Wednesday update

SHORT TERM: gap up opening immediately reversed, DOW -293

Overnight the Asian markets gained 0.2%. European markets opened lower and lost 0.9%. US index futures were higher overnight, and at 8:30 Durable goods orders were reported lower: -1.4% v +2.8%. The market gapped up at the open to SPX 2097, it had closed at 2092 yesterday. Right after the open, however, the market started to pullback. In the opening minutes the SPX hit 2087, bounced to 2094 by 10:30, then hit 2087 again just before 11am. After a bounce to SPX 2092 by 11am the market dropped to 2069 by 1:30. Another rally attempt could only manage a bounce to SPX 2075 by 2:30, then market headed lower to close at 2061.

For the day the SPX/DOW were -1.5%, and the NDX/NAZ were -2.35%. Bonds lost 10 ticks, Crude rallied $1.45, Gold rose $2, and the USD was lower. Medium term support drops to the 2019 and 1973 pivots, with resistance at the 2070 and 2085 pivots. Tomorrow: weekly Jobless claims at 8:30.

The market gapped up at the open today, but then immediately turned lower. Yesterday the cyclicals were putting downside pressure on the market while the growth sector was trying to rally. Today, the growth sector led lower. Around 11:30 the SPX broke key support, for the impulsive pattern, from the recent SPX 2040 low. This created an overlap between this pullback, which we were labeling Micro 4, and the SPX 2081 high, Micro 1. This overlap now makes the entire rally from SPX 2040 to 2115 look corrective. The five week failure to make back to back higher closes, and the constant gap openings, appear to have taken their toll on the uptrend. We now have to consider the recent SPX 2040 low as an A wave, and the SPX 2115 high as a B wave, with the C wave down currently underway. Under this scenario initial support would be naturally at SPX 2040, with the next support at the 2019 pivot. Short term support is at the SPX 2040 and the 2019 pivot, with resistance at the 2070 and 2085 pivots. Short term momentum ended the day extremely oversold. Best to your trading!

MEDIUM TERM: downtrend probabilities increasing

LONG TERM: bull market


About tony caldaro

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160 Responses to Wednesday update

  1. spr qome says:

    Below is a weekend post by FO Bella Waldo.. the pattern repeats again…

    “One strong indication of the possibility of a coming C is a stat provided by Andrew Kassen (Andrew Unknown) of See It Market. His study is that for the past 5 or 6 years, when the S&P visits the 100dma from above, it closes below at least once within 10 days. 42/42 or 43/43, and now it has only until this Thursday or it will be the first exception.”

  2. gtoptions says:

    Thx Tony
    My best EW guess.
    SPX 4th of 5 of C complete? Now lower into 5th target 61.8% @ 2034?
    GL All

  3. My count looks to be right, if so we are in wave 2 to 2080 are and then wave 3 down.

  4. H D says:

    20 point dips now 20 point rips?

  5. nardobeme says:

    OK Shiras… I’m ready for this rally to start. I think we’ll rally till Monday, and then?

    • nar..,2074, then 2090 and then 2110 are real resistances.

      I expected Thursday to be strongly UP, but Saudi/Yemen conflict spoiled my morning, barely managed breakfast profits, wish should have stayed till now.

  6. here comes 2077-2085 and then collapse to 1950

  7. arthurk says:

    Anybody have a clue to whats happening with bonds (TNX)? Usually rates fall when stocks selloff, but last few days both stocks and bonds down. Could this just be the result that Bullards comments about raising rates to prevent a bubble is causing both to fall?

    • tommyboys says:

      From what I see there is very little “flight to safety” on this drop – mostly rotational. If true all the dramatic talk of “wheels falling off” and “collapse” etc…will prove their promoters – once again – nonsensical. Every time we get a 3% pullback we get the end of the word preachers – go figure. Tony’s 2019 pivot ‘may’ be the low for this pullback in a ‘C’ wave completion – or the low is already in…time will tell😉

  8. mjtplayer says:

    “What was support is now resistance”

    The bottom TL of the ED was 2,060 yesterday and rising at about 2pts per day, so roughly 2,062 resistance today. Today’s high in the SPX with the intra-day rally: 2,062.48

    Support clearly broke this a.m., now rallying back to resistance; if we fail here then LL’s ahead and I doubt 2,040 will hold. Next stop would be to fill the open gap from 2/2/15 at 2,020.85

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