wednesday update

SHORT TERM: gap down opening, DOW -2

Overnight the Asian markets lost 0.5%. Europe opened higher but finished mixed. US index futures were lower overnight, and at 8:30 Housing starts were reported lower: 1009k v 1017k, and Building permits higher: 1080k v 1018k. The market gapped down at the open to SPX 2047. The market had closed at SPX 2052 yesterday. The decline continued until 11am when the SPX hit 2040. Then the market rallied back to SPX 2052, yesterday’s close, just after the FOMC minutes were released at 2pm: Another pullback followed to SPX 2044 just before 3pm. Then the market rallied to close at SPX 2049.

For the day the SPX/DOW were -0.10%, and the NDX/NAZ were -0.50%. Bonds lost 9 ticks, Crude slipped 2 cents, Gold dropped $14, and the USD was higher. Medium term support remains at the 2019 and 1973 pivots, with resistance at the 2070 and 2085 pivots. Tomorrow: weekly Jobless claims and the CPI at 8:30, then Existing home sales, the Philly FED, and Leading indicators at 10am.

The market gapped down at the open today, hit SPX 2040, rallied back to 2052 to close the gap, then pulled back again after the FOMC minutes. For the first time, we can now count a potential five waves up from the SPX 1821 downtrend low: 1898-1878-2046-2030-2056. The pullback from SPX 2056 to 2040 may suggest a subdividing 5th wave, or the first wave down. Should the market break SPX 2030 we would favor the latter. However, keep in mind, this uptrend can still unfold in a large a-b-c. So any top call, during this particular uptrend, is a difficult task. The DOW/NDX/NAZ continue to display small daily negative divergences. Short term support is at the 2019 pivot and SPX 2000, with resistance at SPX 2049 and the 2070 pivot. Short term momentum hit oversold from yesterday’s extremely overbought, then ended the day at neutral. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: bull market


About tony caldaro

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117 Responses to wednesday update

  1. JeffMilano says:

    The shallow correction – maybe that was it. Going for ATH till the end of the year.

  2. lunker1 says:

    SPY DIA NAZ all .887 ATH

  3. johnnymagicmoney says:

    Data reflects slowing globally but they promise more stimulus – bid higher!
    Data reflects even more slowing but they promise more stimulus – bid even higher!
    Data reflects dire situation but they promise more stimulus – bid even higher!
    Data is worse than previously expected again but they promise mores timilus – bid higher!

    At what point do people start bidding on what IS and not hope especially when promises have failed to deliver what was hoped for time and time again??

    people are addicted to words and promises of politicians and central bankers…………..hard data doesnt mean anything anymore………………..until of course it does.

    • rc1269 says:

      >>At what point do people start bidding on what IS and not hope especially when promises have failed to deliver what was hoped for time and time again??

      once you and everyone else stop asking and just go long

    • fotis2 says:

      People will invest where they will get the most bang fo their buck right now for most thats the US and the dollar i dont know what will happen in 5 years or next month but right now that is the safest I live in Europe and can testify things are a far cry than what the media shows bottom line Europe is Kaput ,its not working and way past expiry date.

    • I think most of the move from 1820 to here is finished, or nearly so. I also think downside is quite large from here, or the 20 spx handles higher from here which is sure to kill this rally.

      If you missed the move from the bottom 4 weeks ago to here, don’t compound that by going crazy long here. Could be painful.

      Good luck to everyone.

  4. manunidhi21 says:

    Namaste Tony!
    You gave me a tedious task yesterday but I did not find a single impulsive rally making new highs of from a 10 % correction from 2009.

  5. rc1269 says:

    Rounding top. Gann dates. Overbot. Doji’s.
    fat chance. i said it a month ago and i’ll say it again: it’s the holiday season and Janet likes to light her menorah in peace. markets will be dead until next year. if anything expect the slow melt up through december. i hope i’m wrong, since this market is boring me to death. but i don’t think i am.

  6. fotis2 says:

    Last week the 11th I posted a EW count on FTSE
    W2=6318-6229=38.2 W1
    W3=6229-6633=161.8 W1
    So from there it went to W4=6633-6589=38.2 W3 to W2
    W5=6589-6713=a bit over 61.8 of W0-W3
    So I am looking at completed 5waves up an abc zz down where wa=6688 wb=6708 and wc=6640 wich i have as WA and part of WB today and expecting a WC down tmrw.
    Looking at this i could really kick myself for not having traded the W4 retracement.

    • mharrison60 says:

      Where do you see a medium term top happening and any down target from this?
      It sounds like you are favouring Tony’s alt count for European markets.

      Thank you

      • fotis2 says:

        mharison for the FTSE i think tmrw will be telling to me it looks like the start of a W2 down that could retrace 50.0 to 61.8 of the start at 6072 ive got the top at 6715 marked as W1 and 6640 as wa of W2

      • fotis2 says:

        It looks like a b wave up at the close have to be carefull with those the area im watching for a potential reversal is 6680 6700 if it start trading above that i leave it alone.

  7. torehund says:

    Nat gas 2w up from decade important bottom(quite possibly), and second one not to far from being corrected. There could be a massive 3 on the way.

  8. Gary Lewis says:

    Today is certainly an important “turn date”, whether the market reflects it or not. After tonight, the country will never again be the same.

  9. chairman67 says:

  10. jeffbalin says:

    Vix hits the 50ma exactly at 15.74 and whips down 2 points. Rut in downtrend, everything else not yet.

  11. Tony – I’m very puzzled as to why the RSI 5 (e.g. on daily) has been acting very erratic for the past several days…e.g. today prior to the open the daily RSI 5 was in the lower 80’s then during the gap down the RSI 5 shot down and was printing near the upper 50’s and now since the rally it has shot back up low 80’s. Do you have any thought on this?

  12. tommyboys says:

    Fed Philly EXPLODES. Only higher in memory was in 1993 at 41…!!

  13. I’d be a buyer of TNA right here. It’s looking very good as it’s straddling the upside of that broken downtrend.

  14. afarsid says:

    All the news outlets put a positive spin on the jobless numbers. Yes they decreased marginally from the other week, but they were still 7k higher than the expected! Am I correct with this simple interpretation or am I missing something? Had we not been 10k higher last week then it would be an increase. Maybe there isn’t an increase in the “rate” of jobless claims but still higher than want we want/expect

    • buddyglove says:

      Afarsid, respect to you, but the above is a total waste of mental energy, turn of the news and turn on your chart and the fog will clear. gl.

    • jp7972 says:

      In a bull market bad news is bought and good news is bought, in a bear market the opposite. The nature of the news is irrelevant; it’s all about sentiment. (OK, I know some will disagree with this black or white view, but the underlying message has merit). As buddyglove says, turn the news off and look at the chart instead.

  15. gtoptions says:

    Thanks Tony ~ Nice Call
    SPY ~ WPP @ 204.07 (Pre-market Low) Bounce?
    Sorry if this was asked before, but If and when the alternate Major 4 gets going, do you see it near 10%?

  16. Teddy bear is putting yesterday’s Hammer Doji to good use

  17. pooch77 says:

    Randomacts….Bradley Siderograph 2015 Turn Dates S&P 500 Financial Astrology

  18. JeffMilano says:

    Europe is down. So maybe a gap down in US mkts this morning.

  19. bouraq says:

    Russell2k: The weakest link

  20. May I request those who like this as WAVE V to please com up with target of 2856…oh sorry..2543..sorry..2160..

    Nothing personal about it, but if you come here to say “You said it”, IMO, you also should come here “to own it”.

  21. Keybot the Quant turning to a cautious stance since going long at 1900 on 10/20/2014.
    This is the best site for a long term to swing trader. Don’t trade against the Quant.

    Tim Haefke update ES still grinding higher towards 2062-2067.

  22. rabbittrader1 says:

    Rabbittrader1 :Turn Date for Virtual Dollar De-valuation :5/3/11PM /15. De-facto De-valuation to follow within 3 months. Phase in Gold and Silver purchases and acquire GDX, SIL, GDL from Jan to May 2015, IMVHO. (Anyone acting upon this advice does so on their own risk). Of course one might also want to be short SPX at this point, now and again by May 3 2015, ( No guarantees on this either). R.

  23. torehund says:

    Nice little link.
    Understandably, every Yen goes into whatever you can hold on to. But there Will be a time when it Will not buy a lot. Concerning the Japanese Stock market, but at some point the Yen Will decline faster than the market can rise. Heading for default, its the ultimate fiat🙂

  24. robnaardin says:

    Bullish double flat 4 for the wave starting at spx1820?

  25. Walter Crane says:

    Still up on my new tvix position amazingly…..

  26. As a devout cycle watcher, I follow the Stock Trader’s Almanac stuff closely. So, what we have in front of us are two scenarios you have to get ready for. The ‘Santa Claus Rally’ is the last 5 trading days of 2014 and the first 2 of 2015. If the net result of those 7 trading days is negative, then there’s a 90% probability of a new bear market starting next year. Look at 1999/2000 and 2007/8. However, the years ending in ‘5’ are the best trading % gain years of every decade. Over 85% of the time, the market AVERAGES 29% in these years.

    So chew on that. Dec is the best month for TNA every year. When you look at this chart of the weekly TNA, you see that massive congestion zone. To those who don’t pay attention, you’d think the Russell is trading poorly. However, when you look at that chart, it’s just chopping within a large range setting up a massive bull flag that targets $120 on the breakout of this channel. I’d love to see it trade back to the low $50s again, but I doubt it will considering December is right around the corner.

    Also, watch USO. Great setup for a nice quick 5% to 10% here.

    • I just realized that Avi friggn’ nailed USO. I wasn’t paying attention. I just randomly did a search on his site for USO and came up with a post he made back in Aug when it was at $39 suggesting it would fall in an ABC down to where it is now in the ‘fall’. Wow. Sometimes you E-wavers can pull one out of the hat. Now he’s suggesting once this 5th of C finishes here in this area ($28ish), the ramp in USO alone could be upwards of $60ish. Very quick. Gotta admit that chart is coiled pretty hard.

  27. JeffMilano says:

    My tnatech has still a down signal. Today msft and twtr have started a down signal. FB and Yhoo started yestarday. Iwm started a down since the 13. Mdy is in an Up signal. QQQ is in an up signal since 10/20. Spy just started a down signal from today. I only have a limited number of symbols that I follow with tech. To have a significant statistical study one must track at least 16 simbols. So it may be that spy and msft that have turned today may mean that perhaps there is a start of a roll over into a shallow correction. Again I am expecting a year end rally. Then after that a two week sell off after the new year.

  28. bhupal777 says:

    Every trader should be following Peter L. Brandt, if you want to learn about trade setups, entry points and exit points. He is bullish on Japan. We don’t know if he is going to be right or wrong but I always learn something from his posts. No fancy indicators on his chart, he just follows price action using patterns. By following technical patterns explained in Technical analysis book written by ‘Edwards and Magee’ and exercising good risk management, Peter Brandt consistently made 40% yearly returns not just for few years but for decades.

    • Thanks for the suggestion.

    • JeffMilano says:

      Peter, his profitable trades are only 20%. However, he uses stops and he lets the winners run.
      He is a smart trader. No wild stuff. No pain on positions. He cuts loose his unprofitable trades. No pain.

      • bhupal777 says:

        Jeff, Thanks for binging up about his % of successful trades. You are right on that. He openly published his trades and mentioned in various posts that he is only right less than 30% of the times in any given year and he still managed to log 40% yearly returns. That is what I call ‘shrewd risk management’.

    • JeffMilano says:

      Why Caldaro? Tony, provides this blog and he has tutoring. If you like you can take his class if not then … But trading is very, very hard. Because you need to look and search for that set up. And, most important, you are your own enemy when you hang on to a loosing trade. Everything else it is a business, and tony does it honesty. That is the most important part about each one of us. Be honest first to yourself then to Others. But there is no law that sayes that you must tell all, there us such thing as PRIVACY. And that must be respected. So, why bring Tony, it is out of place for such comment when you are uing the board, don’t you think? Live life in style instead of being gruff(in italian is Burbero). Live life in modo signorile. Signorile is refined, elegant. Yes Tony is that type of person, refined and elegant, that is why he lets go of those comments. They are not appropiate.

    • The hedge fund managers have far under performed the SPX for several years so they are hardly a standard of excellence at this time. They have seen a lot of money leave their funds, but the absolute amount and their commissions thereon are still huge, though scarcely justified.

    • cmucha68 says:

      You are right Don Milano

  29. The weekly A-D line still shows a head and shoulders pattern and the daily A-D line is tracing out a minor downward a-b-c pattern. The decline could easily terminate right where it is and the A-D uptrend could resume, but the beginning stages of amplified declines look like the pattern currently manifesting.
    In 1999 the A-D ratio made a top but the SPX, Dow, and Nasdaq contined up until March 2000. So the market can contine much higher without support from the A-D line, but that does not happen until the later stages of a bull market. The final phases of a bull market can produce large gains in the large, and possibly mid-cap stocks, but the risk is that any steep correction can turn out to be the beginning of a primary bear market.
    Since this bull market lost it’s A-D and R2K leadership early in 2014, it has experienced much more volatile behavior than the steady rise of 2013, with net annual price gains appearing and disappearing repeatedly.

    • Regarding “In 1999 the A-D ratio made a top”, it was actually early in 1999, probably in January. So the large-cap indexes and the Nasdaq (dominated by large-cap companies) continued higher for another year or more despite a non-confirming A-D ratio. But the advance was more selective during this period (especially high tech & internet).

    • robnaardin says:

      +1 Nyad uptrend off October lows ended today. Naad on Monday.

    • I misspelled the word “continue” twice in the above post by leaving out the “u” after the second “n”.

  30. NYMO slammed again today……even if we do continue up for a while… the divergence will take hold as VIX also has a very large divergence to the SPX

  31. FiveStars says:

    I have been bullish on SPX lately but now I think market is about to make a significant pullback or correction so hold on to your short positions.🙂

    Thanks Tony.

    • CB says:

      LOL..:) ur doing fine..there is only a limit on the number of posts, not flip-flops, in one day

      • FiveStars says:

        🙂 LOL .. Not sure if Lunker approves this?

      • CB says:

        FiveStars,it actually takes a lot of guts to do what Lunker does here, doesn’t it?; and he truly tries to get us to focus on our mission, so we should appreciate that, I think. Someone has to do it, right?🙂

  32. bhupal777 says:

    Thanks Tony. Regarding your statement
    “However, keep in mind, this uptrend can still unfold in a large a-b-c”.
    Are you saying in your preferred B wave scenario it can morph into a larger a-b-c. That means after 7 waves of upside move if it starts coming down hard that would be C-wave. Did I get that right?

    If yes what would be the target for that a-b-c move or target of B-wave move. Is it 2049 or 2070?

  33. torehund says:

    Norwegian Crown, Euro, actually most currencies foreign to the US has displayed weakness and this should further drain liquidity into the US. At some point buyer of government bonds dires up, but instead of increasing interest rates to attract real buyers the weak economies Will do what it takes to hang onto lower rates by
    1. countries buying each other bonds, Qe-printing into buying own rotten bonds and lately (according to M Armstrong) fueling pension funds into buying bonds as seen in Poland.
    2. This cant be done without some deflationary effect on the currency, which if prolonged into a US real Growth and strength scenario (not just relative but absolute economic strength), Will eventually cause commodity inflation and produce significant stagflationary economic drag.
    3. US markets and currency may enjoy the sweetest period ever in this artificial world economy. I Guess governments around the world hedges themself, so the bill goes to the savers in Euro-land and depositors of other exotic currencies.

  34. Oooooo. Can you feel it? Huh? CAN YOU FEEL IT????

    Something’s ’bout to happen….
    The grind always leads to something big.


  35. fotis2 says:

    Thanks Tony starting to get closer..

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