Friday update

SHORT TERM: pullback mode today, DOW -171

Overnight the Asian markets gained 0.4%. Europe opened lower and lost 1.9%. US index futures were lower, then higher after NFP. At 8:30 Payrolls were reported lower: 252k v  321k, but the Unemployment rate declined: 5.6% v 5.8%. The market opened two points above yesterday’s SPX 2062 close, and then immediately started to pullback. At 10am Wholesale inventories were reported higher: +0.8% v +0.4%. The pullback stair stepped its way lower (2051-2058-2043-2049) until it hit SPX 2038 by 11:30. Just when Europe closed. After that the market tried to rally. Around noon it hit SPX 2051, pulled back to 2043, then hit 2053 in the last hour of trading. Then a pullback to SPX 2045 ended the week.

For the day the SPX/DOW were -0.90%, and the NDX/NAZ were -0.65%. Bonds gained 17 ticks, Crude lost 55 cents, Gold rallied $13, and the USD was lower. Medium term support remains at the 2019 and 1970 pivots, with resistance at the 2070 and 2085 pivots. Today the WLEI was reported lower again: 45.6% v 46.1%.

The market opened at yesterday’s SPX 2064 high, then declined until 11:30 when it hit 2038. Then after a rally to SPX 2053 in the last hour of trading then the market pulled back to end the week at 2045. After reviewing the charts we are maintaining the Minute i and ii labels, and added a Micro wave 1 and 2 label at SPX 2064 and 2038. Micro wave 3 should be underway, or begin once Micro wave 2 has concluded. Short term support is at SPX 2030 and the 2019 pivot, with resistance at the 2070 and 2085 pivots. Short term momentum declined after yesterday’s extremely overbought condition. Best to your weekend!

MEDIUM TERM: uptrend

LONG TERM: bull market


About tony caldaro

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91 Responses to Friday update

  1. jturm says:

    Hello. This is a great site and I want to thank Tony and all the posters.
    Can someone please answer this question: What is WLEI and how can I chart it?
    Thanks -JT

  2. weekly close does not support bear action in my opinion,…close above 50% of the body..seems like a spike before resuming uptrend. next week very interesting

  3. fotis2 says:

    Note shifting of gears to the bearish side:My 2cents:Bear:1.Gap still open target 2030 2.Bear flag on hourly target 2006 3.Wave C down potential target 2022.
    Bull:1.Techs on daily still strong for upside smaller timeframes ready for a bounce 2.Bear flag can turn in double bottom or channel up if low of Friday holds target back to days high.
    Strategy Monday:(1)If low breaks quick short with a tight stop to 2030 (2)If low holds play double botttom or up channel.
    No commentary on ewaves for I do not have enough experience and would only be parroting someone elses take also have no idea what the latest news flash will do to the market.Thats it good luck fellow traders and dont forget the stops.

    • fotis2 says:

      One more point to favour the Bull on the 5min it looks like a falling wedge I could be wrong here wedges seem to outsmart me and would welcome any views on that

  4. rabbittrader1 says:

    Since there is little posting, I will say something about myself. I think i was actually ( first born ) in the year 534 AD. I have lived 18.5 lives since then. (Some of you may be older than me) Anyway ,that is probably how I know about Long Range Planning. But we do not remember our past lives. However we retain SKILLS acquired during earlier lives. More on this later. R.

    • newguest13579 says:

      +1, well said RT.

      I have been a reader here for quite a while and TC’s analysis is very informative. However (as CN points out below), there are now too many distracting and useless comments in amongst some gems that are increasingly difficult to find, with less and less quality posting. But what is really strange is that there are people actually entertaining the useless posts as though they are actually some sort of worthwhile analysis, when it is just drivel. I mean hair color ?? really?? Like chicken little, so goes the rabbit.

    • newguest13579 says:

      Sorry meant “well said RN”

    • Hey, I remember you, in your 14th life you were a slave, lol…

    • robnaardin says:

      RT1, 18.5 lives and you still haven’t figured out the flaw of EW theory? Only took me 4 years to figure it out. I’d guess you’ve never been cursed with having a mensa level iq?

  5. rabbittrader1 says:

    Just Curious Jedimasterstudent; Are you a Red-head or Auburn hair or some kind of blonde? Also , thanks for concurring . For others , I have made 500% on my investments in less than 6 months in commodities trading (like $400,000 on an $80,000 investment in 5 months) .That was on one sugar trade. ,with pyramiding. . . I never did that on stocks.. ( YET..) R.

  6. travis01 says:

    TC,do I see this correctly? We are either in micro 3 up of iii OR can go down further to ~2030 to complete micro 2 before resuming upwards to micro 3. If we break 2030 then the alt count is a downtrend. I managed to get the counts right the past week or so but stayed long from yesterday expecting a higher day today. I think I understand you that you see the market in an uptrend short term, as do I. I guess my only question would be if we could actually have had minute iii end at 2064. Just trying to get it right…thanks bud

  7. torehund says:
    Difficult for the boots to extend it much longer. Now a simple abc plus a complex abc in the end.

  8. rabbittrader1 says:

    My dear FRANCESCA CIARDI, The stock market is entirely voluntary. . The FED does not care if people may lose money ,in thinking there will NEVER be a correction in this 25 year (plus) bull market. They will Do What is Necessary to defend the idea of the DOLLAR as universal currency. THEY WILL RAISE INTEREST RATES,(slowly) starting with a 1/4 % rise in APRIL 2015. Most of the PRIVATE FED central bankers will ,of course be SHORT the stock market BEFORE THAT TIME ( like NOW). IMVHO R.

  9. rabbittrader1 says:

    This will be repeated ONE MORE TIME: !, There was NO super cycle 2. That, was a wave A ,followed by an EXTENDED wave B ending at 2093 in December. 2014. We are now in a MAJOR WAVE C DOWN . (to end in early 2017 at about 535 SPX or less ). On Monday we should reach 2030 and then continue dropping into Feb to the 1800 level and ETC. R

      • Jedi I don’t contribute much but I listen well. I also respect your opinion as well as a number of others here. Would you mind elaborating on which of Rabbit’s statements that you concur with.

      • Thank you, Sheldon. I don’t post often lately … wait to post when I feel true reversal in trend and/or new opportunity. I concur that the market will see lower-low’s before higher-high’s. I also concur that gold is moving higher (as well as miners). I put my money where my mouth is last week with regard to a number of miners/silver.

      • I also concur with Rabbit that WELI going lower — bottom not in and may not be for a long time.

    • I also believe we are nearing a top, if the top is not already in (2093). I believe it will be a slow dyeing bull market and we won’t know for months or years to come because the Fed will provide liquidity from time to time thus prolonging the decline. Will only know in hindsight.

    • simpleiam says:

      Now, this is getting very interesting…

      • I am biggest bear on this board, ok maybe im tied with rabbit and red dragon leo BUT the fact that so many of you BULLS are calling top scares ME! If the biggest bulls are turning bears this may be a bad omen for bears.

      • bhuggs52 says:

        Hear that, Simple. Bull…bear…how about both? I know about the perma-bear. My old man was a perma-bear all through the 1990s, looking for another 1987. He had already scored big in gold in 1979, and then again made major bank shorting the Nikkei through the 1980s. Then he went perma-bear and missed out on the 90s action altogether. He ossified in old age and passed away in 2007, failing to witness 2008. Today I trade with what was left of his once considerable fortune. Any more, from my few successes as a newbie trader, I find myself an opportunist–rather than impose my particular vision onto the markets, let the markets suggest the prudent moves to me and then seize the moment. Carpe diem. Just know your diem.

      • bhuggs52 says:

        ps Simple, thanks again for laying our your rules of the road for intelligent trading the other day. What I mainly got from you I’d also seen stated by the Aden sisters during their follow of the run up in gold–“the trend is your friend.”

      • simpleiam says:

        You and The Sistas are right, huggs. The trend IS your friend, whether it be stocks, gold, anything. Everyone has their market “Rules”, but I try to keep mine to a minimum (5 or 6). Going against trend takes more skill and effort than I can manage, except for big moves.

        Your Dad sounds rather like my Dad, except mine was bullish during the 1970’s and bought growth stocks. He died in 1981, about a year or so before the big Bull started. I’m rather saddened by that.

        Can’t figure out why some posters insist on being “perma” anything? You watch how fast I turn bearish if I think a downward move is coming!

        Wishing you the very best in your investing and trading, regardless of Bull/Bear!

      • bhuggs52 says:

        Cheers to you, sistah.

    • too attractive to be true

  10. Thanks Tony, My TA indicators and the doji candle patterns are still telling me that this downtrend is not done yet. My preferred count is still that we are in an irregular Major 4 wave and that most likely wave 3 of c is just getting started. The decline is going to be large enough to get the crowd talking up Pri 4 but instead I believe the crowd will be tricked again with another V-shape Major 5 wave that should get the crowd talking up SPX 2500 only to fall victims to the Big Nasty Grizzly Bear Pri 4 that has yet to come. My alternate count sides with CN’s view that we saw the end of this bull.

    Also, I don’t know if people have notice but the NKD (Nikkei futures) has been trend leader for some time.

    • tommyboys says:

      FYI – youth ALWAYS replaces the experience in employment and everywhere else – its the cycle of life. Bears gotta stop thinking its permanently 1929 or 2008 – it ain’t. We all choose however the lens we desire to see the world with. Can’t imagine what life must be like for the ultra doom and gloomers on this board – gotta be misery. Once SP takes out 2088 for a few days you best cover anything short .

    • TB, respectfully, I am very aware of the “Life Cycle” process. And if your post is implying that I must be a bear, well I am not a bear but I am an objective realist and a trader and I will not be fooled by any govt financial engineered statistical data. I enjoy trading both sides of the coin and my comments back it up;

      On December 1, 2014 at 5:06 pm – I comment about a downtrend that would be deeper then most traders are anticipating and also stated that I anticipated that the Santa Claus Rally (per my 2 phase definition) would very likely put a lid on the strength of this downtrend.
      December 16, 2014 at 7:59 pm – I comment that I was expecting the Santa Claus Rally Phase 1 (X-mas Rally) to begin on Dec 17th or Dec 18th. Also on varies other dates I commented about the extent (strength and duration of this rally.
      December 19, 2014 at 6:11 pm I comment that Santa was going to be pi-polar (nice and naughty) by granting us with the X-mas rally and Naughty after X-mas. I also posted this chart ( ) and here is an updated chart on how that played out to the day ( ). Also on varies dates I re-iterated the extent (strength and duration of this pullback.
      January 6, 2015 at 1:42 pm I comment I went long for varies reasons.
      January 7, 2015 at 9:06 pm I comment that I was punk’d on my ES short which I had re-gaged after cash markets close. I did covered it overnight and took a 15 or 16 point lost since I was having dinner with the family when that pop happened. I also sat out for rest of this rally as I tried to determine the next trade set-up.
      January 7, 2015 at 5:37 pm I comment on why this bounce would fail.
      On January 9th I went short ES at 2055.5. I did not post this but this is what I did.

    • Matador, trend leader USD/JPY. Carry trading all over the places…

    • SPX,all of Friday’s Intra-day price action set up a perfect bearish bat pattern, which I am hoping to sell @ 2059 -2061, Monday probably…

  11. zaracad9 says:

    Today was crucial for the gold bear case…Tethering on the edge. If short be very careful…GDX must turn down Monday for the bears…

  12. rabbittrader1 says:

    John Bell , I understand, and am sympatico with your post. Regarding WELI , It is already built into the STOCK MARKET CYCLE and Elliot Wave , which projects to 535 SPX ( or lower) by early 2017. R.

  13. afarsid says:

    Inverted cup and handle? Time frame is too short but worth a share…

  14. John Bell says:

    When I see EW people increasing the nesting of 1-2’s it worries me. I give it a little more time to play out and I will this time but very often the nesting of several to many levels of 1-2’s proves to be wrong. On the daily chart the massive negative divergence of the RSI(5) for the previous tops indicates weakening tops. The last new high had a much lower RSI and unless this RSI gets real energy soon it will probably drift in a sideways pattern like the price.

    Market needs some real juice soon. Where is it going to come from?
    BOJapan has played it all out.
    BOChina has played it all out and even Gov gave more stimulus – food stamps for all,etc.
    BOEngland is all played out.
    US FED is all played out for now.
    Only the ECB is left to play it all out and there are two problems (1) implementing a “fair” QE will be hard and Germany strongly objects to giving QE to weak nations and (2) the market has already front run a full ECB QE for January 22 and anything less that very full QE or delayed much more will disappoint the market. I do not think the ECB cannot surprise much on the upside now. Even Yellen made mention of markets front running Central Bank moves like ECB.

    Greece does complicate the whole ECB – QE picture. ECB Jan 22, Greece Jan 25. So rationally ECB may need to wait until the next meeting after Greece issue settles out. So can just give words of will do anything needed and call it a another day. Or go ahead and just not do any QE for Greece and let them default again and ECB and IMF lose all their money invested in Greece. Much more to lose this time.

    So the market juice has to come soon from ECB and be enough to mean something to the markets..

    • CB says:

      TY, John! Very interesting posts.

      • John, the only point to make is. the Market will not be allowed down, the risks are to to big. To many institutional investors are to far leveraged and tax payers money cannot be put at risk this time the implications would be disastrous. So even if it will not be official the FED will keep QE and will keep flooding liquidity in the market unofficially. So will do other CBs ( Japan, China, Russia and so on and on ). They will not let a new kind of bubble explode so early, recovery not strong enough and will be this for much more time, more than you and I could guess.

    • ECB needs to juice that market soon, or we’ll be juicing the pips…

  15. gtoptions says:

    Thanks Tony
    Elaborating on my earlier comment about the 13/34 CCI.
    Three daily technical concerns that would have to clear up quickly on Mon/Tues.
    SPX ~ 13/34 < 0 ~ MACD nearing 0, RSI/5 < 50.
    Comparison reference 4/9/14.
    Weekly charts remain bullish. I'm not bearish just cautious. Enjoy the weekend.

  16. RC, I want to thank you for your post concerning the VIX on Thursday’s update. Your insight in much appreciated, and I’m not just talking my book (have I mentioned I am short ES and long Treasuries and that I believe that the bull market ended with 2014 and that there is a nascent worldwide recession afoot?)

    Seriously, while there is a lot of useless prattle here day after day, there are a few real gems in addition to Tony who really make this place special, and you’re one of them. So thank you for taking the time to write that essay for us.

  17. blackjak100 says:

    TC, clearly still only 3 wave rally. Maybe my a=c=2062ish wave 2 call two days ago holds. I’m still on sidelines because I have no clue which way this thing goes. When does WLEI get concerning?

  18. playitkool says:

    Thanks Tony, I got this one wrong because the pullback was twice as large as I thought since I was expecting w4 and then w5 to finish the degree today. What percent do you give to this as B wave of a larger pullback with C down to follow? Looking forward to the weekend update.

  19. torehund says:

    Go-pro is 4 times as expensive as Peabody, thats nuts 🙂

    • CB says: many nuts, so little time..
      peer pressure, tore, everybody’s gotta have it now, right? cheers!

      • CB says:

        Nice, tore. Thanks. Def. looks like a wash-out… Here’s is the problem with cheap, though.. (just kidding)
        As our good friend Igor says : buy on strength (especially under today’s circumstances in the energy market, right?). So in this case, BTU would have to exceed $8-9 to consider buying it (?) what do you think, tore?

      • torehund says:

        Agree CB, a chart is a chart and a count is a count; amazing how they can add x Waves With a downward tilt, seems like all energy plays are trying to find a bottom and in 2000 or so Btu bottemed at 5,6 usd, its a retest but needs to hold…Still its a bluechip and worlds largest coal producer and it could be the buy of a decade.
        I am preparing counts to refuel into if I get good winners on my smallcap, little afraid to enter smaller coal comps as they are prone to BK..Arch coal is a smaller one that recently had an inside buy. But why bother With smaller comps when bluechips og for nut(tin) 🙂

      • CB says:

        Tore, thanks. Think you are looking in the right place. If Mario provides a good monetary stimulus it should kick of a new demand cycle in China and your material/energy stocks should benefit very nicely. If we all get that trigger and make money on those issues , we’ll know who to thank for the idea |that would be you 🙂 | Let’s watch them closely..

      • CB says:

        should kick off..that is..oops, .it’s getting late, isn’t it… : )

  20. afarsid says:

    Thanks Tony. WLEI at 45.6% is a bit concerning, a .5% drop. Do you give much credence to this indicator?

    • John Bell says:

      WLEI is now entering clear future economic recession projection possibilities levels and should not be ignored by objective analysis anymore. Furthermore the trend has been in steady decline for some time and it seems to now be accelerating to the downside.

      Below 45 is my key level or threshold to be of serious concern. We are nearing that now. At 40 area recession probabilities increase dramatically.

      Many bulls and bears tend to ignore or discount data when it does not go their way and then count it as important when it goes their way. Human nature. You try to make the scene fit your count and expectations of future outcomes. So ignore what does not fit well.

      For me personally the WLEI is one of the few untainted (uncorrupted) serious economic indicators out there. I respect the value. However a low WLEI does not always mean low stock market as FED or Government interventions can stop that. But it does mean the economy is not as strong as many people are saying. WLEI readings of 45.6 indicate to me we are getting more like Europe (weaker) than people think. US is not super strong on its own. A bunch of fudged key data does not equal the real economy. WLEI is probably more realistic about the real economy.

      Some previous low WLEI readings did not result in major stock bear markets because FED stepped in and jumped a ton of QE into the system. They are not in that game now except trying to strong arm ECB into providing QE as the US Fed does not want to or cannot get in that game any time real soon.

      If the economy was strong WLEI would be 53 or higher and oil, gas, electric power, raw materials use would all be increasing. They are all flat. And CAPEX captial expenditures are not growing much at all either – another sign of a weak economy.

      Have a nice weekend.

  21. fotis2 says:

    Thanks Tony a tricky close right at the end made a promising ascending but failed to make more than 5% headway the pattern usually fails if it doesnt shoot of straight away anyway as they say another day another trade have a lovely weekend 🙂

  22. Lee X says:

    Thanks Tony

  23. simpleiam says:

    Thank you, Tony.
    I’m clipping those coupons…

  24. rabbittrader1 says:

    Looking at a BEARISH descending triangle: To continue micro wave 3 to 2030 area monday and eventually completing minor wave1 at 1973 or so.. Havea nice weekend . R.

  25. INDU, SPX and FTSE are still BUY as per my model (even with this last hour fall) as of close.

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