Wednesday update

SHORT TERM: gap up opening, DOW +76

Overnight the Asian markets lost 0.3%. Europe opened lower but gained 0.3%. US index futures were higher overnight as earnings season got underway. At 8:30 the NY FED was reported contracting: -1.2 v +6.9, and at 9:15 Industrial production was lower: -0.6% v +0.1%. The market gapped up at the open to SPX 2104, then rose to 2109 just before 10am. At 10am the NAHB was reported higher: 56 v 53. At 11:30 the SPX hit 2103, and then resumed the rally. At 2pm the FED released its Beige book: At 3pm the SPX hit 2112, then pulled back to close at 2107.

For the day the SPX/DOW gained 0.45%, and the NDX/NAZ gained 0.65%. Bonds gained 5 ticks, Crude rallied $2.65, Gold rose $10, and the USD was lower. Medium term support remains at the 2085 and 2070 pivots, with resistance at the 2131 and 2198 pivots. Tomorrow: weekly Jobless claims and Housing starts at 8:30, then the Philly FED at 10am.

The market gapped up at the open for the first time in over two weeks (March 30th). That gap up opening carried the SPX to 2089 by 3:30, then two days later it was at 2048. Today’s rally carried the SPX to 2112 by 3pm. Also of note, the SPX closed over 2100, the DOW closed over 18,000 and the NAZ closed over 5,000 again. The only two times this type of event occurred was the beginning of March, which led to the SPX 2040 low, and the middle of March, which lead to the SPX 2046 low. Inflection point?

We continue to see this advance, from SPX 2048, as choppy: 2072-2057-2090-2073-2088-2074-2108-2083-2112. One in our group suggested the 2073-2088-2074 was a failed flat and the rally is impulsing. Possible. Let’s see how the market handles the remainder of this week. Short term support remains at the 2085 and 2070 pivots, with resistance at SPX 2115 and SPX 2120. Short term momentum is displaying a slight negative divergence. Best to your trading!

MEDIUM TERM: still an uptrend

LONG TERM: bull market


About tony caldaro

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163 Responses to Wednesday update

  1. I can see the bull herd in denial already. Market is gonna go to new highs because statistically blah blah blah has happened in the past. This is not a normal market, it is a freaking bubble- anything can happen (go wrong) at any moment.

  2. learner3078 says:

    Hi Tony, noticed a small correction in USD these few days, what is your view regarding USD in the short term and medium term? Thanks.

  3. Lee X says:

    I’m offering free hugs for the blog today , who’s first ?
    Some interesting and spot on comments by B G today re :NG and his feeling about SPX acting a little off. Sort thru the crap and ul find good stuff
    Smoke em if ya got em

  4. nardobeme says:

    Still on sell, as of yesterday afternoon. Today’s little move is actually causing further -div with my indicator. Something is brewing…

    • jhjoyner says:

      Market continues to sell off the last hour of trading. Not a strong market

      • IAWT says:

        Lot of negative comments on the board today. Would expect this thing to take off to the upside starting tomorrow….

    • buddyglove says:

      Nard…just been over to ZH to see “whats brewing” and this is their headline…
      “Dutch Central Banker Fired For Being A “Nazi Cross-Dressing, Nymphomaniac, Dominatrix” Prostitute”…Hope this helps.

  5. Page says:

    This market is on life support until tomorrow. I am still long but will exit by tomorrow and take some short position for rainy days.

  6. mjtplayer says:

    VIX just ticked under last Friday’s low of 12.51; just printed 12.50 – possible double bottom?? Just like in late Feb, a low then a bounce in the VIX, only to reverse and test the low to make a double bottom – then a 33% rally over the next 7 trading days, bringing the VIX from the bottom to the top of the BB.

    This LL creates a huge +div on the VIX daily chart. Bollinger bands getting squeezed, May VIX contract ticked under 15 too – with 5 weeks till expiration! Simply amazing how much volatility has been squeezed out of the market over the past couple weeks. Absolutely no fear, a very complacent market.

    • If you controlled the market and knew the market was going down (huge correction/crash) in the near term. Would you manipulate the vix to make it appear everything is fine? Would you manipulate gold & silver? Would you manipulate the news and influence the media?

  7. berniebaruch says:

    For the group:\
    Seems like the big boys have been sitting on the vix for an extended period of time……longer than the norm. Year end volatility in April. Any thoughts?

  8. stephenk1980 says:

    Something is not right with this: Dax tanking, yet risk currencies and US stock markets higher. My guess is the FED is now going to push out the first interest rate rise, hence the $ becoming weaker and helping risk currencies and putting a floor under the US markets, but conversely hitting the German market due to the strengthening Euro. Nothing else seems to make sense to me right now.

  9. DAX has shed over 400 points from its highs. Down today nearly 4 times FTSE & CAC in percentage terms. Seems to be finishing (or has finished) a 3 of “3” type decline today. Not sure of the degree. The “3” could be wave c meaning this decline is nearly over having already retraced 58.5% of its recent advance from 11619. This is the most bullish option and would make this correction, assuming your labelling TC is accurate thus far, Minute 2 of Minor 5 of Int. V of Primary III. The only other possibility I can see is that all of Minor 5 is complete which would mean Primary III is over and the DAX is in Primary IV. In that case Minors 1, 3, & 5 of Int. V measured 1739, 3000 & 771 points respectively. The only change in the labelling I would consider (not necessarily a preference) is to put Minor 3 of Int. V at 12390 rather than at 12219. That would the DAX in Minor 4.

  10. ariez5 says:

    Liked your chart yesterday. In the ending diagonal scenario, all waves have to be 3s, right? Would you think the E wave was reached or that we need another impulse first? Thanks.

    • mjtplayer says:

      Hard to say, if you chart the SPX futures then the potential “E” wave tagged the upper TL yesterday. You could have one more poke higher, but don’t need it.

      OPEX tomorrow, clearly helping to hold things up. Bottom TL was tagged today at 2,097, upper TL stands at 2,114 now and 2,117 at tomorrows close. The potential wedge pattern from 2,040 is getting very tight…

      • ariez5 says:

        Thanks. By the way, you mentioned a negative hourly divergence a couple of days ago. I don’t think the divergences count if the market gets oversold in between the impulses, as happened April 14. But the divergence developing right now looks like it has potential.

  11. berniebaruch says:

    Buy, Hold, or Stop/Sale on UVXY.

  12. manunidhi21 says:

    Namaste Tony!

    Good news -so up
    Bad news-more stimulus coming-so up

    any catalyst

  13. Loving the wave structure, Now give me one more push into OPEX so the next whiplash can unfold

  14. buddyglove says:

    Opp to pick up NG here @2565 or gas Etf (news related drop)good R/R imho. Gl.

  15. fishonhook says:

    Looks like C has been delayed again.

    I remember waiting for these elusive C waves several times in the past few years.

  16. fotis2 says:

    2100 looks to be the line in the sand if the bulls can hold all good otherwise HS target 2088.

    • US markets are putting up a good fight, but with the Dax down over 200… looks very problematic.We ll be lucky to keep losses to under 100 today..imho.I know German markets are up 23% for the year but its still shocking to see a country involved in QE have these kinds of days.Unless as someone warned me a little while ago, the markets are sniffing out that Merkle is not going full blast with QE.I was told they may talk the talk but essentially would not actually participate fully and if word got out to the markets this was happening a freefall could occur after this tremendous rally the DAX has seen.Normally this kind of pullback doesnt occur.Just something to consider.

  17. Market continues to confound and still too many top callers. But, it’s the numbers that count and for me, an exit from longs comes on a close below 2091. Other than that, as TC says “still an uptrend.” 😉

    • So why didn’t you exit your longs? or better yet, why did you even have longs in the first place when Tony has clearly stated from early April, the C wave is coming? Curious why you would seemingly follow somebody but yet you seemed to have done the opposite. A bit of a contradiction no?

      • Well, if a target or exit isn’t hit (or if I feel I have not achieved enough of a profit); then I would probably stay in my position, long or short. TC is a great resource, but I still trade my own views just as many others do here as well. And of course, you can’t win em all.

        Your comment seems to be somewhat of a rambling diatribe, inline with the others I have seem from you; careful lest you be seen as a nasty little troll (or twit, or both). 😉

      • fishonhook says:

        I doubt there are many that trade off Tony’s counts. Maybe it gives them an idea of what he is thinking or a road map. But you cannot trade off a count, an alternate count, and two alternate , alternate counts. Maybe big picture, but definitely not short term.

        • That’s what I like about what Tony offers; it gives me a warm fuzzy and general direction. Perhaps in the OEW course he offers there is more for the shorter term trader. Other than that, there are others here that have good insight as well and I appreciate looking at things from their perspective too. In the end, wins or losses are my own. 🙂

    • jhjoyner says:

      Looking for another retest of 2080 before moving higher.

  18. mjtplayer says:

    Hmmm, strange. So last night, NFLX reported earnings of $0.38 per share, missing estimates of $0.69. CNBC has NFLX earnings posted as $0.77 – huh?

    After a bit of research, it turns out that NFLX indeed had earnings of $0.38, but when you exclude “one-time items” or “extraordinary” non-reoccurring expenses, earnings were $0.77

    This “one-time items” trick is getting overused and abused, companies are overusing it to hide restructuring costs, bad investments/hedges and other schemes that by definition can be “one-time” but are not if they’re occurring every quarter!!

    NFLX is trading at 159x 2015 earnings right now, but that excludes all the “one-time” items – which occur almost every quarter. Including these items from Q1, NFLX is trading at about 177x 2015 earnings. If they have “one-time items” in the other 3 quarters, this valuation could really explode to well over 200x earnings.

    It makes you wonder what S&P 500 earnings really are. If SPX earnings are $118 for 2015, but excludes all the “one-time items”, what is the real number? Instead of trading at 18x earnings, could the SPX be trading at 20x or 22x or higher valuation due to BS reporting??

    This looks and smells fishy – it downright stinks.

    • reddragonleo says:

      Really good and profitable companies are commonly ignored by wallstreet for hype companies. NFLX is worthless as far as future earnings are concerned. You might as well invest in a newspaper company as both are doomed in the coming years. I have no need for NFLX ever since I started downloading movies for free, which everyone will in the coming years.

    • MTJ, all the big banks have been listing all of there housing bust legal and lawsuit loss as “one-timers” for 4 years running and look at where the banksters are trading at…….this “one-timers” are here to stay forever

  19. JNUG, UVXY, SPX: mkt. update and plan for thursday:

  20. kvilia says:
    A) Who knows how much more left in here, he even said he was early in 2006. Still bull but a fading bull.
    B) Should the US markets tank and enter the bear market, make no mistake, global equities will be flushed at an even greater speed.

  21. tommyboys says:

    Base Metals – my alma mater – really seem to be setting up with a big W bottom. AKS has gotten a nice pop last couple days. If so its bullish for the economy (which says nothing of the market of course). Currency is a huge causation here longer term.

  22. zepfan123 says:

    Well I think the days of this market being a good “new” investors market are over for quite a spell.Hopefully we all got some good long term stocks holds in the last 3 to 5 years. But sideways action in a good range is a great traders market,and one doesn’t have to label themselves a bull or bear to play the ups and downs. I’m thinking the DJIA may be in a 1000 point range for a while and the S&P in a 100 pt range. I could live with that for the next 6 months.

  23. sloop says:

    I have support for futures at 2089 area on,different numbers on tradingview dunno why,anycase still expect higher

  24. fotis2 says:

    Looks like an inside day on futures I think break may be to the downside looking at CCI daily.

  25. ashram says:

    Eventful day.
    Breakouts: Crude, GDXJ, Canadian Dollar

    SPX has risen 1453 points in 73 months. Where is the joy? Not on this blog, or anywhere else for that matter.

    • buddyglove says:

      Ash…Plenty of joy from me with this bull, but I try not to get too complacement as we know all good things come to an end eventually. I’m not a bear yet, but i am seeing much better value in the equity of select other countries, and in other asset classes. GL.

    • Lee X says:

      Traders are miserable people by nature is my guess ashram
      It figures the Loonie is going to pop , just in time for Spring musky season.

  26. Awesome tony! Killer stuff.

    3 important Things people are missing about the market.

    1) Earnings is not that bad, they revise down, and then beat. Fancy that!

    2) Crude is bottoming here, could be whats termed a “W BOTTOM formation” See here =>

    3) There are big analysts who keep saying the market is topping, they are saying this so they can get long, while people are selling, and getting caught out yet again and HAD! fancy that as well!!!

    Do not listen to CNBC, these guys are doing the opposite to you. Yes…..fancy that LOL. 😀

    • Do you remember when few years ago and gold at 1900…..same story. Fold than re-reaped at almost the same. (the so called idiots) saying will blast and the idiots saying the opposite, ( will reaps forever ) ???? Those last weeks are looking so similar as it going I cant believe it !!!!

  27. lunker1 says:

    another .94/.95 retrace. maybe this is the D wave of a pennant tri since ATH?

  28. fishonhook says:

    Well Tony you are sticking to your guns on the drop. Good for you. Next we will be calling you imanewbietradertony

  29. ashram says:

    Puff, puff, chug, chug, went the Little Blue Engine. “I think I can – I think I can – I think I can – I think I can – I think I can – I think I can – I think I can – I think I can – I think I can.”

    • CB says:

      Nice job, Ashram. Your chart is doing great.
      In the meantime, just 2 posts below..: “what could go wrong-what could go wrong-what could go wrong”…lol… I just love the diversity of opinions on Tony’s blog…OK, so here’s a little extra encouragement for the Little Blue Train, OK? 😆
      P.S. Hey A, j/k do know I am kidding, right 😛
      Nice work A! Have a good evening everyone!

      • ashram says:

        cicelyalaska says:
        April 15, 2015 at 12:29 pm
        Extremely bad taste showing kids getting hurt. Repulsive.

        CB: I love you, man, but it was in extremely bad taste for you to kill that precious little dog. I am appalled, nauseated, and apoplectic (not to mention flatulent after enjoying the Mexican combination plate for dinner). Who could possibly be serving as your role model for such grotesque cruelty?

        • CB says:

          Say what?
          Not sure I understand what you are saying Ashram. I read your explanation this morning about your earlier GIF post. I understood it, and I thought it was perfectly fine. And that’s all there is to it. I think you gave us a fine explanation. You meant well and Thought that it was understood.
          Not sure what you are trying to say right now, though. Would you mind re-phrasing it, please? Let me know if there is anything I can do. I’ll be happy to. You are a nice guy. Cheers!

          • CB says:

            shld read: You meant well and I Thought that it was understood.

          • ashram says:

            CB says:
            April 15, 2015 at 9:16 pm
            P.S. Hey A, j/k do know I am kidding, right

            j/k in response to you j/k.

          • ashram says:

            Absolutely no offense intended.

          • CB says:

            If you think that was funny, please stop trying..

          • ashram says:

            You got it, coward.

          • CB says:

            Neither I, nor cicelyalaska liked your sadistic GIF showing a little kid getting hurt. And we chose to express it. Thought you were reasonable, yet you’ve chosen to add some more toxic comments. It made me really sad. Please (!) look at your own behavior, Mr. Projecting-A-Lot. Stop blaming others. I won’t do anything good for YOU. And it’s YOUR life, isn’t it?
            And why not just decide whether you want to be disrespectful or clingy and stick with it? Why change like a chameleon every five minutes? Btw, I am a woman, not a man, which does make me a coward, I guess…lol.. Thanks for telling me that. And that just might be the only truthful thing you’ve said in all your posts above.
            Since we won’t be doing any more talking, let me just say one thing to you: try to be yourself more. All we can do is try. That’s all there is…trial and error..just like in trading. Stay inspired, amigo!

          • CB says:

            typo, shld read: Mr. Projecting-A-Lot. Stop blaming others. IT won’t do anything good for YOU.

  30. Lee X says:

    Thanks Tony
    Cubs have a chance at 1st place again tonight against those Rednecks

      • Lee X says:

        Only 154 games to go , what could go wrong ?

        • tony caldaro says:

          Do you remember last year when the Cards went to KC, who were under .500 at the time, and they got swept. KC never looked back after that, right to the WS. And 7-0 this year.
          Or, and you were probably too young, the ’69 Mets were 10 games behind the Cubs in August, traded for Pitts. Don Clendenon, and won the division by 10 games … plus the WS. All it takes is one important turn of fate to turn around a whole season.

          • Lee X says:

            I do remember the KC series and my Dad’s reaction to it , and you’re correct I can’t remember the Mets of 69′ but I know people who’d like to forget it. I find myself enjoying the game more and more in the last few years…thanks a lot Jay Cutler.

        • jeffbalin says:

          That’s hilarious!

          • alexhartley1 says:

            That is amusing Lee. I am a English Chicago Bears fan. Hopefully we’ll do better this season. Seems like we have a sensible GM and solid coaching staff. There’s some talent on the roster as well.

          • Lee X says:

            Hey Alex
            Born and raised in Chicago and I’ll always be a Bears fan but I drank a little too much of their Kool Aid early last year but I’ll be fully recovered by summer camp.
            I agree with you on da new guys , man u got me fired up…..Go Bears !

  31. buddyglove says:

    Agree with the frustrated bulls here about lack of upside energy. We get the setups ok, but there is just no follow thru, and it just doesn’t look right. I am cautious here and have trailed stops up tight below current prices.
    Conversely Gold, Oil and Gas are looking a bit lively, and I think I have been seeing some hot money quitely moving into these sectors. Aimho of course, and good health/wealth to all.

    • blackjak100 says:

      NYA finally broke out today which has to be bullish….UNLESS it’s a false breakout. However, I think this is the real deal since it tested resistance 3 times which resulted in pullbacks. I’m thinking this time is for real. Very broad market breakout so far on low volume which just means there’s no sellers. I just wish we could find a good wave count for it. Maybe Minor 3 is correct.

    • 7dayyss says:

      Concur, if it wasn’t OPEX week, I think we would of seen Tony’s 2034. I suspect we’ll see a rise into Friday, possible even Monday and have our turnaround Tuesday to fetch our 2034. We’ll see over the next two to three days!

    • Buddy: The lack of upside follow through is because we are in an upward corrective wave, not an impulsive wave. It looks to a lot of people like it is an important top. Thus the bull throws more would-be market rodeo champions off it’s back. The bull likes to go up with as few people making the 8-second bell as possible.

  32. zepfan123 says:

    Thanks for the forum Mr. Caldaro

  33. JeffMilano says:

    Few more days for a top. Then either a B or a 1 of 3 sould be correcting.

  34. Thanks Tony

    If the market makes a new ATH with this corrective rally you suggested you would abandon the scenario of re testing 2040. If that’s the case, is there a % of the corrective rally you think we would have to retrace before starting an impulsive rally?

    • tony caldaro says:

      tough call as it still looks corrective
      let’s see what the next two days brings

      • hmmm…maybe time for a 2-day TVIX trade to hedge my UPRO here. I usually wait until I’m within 3% of my target to augment w/a short-term TVIX position as kind of a kicker since UPRO reversals are typically swift…but TC’s cautionary tone is a bit of a tell. Always better to err on the side of caution…that said UPRO (fire) in one hand, TVIX (dynamite) in the other.

      • Turns out that your cautionary tone was prophetic. Glad I put on that TVIX yesterday. Sold this a.m. for a quick 10% gain. Love it when a hedge does its job…like a box of baking soda in the fridge

  35. Tony, why is 2048 to 2072 being considered as wave 1? It looks like 3 waves too me.

  36. Still seeing very negative sentiment here. No impulse, No Volume, yada, yada, yada are the common reasons why it will go down. Days before a massive correction lol. I’ve been hearing this since 2009. Every single time new all time highs are made. Up, up and away.

    Bears, you are still too early, the gentlemen want your money above 2120.


    • Thats what the bulls were saying to the torreadors in 2000 and 2008.Many of my buddies at work told me lots of stuff that were similar in bravado..I said back then, I had a system called the January effect that I stuck to and saved $100,000 total from both bear markets.This year is a rare back to back down January.Looking back you d see there were 4 bear markets and 1 huge correction out of 6 years its happened.The other year was flat.Thats why I m a cautious bull but watching this all very closely.QE and the Fed have done a number on most bearish systems but just when you think its safe to go back in the water…well ask Robert Shaw.But I m 50% in stocks.Cheers.

  37. Apparently the lack of visible volume is done by operation on black pool, that has been a seller…..some algos playing chicken to get this thing up. They maybe will find the way to squeeze more. But at the end who will be the winner?? Also is possible that they are dumping at high. B.P. Move big money…. Eyes open following the trend of the day…..!!

  38. Hi Tony
    what you make of lower high on daily vix today, in respect 2 days ago…and the higher high on SPX ?
    more underlying fear than 2 days ago.
    Divergence with increasing fear and new highs on SPX

  39. fotis2 says:

    Thanks mr. T starting to feel a bit uncomfortable I know it is still supposed to be a bull market but geez 3 months have gone and still at starting point hopefully some direction soon more fun watching corn grow and volume the one indicator I watch closely is slowly disappearing from the chart just now it will be going on fresh air some kinda new alternative energy.GL to everyone and B carefull of B waves.

  40. mjtplayer says:

    Volume today was a joke, same story as the past 3 week, this is getting ridiculous. VIX back into the 12’s, looks like the market is getting squeezed higher into OPEX on Friday; VIX smashed. With volume this crazy light, is anyone trading anymore??

    • MJT, which instrument(s) volume are you referring to? Volume looks “normal” and running slightly above 2014 volume YoY

    • jhjoyner says:

      This uptrend seems to be just short covering. The SPX continues to trail off at the end of day.. Strong markets rise the last hour of the day. There is no buying volume as stated above.
      While the SPX can make new highs over the next several days, there will be a nasty correction to follow. I see no impulse waves which makes me think it is simply a short covering rally.
      The DJT is pathetic only gaining a few points today, again no conviction of a strong uptred.
      I don’t know what wave the SPX is in but doesn’t seem like the beginning of minor 3.

      The market is only a few days away from showing its true color–correction!
      Again the market cannot escape the round numbers in the indexes as TC showed. If they do it will only be by a small margin. Again we will see another correction. After the correction maybe there will be impulse waves and the maarket will not trail off the last hour of trading like it has been doing recently.

  41. torehund says:

    Takk Tony !
    Nothing to add, work is done, just waiting left..

  42. tony caldaro says:

    If companies miss as badly as NFLX over the next few weeks
    the SPX could be at 3000 soon 😉

    • mike7x says:

      Ima’ gonna write that one down! The SPX will have to have a “split” also. 🙂

    • mjtplayer says:

      I hear you Tony, NFLX earnings miss by almost 50% and revenue misses, stock up 12% b/c subscribers were higher than expected. Good price action for a stock trading at 140x 12-mo forward earnings. This stock could drop by 75% and still be grossly overvalued 🙂

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