Friday update

SHORT TERM: market rebounds, DOW +191

Overnight the Asian market lost 0.7%. Europe opened lower but gained 1.2%. US index futures were lower overnight. At 8:30 the CPI was reported lower: -0.4% v -0.3%, and at 9:15 Industrial production was reported lower: -0.1% v +1.3%. The market opened one point above yesterday’s SPX 1991 close, rallied to 2001, then declined to 1988 just past 10am. At 10am Consumer sentiment was reported at a 12 year high: 98.2 v 93.6. The market then rallied to SPX 1212 just before 1pm, pulled back 2004 by 1:30, then hit 2020 just before a 2019 close.

For the day the SPX/DOW were +1.20%, and the NDX/NAZ were +1.35%. Bonds lost 20 ticks, Crude gained $2.30, Gold rallied $16, 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 decrease in the Monetary base: $3.941tn v $3.994tn. Today the WLEI was reported lower: 45% v 45.6%.

The market opened slightly higher today, rallied just above SPX 2000, then dropped down to hit 1988 again. After that the market moved higher into the close hitting the 2019 pivot. While the rally was over 30 points it did not subdivide suggesting it could be just another counter rally. However, the market did make a double bottom at SPX 1988 keeping the Minute wave ii flat pattern intact. More on this over the weekend. Short term support is at SPX 1988 and the 1973 pivot, with resistance at the 2019 pivot and SPX 2057. Short term momentum hit overbought, and ended the week there. Best to your weekend!

MEDIUM TERM: uptrend still in jeopardy

LONG TERM: bull market


About tony caldaro

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71 Responses to Friday update

  1. torehund says:

    never to give up, pattern is complex, but as I think BDI is ripe, watch coal for a possible end pattern, as boats cant sail emptyhanded…

  2. fotis2 says:

    Falling wedge breakout on $/yen possible bullish price movement to 118.650 next couple days last level of support 115.850.Waiting for a retest of break to go long.

  3. John Bell says:

    agree. Swiss win this long term as it is always better for people to live or get paid in a country that has a strong currency. And for many businesses which have to import a lot of goods, they can buy a lot more at less cost with stronger currency. You can buy a lot more stuff or it is much lower cost from weaker currency countries (all the euro area and others – Russia, Japan, etc.)

    The biggest winners are the people who live in France and work and get paid in Switzerland. They instantly got a 20% raise and have chosen to live in a cheaper area – France. Huge win for them.

    Swiss got tired of buying Euros to keep balance and that lead to keeping Euro up more than it should be.

    GS and others lost very big again in a currency trade again. First the huge loss when China let the Yuan float down and they lost millions and millions very quickly. Now Swiss thing and they lost millions and millions again instantly. No wonder GS and other investment houses have poor trading revenues. They are often on the wrong side of the trades (Short Swiss franc, Long China Yuan, Short US bonds) because they do not look at things objectively – “What would you do if you were China” and “What would you do if you were Switzerland” and “why is everybody buying US treasury bonds?”.

    This move came as no surprise to me as they already hinted about it last month. Just that is the way is has been, does not mean it will stay forever – China Yuan, Swiss franc, OPEC supporting oil prices while they lose market share.

    All of the countries that are devaluing their currencies face much higher costs for imported raw materials and goods. Ex: Japan, many small and medium businesses are going bankrupt because of the much higher internal costs for raw materials and imported parts.

    Japan needs a higher Yen to succeed economically, Europe needs a stronger Euro, Russia definitely understands this and wants a stronger Ruble once the west stops trashing their currency in the economic wars going on.

  4. robnaardin says:

    Thanks Tony

    If you look at the daily chart it looks like a triple bottom occurred over 3 days.
    Happy bullish engulfing day.

  5. Today was options expiration. Volume today was lower than yesterday.

  6. SPX: I apologize. I meant to say that the market will be in the top quadrant if it moves above 2032 now We still have to challenge and pass that area. I think we (gulp) will.🙂

  7. nardobeme says:

    Following/ trading IWM, a rising wedge formed today and broke out to the upside shortly after 12,00 Pacific Time. I do believe a great deal of traders had secured short holdings prior to this, which thus, helped ‘fuel’ the EOD gain with ‘panic’ covering. I read this earlier on the blog, and concur. I also noticed massive selling volume on the IWM after hours… Hmm
    Good Friday evening to all!

  8. SPX: Updating my numbers a bit. I do not know what will happen at 2065-2070 or if/when we even get there. However, pretty soon I expect/hope we challenge the small downtrend line …. and it “should” (🙂 ) happen roughly between SPX 2030 and SPX 2044, unless the Gods are peeved.
    The 200MA on the hourlies are at 2043 today. I think we get past it …… because …..

    On the dailies the SPX is in the top (strongest) quadrant of the broad channel I am tracking and as long as that holds, the market seem strong to me.

  9. rabbittrader1 says:

    Some are calling for a US dollar drop and a further move up in the precious metals. Others are calling for 2070 and then new ATH’s in SPX. Although premature in a top in SPX ,last October,I am 99% certain that we have made a CYCLE TOP IN THE DOW and SPX in late Dec. 2014. I think it is premature to buy gold and silver in here . I expect a top in gold ,and silver . Monday or Tuesday ,followed by a drop to SLIGHTLY below $1000 in gold by Feb-March and below $10 in silver. THAT WILL BE THE BUY OF THE DECADE in both metals! (Coming from someone who spent almost 10 years in the Mining business and in 1978 telling the Mining Analyst Society of New York to expect a move in silver to over $40 per ounce by 1980 (it went from $15 to $50.) WE WILL SOON BE AT 1800 in the SPX (for only the very beginning of this MAJOR C WAVE DOWN.. A new day will dawn in the market, but not for THREE YEARS. Look around you, ,listen to the MUSIC. It will be “Today;s the day, the Teddy BEARS have their PICNIC.”!! R.

  10. soulsurfer says:

    yesterday I did a market breadth study, with NYMO almost @ -40 (often where buy-able bottoms have occured over the past years). Today NYMO closed at -2. So far so good. IF NYMO can turn + early next week, then it will favor the bulls and the SI’s will then start to turn back up as well, further cementing the bull case.

  11. simpleiam says:

    I haven’t checked all the action for today yet, but much of this rally (certainly not all), esp. toward EOD has the look of short-covering. As Tony stated, “Up without subdividing [par]…” is the first thing I noticed too. Now saying the rally won’t continue, but…just sayin’. GL All.

    • simpleiam says:

      REVISED: “NOT saying the rally won’t continue…” Sheesh! Apologies Folks.

    • thecustomer14 says:

      Right – a 1 day relief rally after 5 straight days down (and 10 down days out of the last 13) should be viewed with at least some measure of skepticism.

    • torehund says:

      simple, the ascent from a w-2 bottom is always brisk, ragged and has retracement qualities to it in abcs, that way it quickly makes new highs and a more impulsive character takes over…

      • torehund says:

        w1 and w3 (first part), and last part are RACE CARS, smells of burning rubber. Middle part is when common folks participate, walk in the park if you like…

      • simpleiam says:

        Thanks tore. Mostly I’m questioning the rise in the last ~45mins. I’ve had a long trading position on since 1992ish.

      • torehund says:

        You are welcome Simple, the Elliott wave Thing is really easy to understand if you think how group behaviour Works, that way; when folks miss out it goes fast in abc fashion and then when all agree it makes smooth Fives. However on a larger scale it morps into a 5, even with these positively tilted abc movements within it (w1, w3 start and tail end). The most important Clue is that the market never makes a wave that can only be interpreted as a 3 or a 5, it upholds the universal rule of Perfect ambivalence. Also note that a motive wave may start With the end (the 5th wave), upside Down if folks are very pessimistic to begin With. To apprehend this takes experience, but in EW the most difficult skill is to keep the different Dimensions right.

      • simpleiam says:

        tore, I like the term “perfect ambivalence”. Fits the situation(s), well, perfectly.
        Have a great evening. Will TTYL this weekend. Ride the liquid dream, Friend!!!

  12. Peter Sliney says:

    The $SPX 2100 Claw is using all it’s might to pull us back up. A close above the 50 DMA should lock it up.

  13. mharrison60 says:

    What are folks thoughts on market reaction if ECB does launch QE this month – major up, flat or a bored reaction taking us down? Thanks

    This has been speculated and flagged so many times and even more this week, yet on balance I guess if it is announced there will be a rally that there is finally confirmation.

  14. ashram says:

    fotis2 says:
    January 16, 2015 at 12:24 am

    Ashram CN and many others on this site are highly respected, profesional traders who continuously post their views and take on the market based on real life, long term experience and I for one and Im sure many others have benefitted immensely from their willingness to do so.Clogging the site with useless comments doesn’t cut it

    Then stop posting them.
    And your screed would be so much more compelling if you knew how to spell.

    • fotis2 says:

      And my comment ends…
      ….Post your view on where the market is going and why it is going there…

      • torehund says:

        I have posted two Charts on gold the last week, one on the gold bug index, and on gold itself. There is a valid bottom for gold now, who knows what it may morph into, a bear retracing 50 percent of the fall from the top, a lower top almost retest of the top in a wave 2, a wave 5 awaiting after a 4 bottom or a wave 3 awaiting suprising all those supporters of sub 1000 gold. Point is we dont know, what we do know is that currencies are running Wild and countries print like never before, and gold is protecting the Japanese, the Chinese and a Whole lot of folks in different countries from what just hapened in Russia. Currencies are running into peril, world wide.

    • jeffbalin says:

      Wow, brilliant CN. What a post!
      Anyhow, you’re really appreciated here, you’re a very valuable part of the family, thank you.

    • fotis2 says:


      Gee whiz a long on gold hey who would of thought please inform us next time Mr.Anonymous makes a call since you seem familiar with his various aliases or should we just rather wait for the Grasshopper?🙂😉

      • CB says:

        no idea what you should do,’s up to you…everyone has a pair of eyes to see what they need to see…maybe you should ask CN -he seems to have all the answers 🙂

  15. Hope everyone loaded up long at the open per last night’s post. Easy money.

    Thx Tony, looking forward to some good weekend reading as usual.

    Blackjack – agreed. Not sure if we’ll stop at 2070 or make new ATH, will let my indicator do its thing, the strong buy signal it gave at yesterday’s close was a thing of beauty, usually brings 500-1000 points in the DJIA so that would put the SPX at or near ATH. Have a great weekend all, we’ll do it all over again next week.

    • JW says:

      Would you care to describe what your indicator is?

      • It’s proprietary but I’ll be happy to share the next signal as well. So far the results have been amazing, we’ll see how long it continues to be so prescient and trade the heck out of it.

        Previous Buy signal was Dec 16, expecting similar results this time as well, off to a great start, love the fact that so many remain so skeptical; when everyone relents and starts buying, I’ll sell. GL

  16. torehund says:

    Tony think you were right all along, good weekend to boardmembers. lets see the USD show some weakness and retrace most gains in a relentless bull With some topping of gap and goes🙂

  17. blackjak100 says:

    Over 2025…bottom is likely in? I completely disagree as flat pattern suggests a target of 2070 pivot. Bottom is only in with new ATH I’m afraid. Since dec 1st, 44% of trading days triggered HO signals. This is simply amazing! Market internals have been a mess for 6 weeks. It would not shock me to see 2070 pivot next week followed by third wave down. GL and cheers!

    • simpleiam says:

      Hi bj. Don’t know where the 2025 level is coming from; I don’t see it in today’s or yesterdays Updates. Agree that correction still possible for quite some way up. 2070 max, looks about right. Thanks for posting the signals and all.

    • simpleiam says:

      Sorry bj. I see the post below w/2025 reference in it.

  18. hrmny358 says:

    WLEI was reported lower: 45% v 45.6%.
    Anybody concerned? Or just another chance for a stick save by a CB?

  19. fotis2 says:

    Thanks Tony ive noticed over a period of time that when bullish patterns start failing on the upside and bearish on the downside its usually the first warning of a possible trend reversal although lately by the time you blink its already gone up or down.Anyway have a nice weekend🙂

  20. rc1269 says:

    Thanks Tony. Good stuff.

    yo CN, this is in response to your Q on thursday page:

    i don’t day trade (stocks) myself, but now and then if i see something that somebody who does day trade might value and i’m not busy earning an income, then i’ll try to share it.
    we got EL candles on both spx and indu today, so sure there’s a decent chance for a pop. however, that trade failed on a very similar setup on 10/8. after jan 13th’s recent epic failure i’m weary that we’re still in full steam ahead mode. all that’s to say… i think we’ll get a chance to go the right way on Tuesday.😉

    cheers everyone, enjoy the long weekend. thx again TC

    • afarsid says:

      Thank you Tony! Interesting week
      rC, great call earlier brother . Touché

    • lbribiescas says:

      RC, if I recall correctly I believe you have a good handle on the credit markets. If so, do you see any counter-party risk building? CHF had to be one of the biggest carry trades in the market alongside Yen and Euro. With oil imploding and treasuries sucking liquidity out of the market it would seem risks are building and credit lines are being checked. Any thoughts you have would be appreciated.

    • Thanks RC. And I reiterate, that was a great read today – Kudos! Now, what is haunting me is your rather cryptic “I think we’ll get a chance to go the right way on Tuesday,” with the winky eye. 30 year bonds sold down 2 handles from the highs. That is also haunting me a bit. 🙂 Have a great weekend, and as always, thanks for your insight!

  21. Ryan Parker says:

    At first glance today was pretty encouraging. My preliminary look is that if the SPX gets over 2025 the bottom is likely in. 150dma held on SPX plus it closed over the 20 week MA as well which has been key weekly support for a while. Still some things to be concerned about but pessimism is EXTREME from my talks with others. The talking heads (news) have the public scared to death and the market is only down 5%.

    From an e-wave perspective on the SPX I can count the following:
    A= 2094-1992= 102
    B= 1992-2064= 72
    C= 2064-1988= 76

    C subdivides into 5 waves:
    1= 2064-2023= 41
    2= 2023-2057= 34
    3= 2057-1988= 69 or ~1.618 x wave 1
    4= 1988-2021- 33
    5= 2021-1988= 33

    Waves 2 and 4 are almost identical. Waves 2 and 4 don’t overlap. Thus if we take out 2025 the bottom is likely in IMO.

    • Ryan, also note that the 5th wave of wave C also had formed an ED wedge. And the slow start and corrective appearance of the rally from the double lead me to think that we might have entered a horizontal channel consolidation zone. Interestingly enough today’s rally stop neat the top of the TL of the horizontal channel.

      see chart

      It’s a very interesting inflection point no doubt about.

    • soulsurfer says:

      Thanks Ryan,

      one can also see that, using Tony’s Major 3-4 count, at SPX 1988 minute c of minor c was exactly 1.618x minute a (2064->2022), measured from b (2057). At SPX1988 intermediate c= intermediate a, from b (2093): a is from 2079->1972 [105p], c is from 2093-105=1988. Picture perfect.

  22. maxmax12 says:

    Love your site, Tony.

  23. bhuggs52 says:

    Many thanks, Tony. I look forward to Saturday morning Joe and the man with the know. It’s the closest I come each week to going to church.

  24. bhupal777 says:

    Tony, We are at an inflection point whether uptrend continues or more down move yet to come. Though you don’t have a crystal ball but your vast experience and EW skills come to light here. So I am eagerly waiting for your Weekend update. Thank You.

  25. the Dax has gone berserk it was up 500 points on the week yet we were down here and got dragged up today by the extremity of the german and other euro rallies … I have to think this is bearish action till proven otherwise

  26. simpleiam says:

    Thank you, Tony! Much appreciated…

    “While the rally was over 30 points it did not subdivide suggesting it could be just another counter rally. However, the market did make a double bottom at SPX 1988 keeping the Minute wave ii flat pattern intact. More on this over the weekend.”

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