friday update

SHORT TERM: gap up opening, DOW +195

Overnight the Asian markets gained 2.8%. Europe opened higher and gained 1.9%. US index futures were sharply higher overnight. At 8:30 the PCE was reported higher: +0.1% v +0.1%, Personal income was reported higher: +0.2% v +0.3%, but spending was lower: -0.2% v +0.5%. The market gapped up at the open to SPX 2011. It had closed at SPX 1995 yesterday. Within the opening minutes it rose to SPX 2014, then dipped to 2009 just past 10am, before moving higher. At 9:45 the Chicago PMI was reported higher: 66.2 v 60.5. Then at 10am Consumer sentiment was also reported higher: 86.9 v 86.4. By 11:30 the SPX hit 2017. After a pull back to SPX 2011 by 3:30, it then rallied to 2018 to end the day.

For the day the SPX/DOW were +1.15%, and the NDX/NAZ were +1.40%. Bonds lost 8 ticks, Crude dropped 40 cents, Gold fell $25, and the USD was higher. Medium term support remains at the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots. Last night the FED reported a decline in the Monetary base: $3.976tn v $4.114tn. Today the WLEI was reported lower again: 48.8% v 49.9%.

Markets rallied overnight on a surprise increase in the monetary expansion by the Bank of Japan. The US market gapped up to SPX 2011, bounced around a bit, and then moved higher. The current uptrend has now gone 12 days of higher lows and equal/higher highs. Quite surprising considering we thought the probabilities suggested this to be a Major B wave rally of an ongoing Primary IV. We were obviously wrong as Primary III appears to be extending yet again. We spent most of the day attempting to unravel how the recent market action fits within the context of the overall bull market. We will report our findings in the weekend update.

Despite what appeared to be a highly probable setup for Primary IV. For the second year in a row it has eluded us again. We thought Primary III had topped around this time last year as well. The market extended higher then, and extended higher again this time as well. By the tone of some of the recent comments on the blog, there appears to be a misunderstanding on how to use the information we provide. We will be posting some general guidelines to hopefully prevent these misunderstandings from occurring in the future. For now, we can just say that we only trade, not day trade, what we post, and lost money during this unexpected rally beyond the OEW 1973 pivot. Also, keep in mind we are dealing with probabilities, not guarantees. The information we provide is not to be considered trading recommendations. We are just tracking the markets as they unfold. More on this over the weekend. Best to your weekend!

MEDIUM TERM: uptrend continues

LONG TERM: bull market


About tony caldaro

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214 Responses to friday update

  1. My system aligned with Tony on the way down of potential P4, and I exited quickly. Where I differed was how fast I realized the correction was over. It was clear to me early on, and I got long, increasing on the way up. It seems OEW sticks with a scenario for too much time, which can be fatal for traders (hope is not a strategy). Either that or OEW calls the pivots too quickly. My own opinion is that OEW is calling the Pivots too soon. Tony jumped the gun on P4 even before the early August low was taken out. This is not OEW, but was influenced by his thinking on other matters. If OEW is not for day trading or quick swing trading, then it makes no sense to be early on Pivot calls. My advice is to slow down the calls. People may object, but if OEW is valid, getting the call right is more important than when the correct call is made.


  2. I am not an elliotician like many here, just have a basic understanding of it. I believe P3 could travel to 1.618 of P1 and maybe more. I don’t know and will only know when when price shows me P3 is done. But lets say P3 trades 1.618 of P1 this puts the SPX at 2213.5 to end P3. However, I use EW as a road map for possible price action and don’t believe price has to follow the count, because price will do the exact opposite of what you think. The last twos weeks has been a good example of why trying to pick a top can hurt ones trading account when not using a stop. Here is a count I currently have for the spx, may or may not workout??? but will use a stop to show me when I am wrong and not at max pain. I look at fractals too and the spx seems to be on a similar path gold traded 2008-2011. This fractal suggests the spx could go strait up and trade 2200 rather quickly, similar to July & August 2011 where gold made a blow off top. The question I have, could the spx experience a similar blow off top November & December 2014 to end P3? Gold 2008-2011 to SPX 2011-2014 possible fractal.


  3. cmucha68 says:

    I agree, everyone must take responsibility in his own hands. When trading options or futures you can be burned many times and get whipsawed already within small times frames like major or minute waves. 30-40 points in spx can burn a big hole into your position or account if not attentive. That has nothing to do with an opinion of Tony or whomever. More important is the entire discussion about this recent movements and where we are. People are still divided whether we move up a lot from here or if this huge and fast run has lost steam and we are heading back south.

    Some say now that P5 just had begun. If this EW/OEW ever made sense then P3 had ended at 2019 last time and P4 had ended at 1820 and since then P5 is underway. That means P5 is already 200 points old !!!

    If the high in spx will be exceeded by 1 point then P3 has never ended and if not P4 has never ended ?? Makes no sense at all.

    I remember last time after P3 high 2019 was hit and market turn down. Someone asked Tony at around 1940 if we are in P4 now. He’s said “probably or looks like” etc, something like that. At around 1901 pivot someone asked again Tony if this is now P4 and he said something like ” will be confirmed when 1901 pivot is broken”. Then it happened, prices went even lower and immediately he came up with targets of areas like 1680 and so on. He wrote: “yes it can go that low and even more”. Then market turned around and the mysterious B wave discussion started with a lot of statements from people that “this is typical for B waves to move that high on order to fool everybody” and such nonsense. Only a few people have been skeptical early on after market moved way above 1900 to 1940 and pointed to the possibility that 1820 was the absolute low. But no. The stubborn and ignorant people said big C wave is coming and who is not short is a fool and will be burned. And not the smallest assumption or hint from Tony that off the low of 1820 P4 could have ended. No, instead P4 is not less than 15-20% at minimum. And now here we are at 2018 and only now, after 200 points he is considering that P3 may exceed.

    That’s where I agree with people who argue in such a way counting makes no sense. This is not about making fun of someone. It’s a serious business and it can destroy life’s. New traders (newbies) looking up her for guidance can be mislead.

    If at every new pivot your were looking for short entry and got stopped out every time but still were hoping for the big C to start because Tony (“a nasty C wave should unfold “latest after B wave finished at 1973 pivot) and others strongly suggested it (rabbit and co. “believe me, I’m sure, you must be short, we will go down hard, I know it etc.) then you have been mislead. For old chaps around no problem. For newbies a disaster. And never any early warning that there maybe never a C wave coming. Again only very few considered low was in already when price was at 1950 and new all time highs are on the horizon.

    And I asked rabbittrader: “if 1962 was your turning point and 1970 did not matter to you what would you say at 2020 ?? Now he says he has also some long positions and bla bla. What’s getting on my nerves is when people are not objective and flexible and ready to admit they might be wrong. Instead still holding on and defending an opinion whereas the real situation had changed and gone already.

    So I have always criticized how people state something. This and that must happen definitely and throwing out numbers without sense at all, like from this date to that date prices will hit exactly that level and then afterward prices will go to that level and so on with full conviction. But when criticized about their view they say afterwards they have no crystal ball.

    The same now in the upside: some people say prices will go to 2200 and 2400 in that and that time. And if not ??

    My view is to look always for the next 30-40 points, especially if you are trading options and futures within a trend. There plenty of Opportunities long and short. No need to stick only to one direction. There will be big moves and counter rallies. Just being flexible and attentive. And to say something good to my favorite all time rival Lunker: his calculations for the short term are sometimes helpful. At least he is not insisting something must happen.


    • joecthetruthteller says:


      Another great post – you have stated exactly what went on in the blog here – thank you.

      Newbies must be warned that OEW will not make you any money


    • John Bell says:

      Excellent view from a swing short term trader. But what do you tell people who have to hold longer like in 401k’s and some IRA’s. The hardest time frame to pick is the longer term future and that is where 401k’s are for most people.

      Many people who teach trading classes will show how you can trade this and that day trade or swing trade and make money. But when I ask them the simple question if you had to hold a position for 30 days from now and cannot move it, what would you do? Since your friends may see you as a trading expert what would you tell them to do in their 401k’s? What position and what percent of money would you place if forced to hold a minimum of 30 days from now?

      At that point they dodge the question and move on because they say that nobody can guess the future. But that is where 401k is – long term future expectations. And that makes it important to try to establish a long term price expectations. Much money in the US is in the hold for 30 days at least 401k’s. So 401k people need to be looking way out in the future so they can re-balance once a quarter or slightly more often.

      Swing trading is fine for traders and that is a personal choice, but not for 401k’s. Most 401’s you cannot swing trade. Buy and hold.

      Others like me have a life style where I do not have time to watch all the time and swing trade so I like to have a majority of my money on intermediate or longer term holding positions and swing trade the rest. For example this year I have held large in muni bonds since early January and up 14-16% in those and not changed the positions. But have short term traded stock positions.


    • JeffMilano says:

      CM you have stated your case albeit even long. One does not have the time to do it in one gasp. None the kedd you have stated. Sign of growing. You have problem with this round where pivots have been stated and tops were being tried. DID NOT WORK. And now the s&p is above 2000. Newbies should not try picking tops and stay in in a loosing position; actually noone. Second for someone with experiance one would wait for a confirmation of a trend.
      So, in your post, I understand you aretrying to pick up this error, but we are learning and Tony has been right other times, why make a case of such incident. If you want to learn than stay on this blog. If no need to learn as you know it all and want pick such incident and make a case than no need to be on the blog. Thete are lots of things you can do. Like praing, being kind to our fellow human and doing volunteer work.
      When people quote Tony is for CLARIFICATION, not to put anyone on trial. THIS IS NOT A TRIBUNAL, it is a blog that TONY out of his heart and patients makes available for us to learn, clarify and help each other become better traders. Even this, hopefully you understand is pointing out that what you doing is a childish play and Tony is ptoving the doace and I the time to tell you as a brother.


  4. fotis2 says:

    95% of wannabe traders fail Why? It is an Unfortunate fact that 95% of the populace is hardwired from birth to blame others for their mistakes.In trading we blame the MM the Fed the Banks the goverment the war etc. and on this site when a trade goes wrong for certain individuals -Ah its all Tonys fault and OEW.The only truth is that the only thing you will ever have any control over is yourself so take full responsibility of your actions, use the stop loss to protect your position and not your opinion, stop pointing fingers and hey if OEW is not working for you why waste your valuable time here?Ther are many,many sites on the net that offer the super secret jubjub trading system that will turn 10k into 132k in 6monthts from the comfort of your lounge this months special for only $19.99 +free booklet on ‘How to become a hotshot trader in 10min’…IMVHO


    • joecthetruthteller says:


      IF you had read Cm’s post with your eyes WIDE open, he already stated ” everyone must take responsibility in his own hands.”

      So great trader Fortis, are we in the big C, or B, or xyz? Pray tell……


  5. John Bell says:

    If this is Primary V starting (see my post below for explanations – not confirmed yet), I would expect some major divergences in strength from the various world markets. US and stronger markets should see significantly higher highs as local and international money chase the strongest indexes and stocks, but some weaker markets may not achieve new highs. This would be typical for an ending Primary wave V.

    I can fault nobody for thinking more correction was due. Many EW and TA analysis people all over were saying that. And until today when Japan played its last power card unxpectedly (white swan card), you could not tell – more correction or not.


    • fishonhook says:

      any targets for PV?


      • John Bell says:

        From the world view P3 topped July 24. And P4 ended October 16. So three months.
        For P5 we could have a simple 1 main wave that ends in 3 months and goes to 2200. Or we could have subdivision and end much later and 2400 area.
        For the intermediate term we are probably looking at a high early 2015 for the first wave or final wave of P5. So trading would be to get long on the next dip which might be after the US election since things are so extended new term and then hold to at least early January. Then see what happens.

        If you are a short term swing type trader, then the trades would be on the long side and wait for safe dips to enter. Probably will not dip much until after the US election. And there may be a exhaustion pop on the election results posting and then a pause and small correction.


  6. John Bell says:

    —title – world is starting Primary V wave now.
    From viewing various world markets, if they also pick up now, then I think Primary IV is done and we are starting Primary V. Much of the world markets and even small caps US did a full 3 month larger time and price correction lasting 3 months and going down 15-25%.

    The US large caps diverged from much of the world and only went down much in the C wave that many markets in the world experienced. So only the US large caps did not get a real full correction with the Wave A. So In US case the Major A was small and then the Major B went to new highs and then finally US gave up and did a real wave down for Major wave C.

    We had a near zweig breadth thrust to start this off and that usually happens on the start of a larger wave. Also the monthly and weekly charts continue to look like a Primary wave V.

    Have a nice weekend. My thoughts shared as a first time poster here, but have been trading and posting on other blogs for well over a decade.


    • jimnero says:

      yes it feels like pv


    • joecthetruthteller says:

      Thank you John for an interesting post – I now think we are in Primary 5 too – after being misled.


      • John Bell says:

        I have long said that the bull market will end when the world central banks play their last bullets. Or faith is CB’s ultimate power deteriorates and they are found to have not really created real organic growth. Today BOJ played their last bullet. ECB will play their last bullet next year. US FED is out of bullets for now. and others are pretty well done, but may have small bullets left to play. Within the next year the bullets will have been played and yet no real recovery has come and disenchantment with CB’s will increase.

        Then after group think for central bankers has driven every body down the same rabbit hole, We are all going to struggle together after the last bullets are played during the “recovery” from the last great recession.

        I posted tonight because I was getting the feeling around many places that people were getting beat up and wanted to add my thoughts which hopefully shed another view that may clear things up. Nothing is fact of course, but my conclusions above seem to explain the many divergences and that they probably will clear up some now as Cb’s play their last bullets.


      • John Bell says:

        The US large caps did not experience a full Primary IV because of (1) massive stock buybacks and (2) foreign money flowing into us large cap indexes from around the world as international money was chasing the only strong indexes in the world.


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