Tuesday update

SHORT TERM: gap up opening again, DOW +305

Overnight the Asian markets lost 0.5%. Europe opened higher and gained 1.0%. US index futures were higher overnight, and the market gapped up to SPX 2032 at the open. The market had closed at SPX 2021 yesterday. By 10am the SPX had rallied to 2040, and then started to pullback. Also at 10am Factory orders were reported lower: -3.4% v -0.7%, and Auto sales were reported higher. The pullback lasted until noon: SPX 2029 at 11am, 2037 at 11:30, and 2028 by 12pm. Then the market rallied to SPX 2046 by 2pm, pulled back to 2038 by 2:30, then rallied to close at the high 2050.

For the day the SPX/DOW were +1.60%, and the NDX/NAZ were +1.00%. Bonds lost 28 ticks, Crude rallied $2.85, Gold slid $13, and the USD was lower. Medium term support remains at the 2019 and 1973 pivots, with resistance at the 2070 and 2085 pivots. Tomorrow: ADP at 8:15, then ISM services and a speech from FED governor Powell at 10am.

The market gapped up at the open for the second day in a row today. During January’s 15 gaps openings in 20 days, the market only gapped up twice in a row once. That was the three wave SPX 1992 to 2064 rally in early January. Today’s gap opening completed a third wave from yesterday’s SPX 1981 low: 2010-1993-2040. Pulled back to SPX 2028 for a fourth wave, then rallied to 2050 for a fifth wave. This advance is the first impulsive five wave rally since mid-December. That rally started an uptrend.

While we were expecting a downtrend low this week. We are kind of surprised it could of happened on Monday, and especially within the first half hour of trading. Even after yesterday’s rally we thought SPX 1973 could be revisited, if this rally failed to produce five waves. Now with five waves up probabilities suggest a new uptrend is underway. The most likely correction count, in the SPX/NAZ, would be a failed irregular Major wave 4 flat. In the DOW/NDX, just an irregular Major wave 4 flat as they both made lower lows. There is one of possibility: that of an ongoing Major wave 4 triangle with this being the D wave. This possibility is posted on the NDX charts. Short term support is now at SPX 2028 and the 2019 pivot, with resistance at SPX 2057/58 and the 2070 pivot. Short term momentum is displaying a slight negative divergence at today’s close. Best to your trading this volatile market!

MEDIUM TERM: uptrend may be underway

LONG TERM: bull market

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

About tony caldaro

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135 Responses to Tuesday update

  1. ABchart says:

    ECB suspends use of Greek bonds as collateral
    Intermediate top on european indices today as say yesterday…

  2. Walter Crane says:

    Looks like that 17 666 close on dow yesterday is making for a nice BEAR pie. Someone always knows beforehand, all the time.

  3. Don’t be too complacent….

  4. simpleiam says:

    Oh sheet!!! Not even 5 mins since I dropped my short(s)! Ha! Jumped back on short. GL All!

  5. spindoc73 says:

    If oil continues its fall and languishes, how long will it be before companies starting hemorrhaging assets? Anyone have an idea of how big the impact would be on the connected banks and real-estate markets? Boom towns popped up everywhere and started developed at a rapid clip. Gotta believe at the pace those booms developed, that leverage was abundant. If the bubble pops and ripples, the political currency to bail out the maligned consortium of banks and oil will be vanishing.

  6. simpleiam says:

    WTI down almost 8%! Geez…

    • torehund says:

      Impressive how these oil comps manages to keep their mcap, seems strange as oilservice has plummeted. Allegegly Chevron too back lost Revenues on selling Grease, smells booty….

      • simpleiam says:

        tore, most of the big cos. have investments from long ago at prices much less than price of crude now. Oil service doesn’t have that luxury; they invest in the here and now.

  7. torehund says:

    Tony time to open some bubbly water in Dry bulk ?, I have counted my fingers numb, no more BDI-counting for a long time.

  8. Is this rally from 1981 low still impulsive? Too sloppy for my taste.

  9. ashram says:

    Analogs can be treacherous, but this research provides historical context for the current SPX pattern:

  10. Hi Tony
    i signed up to word press just to leave you this note .
    i realize you follow the dow nasdaq and spx yet i feel you
    should atleast look at the $nya . i do see that you have noted
    the potential triangle on the nasdaq yet the nya shows a very clean
    triangle formation that has either completed or is in wave D ( maybe )
    the bearish side of this as i see it ( $nya ) is this has the potential to become
    a complex B wave . as of this morning ( feb 4 0926 pst ) the nya has failed
    to get above its jan 22nd swing high which is a must to give a bullish signal
    Look at the daily chart from july 2014 to today . it is a very textbook Elliott wave
    corrective pattern .the high on nov 25 would be an x wave and the drop into
    the dec 16 low is wave A of a triangle . the dec 26 high is wave B ( or is it ? )
    then wave C the jan 14 low and wave D ? ( the jan 22nd high ? or is it tracing out now ?)
    I initially called the friday-monday low wave E yet im starting to question that since this
    also apears to be tracing out the oposite of wave C ( implies this as wave D not the thrust
    to new highs from wave E ) bottom line on the bullish case and the triangle would require
    a poke above the jan 22 high at a minimum .
    bearish side of this would be .
    the drop from july 2014 to oct 2014 is still ABC ( A ) then the bounce into nov 25 some type
    of X wave , then the drop into dec 16 wave A of a complex B wave which would be putting
    in its final subdivisions . ( A B C D E ) .
    if this is true then the jan 22 high on the NYA will not be broken and what appears to be a bullish scenerio is actually a bearish scenario .
    for this reason i have covered my bullish short term trade and im flat with no speculative positions yet still long stocks in my longer term account .
    I know that getting to complicated with wave counts in most cases are somewhat a waste of time
    yet it is to soon to call this the bottom because the jan 22 high on the nya is the pivot-able swing high that will define the triangle .
    thanks for your posts over the years
    i hope you see the merrit in what im posting here .
    J Longwill

  11. reddragonleo says:

    I see one more move up tomorrow and then down the rest of this week and into next week.

  12. torehund says:

    BIB has been shaking lots and lots, think 3 of 3 the biggie is just around the corner.

  13. Ok guys, BIG DROP COMING. Buckle Up.

  14. uncle10 says:

    Hey Buddy this one is for you. I am long USD/JPY as of this am. I will stop out below 117. I will add above 118.5.

  15. fotis2 says:

    H&S on $/yen a break and close bellow 117.200 targets 116.400

  16. gtoptions says:

    Thanks Tony
    SPY ~ Holds WR1 @ 203.86 ~ Next WR2 @ 205.48

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  18. mjtplayer says:

    DOW bearish wedge still in effect, I count this rally over the last 2 days as minor B of int C, still need a C of C decline to complete major 4 (or A). A rise above the downtrend line would signal this may not be correct (just above 17,700). A rally above 17,840 busts this count.


  19. BTW

    it may be that it is not impulse

  20. sibyn says:

    My last short 2049. Max pain 2058-2064.
    Wating for final break 1980 then 1926, we’ll see.
    GL all and THX Tony.

  21. Hi Tony,
    One can count the last two days as a double zigzag. It seems to me, as a bullish count, that C down from this point is an extremely strong possibility. Furthermore, if you want a bearish count we completed a Minor wave 2 at the close and will begin wave 3 tomorrow.

  22. blackjak100 says:

    Where is the bear CN when the market rockets up from 1980? I think he will be right intermediate term and we will see 1972 breached soon. I’m going to be watching daily (and hourly to lesser extent) RSI and MACD for clues as they should make lower highs if and when s&p hit 2065ish. If there’s any divergence which has been a good guide the past couple of years, it’s the daily RSI.

    • CN is on twitter, where he will stay.

      • fishonhook says:

        Everyone disappears when they are wrong, only to return when all is forgotten. look at rabbit. probably lost half his net worth on S and P puts he was loading up end of last year abut whistling dixie now.

        We are all right for a while and then VERY wrong.

        • ariez5 says:

          FYI, CN trades on three time frames: position trading (weeks or months), swing (using Big Ups and Downs), and daily. I am pretty sure he is still short in his position account from 2093 (note: profitable), that he went long today on the swing Big Up signal (note: profitable), and that he trades both long and short in his daily account.

        • fotis2 says:

          Fish CN knows his stuff he’s been spot on majority of his calls plus very good advice on trading in general when someone knows more its advantageous to try and learn from them especially in trading not the easiest of things to be good at..

    • alexhartley1 says:

      I wouldn’t be knocking CN. Been bang on – read his twitter. Kudos CN

      • bossaenovae says:

        Agree, I don’t understand the acrimony CN has faced here lately. He made a bear market call, but you can be sure he didn’t put all his eggs in one basket and is waiting until his account is empty before changing his mind. All a trader can ask for is to be right more often than wrong, and then have the discipline to keep losses small and let winners run.

        His twitter account is a new bonus with teaching you can use.

  23. spindoc73 says:

    So how low do you guys and gals think this market will drop in the next two weeks? Any guesses?

  24. ashram says:

    Oil bottomed on the day that the cash CRB hit its 1998-2009 uptrend line, so a counter trend commodity rally is underway. Yet the weekly gold chart is highly problematic:


    With a deep retracement for Wave 2 and a five point reversal sloppy Wave 4 triangle, it is a classic bearish pattern. If gold can surmount the downtrend line, then the bulls are in business. However, a break below 1130 would indicate that a fifth wave washout is in progress, and the subsequent price behavior would probably resemble the action that occurred after the fourth reversal point of Wave 2 was violated.

    • Are you sure it’s a triangle and not a consolidation channel ?


    • torehund says:

      Ashram, agree gold is in “no mans land” however the miners are at life support and on further weakness it isnt wrong to just add some for the long term. Gold Will have its time later on. As to the other commodities I think a bear rally is in the Cards and if it lasts until implosion it could og pretty far…Greece is on the Virtual mend and shipping is their game..

    • fotis2 says:

      Looks like it agree not really a confident call on gold but crude chart much cleaner.

      • fotis2 says:

        In fact CN, Bouraq ,AB,BuddyG,jobjas,chrisk,torre,matador,bj ,sibyn, bhupal,cicelaska,lunk,simple, apologies if ive forgotten any one all these guys are obviously pros so look and learn it will not time wasted.

  25. ABchart says:

    Thanks Tony and all.
    My new update (R2K, COMPQ, DJIA, SPX, DAX, CAC + some thoughts):

    • simpleiam says:

      Thanks AB. Listen, I read some French, but not well enough to discern some details in your blog. Question: Is it an expanding wedge you’re seeing in SPX, RUT & others that you’re trying to convey?

      • ABchart says:

        Hello Simpleiam😉
        European indices are very bullish. Intermediate top tomorrow. They will start Thursday a decline, but not very deep (+/-3%).
        US indices are in a flat consolidation that Tony called irregular M4, as long as the support at 1970 holds. This before an uptrend, but I did not have very high goal (SPX 2118, DJIA 18300)
        You have to start to work on your French if you want a vacation here with a euro that will come down to 1/1 and perhaps $ 0.85 lol

      • 7dayyss says:

        M: If you use Google’s browser, once you’re on his page, right click and it will give you the option to translate into English. Cheers

  26. Anyone seeing a H&S on the S&P500 with a neck line of 1988?

  27. bouraq says:

    Today’s post:

  28. gtoptions says:

    Thanks Tony
    Strong day, pushed right into the next inflection point.

  29. Page says:

    SPX rally continues next couple days into Friday then sell off on Friday afternoon.

  30. torehund says:

    Thanks Tony.
    Looking good, not much to add.

  31. nardobeme says:

    Would not be surprised to see a gap up tomorrow, followed by a minor pullback…

  32. mjtplayer says:

    “Volatility will be the theme in 2015” – mjtplayer

    So far, so good. Volatility in spades, huge swings in both directions causing bulls and bears alike to get whiplash. More to come, it’s only Feb. Buy VIX in the mid teens, sell in the low-mid 20’s; rinse and repeat….

    • pimacanyon says:

      Thanks for the VIX reminder. I’ve been using VIX calls as a hedge against my long positions, but I think it’s also considering trading VIX as you’re suggesting here.

  33. bhupal777 says:

    Thanks Tony. Yes I clearly see 5 waves on SPX and $XLF. This is what I am thinking…..Tomorrow and Thursday would be wave 2 consolidation or pullback. Comes the Friday’s jobs number…. we gap up and go. As we all know gap ups or downs are generally Wave 3 motive wave characteristic.

    But……….Biotechnology stocks ($IBB) are at the cusp of breaking down of a rising wedge. $GILD is down 5% after hours. Entire day they have shown very weak action. In contrast Financials ($XLF) are very strong. Unless this is a sector rotation we might be in a fake rally again??? The next 2 days I will wait for more clues. Good Luck all.

  34. rabbittrader1 says:

    Walter crane ,fishonhook, fionamargaret, buddyglove and TONY. , The 9.2 year stock market cycle combined with the 41 month (inverted) cycle , can certainly extend for 4 months. I believe (know) it will . So we see today as the beginning of a fifth wave , which should end in VERY EARLY MAY at 2190 SPX. Though I am busy making money on my long CRUDE OIL, and GOLD SHORTS, and Wheat Short, I did venture to BUY SPXL ,ETF’s today. Remember ,friends, the U.S. STOCK MARKET is the ONLY market that the WORLD has to invest in Right Now. R.

    • Gary Lewis says:

      Shocking! Rabbit goes Bull! You are probably right. The market won’t go down until Central Banks are overthrown. There’s still a chance with Greece, but I think that the bankers would invade Greece and overthrow the government if there was any chance of default.

    • Walter Crane says:

      U happen to notice the number inside the Dow final closing price today. Expect more bear soon. I am not giving up on the bear. My UWTI exploded up today which was comforting.

  35. mharrison60 says:

    If this is all of Major 4 what is your sense for the likely duration of Major 5?


  36. Walter Crane says:

    Dow closes at 17666.40. Come on lets all short this. Its the top of wave 2. 666?

  37. Tony,
    Should the 4’s and C’s on the SPX charts be Purple instead of Green?

    • tommyboys says:

      Nice chart thx for posting…

    • blackjak100 says:

      I mentioned this last week (did not post chart), but it’s the only thing going against my wave 2/B count towards 2065ish. Flats generally end where they start, but we now have five waves complete and a 3-3-5 pattern so it can reverse anytime. However, it’s all about the bonds (not bass no treble)…………………..

      The pattern of weak NASDAQ data and strong NYSE data continued last week. It’s the bonds. About half of the issues traded on the NYSE are fixed income and with 10 year treasuries yields dropping well under 2%, fixed income funds are populating the soaring NYSE new high list. New lows are also soaring, there were over 100 on the NYSE each of the last 3 days of last week. There were also threatening levels of new lows on the NASDAQ.

      In other words, NASDAQ breadth data has been awful while the fixed income saturated NYSE breadth data has been great. Still favoring wave 3/C towards 1900ish very soon.

  38. fotis2 says:

    Thanks Tony!

  39. rolandu11 says:

    Thus, your indicator was right Tony

  40. mike7x says:

    Thanks Tony. The Jan. Jobs report looms large this Friday. And with all the volatility and large swings the market could make new highs by Friday’s close, and end Primary 3.(?) That would be a really short (new) Uptrend. A Primary 4 correction of ~15-20% heading our way soon?

  41. simpleiam says:

    Thank you, Tony!

  42. M1 says:

    Not so bad =)

  43. ashram says:

    The market appears to have initiated its third (and terminal) angle of ascent from the 2009 low. It should be a fun ride. Caution will be mandated when the October 2014/February 2015 uptrend line is violated:


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