Wednesday update

SHORT TERM: gap down opening, DOW -187

Overnight the Asian markets lost 0.8%. Europe opened lower and lost 1.8%. US index futures were lower overnight as well. At 8:30 Retail sales were reported lower: -0.9% v +0.7%, Export prices lower: -1.2% v -1.2%, and Import prices lower: -0.1% v -0.2%. The market gapped down at the open to SPX 2006, declined to 2001, then rallied to 2013 just before 10am. At 10am Business inventories were reported higher: +0.2% v +0.2%. The market then headed lower in a choppy pattern until it hit SPX 1988 around 1:30. The market then started to drift higher ahead of the FED’s Beige book report: After the release the market rallied to SPX 2009 by 2:30, pulled back to 2000 by 3pm, then hit 2013 by 3:30. After that the market dipped to close at SPX 2011.

For the day the SPX/DOW were -0.80%, and the NDX/NAZ were -0.50%. Bonds gained 12 ticks, Crude rallied $2.45, Gold slipped $2, and the USD was lower. Medium term support drops to the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots. Tomorrow: weekly Jobless claims, the PPI, and the NY FED at 8:30; then the Philly FED at 10am.

The market gapped down at the open, bounced, and then took out support at SPX 1992 by early afternoon. This suggests the recent activity from SPX 1992-2064-1988 was at best an ABC Minute wave ii flat. If this weakened uptrend is ever going to enter a Minute wave iii, the time is now. We also posted an alternate count on the SPX daily chart. This suggests the December SPX 2079 high ended Major wave 3. And, the downtrend/uptrend since then were Intermediate waves A and B of an irregular Major wave 4. With the NDX in a Major wave 4 since late November this appears to be another probable count.

Should the market rise in five waves from SPX 1988 we should have a Minute iii underway. If not, and it starts to make lower lows the first support is the 1956/1973 pivots. After that we are looking at possibly the 1869/1901 pivots. We should get our answer before the end of the week. Short term support is at SPX 1988 and the 1973 pivot, with resistance at the 2019 pivot and SPX 2058. Short term momentum finally respected the positive divergence and rose to about neutral. Best to your trading this day traders market!

MEDIUM TERM: uptrend under pressure

LONG TERM: bull market


About tony caldaro

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260 Responses to Wednesday update

  1. SPX closes at … 1992 – does the market like suspense or what?!

    Initial reaction to INTC earnings is down.

    Anyone have an opinion on MU now that it’s back in the $20’s?

  2. afarsid says:

    GPRO just died….

  3. simpleiam says:

    MOC = $200M to the sell side.

  4. simpleiam says:

    Now, raise your hands if you’re really surprised that the Swiss didn’t inform Christine Lagarde of their intentions. Puh-leeease!

  5. fotis2 says:

    Adam and Eve double bottom should payout to 2020

  6. Hi Tony

    Any large cap stocks you like from here forward looking that you got on your list ?

  7. OPEX tomorrow, that could have an impact on market direction.

  8. rc1269 says:

    still seems like there are a lot of dip buyers here

  9. Alright! Now THIS is how you make money in the markets! Scaler is back from a short stint on the CVN76, USS Reagan, thanks to a buddy of mine who just happens to be an F18 WSO. Got me a ride. (not on the jet though 😦 ) Cool nonetheless.

    So, what the hell is happening? I think mostly just cap gains being taken in the new year. Oil’s problem is mostly over leveraged longs getting margined out. No biggy. Just allows us to take advantage. That said, I posted a chart the other day of the $RUT in Log scale which basically warned of this. Now where does TNA look to be headed? Well, look at the chart for clues!

    Remember to always draw your lines! Ideally the mid $60s would setup a monster bounce and 3rd tag of that falling trendline. Also would set up a low in the MACD and Stochs, my two favorite indicators. That will be perfect symmetry.

    What about ERX? I am going to scream from the hills again that that will be the biggest trade I make all year. I bought originally 5 Jan ’16 $40s at $20. I bought today 5 more at $15. My goal is to have 50 with a basis below $15 if possible. I just don’t think oil has too much left it on the downside. For those on the oil trade, this guy knows what he’s talking about:

    • I forgot to mention that Bradley is looming the end of the month. I said the other day that ideally we go down into month-end and then bottom on that Bradley cycle, setting up a big ramp into May. May 10 and 24 are monster Bradley dates for a big reversal. Dec 27th last year was one, and look what happened? Don’t believe in that stuff? Ignore at your peril.

      • spindoc73 says:

        you mentioned it the other day – the rebuttal seemed to imply though that astrology was predicting a rise into the end of the month.

        Spindoc73 says:
        January 8, 2015 at 2:04 pm
        “if the market was going to zoom to new highs in a straight line, it may be more likely to see folks here going all-in short. but instead a sense of capitulation is afoot and some exuberance on long sides. great place for a gut check down, but whether it breaks to new highs or new lows afterwards could be examined as it unfolds.”

        XScaler Echo 1 says:
        January 8, 2015 at 2:07 pm
        Bradley dates might have a say in that

      • Study the actual data and you’ll see that Bradley dates are 50/50, dartboard.

        Far more accurate/useful are Tony’s pivots for one.

    • tommyboys says:

      Interesting the price has dropped right back to the long term trendline. My contention is that this is exactly where it should be. Maybe some shorter term bounces above and below it but longer term it should be riding that trendline. So maybe no huge rally or collapse from here. Its all just been a needed correction back to fair value in an over leveraged asset class…

      • tommyboys says:

        Although “overshooting” to the downside for a bit wouldn’t be surprising considering the momo it’s gathered on the way down first…:)

  10. robnaardin says:

    2 o’clock inverted hammer looking good to get confirmation.

  11. $Baba long here 96.85 …this is for you Uncle

    • uncle10 says:

      thx. I remember while back when BABA was trading 88 your call was it would run 20 plus points, along with the market. then reverse hard and that would be the top of the market. It was a very good call on baba though the market kept going for a few months. why have you changed that and now bullish on market? too much port protection?? 😉 haha btw I closed 1/2 my short position this afternoon.

  12. gtoptions says:

    Last post from me today. Thanks ladies and gents.
    If this is an ending diagonal, the 1 to 1 symmetry with the b wave would be at 2023 from the 1988 low. Then you’ll have overlap of the ‘a’ wave. Thought are welcome. GL all.

    • robnaardin says:

      I didn’t like yesterdays bottom. I figured that rally was destined to crap out.
      Todays bottom looks a lot better.

  13. mjtplayer says:

    Today’s SNB decision to drop the Euro peg puts even more pressure on next weeks ECB meeting. With the Swiss bid gone, the Euro could accelerate lower, but if QE is announced next week the Euro could really tank – a double whammy. Looks like the Euro will join the Yen on the path to becoming toilet paper….

  14. rabbittrader1 says:

    This market has epilepsy, Nurse get your hypodermic needle and put it out of it’s misery..

  15. this is an ending diagonal pattern, but uptrend still need to make new high before major 4 will begin. the pattern also unfold the irregular price action of these day: every wave is formed by an abc

  16. stephenk1980 says:

    A bounce is now likely before 20:00, if it doesn’t materialise then it’s probably heading to the 1973 pivot as many are thinking.

    • stephenk1980 says:

      The 4hr chart says this bounce could be happening now, the 2 hour chart says we need one more low below 1990.7

    • rc1269 says:

      that sounds suspiciously like, “we should go up, but if we don’t go up, we’ll go down”

      • stephenk1980 says:

        haha you know nothing is guaranteed. I’m just saying that if there is to be a bounce, the only one I can currently see (a recognised pattern) is one that has to be before 20:00 and ideally it will make a low below 1990.7 beforehand too. If it doesn’t happen then I’ve no idea on further longs at this time and perhaps it will then go down to the pivot as others are expecting, but I have no more clues so yes, could do anything if that doesn’t work!

    • stephenk1980 says:

      So it’s 20:00 now and I’m in for the bounce. Sl low of today. Good luck to me!

  17. fotis2 says:

    Very tricky today cant see a setup either way

  18. After Monday’s trade I put out a signal alert to look for Long trades if the Emini broke above the 2,025 – 2,030 zone. And sure enough, we took off like a rocket first thing this morning and made it to 2,050. But that was it – it was like we hit a wall.

    Turned out to be a nice topping out pattern. Pull Back to End of Trend signals on the 1,500 and 4,500 tick charts. Plus Exhaustion Buying, Bearish Divergence and Pros active at the Highs. A nice trifecta of non-correlated Emini signals. Plus all happening before 11am Chicago time – so good for a reversal trade.

    But the strength of the sell-off was a complete surprise. We cracked through Monday’s Low and eventually bounced off 2,001. This level is now critical – plus it’s cyclical support on the daily charts for all the other market indices (Dow, NASDAQ and Russell). I’ll be watching 2,001 like a hawk tomorrow. For the uptrend to stay confirmed, this level has to hold.

  19. lunker1 says:

    Weekly 34EMA = 1984
    from 2064 5=1=1980
    from 2057 C=.62A=1978
    H&S = 1975
    from 2094 C=A=1962

  20. Tony – we have a wedge from the 2064 downtrend and it’s targeting near your 1973 Pivot. And I believe this favors the Major 4 is definitely in play here.

  21. Tony, yesterday you wrote “If this weakened uptrend is ever going to enter a Minute wave iii the time is now” – how does today’s action strike you?

  22. Ryan Parker says:

    Interesting that Europe (aside from the SMI today) has been stronger than the US this week. Generally we have been weak until they close and moved higher after that. DAX back over 10k and US down today. Interesting….

    • GYN LAB says:

      Catching up with the US from the 2014 lag?

    • rc1269 says:

      i think it’s just all EUR and ECB expectation driven. they will try to do to their market(s) what we’ve been doing to ours for years.
      the trade has been and will be – chase the next growing CB balance sheet. check out the Nikkei. japan’s economy is in complete shambles, but does it matter?
      it will work until it doesn’t

    • mjtplayer says:

      Just being priced in cheaper Euro’s, like the Nikkei and the Yen

  23. uncle10 says:

    ok. whats it going to be? ready?

  24. rc1269 says:

    it’s almost like all rips are being sold

  25. lunker1 says:

    H&S target 1975

  26. GYN LAB says:

    It would be nice to get the final flush down to 1973/1956 pivot to complete the flat Minor 2 today/tomorrow, sppok the market then turn around for bear squeeze in Minor 3!

  27. H D says:

    Tony, that 2019 pivot likes to party! think we have a double bottom pattern vs the pivot. JMHO

  28. still trying to figure how all this news with swiss etc is bullish european markets while obviously not so bullish us…dax and europe having a huge up day dax to new highs potentially closing here, and all week the divergence has been glaring ,,,,,could it be qe in europe while it ends here ?thoughts anyone?

  29. Might trade sideways today. Waiting for earnings from Intel, Kinder Morgan,Blackrock and Goldman sachs tomorrow. With a three day weekend Friday could be explosive either way.

  30. DOW likely jump 300 points in matter of minute. Thanks to my model

    • tommyboys says:

      Don’t blink with the VIX over 22. What is the premise of your model?

      • tommyboys, VIX is not the parameter. I am not putting details of my model. Enjoy fruits of my model for free. please do thank Tony as he is allowing me to post here. FYI, I have covered long of SPX for a while, but will be back in

    • buddyglove says:

      Your Model…is she Blonde or Brunette?

    • simpleiam says:

      Not a 300-pointer (yet), but a fast turn around!
      Nice call, SHRIHAS!

    • afarsid says:

      Can your model tell me what it will do after that 300 point jump? Now that would be something 🙂

      • ok, let me explain, Model when run on smaller time frame, gives buy/sell signal for smaller timeframe. Now, since,, it is on smaller time frame, signals get invalidated on smaller time frame as well. Didn’t I say “FYI, I have covered long of SPX for a while, but will be back in..”
        I said to alert everyone not to jump in.

        Now, smaller time frame makes bigger time frame. If today Market does not break yesterday’s low and crosses 2011 tomorrow (2011 is approx., final figure will come around close) , then it will be buy signal on longer time frame.

        My model is Blonde, so you know “academic intelligence wise” where it will stand. BG, are you reading?

      • tommyboys says:

        Clear as mud

  31. buddyglove says:

    Ideally, I would like to see a Pinocchio down into my bullish set-up zone @1960/70 cash.

  32. The economy is do FLUNKtastic…….Two month ago philly record +40 reading and today’s data was 6.3

  33. mjtplayer says:

    Glad to see the SNB cut their losses and come out to say the Euro-peg strategy isn’t working. To be “Franc”, the policy was stupid and turned out to be a complete disaster. I think now the Swiss realize the Euro is doomed and further actions will only continue tanking the Euro (ECB QE or a Greece exit). I view this move by the SNB as a type of stop loss on a bad trade – good for them to realize the bad policy, admit it, and then end it.

  34. scottycj1 says:

    The real selling is about to start 🙂

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