Wednesday update

SHORT TERM: gap up opening sold, DOW -196

Overnight the Asian markets gained 0.1%. Europe opened higher but ended mixed. US index futures were higher overnight, and the market gapped up to SPX 2042 – the high of the day. The market had closed at SPX 2030 yesterday. Right after the open the market started to decline and hit SPX 2023 by 11:30. It then rallied to SPX 2036 by 12:30, before pulling back to 2030 by 2pm just before the FOMC statement: Right after the statement the market rallied to SPX 2037, then reversed and made a new low for the day at 2018 by 2:30. After a bounce to SPX 2027 by 3pm, the market headed lower again. Heading into the close the SPX hit 2001, then closed at 2002.

For the day the SPX/DOW were -1.25%, and the NDX/NAZ were -0.75%. Bonds gained 26 ticks, Crude lost $1.90, Gold dropped $10 and the USD was higher. Medium term support drops to the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots. Tomorrow: weekly Jobless claims at 8:30, Pending home sales at 10am, and at 1pm FED governor Powell gives a speech.

Today the market had a gap opening for the seventh day in a row, and the fourteenth time out of eighteen trading days this month. This kind of volatility usually occurs during corrections. Despite several attempts to move to new highs this month, it looks like we have been in a correction since the SPX 2094 high in late-December. Completely missed it.

As a result of this probability we have moved our preferred count from the daily charts to the hourly charts. But have yet to update the weekly charts until the downtrend is confirmed. Since this pattern does look like an irregular Major wave 4 correction: A SPX 1973, B SPX 2094, and C underway. A flat could form with a retest of the OEW 1973 pivot to end Major 4. Should the market break that pivot, then we are probably looking at something more substantial. Short term support is now at the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots. Short term momentum ended the day quite oversold. Best to your trading!

MEDIUM TERM: downtrend highly probable

LONG TERM: bull market


About tony caldaro

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212 Responses to Wednesday update

  1. zvyezda says:

    The ‘fix’ was just leaked – after the cronies got it first:


  2. rabbittrader1 says:

    afarsid; looks to me like steady, slow, straight up from here to early MAY in SPX IMVHO.

  3. simpleiam says:

    Nice EOM buying. Should follow-thru Friday also. Hope it holds for Monday, but might be asking too much.

  4. Interesting day. Looks like lucy pulled the ball away again from Charlie Brown. Gap and go tomorrow.

  5. rabbittrader1 says:

    FWIW , Page et-al. Gold should LOSE an average of $20 per day over the next 12 business days. It broke DOWN today (confirming further DOWN move. I would NOT be buying GOLD STOCKS just YET. R.

  6. gasman88 says:

    If bears have any hope 150 dma needs to be broken. SPX touched and bounced off this line several times since Dec.

  7. fishonhook says:

    saved from another bearish breakdown.
    CN you have been nailing the turns recently

    • Thanks fish – I was thinking of you when I wrote the post below about support/resistance and overbought/oversold. I know you’ve expressed some frustration here in the past when you have felt price broke a support level but then rallied anyway. I’m not telling you what to think, but keeping those ideas in the back of your mind help put certain trends and the inevitable reactions in a perspective that might augment what you are already seeing yourself.

  8. here we go again, buy weakness… some follow trough tomorrow and here we go again to top of the range to sell strenght

  9. So far ABC up in the $INDU with A=C at the HOD

  10. Page says:

    My target for Gold around $1250 hit today, I have started long positions in Gold and gold miners.

  11. rabbittrader1 says:

    Triple bottom in SPX 1993-1988-1989, nice .rounded saucer bottom- Moving HIGHER into eraly MAY (for strarters , until correction. Note Gold dropping (asI said it would at possibly the $1300 area. Staying short gold till mid to late Feb, also short GDX and Silver until then. Not playing with the SPX , I;ll do better with GOLD. .

  12. tommyboys says:

    Shell made a paltry $3.3B for the Q. – UP from last year – go figure. Missed expectations by $800M but hey I’d take it. They are cutting some exploration investment – but so would I. Oil companies might cry the blues but I think they’ll be just fine.

  13. fotis2 says:

    That IHS is pointing to 2026

  14. blackjak100 says:

    Really would like one more flush below 1989 to buy. Just looks like we need it to complete 5 of c, but I’m not a great squiggle counter.

  15. fotis2 says:

    $/yen can overcome 118.800 tmrw should be green so far so good has staged a decent rally since yesterday than the other obstacle is the downtrend from 7 Dec would make it the 3rd touch around 120.000 thats the one to watch.

  16. mjtplayer says:

    Buddyglove – I see a bearish wedge pattern. Already confirmed in the DOW, today’s low in the SPX was wave D, now rallying in wave E. From what I’m looking at, Feb looks to volatile as we drop in int c to complete major 4 (or major A of P4) beginning next week.

  17. rc1269 says:

    uh oh cocoa just entered a bear mkt. must be due to the spike in the swiss franc and impact on swiss chocolate sales. hmmm

  18. buddyglove says:

    Good chance mkt has put in a sneaky low here (although always the danger of a short flush), which would give us a nice IHS setup, with new highs by the end of next week easily achievable.
    Aimho and GL.
    S&P fut 4 hour.

  19. GYN LAB says:

    From fib perspective, the indices hit and held the following levels so far:
    ES 1981 (.886 of 1970-2062)
    NQ 4100 (.764 of 4042-4286)
    TF 1165 (.618 of 1139-1206)
    I continue to stick to the Micro 1-2 of Minute iii scenario as this does look like an LD followed by a deep wave 2 pullback, which if confirmed will deliver a powerful Minutes iii, iv & v with shallow iv pullback. Breaking firmly below these levels, this count will RIP!

  20. H D says:

    Is there POMO today?

  21. buddyglove says:

    Watching carefully now as mkts are close or at my area of interest, and I am seeing some early bidding, and reversal signatures in futures mkts. Lows could be in or very close imo, and I am expecting strong tunaround today. bears need to take care imho..Good health and good fortune to all.

  22. chrisk44342 says:

    1-29 trading follow up

    • chrisk44342 says:

      I feel this is a good exercise for traders to follow. On the 6e trade, I anticipated where price might go based on support and resistance. I didn’t predict. Without actually trading the market, someone could look at my swing charts and say, hey, his 6e channel didn’t work! There are no absolutes in trading. Just as Tony says, you need to be willing to adapt and modify based on what you see, not what your prediction machine tells you. By using common sense, you can make trading work, but predicting the market is not part of the equation.

  23. mjtplayer says:

    I have the DOW in a bearish wedge pattern, which it broke yesterday, but the SPX in a triangle. At this a.m. low of 1,992 we put-in wave D, should rally up to 2,020 – 2,030 for an E wave to complete the int B triangle. If we drop a bit more in the SPX down to 1,988 or a bit lower, then the SPX would also be tracing-out a bearish wedge – but still in wave D. The DOW is leading and ahead of the SPX.

    DOW Bearish wedge:

    SPX triangle, but could turn into a bearish wedge:

  24. rc1269 says:

    Looking at the SPX monthly candles it appears to be forming a diamond top the last three months, January inclusive. If we open Feb below the Jan lows (presently 1988) then I think we could have some problems

  25. lbhkinqa says:

    Hi Tony,

    If Major wave 2 was a 10% retrace, Intermediate 2 was a 10% retrace, Intermediate 4 was a 10% retrace, doesn’t it follow that Major 4 should also be a 10% retrace?

  26. The $NYAD and $NYHL have provided a firm background for the primary bullish trend, but today once again the market is having a hard time finding a floor.

    • Here is how I am framing current price action in my mind: Remember Fiona’s demand line and the supply line I suggested? Those mark of a narrowing trading range where traders are more or less comfortable with current values. Price has trade down to, and in some case slightly below the demand line. IMO, price is now oversold. A rally could therefore be expected to develop from these levels. Trading to those demand/supply levels, and even trading slightly above or below them indicates overbought/oversold. This si where TA gets a bad reputation, because too many vendors/authors, etc. lead people to think of these levels, represented by the “lines” on you chart as “support” and “resistance, and people become frustrated with TA when a trendline “breaks” but doesn’t lead to the downtrend/uptrend they expect from “broken support” or “broken resistance.” Only once price starts to trend following trade through supply or demand is it safe to anticipate that the market is now seeking a new level of value. This works for me, but it may not work for others. It often requires one to change the way they have “learned” to judge the markets. This is where a study of Wyckoff (the real Richard Wyckoff and not the Wyckoff Institute version) can help, especially when coupled with a concerted effort to watch and observe price over a period of time.

    • torehund says:

      its just choppy action, no wave consistency, or x wave stuff if you like. Grand move is in the Works 2s is a game of patience..

  27. GYN LAB says:

    Good morning all!
    NQ and ES futures overshot the .764 retracement area this morning but hanging onto that support, and RUT futures brushed the .618 (all from last week’s rise). For bulls the time is now to rally from here to keep the Micro 1-2 of Minute iii count alive, today will probably provide answers to this!

  28. uncle10 says:

    Thanks Tony. I don’t think you “completely missed” anything. Yesterday at this time we were a decent day or two away from all time highs. Im still long with a stop below 2000 ( as always on closing basis).

  29. Just watch the 34 week MA line on weekly charts for indices… the rest is NOISE

    • blackjak100 says:

      Agreed…34 wk SMA sits at 1997 & 34 wk EMA sits at 1990ish. Overshoot is OK breach is not. Would like to see 1990ish to go long. small bounce first for 4 of c and then 5 of c to 1990ish. Internally, I just don’t see market as short term bearish. Int term bearish is possible.

    • The 34 wkly MA may hold for one last dead cat bounce but it will be cracked think of it as a trend line that has been tested/hit 4 (maybe 5) times already by this irregular Major 4 downtrend. Just saying

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