Friday update

SHORT TERM: gap down opening then choppy, DOW -252

Overnight the Asian markets lost 0.5%. Europe opened higher, but lost 0.6%. US index futures were lower overnight, and at 8:30 Q4 GDP was reported lower: +2.6% v +5.0%. The market gapped down at the open to SPX 2010, rallied to 2019 in the opening minutes, then headed lower. At 9:45 the Chicago PMI was reported higher: 59.4 v 58.3, then at 9:55 Consumer sentiment was reported lower: 98.1 v 98.2. The pullback continued until 11:30 when the SPX hit 2000. After that it rallied to SPX 2016 by 12:30, pulled back to 2005 by 1:30, rallied to 2023 by 2:30, then started to decline again. At 12:45 FED governor Tarullo’s speech was released: http://www.federalreserve.gov/newsevents/speech/tarullo20150130a.htm. Heading into the close the SPX hit 1993, then bounced to close at 1995.

For the day the SPX/DOW were -1.35%, and the NDX/NAZ were -0.90%. Bonds gained 26 ticks, Crude rallied $3.05, Gold rose $27, and the USD was lower. Medium term support drops back to the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots. Today the WLEI was reported higher: 45.7% v 45.0%.

The market gapped down at the open, rallied, then made a low at SPX 2000. After that it rallied in three waves to SPX 2023 before heading even lower into the close. Another choppy day while hitting the SPX 1988/1993 area for the fourth time this month. We have a lot to cover in the weekend update. But if you have been keeping track of the daily reports you should be fairly up to date. Best to your weekend!

MEDIUM TERM: downtrend

LONGN TERM: bull market

CHARTS: http://stockcharts.com/public/1269446/tenpp

About tony caldaro

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52 Responses to Friday update

  1. ashram says:

    During the uptrend from the 2011 low, there have been five corrections larger than the current one. Each time, with the predictability of lemmings jumping off a cliff, the hysterics have emerged to declare a new bear market. With their Hindenburg Omens and convoluted wave counts, they have repeatedly managed to scare investors out of a participating in a historically powerful bull market, Each time they have been wrong, and each time they have shamelessly returned to be wrong yet again.

    The function of a bull market correction is to shake out those who are undercapitalized, weak-willed, or feeble-minded. The consolidation that began in December is succeeding beautifully. The hysterics are shrieking once more that a devastating bear market has arrived, yet a glance at the weekly chart reveals just a blip: a small pullback within a powerful uptrend with the primary trendline intact. This consolidation has been unusually volatile and complex, but in terms of amplitude it is just a normal pullback.

    The technical indicators which have produced hundred point SPX rallies for years identified the January 17 low, but this time the rally was only 75 points. Disappointing? Yes. Disastrous? That is wishful thinking on the part of those who are frequently wrong but never in doubt. The market is again approaching levels consistent with a significant low, so this is not exactly the optimal time to set your hair on fire and don your Robert Prechter mask.

    Unless…someone can construct a coherent EW count that identifies the December 2014 high as being the top of the bull market. Thus far, no one has met that challenge, or even come close. Lots of noise and chest-pounding from caterwauling dilettantes who view every pullback as the start of the Zombie Apochalypse, but we have witnessed their tired act countless times.

    This remains a bull market.

  2. infantguru says:

    Just a thought:

    If Feb closing is historically to be worse than Jan’s, then next week bottoming is unlikely.
    It needs to go down significantly so even after the Feb rally, later in the month and going into March should still put Feb’s close worse than Jan’s by some…

  3. student8888 says:

    bads news for bulls:

  4. Tony – Here is a chart of how I am seeing Minor C of Major 4 unfolding and why I am currently inclined to labeling yesterday’s 1989 low as Minute a of Minor C and yesterday’s 2025 high as minute b of Minor C. I also think it helps explain why the bullish BARR pattern failed to materialize.

    http://tos.mx/GJw3Af

  5. torehund says:


    scary banks are gambeling With deposits…still…

    • torehund says:

      So if the bank isnt smart enough to distribute Stocks back to the depositor before it all implodes the reluctant depositor Will loose the deposits, thats a loose loose situation.

  6. Caldaro whats your thoughts on biotech sectors . you have a chart . thinking the GILD or Kite Pharma’s of the world?

  7. M1 says:

    After all the noise I still see the same


  8. IAWT says:

    Bulls need an epic stick save. Still feel 1900, most likely a bit lower is in the cards. One day at a time. Thanks TC.

  9. I am thinking that your concept might be a very distinct possibility. The current count being shown while correct in it’s pattern could possibly be 1 degree of trend off. This is supported by the Elliott guideline that 4th waves usually end within the span of the 4th wave of one lesser degree, usually near the terminus. (Elliott Wave Princilple p.64) That would mean int IV of M3. which is 1820. My point is that there is plenty of room for the current pattern to be only int a of M4 and still end within the mentioned confines.

  10. JW says:

    For a market that is getting ready to melt down, it is interesting that the weekly $NYAD keeps going up:

    https://stockcharts.com/h-sc/ui?s=$NYAD&p=W&yr=1&mn=0&dy=0&id=t16816866044&a=384218048&r=1422659570389&cmd=print

    • blackjak100 says:

      I can’t figure that out either. If we are in a bear market like CN thinks, NYAD should not be near ATH aka Oct 2007. Everyone seems awfully bearish here which makes me think a run to 2070ish first is still in the works.

  11. Thanks Tony, today’s price action/candle/bar , IMO, has tilt heavily in favor of the 1929-1901 SPX Pivots (50% probability) for Major 4 measured target vs the 1956 Pivot (35% probability) vs retest of the 1821 Oct low (15% probability). The BARR bullish pattern that I was considering that would have increased the probability of the 1956 Pivot failed miserably as it failed just as fast as it attempted to break to the upside ( http://tos.mx/YFbOxp ). For now i’m going go with the plan of labeling yesterday’s 1989 low as Minute a of Minor C and yesterday’s 2025 high as minute b of Minor C

    • simpleiam says:

      Thanks Matador. A real consideration.

    • GYN LAB says:

      Thanks M, but Minor C needs to be 5 waves no? maybe the Minutes 1-2 with 3 starting today?

      • simpleiam says:

        Gyn, you mean minute 3 up? I don’t think so. Also, take a look at jobjas’ charts below. Both Matador and jobjas have interesting takes on Major 4. I’m not in the minute 3 camp at all. The question is: Are we in Minor C (Matador), or about to finish Minor A? I believe Matador when he says his barr test failed; see it on the chart, but think jobjas might also have part of the answer to this conundrum. I’m just going to have to wait and watch this play out. If we see a solid 10% down, I might also be inclined to consider P4.

      • simpleiam says:

        Gyn I realize you’re talking to Matador, but for 5 waves down, see jobjas. Doesn’t mean Matador doesn’t have 5 waves down… Anyway, that’s all. GL!

      • Gyn-
        Based on EW textbook yes, but real world not always that simple. Overtime you will notice that many, if not most, EW guys are always trying to label just about everything in 5 waves. I started out the same way then overtime, and also thanks to Tony, I learned that typically corrections trade like an old school report card with mainly A’s and B’s and occasionally a C. for example as Minor C continuously to subdivide Tony will very likely label Minor C as follow ( Minute a, Minute b, Micro a, Micro b, Micro c of Minute c of Minor C) while and EW guy will label it as plain vanilla (wave 1, 2, 3, 4 and 5). hope this helps.

  12. mjtplayer says:

    Thanks Tony!

    Triangle still working well, SPX just a few points from blowing out the lower TL. Could be a gap down Monday to take it out or one more bounce first, then take it out Tuesday – we’ll see.

    https://www.tradingview.com/e/u6UfPyLb/

    Today was day 4 in the VIX rally, VXX worked like a charm this week, should top out by Wed:

    https://www.tradingview.com/e/AKW7XYiO/

    • pooch77 says:

      With the weekly Stoch now pointing straight down it might be mid Feb for bottom, hate to go long when its half way down

      • mjtplayer says:

        I wouldn’t go long next week, looking for a temp low in stocks or high in the VIX middle of next week. Perhaps we complete minor A of int c next week and begin to rally in minor B? Agree with you, I’m looking for a bottom mid-late Feb.

      • robnaardin says:

        pooch, Monthly macd histogram is red for the first time since 2011.

  13. torehund says:

    Congrats to the bears today, good weekend to all.

  14. GYN LAB says:

    Thanks Mr T, and thanks bouraq for your awesome channel works!
    I have been following the (probably) wrong count all week but still managed to make money, not least helped by your channels!!

  15. fotis2 says:

    Thanks Tony getting a bit tough for the bulls one good thing seems the fog of direction is at last starting to clear up.

  16. pooch77 says:

    Hit 1223 then all hell breaks loose…tough to trade

  17. gtoptions says:

    Thanks Tony ~ Your daily and weekly updates are very much appreciated.
    USO had a small change in attitude since the 09 low break. The weekly chart below points out some short term resistance hurdles. Be careful.

    https://www.tradingview.com/x/PlxTLYRH/

  18. Thanks Tony! Sure trading like a bear market, imo 😉

  19. iamwhoiis says:

    CN, when a weekly Big Down occurs 4 weeks after the initial Big Down (SPX500), is that confirmation of the initial signal, or an entirely new signal?
    ps. I appreciate all that you do to help the rest of us learn about price action and its meaning…thank you

    • The confirmation was the lower close in the lower half of the weekly range the first trading week of the year. A week with a large weekly loss is not the same as a Big Down as I use the term. I refer to a set up situation, where as a large loss is simply a large loss.

  20. buddyslim says:

    we need a good puke down… to flush out the system before a move up

    looks like it’s coming soon

    • simpleiam says:

      Think a flush might be the end of A down. See jobjas chart above.

      • I am thinking that your concept might be a very distinct possibility. The current count being shown while correct in it’s pattern could possibly be 1 degree of trend off. This is supported by the Elliott guideline that 4th waves usually end within the span of the 4th wave of one lesser degree, usually near the terminus. (Elliott Wave Princilple p.64) That would mean int IV of M3. which is 1820. My point is that there is plenty of room for the current pattern to be only int a of M4 and still end within the mentioned confines.

      • simpleiam says:

        Hi tom. The concept is actually that of “jobjas”, who, like Matador, has been in the Major 4 camp for some time. It’s a big concern that the next uptrend of any sizeable amount could likely signify a B wave. Much depends upon where this downtrend ends.

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