly MACD & Stoch sell signal.

  16. Big Ups trigger on the _________ index and the _________ index. Gimme $5 lol 😉

    $RUT & $TRAN

  17. lunker1 says:

    1821+55=1876=top of pivot

  18. buddyglove says:

    Europe struggles cos ECB is so far behind the Curve, it’s about Draghi grew a pair and unleashed some of the old QE magic fairy dust.

    • rc1269 says:

      Europe struggles because they’re experiencing the natural fluctuation in economic cycles, presently in the contraction stage. QE is a horrible invention that embodies hubris and selfishness. hubris that we think we can (and should try to) control with the printing of money human nature and the cycles of fear and optimism. selfishness because it is designed merely to benefit the today with no serious consideration given to the effects on future generations. anybody who tells you the benefits last any longer than a short few years i think is either lying to you or doesn’t understand how it’s meant to work. just witness the corporate share buyback phenomenon in lieu of job creation; financial wealth based on money printing just pours back into the same hands.
      by design QE pulls forward asset returns. the world can only generate a certain long-term average economic growth and return (population x productivity), and every period of above trend returns must and will be offset with a period of below trend returns. inflating financial asset values during a time of otherwise deflationary psyche has merely taken away potential asset returns from future generations.
      everyone hates the great depression, but the one thing it did do is re-calibrate wealth relative to income. the ratio of wealth to disposable income typically balloons before periods of strife (like the roaring 20s, prior to the depression), and the resulting market depressions serve to recalibrate that. rather than allow that natural course to take place this time around, we instead bolstered financial assets in a manner that only served to widen the wealth/income ratio at precisely a time when the natural course would have lessened it.
      population growth and productivity improvements are the only long term drivers of economic growth. everything else is a temporal shell game
      all merely my personal opinion, of course.

      • buddyglove says:

        Thnx RC, everything you wrote is interesting and makes sense….but i would still be happier if my European investments went higher 😉

      • tony caldaro says:

        Thanks RC
        Personally I prefer QE to food lines at the local shelter.
        Depressions, imo, should be avoided at all costs.
        QE has not only softened the great recession but kept us out of a depression.
        We will likely pay for this activity with some sort of hyper-inflation in the 2030’s.
        But since the FED started up 100 years ago the USD has depreciated by nearly 99%, and still people are far better off than they were in the ‘reset’ 1930’s.

      • va89blog says:

        I think soup kitchens have been replaced by food stamps/EBT cards. Instead of helping locally like in the ’30s, this aid has been nationalized. Whether it’s better or not is up to the individual to decide.

      • rc1269 says:

        I do appreciate your sentiment Tony, and I’m certainly not advocating food lines. I do think, however, that QE 1 + all the bailouts probably was sufficient to stop the downward spiral in asset prices. Everything after that, however, started to seem like the wrong antidote for what ails us and I question the tradeoffs.

  19. rc1269 says:

    1866-69: fourth time’s the charm?

  20. perversionofthemean says:

    VXX looks ready to dump. Snap-back to the breakdown point appears complete.

  21. sibyn says:

    SPX right now 1856,5.Short term CH 1865,5>1844,5>1900. +2,04%close today

    • reddragonleo says:

      Which cup and handle pattern are you referring to? The one that includes yesterday as the cup and today as the handle is a 40 point “top of cup to bottom of cup”, which projects 40 point up from around 1860 area.

      The smaller cup and handle from today looks to be about a 25 point swing from the cup low to high, so that implies about 25 points up from the top of the cup, or about 1890 with the top cup around 1865. Is that what you see or did I miss something?

      P.S. The ascending triangle chart I posted shows both the larger and smaller CH inside them.

  22. johnnymagicmoney says:

    hmmm traderdicks maybe your name should be dicktrader – do you have dislexia?

  23. H D says:

    Hey Tony, Nice pivot! 1869 she’s tuff

  24. blackjak100 says:

    Breadth extremely good again but doesn’t suggest market moves up. However, suggests a bottoming process could be in progress.

    • Ryan Parker says:

      The Russell 2000 is already having its best rally since August at 44 points. If it can clear 1084 it looks like some kind of a bottom is in there. See 1873-1878 as key for SPX. 1873 is 52 points from 1821 bottom and 1878 is 38% retrace of 1970-1821 + gap from Tuesday’s close. Small caps have been outperforming this week by a large margin which I would attribute to the fact that they have been pummeled since the beginning of Q3 while the big caps didn’t start heading south until less than a month ago.

      • mjtplayer says:

        Small-caps lead the way down in major A, now leading the way up in major B; they should top-out well before the broader averages and turn back down, leading us lower in Major C.

        Looking to re-load on TWM around low-mid $48’s – which is IWM around $110.

        Another nice short set-up is biotech via IBB. Held-up well during the first leg down, but the uptrend since April has been broken, now bouncing to back-test that uptrend line, which lies around $265 – $270. 2x short BIS is the mid $12’s is my buy target

      • blackjak100 says:

        Agreed 1873-1878 is key for $SPX and I think 1876 completed DZZ from 1821. So far it’s struggling in the area and I dumped some of my longs from 1830ish at 1874 and added to my short. I’m trying to limit the losses in some of my underwater trades right now.

        I don’t follow R2K hardly at all so I can’t speak much on it other than it seems to be basing. Still need to see selling in the last hour to confirm. GL and cheers!

  25. johnnymagicmoney says:

    35 winning trades 13 losing trades in last two months with help of this site. As I told Tony all of you paid for my wedding and then some. Thanks everybody. Very grateful!! I am kickin butt with all of your help. I went long this morning and just sold when SPY went positive for a brief moment ………….can’t tell if we will have one more flush or two or if we are on the verge of B …………………….anyone????? Its like flipping a coin at this point

  26. ariez5 says:

    TAN Big Up

  27. lunker1 says:

    1862 bottom pivot resistance?

  28. berniebaruch says:

    My oatmeal was lumpy today. DAMN.

  29. mjtplayer says:

    Time for a small rant – why in the hell are we still allowing commercial flights in and out of these Ebola risk countries???????? These countries should be under QUARANTINE and military order if anyone were to take this serious enough, never mind commercial flights in and out, it’s just nuts! Are these politicians taking this seriously or what? That question is directed straight towards Obama, he has the power to stop flights right now, immediately.

    To think non-medical trained NSA or security individuals can spot and stop entry with a thermometer is just insane, like catching water with a strainer, this is a complete joke. Is the CDC or gov’t capable of doing anything right? This has been botched from day one and continues to be a clown show. This is a deadly plague that kills 50% of people it infects within weeks, not the flu. I can’t believe how incompetent the gov’t is, I prey to god this doesn’t spread and take the lives of others.

    I’ll get off the soapbox now….

    • mrgreen2010 says:

      I agree…its the we cant close our borders cumbaya crowd in charge of our govmint…f..n morons

    • So they can blame the market correction on ebola …… ebola = fear = slow growth

    • purplember says:

      MJT quite simply we elected incompetence. not to speak of the corruption, lies and coverups as well.

    • cicelyalaska says:

      I totally agree that the lack of travel restrictions and laughable health checks are bewildering. Direct travel from the three hot spot countries should be banned and anyone who answers that they have been in those countries in the past 21 days should be quarantined. The CDC is playing a numbers game here and assuming that Ebola is not very infectious and those who bring it will not spread it. They are mostly correct, however what has happened so far in the US shows how all the wrong steps can be taken. I’m sure that never in their wildest dreams could a nurse have traveled so freely after knowingly been exposed. If another case pops up in Ohio, all bets are off, this is far easily spreadable than they know and they do not understand this virus. Statistically though, get your flu shot to keep from dying this year.

    • rc1269 says:

      We can’t fly to Cuba but we can fly to Liberia and Sierra Lione. gubment, they’s smart

    • syedsma says:

      What would we do if one of our family members (US Citizen, of course), traveling on a business trip to one of those countries with Ebola? Would we be looking for ways to bring them back and get them the best treatment in the world? Or would we be saying “Hey family member, we don’t own you. Rather you should be left in that country to die”?

      • mjtplayer says:

        They shouldn’t be traveling to those countries in the first place, period. Only medical necessary personal & military; no commercial travel for business or leisure.

  30. magnus1234 says:

    Market internal, advance.decliners, have miproved from -2000 to now possitive 100 within 1h30m. Bears squaring?

  31. scorp100 says:

    Namaste Tony. Are you watching shippers? Turnaround or oversold bounce?

  32. rc1269 says:

    why do the people who run our economy have to be so annoying and/or clueless. Bullard blames “the market” for Europe’s woes. comical. as if Europeans had nothing to do with their own economic fate. i’m sure the “subprime crisis is contained” as well. just brilliant
    And then in the same breath he says “US economic fundamentals remain strong” and that “the Fed should consider delaying the end of QE.” really man? where do they find these people. just say what you mean for once, “we don’t like how stocks have sold off more than 2% so maybe we should pump some more meaningless money into the system.”
    drives me nuts that they think we’re all so dumb. of course, most of us are, but still…

  33. mrgreen2010 says:

    USD/JPY hanging tough at 50DMA supportive of market not falling out of bed so far….IWM net positive. Looking at FB and AAPL about to break down current levels. Looking to add AZO, CMG, V, and GILD longer term puts not see much upside for them. Closed NFLX puts…LION, TIGERS AND BEARS OH MY!

  34. lunker1 says:

    20 pts in 2 min?!
    someone enter too many zeros?

    1869-34=1935 low

  35. FiveStars says:

    I am very certain markets will close Green today.

  36. rc1269 says:

    Bullard to the rescue
    “Fed should consider delay in ending QE”

  37. selhai says:

    I wouldn’t normally post this, but BBC just reported a possible Ebola case in Connecticut.

  38. uncle10 says:

    what a market. I bought like everyone else in the world at the open. out now. gl and be careful out there.

    • rc1269 says:

      yeah it’s time to change the playbook when the trade that has worked 97% of the time doesn’t seem to be working at the moment. go flat and re-assess. i’m with ya.

  39. magnus1234 says:

    10 before 10 “Classic Ben Lichtenstein saying”.

    Meaning 10 Big Car (SP500 futures) handles before 10am

  40. Ryan Parker says:

    My thoughts here:
    A= 2019-1926= 93
    B= 1926-1978= 52
    C as follows
    1= 1978-1925=53
    2= 1925-1970=45
    3= 1970-1821= 149
    4= 1821-1873 or 1878 (52-57 points, 1878 would be 38% retrace of 1978-1821 and close the gap down from yesterday)
    5= wave 1 @ 1785

    Of course this depends on whether the market can bounce from here into tomorrow. Would provide alternation for waves 2 and 4 of C.

  41. mjtplayer says:

    Yesterday’s low at 1,820 = major A? (5 minor waves down from int b high?)
    Yesterday afternoon rally to 1,870 = minor A? (50 points)
    Now pulling back in minor B? 1,840 area is .618 retrace

    Just a thought…

    • blackjak100 says:

      Or a triangle where we roll over from 1850-1855 and bottom at 1830ish for wave b of triangle. Just something to watch for at 1850-1855.

  42. fionamargaret says:

    ….pretty bleak talk about periphery bonds in Europe this morning – yes, we have seen this movie before…

    …be careful…x

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