Wednesday update

SHORT TERM: gap down opening then choppy day, DOW +7

Overnight the Asian markets gained 0.7%. Europe opened lower and finished mixed. US index futures were lower overnight, and at 8:15 the ADP index was reported lower: 213k v 241k. The market gapped down at the open to SPX 2042, then bounced around a bit. The SPX had closed at 2050 yesterday. At 10am ISM services was reported higher: 56.7 v 56.2. The market hit SPX 2039 by 10:30 then tried to rally. At 11:30 the SPX hit a new high for the rally at 2052, then pulled back to 2042 by 12:30. After that the market bounced to SPX 2049 by 2pm, pulled back to 2042 again by 2:30, then tried to move higher. Heading into the last hour the SPX hit 2055, then sold off quickly to 2037 on an ECB Greek bank ruling, before bouncing into a 2042 close.

For the day the SPX/DOW were mixed, and the NDX/NAZ were -0.20%. Bonds gained 1 tick, Crude dropped $4.15, Gold rose $5, and the USD was higher. Medium term support remains at the 2019 and 1973 pivots, with resistance at the 2070 and 2085 pivots. Tomorrow: weekly Jobless claims and the Trade deficit at 8:30.

The market gapped down at the open, moving February’s gap opening streak to 3 for 3. After declining to SPX 2039 the market made several more waves on the way higher: 2052-2042-2055. This gives us an impulsive 9 waves up from Monday’s SPX 1981 low. However, the last several waves could have formed a small 5th wave diagonal triangle: 2050-2039-2052-2042-2055. This suggested the market could experience its largest pullback, since the rally began, next. And, the market started to decline in the last hour of trading. Short term support remains at SPX 2028 and the 2019 pivot, with resistance at SPX 2057/58 and the 2070 pivot. Short term momentum continued to display a negative divergence at todays highs, and ended the day at neutral. Best to your trading!

MEDIUM TERM: uptrend probably underway

LONG TERM: bull market


About tony caldaro

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219 Responses to Wednesday update

  1. simpleiam says:

    Would like to see a gap up over 2070 in the morning. 50/50. GL All!

  2. Bulls, If you are not selling here at 2060 you may need to get your brain examined for a sever case of greed. We are going down to 2030 before we go higher or straight down to 1960 from here.

    • simpleiam says:

      Matador, what do you think about this 2064 area? Do we need to get through it on this 3rd try, else, no good, or what?

      • This is a tough wave here, on one hand it’s the cleanness 5 waves up we have seen since this whole corrective move started but at a glance from a wave symmetry perspective one can almost pin it as a mini-me of Inter b wave. When I get home tonight I take a closer look to see if the wave structure is leaning either more bullish or bearish.

  3. simpleiam says:

    Really need to get past 2064, and preferably, up through 2070 pivot…

  4. fishonhook says:

    Anyone got the cajones to be short in front of the jobs report?
    The number is not important it is the reaction from the WS money-whores that counts.

    Good number = good we are in a recovery, or bad the Fed will raise rates
    Bad number = good, Fed will never raise rates or bad, we are heading into the world wide recession too.

    • johnnymagicmoney says:


      good number = best economy ever buy buy buy
      bad number = best economy ever buy buy buy

      that is basically what I see – bunch of retards out there

    • Dex T says:

      If the trend has turned and we are back to a “buying the dip” mentality the data won’t matter everything will be considered good even if it’s awful.

  5. lunker1 says:

    candle battle 55s 59r

  6. fotis2 says:

    This action is bullish broke above the downtrend line wich now looks like support broke out of the morning range potential target 2066 of course it can reverse but right now the trade looks long

  7. ashram says:

    V has broken out, and DD IBM JNJ TRV XOM are other DJI components near previous inflection points. That is 25% of the index, so a little more strength here could lead to much more strength in the near future. RUT also seems about ready to impose a coup de gras upon the End Of Days crowd.

    • CB says:

      Nice charts, Ash. Visa breakout is quite interesting.. either our consumer spending is really good or V got a nice boost from the Apple-pay deal..def. a good one to watch going forward..Thanks Ash.

  8. johnnymagicmoney says:

    so charts are psychology and humans create computers which the models are derivatives of their psychology but I wonder if any work has been done to study how the models run by computers are negating the pure psychology element (in essence partially destroying the value of wave theory or any techincal) of the market even though they are dervivatives of the human mind. How have algorithims made these moves less predictable versus before? I have seen so many situations in the charts where the it really looks likely that it will drop and it doesnt and visa versa to a degree that I question elliot or any technical analysis less than before. Am I making sense? Its like cocaine’s derivative in crack………..change a couple molecules and its worse even though its still coke!! How has the algorithims destroyed historical tehncial analysis is my question when in the past it was pure psychology emanating from orders from human beings??

    • magnus1234 says:

      I don’t know about such algos but I have had the same thoughts and believe I have observed it…no proof though

    • buddyglove says:

      JM…Financial mkts evolve and we up up against some of the finest, strategic and most devious minds in the world…no-one said it was easy.

      • perversionofthemean says:

        BG: so true. We’d never think to get on the court with LeBron or Kobe, yet we do so on Wall Street against myriad Ph.D. malevolents.
        If you can’t tell who the mark is…you’re the mark.
        What’s most insidious is the Zonk Principle. I teach, and we play a game called Zonk. Students get to draw different value ping pong balls from a bag. The catch is that there is a Zonk ball, that zeros your balance. As long as you stay in the game, you’re eventually going to draw the Zonk, and be wiped out. Flash-crashes, the ’87-crash, the ’29 crash, all of these should worry all who buy-and-hope. At the same time, lacking an effective system, trading the fractals can ruin an account too!

    • reddragonleo says:

      Simple answer:

      The markets were created to steal money from the sheep, and they’ve done ever since it all started. But in order for “them” to steal the money they have to get the majority of the sheep on one side a trade so they can take the other side and then program SkyNet to run the market in that direction.

      In the past technical’s worked quite well, as did elliottwave and Fib retracement levels. But that was back when only “they” had access to those studies and charts. Now with the internet the sheep have gotten the same access that the wolves have had. This means the sheep can attempt to follow what the wolves are doing and get on the same side of the trade as them.

      This naturally won’t work as the wolves can’t steal the sheep’s money if the sheep know what the wolves are doing or about to do. So they had to rewrite SkyNet’s algorithms so it wouldn’t follow commonly seen technical’s, elliottwave, retracement levels and chart patterns.

      Then they make sure to keep those algo’s secret so they can again go back to stealing the sheep’s money. You’ll notice that counting waves today isn’t anything like it was before the sheep had access to the same level of access to TA’s, EW, etc…

      Simply put… if a pattern is seen by too many sheep “they” (SkyNet) will trick them and not allow that pattern to work. So when we are all expecting nice wave counts with typical 23.6%, 38.2% counter trend waves to happen we aren’t likely going to see them.

      The huge bear squeezes up that we’ve had recently from the October 15th low of 1820 last year, December 16th low of 1972, January 6th low of 1992, January 15th low of 1991 and recent low of 1989 are perfect examples of straight up moves with next to nothing on pullback waves for waves 2 and 4 or a B wave.

      SkyNet knows we sheep are NOW counting the waves with charting analysis programs that available to every trader on the planet with internet access. So it doesn’t give us some nice predictable Fib level pullback to get long at. It’s just one huge move up with small pullbacks of 5% or so intraday.

      They force you to chase it up not knowing when it will end and they trick you by blasting through the easily known resistance levels on the way up as well as wave count estimated percentage lengths. So C doesn’t equal some nice 1.618% length of A anymore, nor does B pullback 38.2% or some other nice Fib level.

      It’s much, much harder now to predict the market then ever before as the more sheep that use TA’s, EW, Fib’s, etc… the more likely they won’t work. If the masses see it then SkyNet will manipulate the market so the pattern fails.

      There’s no easy way to figure it out either as SkyNet is of course tied into the release of news events that will move the market in one direction or the other. That was the case yesterday when that negative news about the ECB liquidity problem was conveniently released at 8:30 pm their time (3:30 pm EST) right when the SPX filled the 2052 gap low from 01/26.

      I was actually expecting the market to remain flat yesterday with a gap up today to fill that gap, which would have been shortable. But running it up yesterday to fill the gap and then releasing the news perfectly timed to dump the market quickly worked off the overbought condition I was seeing on the short term that would have produced a much deeper sell off if it would have happened today at the open.

      They timed that sell off during the last 30 minutes of the day so they could have the afterhours session and the morning session to save the market… which they did. If it would have happened at the open today traders would have had the entire day to sell it down, and that’s not what they wanted to happen…. so it didn’t.

      They caught traders off guard during that last 30 minutes of the day yesterday and got some new bears short in the market from that news. They used those shorts to squeeze the market up afterhours and this morning.

      Nothing in these world is random as all the news is controlled and released based on what “they” want to happen in the market. This isn’t new as it’s always been this way, but even more so today as there are only 6 companies that own 100% of every news media outlet out there.

      So it’s much easier for them to hold back the release of some negative piece of news until such time that the squeeze out the last bear, which they then release the news when none of the sheep are short (of course the wolves are) and down goes the market.

      As for today…

      What are the majority of the sheep looking for now? Is a squeeze coming as more retail shorts pile in from this obvious triple top zone we are at now (which are said to be rare as they usually breakthrough them)? Or is a dump happening with all the sheep long?

      I wish I knew the answer as I’d take a position but I don’t. It’s a toss of a coin for me predicting the next move here and it’s not a trade I want to take. But SkyNet knows the next move as it see’s all the sheeps’ hands. It knows where all the bulls’ and bears’ have their stops at and will steal the one with most… after all that’s what’s it’s programmed to do.

      • buddyglove says:

        Reddrag…excellent post.

      • johnnymagicmoney says:

        very nice reply ……………..I makes things frustrating. In some senses becoming more educated about the market has made me less effective lol. I feel powerless in this current market. Damned if I short, damned if I go long.

      • magnus1234 says:

        @Red…normaly I dont have the time nor the energy to read such a long reply. But this time I did. It was worth it.

      • reddragonleo says:

        Thanks Buddy, Johnny and Magnus… and normally I don’t have the time to write such a long post either. But I felt it was worth as too many traders aren’t aware of the impact the internet has had on trading. Now we sheep have too include ways of looking and the charts that the rest of the sheep don’t see… and take a chance that it’s the same thing SkyNet plans to do next.

      • Excellent and so true. Do not have time to go in detail but Goldman and 4 major banks have the ability to move the market in any direction they want. The best way to beat them at there own game is to do what I do NO SWING TRADES or POSITION TRADES.. I day
        trade 233 tick and consistently scalp $500 to $800 a day 5 days a week. Do the math.

  9. If we are in c wave down we are going to 2030, if we are in wave 3 up we are still going to 2030 before the uptrend resumes. easy money to be made on next 25 points down

  10. bhupal777 says:

    My analysis telling me that market will be going down very hard. But market doesn’t care about my view. So let the market reveal it’s intentions. We are very close to an inflection point.

  11. bhupal777 says:

    On S&P – Tomorrow’s close will tell us the market direction for coming weeks to come. No positions yet.

  12. bhupal777 says:

    Those who follow EW analysis, do see the same bearish count that I am seeing for $TWTR. Looks like going down after hours. Playing with PUT options (less than 1% risk on my account).

  13. johnnymagicmoney says:

    I shorted at 2059 lets see what happens…………….short leash here no pun intended

  14. We are going back down to 2030 from here at the minimum in bull scenario, in bear scenario we gonna drop very hard and fast.

  15. Looking at the S&P weekly chart, If a major Wave 5 is underway, are you looking for it to test the top of your trend line at $2200+?

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