Wednesday update

SHORT TERM: gap up opening rebound, DOW +213

Overnight the Asian markets gained 0.2%. Europe opened higher and gained 0.7%. US index futures were higher overnight. At 8:15 the ADP index was reported higher: 241k v 208k, then at 8:30 the Trade deficit was reported lower: -$39.0bn v -$43.4bn. The market gapped up at the open to SPX 2015, and rallied to 2025 by 10am. Then it pulled back in a flat formation (2013-2021-2012) by 11:30. After that a rally to SPX 2030 around noon, then it pulled back to 2020 ahead of the FOMC minutes: After the report the market rallied to SPX 2028, dipped to 2021 by 3pm, then bounced to close at 2026.

For the day the SPX/DOW were +1.20%, and the NDX/NAZ were +1.20%. Bonds gained 4 ticks, Crude added 65 cents, Gold slipped $6, and the USD was higher. Medium term support rises to the 2019 and 1973 pivots, with resistance at the 2070 and 2085 pivots. Tomorrow: weekly Jobless claims at 8:30, then Consumer credit at 3pm.

The market gapped up at the open today, resuming yesterday’s late afternoon rally. The SPX hit 2025 at 10am, pulled back, then hit 2030 around noon. This represents a 38 point rally off yesterday’s SPX 1992 low. Thus far this advance looks a bit choppy on the “very” short term charts: 2017-2002-2025-2012-2030. Since the short term charts look okay, this advance could be a series of 1-2’s or part/all of a B wave rally. In either case it does not look like the initial rally coming off the last two important lows. Short term support is at the 2019 pivot and SPX 1992, with resistance at SPX 2030 and the 2070 pivot. Short term momentum rose above neutral after yesterday’s positive divergence. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: bull market


About tony caldaro

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242 Responses to Wednesday update

  1. If the 2009-2014 Bull is in fact the 2009 – 2015 Bull, then I see two possibilities. Yesterday triggered a daily Big Up with a target of 2105-2121 by Feb opex. If it does get there, it could be the final high of a final wedge, as Fiona has pointed out for at least a week or two. If it reaches that 2105-2121, a pullback is likely there. If the pullbackis sufficient to become a downtrend, then Bull ends there. If, on the other hand, the pullback ends just below the December low or higher, and then If price then breaks through the high of Fiona’a wedge, then Tony’s extending wave count is very likely – when a wedge fails on any timeframe, it usually fuels a rocket ship. If, as I was thinking, the 2009 – 2014 Bull is in the books, then this rally should fail at or below the 2014 high.

  2. elmer510 says:

    Minute 3 of minor 3 of IM 5, I presume.

    Some good days ahead now.

    New ATH to follow.

  3. simpleiam says:

    Best Interview of The Day: Pullbacks Are Coupons!

  4. gasman88 says:

    So is it 100% certain that we’ll see new ATH over the next few days?
    Zero risk going long here, because V-shape bounce has never failed before reaching new high?

  5. rabbittrader1 says:

    sibyn High today SPX 64.08 However, my scenario is still good up to 2071 SPX (for a .782 correction in minutte wave 2 We shall see. ! R’

  6. llerias7 says:

    Three days ago I pointed out this minute (iii) of minor 3 explosive wave…thanks to Tony EW count…you just had to stick to it and not hesitate…and of course a few more information to confirm it. Next OEW is 2131, but I think it might print 2150 b4 minor 3 ends…

  7. Peter Sliney says:

    SPX 2100 won’t be denied. Here we go.

  8. sibyn says:

    2067 now 🙂

  9. Page says:

    Short term Market is overbought, expecting some pullback tomorrow.

  10. rabbittrader1 says:

    Just pointing out that we have had a .618 FIB correction up to 2061.6 from 1993 . A minutte wave 2 of wave 1 down of a C wave?? (Not too strident, I hope, fishonhook.)R.

  11. SPX, INDU, FTSE have all turned BUY on my model at SPX 2047 equivalent. However, I am keeping my small SHORT position open for a while. I may open another small short at 2066 equivalent. Layoffs is definitely not a good sign. Better to remain short though in small qty.

  12. gtoptions says:

    Coming up on the SPX WPP @ 2066
    Stall or follow through to WR1 @ 2084?

  13. mike7x says:

    The V-shaped bounce was all the rage in 2014 and emerged as a leading candidate for pattern of the year. By the looks of things this morning, it may make an early appearance in 2015. Back in November, the S&P completed its ninth V-shaped reversal since 2013, according to Dana Lyons. That’s something that happened once every 1.6 years from 1950 to 2012. We could be in the midst of the 10th in just two years. Clearly, calling the top has been a fool’s game.

    In fact, calling anything with regards to this market is getting increasingly difficult. In 2014, only about 16% of the hundreds of advisers monitored by the Hulbert Financial Digest beat the broad market, as measured by the Wilshire 5000 W5000, +1.60% Five years ago, 33% did it. Link:

    • tommyboys says:

      The v shaped quick recovery (5%+) has only happened 38 times in 62 years. 10 of them in the past 24 months!!

      • mjtplayer says:

        Score one more for central banks! Makes you wonder what the other side will look like in the years ahead 😦

      • tommyboys says:

        Could be we’re just getting back to where we would’ve been had Congress not decided to raise banking reserve requirements at the most vulnerable time in our history…if so not huge “other side” just corrections in a continued two decade bull ahead. Time will tell.

      • tommyboys says:

        “NO” huge !

      • rc1269 says:

        “Could be we’re just getting back to where we would’ve been had Congress not decided to raise banking reserve requirements at the most vulnerable time in our history”

        hmm.. i suppose we can ignore all of the bubble-inducing congressional and banking activities/decisions that outnumber the bearish actions by at least 1,000:1 over the last few decades

    • simpleiam says:

      Thanks AB. Very interesting SPX chart. Haven’t checked the levels yet, but movement looks right.

      • bhuggs52 says:

        Agreed, nice chart. Once this move looks firmly impulsive, and it’s getting there, this spooky cat could take the plunge and go long.

      • bhuggs52 says:

        BTW Simple, I’m impressed that you tagged this up move early and as you posted, already pulled some profits. If you don’t mind my asking, was the early tell for you the first mini five waves up on the initial leg, or perhaps something else?

      • simpleiam says:

        Howdy Huggs! The wave counts Tony provides act as both catalysts and confirmations to me of most likely moves to come IMO. Given the scenario he postulated, AND THE PULLBACK, one should have gone shopping for longs. Not that you asked for this, but I will post it anyway, then I’ve got to go (too many posts).

        #1 Rule: ALWAYS buy on pullbacks and corrections. It’s The Buffett Method (as jedi pointed out) and it works. This does not mean go All-In; for some reason, a few posters don’t understand this. When you see that downward move start to flush and bounce, start nibbling. Since I wasn’t sure where the bounce would come this last time, I piked-it on 2 days, which turned out well. Keep in mind that I have continual longs that I bought early in this Bull that I just let ride, mostly div payers.

        #2 Rule: Stop Shorting in these uptrends if you’re not very, very good at it! In the earlier years of this Bull, I could short and make really good money; this has gotten harder over the past year or so for me, so I just stopped trying it. My success rates in trading improved by ~50% once I cut that out. That being said, I will attempt to short what I perceive is a large pullback or correction; major or primary waves. If I feel really comfortable, I might try a minor wave, but shorting should never be your first choice when trying to make money in a Bull market.

        #3 Rule: When you take on a position and the market goes against you with a 3X or other fast-moving, or highly leveraged position, you might give it a little leeway, but then drop the position like a hot potato if it starts to really roll against you! Cut and Run! Don’t double down! Sometimes the market will turn around and fool you, but for me, it’s not worth it financially, or emotionally.

        BTFD!!!!! 🙂

      • bhuggs52 says:

        Grazie mia bella

    • asaraniti says:

      To AB, Tony, et. al.

      AB, like your charting.

      Can we have a discussion on likely targets for minor 3, 4 and 5. Using common EW relationships of wave 3 = 1.62X wave 1, wave 4 =.23X wave 3 and wave 5=.5 wave,I come up with:
      wave 3 completes at SPX 2,414 (1972 + /273 X 1.62/)
      wave 4 completes at SPX 2,313 (2,414 – /.23 X 442/)
      wave 5 completes at SPX 2,449 (2,313 + /.5 X 273/)

      • tony caldaro says:

        no quite that bullish Asaraniti
        looking for 2214 for this uptrend: Minor 3

      • tony caldaro says:

        The explanation was in a previous weekend update:
        Minor 1821-2079 = 258 pts.
        Minor 2 bottomed @ 1973
        Minor 3 = Minor 1 @ 2231
        However there is a P3 = 1.618 P1 relationship @ 2214
        This is a much stronger pivot than 2231, while both are relatively close to each other.

    • fionamargaret says:

      ..good stuff AB…

      • asaraniti says:


        Thank you for replying. I know others might be asking the following question, so I go first….I/we read your reviews, I simply have to ask, how did you arrive at that target? @ SPX 2,214, wave 3 would be approx 55% of wave 1. Just to continue my thought process, wave 4 would be 2,160 ish (-.23% of wave 3), and wave 5 would complete at 2300 ish .5% of wave 1)? Is that your thinking?

      • ABchart says:

        Thank you, @simpleiam @bhuggs52 @fiona @tony @asaraniti, for your comments.

        @asaranti: Tony’s answer is correct. He is a specialist. But if you want my own answer, I can post a reply in detail next Sunday under the weekly analysis of Tony while posting a graph of the SPX long term with the calculations.

      • simpleiam says:

        AB, can I interject a little something here. Since it’s last hour, then I’m going to post it. The retracement level of 23.6% seems to be what you’re using, but IMO, and from experience, that level rarely holds. The minimum in my charts is 38%, depending upon the wave. 23.6% is why your wave levels are so high. JMO. Thanks again.

      • ABchart says:

        Agree Simpleiam. I use the most classic retracements (23.6 / 38.2 / 50 / 61.8 / 76.4). I try to adapt them as if the indices are strong or weak. Depending on the nature of the waves (Pri, Maj, Int … etc). Our CAC never retraces below 61.8% lol

    • playitkool says:

      AB, do you have a chart of the entire rally off of the 2011 low? I would like to your wave count for that. Thanks.

  14. H D says:

    2060 is 34 handle rally, also 34 from ATH. Could still be same wave. Been a popular # this year so far. Ok have a great one all.

  15. fishonhook says:

    The huge down followed by huge up is catching most of us on the wring side of the trade. As soon as the market looks like it will have a good correction , bang, it reverses on a dime and up it goes

    We have our bias ” the market is over valued ” or ” the economy is just getting going to get better” which is our mental back drop and then we look for confirmation like Tony saying ” this rebound doesn’t look like the others ” to signify something ( well it does now!)

    Times like this are best spent with small positions or tight stops and wait for the dust to settle.

    Rabbit fwiw I think you need to be a little less strident and forceful in your calls, after your catastrophic calls of late last year. I know I was unduly influenced at first and I am sure others were too.. Or bettr still wait a while for your sins to be forgotten by the next batch on followers

  16. Cant wait for this down wave, unfortuanately many will be caught off guard…

    • simpleiam says:

      I seriously doubt truly good traders will be caught off guard. Mostly the One-Way Newbies will get mashed.

    • jeffbalin says:

      Nice of you to care about us. We are more concerned about you. You’ve been caught off guard for 2 years already, every day calling for a crash that never comes. You must have an unlimited amount of money to lose…. or, more likely, no positions, right? Do you ever take any positions or just posting?

      • jeffbalin, I put my wave counts and thought out there. Yes I have been bearish for a while actually more than 2 years.., that doesn’t mean I don’t trade up or down and it certainly doesn’t mean I don’t make profitable trades. I think we are about to start a b wave or a 3 wave down from here. I am short as of yesterday (little early) I will cover my short somewhere between 1900-1950 of coure only to reshort after a big rally.

      • **** start a c wave or a wave 3 down.. taking us deep into 1900s

    • fotis2 says:

      Nah the majority of day traders would of long the IHS measured target 2069 still looks a posible no reversal signs yet however a good place to trail a stop and lock profit is always at first resistance so no off guard.

  17. spindoc73 says:

    based on the lack of conviction on both sides – some arrogance, some humility, etc, this looks like a nice place for the market to work its way down a bit. as it does, perhaps the direction of the next vertical move will become more apparent. gl

  18. jeffbalin says:

    I don’t have this technically confirmed yet by my own charts but it appears to me that Tonys Spx count is on and will be confirmed, or at least one of the bullish counts. I went long yesterday with medium term thinking but I was ready to get out quick. Tony, you are able to keep calm and steady with your rules even when the market is way pushing the limits of the primary count. I guess it could still go the other way but the odds dropped a lot. Kudos to Tony, a true EW maestro.

  19. sibyn says:

    Short term… if 2057 then 2067 now.

  20. simpleiam says:

    Took some profits on positions bought earlier this week. What a great move upward!

  21. torehund says:

    For all you oil addicts:): Petroleo Brasileiro(PBR) is up 10 percent, could be the start of a key reversal.

  22. blackjak100 says:

    I’m still on sidelines but have no intention of shorting today. I haven’t given up on this being a wave 2 yet. a=c=2063ish so want to see how price reacts near there first.

  23. soulsurfer says:

    Meredith Willson wrote in 1951 the famous song: “It’s beginning to look a lot like Christmas”. however, I’d say “it’s beginning to look a lot like late 2011” :

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