Tuesday update

SHORT TERM: new highs, DOW +92

Overnight the Asian markets gained 0.1%. Europe opened higher and gained 0.6%. US index futures were higher overnight, and at 9am Case-Shiller was reported higher: +4.5% v +4.3%. The market opened one point below yesterday’s SPX 2110 close, ticked up to 2111, then pulled back to 2106 by 10am. At 10am Consumer confidence was reported lower: 96.4 v 102.9, and FED chair Yellen testified before the Senate: http://www.federalreserve.gov/newsevents/testimony/yellen20150224a.htm. During the testimony the market rallied to SPX 2117 by 11:30. Then it pulled back to SPX 2109 by 12:30. After that the market made a new high at SPX 2118 before dipping to 2115 at the close.

For the day the SPX/DOW were +0.40%, and the NDX/NAZ were +0.10%. Bonds gained 24 ticks, Crude slipped 35 cents, Gold slid $2, and the USD was higher. Medium term support remains at the 2085 and 2070 pivots, with resistance at the 2131 and 2198 pivots. Tomorrow: New home sales, and FED chair Yellen addresses Congress at 10am.

The market opened slightly lower today, put in its low for the day within the first hour for the sixth day in a row, then moved higher for the rest of the day. The market made another new high today at SPX 2118, as it continues to rise from Friday’s 2085 low with small pullbacks along the way. One of the three short term counts posted over the weekend, the 30% probability #2, was eliminated today with Greece getting final approval for the 4 month loan extension. The 10% probability option #1, suggests the maximum upside for the uptrend is SPX 2145. It is still in play and we raise its probabilityΒ toΒ 20%. Option #3, at now an 80% probability, continues to look like the most obvious count. Short term support is at the 2085 and 2070 pivots, with resistance now at the 2131 and 2198 pivots. Short term momentum is now overbought. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: bull market

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

About tony caldaro

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132 Responses to Tuesday update

  1. lunker1 says:

    test of 2010 support. Next S 2005/6. 1/2/4 hr candle close below 2005 are my stops for day/swing trades.

  2. Question, what happens when a trend line is hugged for considerable time?

  3. Everything closes Green. Gap and go tomorrow

  4. uncle10 says:

    Hey Tony. just checking in on the blog.
    Naz 5000 area is going to be some resistance.if looking left.. πŸ˜‰

  5. bhuggs52 says:

    Just got stopped out on my UPRO long; had adjusted the stop to 1%, and sorta glad I did, given what might be looming here. Made a 1.2% profit on the trade overall. Welcome to the big leagues.

  6. llerias7 says:

    Pullback soon for the minor 4 of Int.I down to OEW2070 ?

  7. take notice people, 10 of the 15 stock in NDX are well in the green but they are not enough to undo aapl’s damage to NDX today.

  8. robnaardin says:

    AAPL 50 Hma @ 129.63. πŸ˜‰

  9. fotis2 says:

    Srong clean breakout to the upside so far 2131 here we come .

  10. johnnymagicmoney says:

    Tony – I scanned a few past reports but am a tad confused. Roughly where do you see Primary 3 toping on the SPX before Primary 4 ….at what range again (preferred count)?

  11. Hi Tony,
    I highly respect your opinion. You have truly mastered the science of OEW. Nevertheless, recently I remember you gave wonderful advice to someone who came into some money and wanted to know if he should invest and you told him that you were not a financial advisor and that you felt that getting into the market at this point after the market has more than tripled in price would not be a good idea. This advise could not be more sound. Because just when you think the Fed is in complete control and the wave pattern is a cinch a virtual lock 80% probability. Where greed rules and the sky is the limit. That is when people need to be careful, to be prudent, to not chase the market and to wait for better opportunities. I know I may sound foolish to some of you, but so be it. Better a bird in the hand….

  12. CB says:

    or use those steep TLs (stops..) http://screencast.com/t/vUxYmZiPaQ GL all.

    • bhuggs52 says:

      Gotcha, CB. My stop would more likely be at 1% rather than the 5% if I track the TL on your chart. Hence the value of TL charts. Thanks. Although, my strategy was to avoid being stopped out on a short drop…so then do I compromise, and consider a 2% stop? I’m still learning.

      • gtoptions says:

        If you are trading UPRO, not holding. I personally would have a target price to exit, instead of waiting to get stopped out.

        Using fibonacci price extensions off of minor and major swings work well.
        Example only ~ UPRO 145.40 is the 127.2% ext of Dec/Feb High/Low swing.

        • bhuggs52 says:

          GT, thanks. I’m always so impressed with the extent of the technicals that you and some of the others operate with. Very professional. I’m hardly there yet, in those terms, and so appreciate your details. I am using the SPX itself, with the pivot just above, at 2131 as the target. So we’re probably talking apples/oranges here? And yet certainly, to have a grip on the fib extensions as you do–man, I’m just humble. Thanks again.

      • fotis2 says:

        Huggs I think everyone has a pet method mine is opening 2 positions and once the trade moves for me close one 1/2 way to target and trail the second at break even with a forward target limit.

      • CB says:

        You are welcome, bhuggs. Nice job on your trade,
        Agree with you, gt is a great technician. We all learn a lot from him every day. Thanks guys. GL everyone.

  13. mjtplayer says:

    Hey Tony – general market question for you regarding Nasdaq 5,000

    Everyone is expecting NAZ to hit 5k, financial media getting ready to drop the confetti. If there was ever upside resistance, it would be NAZ 5k. That said, it tells me there are to highly likely probabilities:

    1) Since everyone is expecting NAZ 5k, we don’t make it just yet and stop just short.

    2) We hit NAZ 5k, the media pop the champagne, and we sell-off (like $50 silver) – i.e. the obvious target.

    What are your thoughts? I know your wave count is predicting up and away, but do you really think NAZ 5k will provide no resistance on the first visit? Thanks

    • tony caldaro says:

      Still needs to rise about 3% to get there. Should be good for at least 2% for the SPX.
      Would expect some psychological resistance when it gets there.
      Took 15 years. The DOW, btw, took 25 years to get back to 1929 levels.
      If we use the DOW comparison: the 2000 high should offer temporary resistance, then the NAZ should blow right through it.

      • mjtplayer says:

        Thanks Tony. Yes, about 3% from ATH, but just 0.5% from NAZ 5,000.

        FYI: about an hour and a half ago, someone bought 31k contracts of the March VIX 23 strike calls. That’s a big trade, what’s notable is that the March VIX options contracts (which expire exactly 3 weeks from today) had zero volume around that strike, literally. No contracts traded today on the 20, 21, 22, 24, 25 or 26 VIX call strikes at the time of that purchase. Interesting trade, probably a hedge of a larger portfolio, but something to watch…

  14. bhuggs52 says:

    I want to thank Bhupal, JD and Simple for their comments below on my question about stops. I much appreciate the generosity of the experienced hands on this blog. Thanks as always also to the TopCat for leading the charge. The day I found my way to his blog, I kissed the Devil’s Ring goodbye and started to learn. I’m up 1.71% on my recent trade. If it can hit 2%, I’ll cash out and go pay my car insurance for the year. Bless you all.

  15. simpleiam says:

    Thanks for the Update Tony!

  16. gtoptions says:

    Thanks Tony
    SPY ~ Tues stalled at WR2 @ 212.04 ~ Next WR3 @ 213.03
    Possible retest or WR1 @ 211.43.
    GL All… Trade what you see…..

  17. fotis2 says:

    $/yen long to 119.250 support held nicely.Light crude looks also holding good support 48.00 so still long to 54.90 till proven wrong SP we shall see.GL guys and gals

  18. stormchaser80 says:

    This run looks long in the tooth. 10Y yield and oil leading lower. MACD on hourly chart looks out of steam.

    This rally never did trigger any of my NYMO/NAMO/Zweig breadth or participation index thrusts.

    The rally will end when it seems most likely that it will go on forever. We may be at that point.

    • tommyboys says:

      Not until all the guessing stops. If you puck the top “this time”.- you be in rare lucky company. Eventually someone will be right – its inevitable.

    • nardobeme says:

      Looks like you might have been right Storm. Congrats! As far as all the guessing comment by TBoys… this fine blog has both bears and bulls, and the in betweeners guessing the top/bottom on a daily basis. One is entitled to their opinion/ observation correct? I can see why CN left: the negativity here is really something…

  19. fishonhook says:

    Tony? Anyone else

    What pattern do you see with the cad?
    Basing for a move up
    Or 4th wave zig zag

  20. “When deflations ends, there will be about 15+ years of economic growth with generally low rates (not ZIRP). This gives governments time to lower Debt/GDP.
    After that inflation kicks in.
    Historical reference:
    1929-1949 deflation
    1949-1967 growth ”

    We know what type of jobs the economy created then. What industries are going to create that type of growth in the coming decade?

    • tony caldaro says:

      Job growth areas over the next two decades is going to require a lot more education than just the high school diploma of the 1950’s and 1960’s. That was a labor/services intensive society. This is a technology/services intensive society.
      Technology, Engineering, and Medical degrees probably offer the most growth potential.

      • Unfortunately we have a rapidly expanding portion of the population, who are unable to compete in these fields. That is likely to cause social problems.

        • tony caldaro says:

          That will take time, the 2030’s?, before it becomes a movement.
          First the new economy has to be established. That has not occurred yet.

        • simpleiam says:

          Agree w/you, Fetal. Already social challenges because of poor education. In Texas, The Electrical Workers Union is running 30-min. TV programs on weekends in desperate attempt to attract HS grads with decent grades with working knowledge of math, in order to train as electricians. Union will pay recruits all the way through trainings and benefits also. The comments repeated over and over again is employers can’t find qualified personnel with decent education background, even HS grads.

  21. filipozze says:

    2145 will be the end of minute wave 3 then up to 2250 to complete this cycle

  22. torehund says:

    Tony waving his firm bullish hand awaiting spring is nothing but a Perfect magic carpet for us to surf on into summer. I dont have much to add, my smallcaps are getting restless legs, doing their initial springlike and always spirited moves..
    Not too many worries right now, back in Peru and the beginning of Autumn bringing Waves from storms at the South pole. Helloes to all on the blog πŸ™‚

      • rabbittrader1 says:

        You ask a simple question, but a complicated one.. For many years, before 1971 t0 1974, and before President Nixon closed the gold window , silver traded at a ratio of 15 to one to gold . i.e, silver at about $2.35 per ounce and gold at $35.00 per ounce. After that in the late 1970’s to 1980 (a highly inflationary period) silver rose to $50.00 per ounce and gold to over $800 in late 1979 to early 1980. Gold had risen to about $250 per ounce in early 1979 and silver to about $35 per ounce in early 1979. . Then all hell broke loose. I remember speaking to the Mining Analysts Society in New York in 1978 ,when silver was about $15 to $20 and telling them that silver would soon be over $35 per ounce. The Hunt brothers were buying silver and had long positions on the Futures exchange. Paul Volker was FED CHAIRMAN and began raising interest rates to finally over 20% by early 1980.. The FEd also told the CFTC (Commodity Futures Trading Commission) to announce that NO ONE WAS PERMITTED TO BUY SILVER (or GOLD) Futures on the commodity exchanges until further notice. People were only permitted to SELL. ( SO MUCH FOR FREE ENTERPRISE, and CAPITALISM !!!) But that is another story ,about BANK exposure on the WRONG SIDE at the TIME. Anyway, with interest rates at 20% and a buying prohibition in precious metals and the HUNT brothers being pilloried for buying silver , the price of both metals plummeted. (Some people ,who thought they had a RIGHT to buy silver and gold LOST THEIR SHIRTS (and some killed themselves, over their losses By the way the US government has , from time to time SOLD GOLD from its reserves ,into the market to dampen speculation. They have not done this with SILVER, because the US government has NO MORE SILVER RESERVES. However there is an organization called the SILVER BUYERS INSTITUTE, (I may have the name wrong) They represent all the industrial users of ,silver,and they have a powerful lobby in Washington , that keeps silver prices low. NOW ,some say that silver (poor mans gold) will return someday to it’s historic ratio of 15 to 1 , in terms of gold. If it did ,with gold at $1211 per ounce that means silver should rise to $80 per ounce ( it is now $16.66 per ounce) Now I ,happen to think that buying circulated silver dollars and holding them for TRUE MONEY might be a good thing (to spend when everyone finally realizes that paper dolars are worthless) I also think that buying certain silver stocks like Coeur Mining ( CDE) might be a good idea, and buying silver trusts like USLV might be good. , BUT, I am waiting ! P.S. I spent 10 years in the mining business with a N.Y.S.E. silver and gold mining company. Yours truly, Rabbit.

  23. Im not quite sure why but i suddenly feel quite bearish..nasdaq up 10 days in row and approaching resistance apple leading the feel good nasdaq sentiment ,,,,es has had plenty good news last few days .greece yellen and supportive european markets ..most of the bears here have folded their tents…..pt call ratios were a bit more complacent of late..commitment of traders showed signifigant longs in dow and russel indexes (both heavily spec oriented )…. perhaps im groping

  24. bhupal777 says:

    Thanks Tony. All the longs working just fine, ITB being the best today. Entered EDC (EEM leveraged etf) at 25 with a stop loss of 24. Hoping it will ride to 29. That is 1:5 R/R.

    CYBR might have positioned to fall further starting tomorrow. Seeing very bearish H&S formation on an hourly chart. It can fall all the way back to 40.

    • bhuggs52 says:

      Bhupal, a question from a neophyte to your voice of experience, if you don’t mind. I took a long position in UPRO yesterday, with a %5 trailing stop. Shares are around 143.00, so my stop wouldn’t kick in until the ETF fell 7 points. So here’s my question? I think I need a tighter stop? And then it seems that stops will always depend on the particular instrument, price, market volatilities? And do I adjust my stops along the way sometimes? Curious to learn a bit more here. Thanks.

      • bhupal777 says:

        Bhuggs, I can’t comment on your trade’s stop loss. But I will explain why I entered EDC trade and why the stop loss is at 24 and why I think it has a potential to go to 28 or 29.
        Take a look at the chart.


        Remember that it is a short term trade. From the above chart, last 2 months of price action is contained with in the trend lines. Recently it has touched the bottom TL and reversed swiftly. In fact on 2/11, it almost looks like a fake out move down. That happened to be a 50 day SMA. After that move recently there is a 5 days of consolidation. Yesterday we have seen a really good green price bar moving up off of all that consolidation zone. I entered the breakout. To be on the right side of the trade the price should not violate the recent consolidation lower boundary which is 24. That is why the stop loss is at 24. Upper trend line resistance is at around 29 which is also under belly of 200 SMA. So prudent to take profits at major resistance lines and watch for more clues. My opinion is, stops should be based on the trade strategy.
        For example on $CYBR my stop is at 40, I entered at 55, that means I could only afford very small position to contain the losses to 0.5% of my total account. I believe CYBR will give up all the recent upside move all the way back to consolidation breakout zone around 40. If it doesn’t stop there it is very bearish. But if it stops and reverses then it is going to be a multi bagger as we are entering the euphoria phase of this bull market. Hope that helps.

        • bhuggs52 says:

          Thank for your comments and explanation. I can certainly see from the EDC chart where you’re going with your trade, and why your stop is where you have it. I also understand that stops will depend on strategy and how much I’m willing to risk in any correction off the trend that I based on the trade on. Your pointers are much appreciated.

      • JD C. says:

        Personally I try to buy on a daily chart. Higher lows all the way from spx 1075 up to spx 2019. At times reduce risk, at times add risk and options. Pick a time frame. After a while you will realize that whatever time frame you buy on that buying opportunities will present themselves. When buying don’t worry about ew counts, use them as a guideline, another tool. If you buy on a shorter time frame chart, sell some and use stops. If you buy low enough then hold with low stops and use ew as a guideline. If you bought in at the 2011 or 2012 lows you’d probably be satisfied reducing risk up here or trading shorter term, it’s all relative.

        • bhuggs52 says:

          JD, thanks for weighing in. Your charts are illustrative. And your comments. I realize that I’m trading for a potential rather smaller profit by taking a position well into this recent move, but that’s my risk-aversion at work. I think once I get better at this, I won’t wait as long into a move to position myself, and will take on risk more readily at those lower levels off the turns, especially once I learn to use the stops more effectively. Thanks again.

      • simpleiam says:

        “And do I adjust my stops along the way sometimes?”

        Hey hugs, with a 3X’s, adjusting stop might be a good idea.

        • bhuggs52 says:

          Hi Simple, still in the land of pasta and sauce? Are you going to visit Firenze? My favorite. And yeah, as I look at my stop on my recent trade, I’m like, hmmmm, I need to tighten that little dude so I’m riding with less risk. I can see it’s a matter of learning how to fine tune things. At least I’m in this trade with only 10% of my funds. Believe this, I used to go “all in” with no stops and then hold my breath. I have a lot to learn. Thanks again and enjoy if you’re still over the pond, and if not, welcome home!

  25. bouraq says:

    Todays post: $SP500 $DJIA $RUT $DAX $FTSE $NATGAS $CORN

  26. fishonhook says:

    Not one of the dumbass senators asked the old lady

    1) How come old Greenspan, whom you revere, told the japanese that they were wrong to support their banks and keep to ZIRP in the 1990’s and that is exactly what you are doing.
    2) The only reason we are at ZIRP is because of the failure of the Fed (and the dolt Greenspan advocating less Wall Street regulation) to prevent bubbles which then exploded and the answer is always more lax money
    3) Doesn’t ZIRP forever just steal money from savers and the prudent and hand it over to the speculators?
    4) The world has 50% MORE debt than 2008 when everything collapsed because of too much debt. You have just compounded the problem with your lax policies and free money for speculators.

    There is too much power in the hands of an un-elected person and the elected officials are too stupid to monitor things.

    • tony caldaro says:

      There is too much power in the hands of an un-elected person and the elected officials are too stupid to monitor things.
      Probably better that way too.
      Elected officials are only interested in getting re-elected, no nothing about running a central bank, and even less about running an economy.

    • mjtplayer says:

      Why do we have ZIRP forever? Two reasons: 1) Governments are broke, they can’t afford to pay higher rates and 2) Nobody wants the party to end, especially the politicians in power at the time (Obama). They just want to keep things going and hand-off the mess to the next guy/gal.

      Pay close attention to #1, this is why you’ll never have “normal” interest rates again. Even when the Fed begins raising rates, if they do, it will be a token gesture. Perhaps raising them to 1% or maybe 2%, but that’s it. The days of a 5% savings acct or money market are over.

    • purplember says:

      everyone is putting great faith into the FED and it looks great as long as stock is high. However the FED in 2007 didn’t even foresee a recession coming, said banks were adequate loan/debt level. FED has way too much power and don’t believe as smart as they think they are. even a blind pig can print & spend money but can’t do that forever.

      • tony caldaro says:

        That’s what they said in public, not what they thought in private.
        They knew there was a housing bubble, and the inverted yield curve in 2006 started the deflate gate. However, they did not know how corrupt the mortgage market had become.

      • joecthetruthteller says:

        Hence she objected to having the FED get AUDITED.

        • tony caldaro says:

          The FED is already audited.
          This bill is about Congress dictating monetary policy, not auditing the FED.
          Ron Paul wanted to audit the FED. Rand Paul wants to run it,

          • fishonhook says:

            Your faith in the intelligence of the dolts at the Fed Tony is misplaced.

            Greenspan was a complete idiot. he actually ruined lives by going out and saying ‘you should go short and variable on your mortgages, you will always do better than fixed”. He then raised rates 16 TIMES after that speech, killing anyone who took his advice. The records are there, look it up.

            A fool who could be removed until he was ready to leave. leaving a crisis in his wake. Nice.

          • chrisk44342 says:

            I think Greenspan needs more cowbell

          • tommyboys says:

            This whole discussion has been beaten with a stick for the past decade and a half. Either you’re young or newer to this blog and haven’t been over this or you just like beating a dead horse. Any crisis in the future is likely to come from a completely different area and totally unexpected. The “Fed” has gotten two decades of play and is scrutinized by my barber so it won’t come from there. Exhausting reading all this “what if” nonsense. “Play whats in front of you – who cares the cause” is my motto.

  27. soulsurfer says:

    Thanks Tony! A 2198+ target would fit well with the bull-flag pattern that formed and which targets low 2200s. For simplicity sake lets cap it at 2220. Then we have a 240p long intermediate i.

    Now, assuming the typical 5% correction as we’ve seen many times during this bull, then the SPX should fall back to ~2100 (re-test of breakout level: R become S), which would also be a 50% retrace of intermediate i; typical for a 2nd wave (in this case intermediate ii).

    Assuming standard extensions for intermediate iii and v; 1.618x and 2.00x, respectively, we then get to 2100 + 1.618×240=2488, and 2100 + 2.00×240 = 2580, respectively. The latter is right in the middle of your Primary III target! πŸ™‚ Can it be that simple!?!? πŸ™‚

  28. tony caldaro says:

    no maximum, just expecting 2198+

  29. JW says:

    Tony, what is the maximum upside for Option #3?

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