Wednesday update

SHORT TERM: gap down reversal, DOW -261

Overnight Asian markets lost 3.5%. European markets opened higher and gained 0.7%. US index futures were again substantially lower overnight before rising somewhat heading into the open. The market nonetheless gapped down at the open to SPX 2066, bounced to 2069, then headed lower. By 10:30 the SPX hit 2056, then bounced to 2065 by 11am, before hitting 2051 by noon. After that the market drifted higher until around 2pm when it hit SPX 2060 and the FOMC minutes were released: The market then declined to SPX 2045 just before 3pm, nearly fully retracing yesterday’s rally. At 3pm Consumer credit was reported lower: $16.1bn v $20.5bn. Heading into the close the market rallied to SPX 2054, then declined to close at 2047.

For the day the SPX/DOW were -1.55%, and the NDX/NAZ were -1.75%. Bonds gained 7 ticks, Crude slid 50 cents, Gold rose $3, and the USD was lower. Medium term support drops back to the 2019 and 1973 pivots, with resistance at the 2070 and 2085 pivots. Tomorrow: weekly Jobless claims at 8:30, and a speech from FED governor Brainard at 10am.

The market gapped down at the open for the second day this week. Then after a small bounce to SPX 2069, the high for the day, the market headed lower until it nearly fully retraced yesterday’s entire rally from SPX 2044. It is quite clear Minute C did not end yesterday, and has subdivided into a more complex three wave pattern. Possibly: A 2044, B 2084, C 2045 so far. In fact, the decline from Minute B at SPX 2085 displays a seven wave decline to 2044, a rally to 2084, and now another seven wave decline to 2045. Potentially that was enough. We continue to expect support, for this downtrend, to hold in the lower SPX 2040’s or the 2019 pivot range. Short term support is at SPX 2040 and the 2019 pivot, with resistance at the 2070 and 2085 pivots. Short term momentum hit slightly oversold during today’s decline. Best to your trading this volatile market!

MEDIUM TERM: downtrend

LONG TERM: bull market


About tony caldaro

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137 Responses to Wednesday update

  1. kvilia says:

    Back from vacation, sold short RUT positions with a slight profit, same goes for UVXY. Bloomberg reported most short sale positions open since financial crisis – look out for a massive short covering should the bottom take place – appears Tony’s forecast is played out again, hat’s off. Not trying to gamble now, will enter long positions as soon as downtrend reversal is confirmed.
    Cheers to all!

  2. Mr C would you agree that gold is setting up for a pretty decent positive divergence on the weekly if we make new lows soon? Thank you.

  3. H D says:

    Got stopped trying to buy HWB 2057 again, Not sure if they r keeping people out or if I got lucky to get out. alt, Triangle B wave or C down from 2084 (2085P) 1-2 down, Friday gets the iii of 3 treatment either way it seems.

  4. stephenk1980 says:

    Sold my longs earlier but just gone in long again. Now or never for the potential bounce IMO.

  5. Well it looks like the bots will have us trapped in this shallow range until Gre-weekend is resolved

  6. Peter Sliney says:

    The over night raiding of bear stops make this a particular hard short. I don’t think we have seen the lows of this move.

  7. GYN LAB says:

    Would like to see the decline hold here at 2056… .618 retrace of 2045-2074

    • NEWBIE says:

      we bounced off 2056.whats your target or wave count?

      • GYN LAB says:

        from yesterday LOD, wave 1-2 within this Minor 1 (could be Minute i instead) of int iii, if this 2056 holds then I would like to see the upcoming wave break out of 2085 pivot with conviction.

  8. By today’s numbers…
    Close above 2069.46 pretty much ends bear posture and enters limbo land.
    For trend change need sustained move above 2082.25.

  9. So is the new pattern..we sell off after Europe closes now?Screwy markets as Elmer Fudd would say.

  10. mjtplayer says:

    Hey Newbie – the wedge is already complete, just look at the NYSE Composite.

    In the SPX, yes we could rally up to the 2,100 area and close the open gap at 2,101, which would also be an almost exact .618 retrace from 2,134 down to 2,044. You could even go a bit higher, up to 2,110, but I don’t know, I think 2,085 – 2,090 will be heavy resistance. If we do rally to SPX 2,100 area, I would have that as int B, with int C down to follow to complete major A.

    Short-term, I don’t know where we’re headed, the next 25 or 30pts in the SPX could go either way: down for an “E” wave around 2,040 to complete an LD for int A, or up to 2,090 – 2,100 in int B.

    • I am not sure about Jan 2015 (my eyes are not that great, and a 20-year monthly chart has small candles), but that aside, July 2015 seems to be the first month since 2011 that has opened at about the 10-MA monthly and seems to want to trade quite a bit lower. Time will tell.

      Also, on the multi-year monthly chart, the MACD is beginning to look like Quasimodo has stooped over to get his track shoes on 🙂 . I worry about how big patterns like this can fix themselves. I suppose it depends a lot on where the month ends.

    • NEWBIE says:

      mjt, nice post- thanks.

  11. blackjak100 says:

    Gap & crap kind of day???

  12. bhuggs52 says:

    Congrats to Nardo and Page for taking their long positions yesterday, especially to Page for tagging the move up today in the Shanghai index. How long will you hold that ETF? Cheers!

    • Page says:

      Thanks. I am going to hold for a while, if Chinese market moves higher tonight then Chinese ETFs will go nuts, also Greece resolution will fuel Chinese rally.

      • nardobeme says:

        Thanks as well. Sold my options at open; one of my most largest % gainers. I then reinvested into more calls, as I too expect some follow thru tomorrow.Imo, SPX is at a juncture right now; complete the “rounded” top pattern down, or break to the upside. It’s clearly visible to me… GL Page.

  13. NEWBIE says:

    what wave structure do you guys think we are in with todays action so far?

    • alexhartley1 says:

      I think if we push on past the morning high we might be looking at the very early stages of intermediate iii. If we continue to tail off and not move up to the 2085 pivot later today we’ll likely have the final part of the minor c wave down in the next few days into the 16-17th.

    • Newbie, this is for you keep your eye on that box zone

      • NEWBIE says:

        Thanks. It looks like if we break through 2085 -2090 bulls are back in control and we going much higher.

        • Worst case I would expect a rejection near the daily 55 SMA current at 2101.74 and decline which is also near the 2101.22 gap.

          • NEWBIE says:

            Im a bear but I cant rule this out

          • gtoptions says:

            Nice work El
            SPX 50sma & .618 @ 2100. SPY strong volume/price resistance @ 210ish

          • NEWBIE says:

            Gt, please share your conspiracy theory.

          • I can….LOL…..I have charted tons of wedges very successfully and none of mine look that sloppy. Most traders who have been proposing a wedge have been doing so since 2014 and every time it fails to deliver to the downside they just keep moving the count to fit the wedge rather than looking for a more viable pattern or count. One thing is to monitor and adjust another is “insanity: doing the same thing over and over again and expecting different results.”

        • gtoptions says:

          With today’s big gap up I would go more towards reality than theory at this point. Case in point the SPY is now off hard to borrow.
          The short of this theory goes like this; How does a large group of Shorts cover without triggering a huge rally? Create a panic with “an alleged NYSE system failure” so they can cover and keep the markets reasonably stable. Makes you wonder why the markets didn’t drop further and why they are up today. Just calling it was it is, a theory. 😉

  14. soulsurfer says:

    NYSI reaching very low levels (4th lowest since 2009) while price is down only 4.2%. Too far too fast!?

    • ABchart says:

      Thanks Soul!
      It was one of the elements that I watched yesterday. There was also the Trin which was very high, VIX/VXV too high, CPCI too high…etc.
      There was also a positive divergence in hourly and daily, and many other things that militated for a rebound or its imminence.

      • soulsurfer says:

        You’re welcome. I agree with all you said. The NYSI is more for longer term signals (months+). Readings close to where it is now have staged multi month rallies. Although past performance is no guarantee for future results, there’s nothing to suggest it won’t happen this time, and it fits perfectly well with Tony’s count.

    • llerias7 says:

      Yeah…The Fuhrer Frau Merkel do not allow any mercy…

      • Dex T says:

        They have been tolerant enough. The Greeks have nobody to blame except themselves.
        If the EU rules were broken and the Greeks were given debt relief then several other debtor countries would line up demanding similar treatment. There is no easy way out. The Greeks have spent the money and tried but just can’t make it work.

        Time for them to move on.

        • Greeks have spend the money…not quite right. All the money lend to Greece were used to pay back the French, British, Dutch, Swiss banks that loaned it in the first place, so now the debt is with the European governments and no longer commercial banks. poor greeks barely got any money…they have been going through austerity for more than 7 years now.

    • mjtplayer says:

      Get the feeling that nether side really wants a deal? Germany unwilling to accept debt haircuts, Greece unwilling to make serious pension reforms.

      Perhaps they finally “Grexit” next week. Just leave the EU, issue Drachma and default on outstanding debt and get it over with.

      • Dex T says:

        Neither side has a choice. If the Germans caved in then Spain , Italy, Portugal, etc.. would demand their debt be cut as well. The Germans would also send the clear signal that they are weak and any of the nations can just take money from them and not pay it back.

        They must remain firm. If they give in now they will forever be subsidizing the other nations until their own country is in poverty.

        The Greeks just want to continue as was. They can’t grow or pay of their debts and aren’t willing to put up with any austerity so what can they possibly change or offer?

  15. Thanks TC; isn’t this some fine Kabuki theater? Grexit? 😉

    Slow, steady, methodical always wins the race.

  16. 4 minutes well worth watching. Nigel Farage at the batting plate inside the European Parliament. His discourse includes commentary directed straight to Greek PM Tsipras who is also in attendance.

    • llerias7 says:

      Yeah, I saw it yesterday…but unfortunely Greeks are about to make a deal with cuts and reforms again in exchange of a special debt haircut…

      • mjtplayer says:

        Which only means that the Greek drama will return in a few months when they run out of money again. Bankruptcy is inevitable for Greece, sooner the better.

        • fotis2 says:

          Not before the lenders squeeze the last drop of blood.Macbeth’s The Merchant Of Venice comes to mind nothing changes Big Fish eat Small Fish the way of the World Since the Dawn of Time.

    • bhuggs52 says:

      Good stuff, TJ. Thanks for posting. Farage certainly offers a sober and impassioned plea in support of the Grexit. Nothing like a former commodities broker who has been shaped in the forges of trading to tell it like it is.

  17. ABchart says:

    I prepare my update I’ll post the weekend. somthing like:

    SPX: 2044> 2090> 2070> 2140> 2115> 2185
    CAC: 4600> 4800> 4720> 4950> 4820> 5150/200
    DAX: 10650> 11050> 10900> 11400> 11000> 11800/12000

    Does anyone have the same scenario?

    • alexhartley1 says:

      I have us going to new all time highs AB but I wonder if there’s another lower low first. Today should be up but tomorrow into the 16-17th should be down.

      I’ll be interested to see how much it rises today before I start to get more confident that the bottom is in.

  18. ABchart says:


    In which case a wave 5 of an uptrend fails below the top of wave 3?

    • tony caldaro says:

      That’s a failed 5th, which is usually followed by a dramatic selloff

      • ABchart says:

        Yes thanks! I am tracking the CAC and the DAX. Right now i think that minor/int. 4 is in place at 4600 and 10650, but they will fail to exceed their April high and fall badly to 4200 and 9500.

  19. blackjak100 says:

    Obviously no wave iii…yet. Nate didn’t think so as he published this before futes ramp…

  20. stephenk1980 says:

    Looks like this is the bull trap I was positioned long for yesterday. Annoying that I quit half of them but oh well. Looking for gap fill and maybe a little more before reversal to the bottom around the 2019 pivot

    • HW says:

      Or yesterday was bear trap? Almost full retrace but int ii low in either yesterday 2045 or tuesday 2044?

      • stephenk1980 says:

        If yesterday was a bear trap I would have thought a lower low would have been made. I would also have expected it to bounce more strongly from the 2040 area once it was first hit without so much retracing – the market doesn’t tend to give plenty of time for people to load up on longs at the bottom.

        • HW says:

          Agree.. although Mr T’s analysis says 2045 could have been enough for a double bottom, common pattern in the last few months. Market maybe offered an afternoon at the bottom to load longs for those looking up, especially if today would be a gapup and go +300-400 day. Or we test 2070 then come back down for LL. All ifs and maybes… pity i dont have a crystal ball

  21. torehund says:

    Thanks Tony.
    Crude and Euro behave as expected, more waterfall declines to follow.
    One other observation is that the accumulated earth shakes is at record high in Europe, centered around Greece. Climax building up there not only in economical issues. Santorini has a volcano erupting in 1925 and during 2nd wold war.

    • torehund says:

      Interesting anecdote from Greece: One person attempted to buy jewelry for 1 million Euro, but the shop owner decided not to sell any.
      Why sell gold items if you are in the Euro-zone, and the Euro ITSELF is the problem ?

  22. fotis2 says:

    Thanks Tony looks like turnaround today so far.

  23. stmro says:

    Wow – guess i caught a short-term bottom in China. More luck than anything else.

    2047 SPX Long – Raising stop to 2055
    3150 SSE Long – Raising stop to 3700

  24. alexhartley1 says:

    Next important turn date is 16-17 July….. That could be the bottom. From there would expect a move to new highs. Today should be up and then into the turn a bottom should be formed in the target zones already mentioned by others on the blog.

  25. Well so far things going as excepted….the suspicious NYSE halt was an excuse to stop any market sell off and an opportunity to re-program the algo bots to absorb any supply once the NYSE halt was lift and now the ramping up is happening overnight…..LOL

  26. stmro says:

    Ok v. small long on SSE @ 3150, stop 2850. Target 4000.

    Very risky trade by my standards, we’ll see.

  27. My 2 1/2:cents….A while back thought the Transports were giving bad signals (back at 9000).possibly down to 7500.Makes sense I think we might go along for the ride til we test that number.Broke a bear flag at 8090–should make a stop at 7800.Wouldn t take much…a bad day with Greece on Sunday would take us there.Or more carnage in China.
    Unless we re going into a freefall… buying some overall equities at 7500 looks like a plan to me.At least for a bounce.Or if we see 10 year bond yields collapse into the 1s again…another sign to buy.
    Or if we have whooosh day down to 1800 area, but lets not get ahead of ourselves.I m also watching IWM to see if it breaks 120.If it does–more selling yto come sooner or later.
    Good luck all.

  28. mike7x says:

    The SPX (on a weekly basis, chart) is acting very similar to last Oct. so far. Seems like there will be a test of the 2019-2040 range soon.

  29. fionamargaret says:
    • wavediver says:

      Fiona, I agree on your target range. Also, 2010 would be a .382 retrace from the Oct lows. Your thoughts on that count?

  30. Vox Zeit says:

    Tony et al, in regards to the hourly SPX chart, the high at 2134.72 is labelled as a gray Nano-i wave; isn’t this supposed to be a purple Intermediate-i wave instead, as indicated on the daily chart? Or, does the hourly chart indicate an alternate count?

  31. ABchart says:

    Thanks Tony and all posters!

    90% chance that low is in place or not far away. 15 points risk on the SPX, 50 points risk on the NDX and 100 points risk on the DJIA.
    A big rebound is very likely tomorrow and Friday, perhaps +2/3% (2085/2100 area). If there are a deal with Greece next weekend, then gap up and go to 2185. If failure, back down between 2030/40 before uptrend to 2,185 later in the month.

    Good luck to all!

  32. esvxm says:

    Thanks Tony for the analysis!
    German DAX, Dow Jones Industrials, S&P 500 and longer term US bonds analysis….

  33. No doubt that Da Chinese and Japanese indices experienced a little taste of this action pack

  34. mjtplayer says:

    Here’s my updated count and best guess, a potential LD with one more poke down to LL around 2,040 or slightly below:

  35. Peter Sliney says:

    There’s the 6/26 to 6/29 gap that makes me hesitate on selling. Friday to Monday gaps usually fill quickly before resuming the trend. Sellers can be right at the wrong time.

  36. Lee X says:

    Thanks Tony

  37. Gary Lewis says:

    I notice that SPY closed at 204.50 on 3/11 and today, 83 trade days later, at 204.53. Any cycle watchers seeing a cycle low coming at this time frame? In the old days, markets used to cycle at 13 to 17 week intervals. Seems to fit the time frame. Time to start adding some calls in anticipation of wave iii?

  38. fishonhook says:

    1) Kudos to BJ for calling this bull trap. Nothing like calling your shots

    2) Re Shanghai right on 200DMA and horizontal support . Bounce here or crash

    I am not touching it though as I don’t trust the market which is so heavily manipulated and also $HSI was at the same spot two days ago and sliced through.

    • blackjak100 says:

      Ty but still unfinished business to downside if my wave iii call is correct. NYAD -2000 today with a dovish fed minutes released. This market will not change course with a snap of finger as there’s a lot of technical damage to repair first. Can’t believe people on here are going long but it’s not my $ so who am I to say.

      • stmro says:

        SSE is well below the 200dma on my platform (AH). Currently 3150. In fact i have the low from yesterday’s session at 2900, so i suspect it’s going to slice through on open and continue quite a bit lower.

        Re going long SPX – it’s very close to a decent support and therefore the risk is very well defined. I stand to lose 4 pts with a stop below 2044 and gain roughly 40 pts with resistance at previous high (2085). I give my odds of the trade being successful at 25%.

        0.25 * 40 / 0.75 * 4 = pretty good risk / reward!

    • Nardo called it too, kudos to them both.

  39. Jim Guthery says:

    Anybody thinking of buying some xiv around spx2040?

    • mjtplayer says:

      I bought a little before the close around $37.75, will buy more if we break down into the $34’s, but will keep the position small. Upside target of $42 – $44

  40. Crap! the story below sound very familiar, were did we last hear something like this, uh, oh yeah, during housing crisis…

  41. lunker1 says:

    Looking at Tony’s 60min SPX chart there are 4 tweezer double bottoms 2040, 2076, 2099, 2072 and a failed one in May at 2078-10=2068. So it would seem another double bottom at 2044 or maybe failed one -10 to 2034.

  42. nardobeme says:

    Thanks Tony. Never a dull moment, eh? I broke my own rules: went long $SPY at close against my swing indicator, but, morning indicator suggests a green opening (oversold bounce?). Long China by way of $ASHR. Looking for a 3 pt. move… Thanks to ElMat for the info on Nikkei futures today. Will be a buy too as soon as the dust settles. Looking at the charts, it “looks” like a visit to the 2010 might be needed before the journey up. GL all.

  43. Thx Tony. What’s your current take on gold for next 1-6 months?

  44. stmro says:

    Overnight long here at 2047, stop 2043. No target.

    Worth a shot :D.

    Still stalking an SSE position. Down-move doesn’t look exhausted yet and plenty more heavily-margined retail speculators to shake out.

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