Monday update

SHORT TERM: gap up opening, DOW +242

Overnight the Asian markets lost 0.1%. Europe opened higher and gained 0.7%. US index futures were higher overnight, and the market gapped up to SPX 2093 at the open. The market had closed at SPX 2078 on Friday. By 10:30 the SPX had hit 2100. Then after a quick dip to SPX 2097 the rally resumed. At 2:30 the SPX hit 2105. Then after another small dip in the last hour of trading the market closed at SPX 2104.

For the day the SPX/DOW were +1.30%, and the NDZ/NAZ were +1.15%. Bonds lost 12 ticks, Crude gained 90 cents, Gold rose $11, and the USD was lower. Medium term support rises to the 2085 and 2070 pivots, with resistance at the 2131 and 2198 pivots. Over the weekend the MMIS was reported higher: 57.4% v 57.2%. Tomorrow: Wholesale inventories at 10am.

The market gapped up at the open today, following Friday’s afternoon rally. The rally paused at SPX 2100, then at 2105, then closed over 2100 yet again. Seems this market has been here many times before during the past six months. In fact, the market has traded +/- 2+% of the 2085 pivot during that entire time. Despite the rally we are maintaining the count that Minute wave C is underway from SPX 2114. Short term support is again at the 2085 and 2070 pivots, with resistance at SPX 2114 and the 2131 pivot. Short term momentum spiked to extremely overbought after Friday’s positive divergence. Best to your trading!

MEDIUM TERM: choppy uptrend continues

LONG TERM: bull market


About tony caldaro

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183 Responses to Monday update

  1. Well I couldn t bring myself to sell my GDX today…just think its going to fill the 15 1/2-16 gap…even with the Gartman curse hanging in the air like a foul odor.I m wearing a clothespin on my nose as i write this.Good luck all.

  2. This is unprecedented in recent history where the fate of the dollar as reserve currency is being so openly discussed. Kerry Puts Dollar on Line in Appeal for Congress to Approve Iran Deal. Desperate times? Indeed…

    Hopefully my fellow Americans understand the implications resulting from loss of reserve currency status? And it’s not a matter of if… Prepare accordingly. 😉

  3. fishonhook says:

    So Joe and others. lets see it work in real time.
    The five minute showed the five waves. We are now in the midst of a three wave bounce..yes?
    then another 5 waves down to at 2040 would make sense.

    • Here’s another one fishonhook : we are back to the prior ivth wave, a common expectation. But we are only to the 23.6% Fibo retrace, even less if the 3 is used for the top.

      SPX - Five-Minute - Aug-11 1422 PM (5 min)

      Was a fifth wave call, correct? In “near-real-time”. That’s all I’m asking. There are three clear waves following it.

    • EL MATADOR says:

      Hey Fish, you want to know how messy this decline is going be? try looking at it from a wave symmetry perspective…

      using MTJ’s chart from this morning

      Take the prince range from 2120 magenta C to 2135 PIII next invert the price range then slide it over and place magenta C price where magenta A is at 2044. Do you see the wave symmetry?

  4. EL MATADOR says:

    Where all the Bulls go, any of ya join me for a bounce bull long, eh?

    • NEWBIE says:

      Don’t get caught with your pants down :-). Next significant bounce 2020-2040 only to be followed by a smashing below 2000

      • zepfan123 says:

        Gotta get a close or two well below SPX 2070 here first.

      • EL MATADOR says:

        nah man, you know me newbie I like swing with bulls and bears got trade a beautiful trading range like this one while it last cuz once it is complete it is back to boredom trading

      • lunker1 says:

        the NEWBIE Cheerleading Bear doll is available for early for holiday orders.
        It’s a little boring though.
        Says the same thing everyday.

        • NEWBIE says:

          Sorry to hear your position is underwater and you have nothing better to do than to take your frustrations out on me. You fell for the bait yesterday, I even have a picture of it. 🙂

          • zepfan123 says:

            Actually Newb..since I started posting here 3 or 4 months ago when the SPX ATH was the same as today..SPX are no more wrong than anybody else here. The first couple days I was here there were a bunch of posters calling for new ATH’s over SPX 2200 any day. Very wrong. Well today..the ATH is still 2130.82..and we are well below it at 2080(ish). – We are caught in a very frustrating tiny SPX trading range that NOBODY anticipated and nobody knows when we will finally break out of our tiny trading range. But as I’ve said many times..i’m in the camp thinking that when we will be to the downside. At least with the market action I’ve been seeing lately.

  5. EL MATADOR says:

    bounce coming me nibble at cautious long

  6. zepfan123 says:

    Well the planets are certainly getting lined up to get this back down to SPX 2070 today at least.The broad market is slowly getting worse every hour. All key indexes including the Dow,SPX,TRANS,COMP and RUT are at or near the ‘lows of day’.now.Could be a 300+ pt down day on the DJIA. I’m now playing this via Sept DIA 170 puts…so of course I’d love to see the Dow below 17,000 in Aug. Odds look pretty good for that happening to me right now.

  7. Here is an SP500 chart is near “real-time”. Don’t make the mistake the “rookies” make in counting Elliott Waves. The wave labeled 4 is “not” the first wave down. There is a way to know this almost without exception. Do you know how to tell??

    SPX - Five-Minute - Aug-11 1306 PM (5 min)

    • maybe if you tell us, will learn something new. expect also to stir the debate pot a bit, I for one I am interested in learning from everybody here, bear or bull. thx.

      • Ok. Thanks for asking. There are two key ways to know. One before-hand. One for confirmation. Do you see those horizontal lines, and the way the 3rd wave got to very nearly the 6.86 level. That is 6.86 times the first wave. That is the issue I made such a big deal about yesterday! Those horizontal lines are called Fibonacci extensions. ‘Usually’ wave 3 is 1.618 or 2.618 x wave 1. But, the Elliott Wave principle by Frost & Prechter tells us that when a wave three travels 4.236 times wave 1, or worse 6.867 x wave 1, then we ‘should expect a failure”. A termination. A truncation. That is what happened.

        The next way to tell almost for sure, is the wave labeled (ii) in the down wave is a FLAT. that’s because it’s b wave comes almost level to (i). The requirement is 90%, of wave (i), at least for the b wave of a FLAT. Then look at wave (iv). Wave (iv) is a zigzag. It’s b wave comes only 33% of the way down towards wave (iii). That means there is now ‘alternation’ in the wave, and it forms a perfect impulse!

        I can already tell you by looking at the further five-minute chart, that the location I picked for wave (v) of this wave is ‘already correct’. A full three-wave upward wave has since occurred.

    • john b says:

      are you saying impulsive up and then impulsive down again?

      • It was a “five wave” impulsive C wave up with a slight truncation in the regular session (not overnight)! Like I said in responding to the Mandelbrot bio noise and clatter: the distribution of value of 0.17 versus 0.20, means third waves and C waves are “wonders to behold”. This has elements of both – and guess what it occurred on? M&A Monday. That is another ‘dead give-away’. They can’t wait to “buy-each-other’s-companies-up-at-any-price” and the market turns on them. It is yet another sign of over-blown sentiment in the topping process.

    • H D says:

      ET, nice 0 at Fridays low, you’re a quick learner. This is first for me to see that fib extension.

    • am wondering why you anchor the second set of fibs at top of the latest wave ii and the100 line is just hanging above the first 100 line? thanks for your contribution to the group

      • I was looking to see how long my wave (iii) was. And since it it is LESS than 100% of wave (i), then that means wave (v) MUST be shorter than wave (iii). It is and a small correction has already occurred! Those are part of the Elliott wave rules! Wave three must ‘never’ be the shortest wave.

    • john b says:

      although your wave 5 looks like 3 waves, I can also see it as 5 up,but possibly 3 too lol. down so far looking abc

  8. manunidhi21 says:

    Namaste Tony!

  9. mike7x says:

    #ChinaSurprise It’s always the things that you don’t expect. Back to where we were late last week…chop continues. Looks like SPX broke initial support and we may go to ~2045 sooner than later. By the end of this week? Opex coming and I think SPX will be a buy before then.

    • NEWBIE says:

      mike, I bet the majority of shorts cover and buyers pile in at 2045 only to be shocked that this downturn is not done at 2045.

      • mike7x says:

        That’s the gamble IMO. IF SPX doesn’t hold ~2045 than 2020 and Tony’s other support levels come into play. Below 1990’s and the odds of Primary 4 begin increasing. FOMC, China, Bradley dates, #unknowns, etc., coming into play within the next few weeks. Aug/Sep usually bad months to begin with.

    • senrex says:

      DAX closed down 2.7% today. If SPX has a similar down day, it would bring us to 2047.

  10. zepfan123 says:

    So DJIA down almost 250 pts. Yesterday’s 240 pt rally never happened. 28 of the 30 Dow stocks are in the red and some of the biggies are down big.- AAPL and GS down over $4. – BA,CAT and MMM down over $2.- I’ve noticed every time we get a rally back to SPX 2100..the Dow is at a lower figure than the previous time we tag SPX 2100. Not a near term bullish scenario.

  11. mjtplayer says:

    SPX down into Thursday or Friday (New Moon), testing the 2,040 – 2,045 area and completing minor A, then a 1 week+ ramp into OPEX the following Friday for minor B – back to SPX 2,090 – 2,100 area? How’s that for a potential road map?

    Then the “c of C” down to complete minor C of int C and major A of P4. A turn lower around or just after OPEX would also line-up with the major Bradley turn date on Aug 27th too. Markets have been rallying into OPEX, but generally don’t top until a day or 2 after, i.e. Monday or Tuesday the following week – the Bradley turn date is Thursday that following week after OPEX.

    • bhuggs52 says:

      Good analysis mjt. Certainly feels like we’re heading down into a wave C as Tony suggested was on hand. The extent of the drop should prove muy muy interesting as they say in muy muy land. I’m looking at UVXY for a position that I should have already taken.

    • That sounds great, and works with what I’m looking for. Anything below 2044, then a reaction up into the Friday close, and a higher reaction high (perhaps 2095+) for next week to meet another (expiration) expectation, and perhaps (likely) a bit higher the week after.

      I wrote this out somewhere or other after the last expiration when I realized it, and hope you or others here find it useful. Of the past 7 expirations, the highs for the 10 days after expiration came in the first day (Monday) three times, the third day(Wednesday) three times, and the sixth day (two Mondays later) once. That’s not even necessarily a higher high than the expiration week high, just the 10 day highs for the 10 days after expiration. The idea is to sell pops out of expiration, opposite of buying dips into expiration.

    • looking good playa….although a break of 2044, would bring a swift move to 2020 imho…while they run all the bull stops below…that would get us the spy 202 gap-fill

  12. NEWBIE says:

    This time its gonna HURT!

  13. what level do we get a bounce 2070?

  14. sibyn says:

    Short term RCH handle 11458,5 RCH Goal 11059,255

  15. gtoptions says:

    Thanks Tony
    SPY ~ Testing WPP @ 208.71
    Harmonic pattern is void below 207 ~ GL All

  16. mjtplayer says:

    Oil is tanking, now at $43.36 and less than $1 from the March low at $42.41

    Those who said the bottom was “in” for oil, care to revise your opinion? What does everyone think? Are we testing the lows here around $42/43 and we rebound higher? Or, do we go through this area and fall to $40 or below?? What does everyone think?

    I think we bounce in the short-term, but eventually fall below this area and breach $40 to the downside in what could be a final wave 5 flush. Perhaps we test the Jan 2009 low of $32, or maybe within a couple dollars of it, say mid $30’s.

    • Whats short term…tomorrow? Have to go with the deflationary trend.Could be cash is king.

      • mjtplayer says:

        I have no positions in oil/energy, nor do I plan to have any, so I’m not trying to play any bounce. Just saying, when a market gets oversold near critical support, it usually bounces. Whether oil bounces or not, I don’t know.

    • ABchart says:

      May be 42/43 > 52/53 > 32/33? 😉

    • tommyboys says:

      Oil is in a secular bear imho…and as stated numerous times here – oil will be in the $30 range within 12-18 months – and likely stay there for several years…

      • Don t you think equities in general follow down then? Not because oil is going down, but the REASON why oil is going down.Stocks have. always been the slowest turtle in the race to figure out whats happening macrowise, but once it clicks in…they turn into a roadrunner.Be careful all.

        • tommyboys says:

          Nope equities will not follow. Equities had their bear while commodities rallied. This inverse correlation will remain for some time ’til the cycle plays itself out (years). Lower energy is bullish for equities at this stage.

          • I have to disagree.To me oil crashing causes “dislocation”and unbalance in the general equity markets.The timeframe is from 12-24 months after oil freefalls.Examples.1986:oil went to the 20s…1987 crash.
            1996 oil retested 20s…1998 major selloff.Have to say, I didn t think it up…read it years ago…but I agree.Oil on the upside is also unbalancing…2007 as we all remember.Either way…wild swings in oil are not bullish for stocks..imho.and we re definitely in the 12-24 month window.Good luck though.

        • EL MATADOR says:

          Hey Learned, remember we were discussing dislocation a few days ago….”Dislocation” talk is making it’s rounds

          “People are concerned about not getting prices they want in a market dislocation,” said Woodard, a senior equity derivatives strategist at BGC Partners in New York. “We have known unknowns, in where we know there are things we think are going to happen in terms of monetary policy, but we don’t know what the consequences will be.”

          • tommyboys says:

            “Crash” versus orderly decline. Energy is but one space in the world of equities. Different sectors act differently at different times. Rotation the difference between bulls and bears.

          • Yes I remember…I agreed with you.Thought it was wise you brought it up here.I had heard of it long ago…but you reminded me.Anything can happen to equities in the situation we re in now…to the downside.

    • Dex T says:

      I agree and think that oil will eventually breach the low. I think a temporary bottom will be reached around the $30-$35 range.

      Aside from this I think that the days of $100 oil are in the past. There is just too much supply and the industry faces increasing competition from renewable energy sources. What used to be science fiction is steadily turning into reality.

      Next year or 2 I can see oil rally up to the $60-70 range but eventually sink back to the under $50 area.

  17. QE this time will hasten the end of the system and a return to some semblance of normalcy (following a turbulent adjustment period of at least 3-6 months; prepare accordingly). Markets will still allow for speculation but the vast majority will have already been removed from the pool. Thus, volatility will decrease and the paper playas will need to seek alternate employment. And that applies to the entire FIRE industry. Good luck and hope you have a skill other than paper pushing. 😉

  18. john b says:

    where,s Joe,this 4th of yours is a bit low aint it?

    • Good question, john b. Clearly you know by my posts I was ‘prepared for the down side’. It arrived. What about the upward count? Wave 4 ended where it is shown, and wave 5 ended in the upward truncation (cash did not make a new high, but futures did make a new high overnight, did they not??!!). Nobody has answered the question as to the importance of the 6.86; regardless of the market direction I am WAITING for someone to demonstrate true knowledge of Elliott Wave, and tell me what that 6.86 is. I know what it is. Do you?

      • H D says:

        6.86, the price of a combo meal?

        How r you ET? I think you are coming from a good place to help people see the value of EW. Most people try to add too many numbers and start their counts from months and years of data. What might help some is to start at 0, clearly a wave terminated at 2134, start counting there based on 3’s or 5’s and see if that helps. Use some fibs and data based on those retracements & and the structure from them will assist in the ‘tradeable’ part of wave theory.

        For me and john b, yesterday- “2104 is a big level”

      • EL MATADOR says:

        Hey Joe, nice work trying to pass down some of the EW knowledge. It’s very difficult to be a good teacher. I know we don’t see 100% eye to eye on EW rules and guidelines by Mr. Prechter but we do agree a lot more then we think.

        Anyways, to answer your question regarding the 6.86 number, are you referring to it in terms of Fibonacci ration relationship such as 1.618*4.236 = 6.854
        the wave i of 3 is approx. 1.618*wave 1
        in which iii of was almost 4.236*i of 3
        ideally had it not been for the bell v of 3 would have tagged 6.854 fib.

  19. Threat of deflation increased to some unmeasurable degree today..I guess we just wait for stocks to give in to it.Then QE from Yellen to save it all again.That s how its looking to me.Good luck all.

  20. Just correcting something I said here over the weekend after checking again. Below 2064 would only be a three week low, not a five week low, so it wouldn’t satisfy what I’m looking for with the Bradley dates. Below 2044 would be a six week low, and would also be the second decent low since the ATH at 2135.

    Something like that is what I’m gonna have to be looking for here for the Bradley thing this week. Sorry all.

    • mjtplayer says:

      The Bradley date you should be watching is in 2 weeks, Thursday, Aug 27th. This is the strongest Bradley turn date in 2015, all others since May 10th & 24th have been relatively small dates (low power) that may or may not work.

      • I hear that, but what I’ve been studying and noting here is that I’ve look at all Bradleys the past few years, and since 2013 its the ones (big or small) at 5 week highs or lows that have produced the reactions. 2133 a few weeks ago was such an example.

        The 8/27 is on my radar too, but if we get below 2044 between now and Monday and then back above for an entire day, I’d expect a reaction for each of three weeks including the date the extreme below 2044 is hit. The third week (second full week after) has not worked three of about fifteen times in three years. But the intraweek reaction and the next week/first-full-week reaction (higher reaction high or lower reaction low) has been 100%.

  21. zepfan123 says:

    Well the Dow and S&P ATH for 2015 may be in with this China currency devaluation news.- Looks like we’re gonna give back all or most of yesterdays 240 pts real quick this morning.

  22. ABchart says:

    Colombia will devalues: “Peso drop is absolutely needed” Cardenas says.
    awaiting reactions from Japan, South Korea, Australia, Singapore … the coming days. Endless war.

  23. EL MATADOR says:

    What happen to all those record shorts and Bears? Let me guess they got short squeezed yesterday yeah ok sure they did

  24. lunker1 says:

    The correction will be over when AAPL double bottoms.

  25. camper1888 says:

    Choppy market again , buy the blood ..this is too easy

  26. tommyboys says:

    Pivot frigg’in ping pong…

  27. ABchart says:

    I think the Yuan devaluation will not be good for Apple.

  28. fotis2 says:

    Well thanks to all and Trader Joe for probably the best read of the year with strong arguments both for and against EW as well as its interpretation and application according to one’s understanding of the theory.Big question:Is a profitable trading strategy using only Elliot waves a reality or just a pipe dream?Todays action is a good example looking for a WC down.Lets see GL and keep up with the excellent commentary.

    • No offense but good commentary does not make you money good trading skills does

    • chrisk44342 says:

      All that matters is how you manage the risk, right? If a fib level does it for you, more power to ya.

    • Well thanks for the compliment on the read. The answer to your question depends on the use of that word “only”. Much like Igor was correct to point out in his post: many excellent Elliotticians and traders ((like Glen Neely, and like Bill Williams) view counting Elliott Waves (and the technical indicators & sentiment that go along with it) to be “one aspect” of an integrated trading plan. Hint: the other aspect is determining where within a wave, or wave sequence a person wishes to place a trade, and in which direction, and why.

      So, to make life simple, let’s call the two aspects of trading, wave-counting, and probability assessment. Don’t worry about the latter term just yet. Instead, think about this: in years gone by kids made some of their money by having “paper-routes”. They would make their money by delivering newspapers to peoples homes by riding their bicycles with a sack of newspapers on it.

      If a kid showed up for the job interview, and abruptly asked, “what do you mean I have to ride a bicycle AND throw newspapers from off it at the same time?”, they clearly would not get the job.

      Elliott Wave trading is a job. There are people who do this for a living. They are professionals. The cynical among you might call them snarky names. And, of course, there are hacks, too, who misuse it greatly. Here’s the question? Do you want the job? Do you want to be the professional? Unfortunately, if you do, then you have to learn to both count Elliott Wave, and make probability assessments – almost at the same time. Are you up to it? Can you do two things at once? Can you ride a bike, and throw newspapers from it at the same time? Is it worth your effort? Only you can decide.

      • fishonhook says:

        Good comments Joe, except most of the EW technicians I have come across have thrown the newspaper at the wrong house! Then claim that they are really on another route , the alternate route.

        The ideal would be to catch 3rd waves up or down.
        Picking 5th waves would be ok too.

        If we could just do that we would make money.

        • It would be helpful to stop with the generalized comments about “most EW technicians”, etc. First, there needs to be demonstration that one knows the theory .. inside and out. I can tell by the way some people respond to these posts – they don’t have a clue! Your two comments about which waves to catch, are, however, right on! And it can be done, but not without RISK (it is a game of risk). One can try to ‘minimize the risk’, but it can’t be eliminated.

  29. MR C and anyone else…what effect will China’s currency move have on stocks and commodities here?

    • ABchart says:

      No effects on commodities. Negative for companies exporting to China.
      This morning in France:
      LVMH = -3,4%
      Hermès = -2,4%
      Kering = -2,25%
      Valeo = -2,5%
      Peugeot = -2%

      • Seriously? Absolutely no effect on commodities, priced in USD/Reserve Currency? I wonder if you’ll say that on Friday, if there’s a noticeable disparity between Monday closing prices in commodities vs. the rest of the week – compared to equities in general.

        • Does anyone else agree that all these other countries debasing their currencies has the same effect as the US raising rates ? Based on the dollar for the last few months-yes.Certainly not in percentage or basis points but in comparison to other countries, our status quo is an increase
          Now our markets seem to be taking this pretty well, Dax not so much.The dollar has reversed its gains overnight and is lower-helping equities.So much yin and yang(unintentional Chinese pun)though…Oil down…I think Gartman won t let gold stay in the green today…but early ABX(Barrick Gold) was up 3%.Doubts that lasts.It all seems to depend on the dollar.Good luck all.

  30. rc1269 says:

    Anybody else notice that oddly coincidental (though clearly not causal) PBOC announcement and simultaneous drop in the CNYUSD and equity futures?
    I mean, I know it’s just the charts that did it. But man did the PBOC time their announcement just right to coincide with the decline. They know their charts! 🙂

    • Hey RC…

      I pay a lot of attention to your posts and your comments, and you being a money-manager managing millions (or billions is it?), I get the sense you are bearish or with the P4 crowd like me?

      I thought today was a short squeeze to stop the bears who shorted the 2088 break on Friday and to trap bulls above 2100.

      Looking for a sustained sell off for the next 100-150 handles down….what’s ur take bud?

    • Is the YUAN devaluation the black swan the market has been waiting for? Can we get a 40 handle gap-down by the time the markets open? Can this be the trigger for wave-3 down after a day long short squeeze that squeeze every ball a bear ever managed to grow?

      O boy..the possibilities on this is endless…..A 2-3% market selloff will be a good kick off to P4 tomorrow….

      To be seen………

    • uncle10 says:

      again Im looking at the 10 minute chart of es and just see a gradual slow move down. what time did the “news” hit the wires? you sure can’t tell by looking at es.

  31. NEWBIE says:

    Wave 3 targeting 2020-2040, Go Bears.

    • PUG had posted a nice chart of DJIA showing the neckline and I think the neckline was retested today.

      I think he sounded bearish and his free update on his blog has Cycle 1 topped out. If he is right, and I am told he has been more right than wrong for the last 7 years of this bull market, then we are going to go much lower than 2020-2040.

      I think the 1950 area is interesting for the major A of P4 target.

      Let’s get ‘er done!!

  32. blackjak100 says:

    some volatility in the S&P & gold futes tonight…we shall see where they are in the AM.

  33. So, this is the next chart I wanted to post today. It is a 5-minute chart of the SP500. Before getting excited, I want to tell you that in a “live” chat room. I called the point marked ‘0’, which is a five minute bar to “within one minute” as a low. I know this sounds incredulous, but there are people in that chat room that can verify it. (This site simply doesn’t offer a chat room). Let me say it again “to one minute”.

    But beyond that .. (more text below chart)

    SPX - Intraday - Aug-10 2112 PM (5 min)

    .. beyond that I called the Leading Diagonal in the lower left hand corner, as “soon” as it made wave v. If you don’t recognize this as a Leading Diagonal, then you simply do not know your Elliott Wave fully, yet. And so, I said there would be higher waves on Monday. All great, correct ? But here is the significant part.

    The significant part is that in all the “Bluster” that certain individuals posted about the Mandelbrot bio being irrelevant, no one ‘just bothered to ask’ .. hey Joe, “what does he mean that the distribution is 1.7 and no 2.0”? What the heck does that mean? Because people had to post about ‘their’ thoughts and not just be curious at the time.

    As, the article says, what it means is that the distribution of prices is not, random, it is ‘chaotic’. It means that price change is ‘not linear’ and not proportional .People are used to “linear, regular, periodic”. The 1.7 means it is NOT that. So, look at the size of the first wave, the diagonal. And then look at this Elliott Wave chart from Friday & today.

    Do you see how the third wave is completely “outsized” compared to the 1st wave. It makes no linear sense. It is bizarre. It is wildly longer. That’s what the 1.7 means. If you can see that on this chart, then you can understand that there are “in fact” third waves that “are wonders to behold”. And if you can see that the fifth wave of three ended in a choppy, overlapping fashion, then you can see an “ending diagonal” for yourself – live and in real time (almost). And the fact that if it ends a “third wave” it does not, as the misconception go, have this wildly deep retrace – because a shallow fourth wave will follow it. BUT, it ‘does’ end a third wave.

    That’s what the 1.7 means. It is hard to explain to people of varying math backgrounds. But if you can understand that it has been theoretically and statistically shown that outsized “third waves”, including outsized “C” waves, exist (’cause C waves are in the third position of a flat or zigzag), then you are well underway to having proven for yourself that Elliott Wave theory is valid and correct, and all you have to do is figure out ‘how’ and ‘when’ to incorporate it into your trading system. This is not an easy task. Every individual is unique and separate, and usually, they want to do it “their own way” – when simpler, more objective procedures exist than by seat-of-the-pants or haphazard.

    I will not post much more on here until the weekend. There is a lot to absorb. Are you up to the task?

    • Before posting, ask yourself the question, “Why did the 3rd wave stop within 0.5 S&P point of the line marked 686.0%. Do you know what 6.86 is? It is 6.86 times wave 1, yes, but what else is it?

    • chrisk44342 says:

      Joe you do know your ew. Kudos to you for that. This is can be a fragile lot here on tony’s site i have learned. Many who come here looking for a guru to tell them what to do. I wiuld be careful about posting trading room successes because we both know that EW is based on variable outcomes and requires a degree of flexibility most traders do not possess. I personally feel that success in predicting something is like crossing a busy street. You might make it one time but u may get run over the next. Better to use EW to assess risk/reward because lets face it, we get into embedded states that will cause any wave count to change.

  34. Tough crowd. Maybe things will get clearer in the next few days. Break above 2115 higher we go. Probably 2180. Otherwise 2040ish. After that we shall see.

  35. mjtplayer says:

    Thanks Tony!

    Still a summertime market, chop-chop. I thought the same thing today when I saw SPX 2,100 again, the market just can’t seem to separate away from this area, up or down.

  36. blackjak100 says:

    I went short gold today and probably a tad early, but was elated when I saw this timing indicator…

  37. @fishonhook, in particular, and others. This is the first of one of the charts I wanted to provide today. This chart was posted on another site, after I completed the counting of the potential ending diagonal triangle. What is of importance is not the count. First, of importance is the date. This chart was done on 21 July. It is not changed in any way. So, the first question is, relative to DOW prices, was this chart incorrect? No, just the opposite, the DOW dropped and it dropped at least until 07 August. Could you have made money? Only if you recognized it first. Then, maybe yes or maybe no.

    DOWI - Daily - Jul-21 1409 PM (1 day)

    Second, of importance is that little text box at the top that starts with “Peace is Breaking Out”. This is called a Sentiment analysis (of one kind). Like any person, I am entitled to read the newspaper or listen to the news on television, or read web-sites and form my opinion of what is going on in the world. When I did at this time, I couldn’t believe the “cluster” of things were in the news. Russia was calling for “co-operation”. Huh? We were potentially making a nuclear treaty with Iran. Huh? The Supreme Court had just decided in favor of same-sex marriage, Huh? And Greece had said, “Ok, we’ll deal”. Huh? Taken together this signaled to me that, possibly, “Peace was breaking out.” And this was occurring “at the same time” as a potential Ending Diagonal Triangle?!

    It is Robert Prechter who said, “Wars break out at bear market bottoms, peace breaks out at the top.” That’s who I learned it from.

    And that is the third thing of importance. You know who I “did not see” this type of sentiment analysis from? You guessed it: the guy who invented it. One of the points I am trying to make is that even the “originators” of wave theory seem not be following it the way they prescribed it! They are human. I am too. Things happen. But – just like my re-analysis in July 2011 of the possible five-wave up sequence in the Dow that I posted over the weekend, I am very, very cautious that mistakes aren’t being made in what is essentially a simple procedure. Other sites did not post this type of sentiment analysis, and maybe it is an error of omission on their part too! After all, what’s to write about when the news is ‘generally good’. Hmm .. hmmm.

  38. This is one of the more convincing rallies we’ve had for quite a while, but Tony is prudently abstaining from buying into it as the real deal. AT a +1614, the NYSE A-D line put on it’s best performance in 2 or 3 months. The DJ Transports, up 1.47%, put on a strong performance as well. However, to feel confident that we are really in an impulse phase, I would like to see a kickoff where the Transports come close to doubling the increase of the SPX, which was up 1.28% today. And a +2000 day would be an ideal scenario for the NYSE A-D line.

    • fishonhook says:

      Well let’s see if you ending diagonal pans out
      I think you have made your case for an ending diagonal
      No need to hedge by saying maybe p 4 too
      If you are certain in your rules and counts stick to one
      Wish all EW counters did that
      To do otherwise is a cop out IMO

      • Rancho says:

        Fishonhook, Hedging even if it is only a small amount has helped me to minimize my losses ( when wave counts go wrong – which happens )

        • fishonhook says:

          Alternate counts make EW less credible
          Would you go to a doctor who kept saying
          ” it’s either cancer or nothing. We won’t know until you die or get better”
          I would prefer an EW counter who stuck to their count until proven wrong

          • Rancho says:

            Well … they can be proven wrong and accept the mistake. But I/we lose the money. As long as I am relying on somebody else’s count I would hedge …just in case. I think of it as insurance 🙂

      • Please see the newer chart post, as well. Thanks for being open-minded.

  39. JeffMilano says:

    Thank you Tony for your great weekend report. In my computer system, what the mkt has done is consalidation in this time cycle. First time perios was up consalidation and then down. I am still looking for an ATH in the september period. Thanks.

  40. torehund says:

    Thanks Tony.
    Politicians have a way of taking away the already granted (absence of cold war), then later on give it back. Such a maneuver creates a net perception of gain among the population despite the zero sum. Its like creating happiness out of nutting….Well Trump announced he will match well with Vladimir, so if you want peace, then you know what you have to vote 🙂 I will try not to mention Donald anymore, rotten eggs pounding towards me, lol.

    • tony caldaro says:

      Personally think.
      The more attention Trump gets the less chance the GOP has of winning the WH.

      • uncle10 says:

        There are only 2 possible outcomes that I see. 1. he wins gop nomination and loses to hillary. or 2. he loses out to bush and then runs as indep. thus giving it to hillary. either way she is our next pres.

      • You guys must be out of touch with the mainstream and perhaps women as well. There is no candidate that is talking the real issues facing our country and willing to make the tough decisions to right this ship. Hillary doesn’t stand a chance and neither does Sanders or Bush. Time to toss PC and recognize that 800 lb gorilla tapping you on the forehead. Or perhaps a more dire situation is needed first? 😉

  41. Despite any count, this doesn’t have the face of a C wave. Maintaining the view of more low to go, I would insist on a B wave instead. But, would look for alternate count, just in case would surprise us again.

    • nardobeme says:

      A nice Regina Blu atop a rustic baguette accompanied by a fine Barolo would be just fine by my standards. Agree. Thinking outside the mainstream is always beneficial.

  42. blackjak100 says:

    You could argue there is a decent symmetrical complex inverse H&S on the 60min chart targeting 2220ish. Not sure of success rate when there’s 2 shoulders on each side, but it is a very clean formation.

  43. Yesterday, someone questioned Elliott Wave. I’ve never seen that happen. Lol. OK. Let’s say you are completely opposed to some guy named Robber Preacher (sic) for popularizing a theory from the 1930’s made by Ron Idiot (sic). Have you ever bothered to truly research this? Are you aware that Elliott’s theory of fractals has been mathematically verified in the markets? This occurred later by a guy working on SuperComputers at IBM. His name is Benoit Mandelbrot. You can read a brief description of his work at the link below, and, then, question his credentials!

    Mandelbrot’s awards include the Wolf Prize for Physics in 1993, the Lewis Fry Richardson Prize of the European Geophysical Society in 2000, the Japan Prize in 2003, and the Einstein Lectureship of the American Mathematical Society in 2006.

    Oh yea, and the company, IBM, thought he was good enough to keep around for a while. Always a good sign. C’mon guys, read. Learn what’s out there. You’ll be surprised.

    • torehund says:

      There is no holy grail in stock trading but good tools (EW and techs) plus years and years of experience (losses, utter despair, and some wins), and still thats sometimes not enough to succeed.
      Looking at a pattern in retrospect makes a lot more sense than anticipating what will happen, or it would be easy 🙂
      Stock trading is plain and simply the most humiliating experience there is, and thats why we never get bored, and further the education of ourself to fill the missing gaps.

    • fishonhook says:

      Well Joe, yesterday you said in a thread that you thought P5 was done and the correction had started. Then later in the thread you said we could be in P4.

      If you cannot differentiate between P4 and the end of P5 how can you possibly call EW a robust tool for analysis?

      • EL MATADOR says:

        Memory is deceptive because it is colored by today’s events.
        – Albert Einstein –

        • zepfan123 says:

          “I can calculate the movement of stars, but not the madness of men.”
          -Issac Newton-
          Newton had purchased South Sea Company shares in the year 1720 at more than three times the price of the initial offering, and then soon proceeded to lose all of it… £20,000, which amounted to almost all his life savings.

      • Hi fishonhook. People around here have a great way of trying to put words in my mouth, That’s probably because they don’t know me well, yet : understandable. I know you were not trying to do that, but I ‘never’ called EW a ‘robust’ tool for analysis. You did. I just said Madelbrot has proven that fractals exist in financial markets and stock prices (be sure to read down far enough not to miss those sentences.)

        You have seen TC on this site use some indicators on his charts, have you not? Do you forget Robert Prechter was/is a member of the Market Technicians Association. In short, he uses 1) technical tools, and 2) sentiment tools to try to arrive at the best count, as well. So do I. I use a different set than you see here.

        In a vacuum, Elliott Waves are even tougher to describe. I stand by what’s in my video based on the location of the 1.618 extension. Is a 2.618 extension possible? Sure – just less likely. Anecdotally, there are a lot of people who are getting very irate when you say the market might go down. A lot of people, and sites, are “still counting upward”. That’s ok, but it’s a caution sign to me.

        If I get some time later tonight, I will try to post two charts you might find of interest.

        • torehund says:

          Whats really difficult is to ascertain when a longer range trend is reversing itself, and then have the patience to wait until it truly does so. An example is the timeline of events I have been pointing towards starting with the US debt crisis, merging into the Ukraine conflict and ending in a surreal revival of the cold war.
          There is no way one would think that politicians could inadvertently push themselves into such a cumbersome corner. Nothing of benefit has come out of it except illustrating the madness of current thinking…Donald pushes the easy button..
          Germany netted 100 billion Euros in the bond hysteria loaning money for nuttin, they only needed to yell Greece, make tumults and turmoil to make their Bunds attractive. In fact they have netted far more than what can possibly be lost by a Greek default.
          So is it rigged, well I don’t think so; the politicians just aren’t smart enough to execute such a contrived concerted plan. Its just how the world spins, events going to one surreal extreme and then reverting to the other surreal extreme.
          Livermore once uttered “a stock is never to low not to sell it and never to expensive not to buy it”. Madness of crowds, in which we the objective ones also takes part.

          • While I agree with the first sentence in the post, I fail to see how the rest of the post helps people in this website make progress. After all, they are here to see how someone else (TC) views and analyze the Elliott Wave – not how they grouse about the world.

          • torehund says:

            Trader Joe: If something can’t be ascertained by EW and techs alone, then the poor mans option is to look at whats going on in the real world too. Fundamentals (including politics) and analyzing possible outcomes could be a tool telling us what to expect next. Counts just aren’t clear at this moment ( primary 4 next followers are gaining momentum ).
            At crossroads EW and techs can tell us nothing about direction, although its helpful to know if its a crossroad or not, then one may act accordingly once the market has decided what to do.
            Politicians have cornered themselves, and the public is pushing the eject button on them all. Thats important information to the traders, as a major trend shift may be just around the corner.

    • cmucha68 says:

      Mandelbrot never put even a single nickel into trading a d his fractal theories have proven useless for trading. He is a good theoriest but has no clue about real trading. Need to know something valuable about making real and big money ask people like Steve Cohen or Paul Tudor Jones or Bill Lipschutz, only to name a few. Trading is an art. Either you have a gut feel or not. If not, no EW or OEW will help you. But you can sell books and DVD’s like this looser Prechter. Or did you hear of any multi billion hedge fund running by him ? Me not.

      • zepfan123 says:

        Sometimes I’m surprised Prechter is still alive. Lots of folks have spent a lot of money buying and reading his stuff and lost a ton of money sticking with him and his market predictions.

      • We agree on one point: Mandelbrot was not a trader. But someone has to develop the math, if you want confidence in a theory. Elliott’s difficulty was that he could only develop it anecdotally. He simply did not have the computational power at the time.

        And, yes, I have heard of hedge funds that exclusively use Elliott Wave: some of whom have been at the top of the Futures Magazine trading list. Unfortunately, you wouldn’t know it unless you dropped your cynical view about the topic and researched it. You may know that Glen Neely, who wrote the book “Mastering Elliott Wave” started such a hedge fund within the last two years. Furthermore, Bill Williams is a legendary trader along with those you cited, who exclusively uses/used Elliott Wave techniques.

        And, if you’d rather have the cynical bias, be cynical about this: You can be sure that the “quants” at Goldmann Sachs are fully aware of the implications of fractals applications – where little ‘ole you ain’t.

        • Igor says:

          Actually, when Glenn Neely launched his fund, he quickly realized that he cannot trade based on his own neowave predictions. This is what he wrote regarding the matter:

          The primary goal of the NEoWave TRADING service is to make money for subscribers; the goal of the NEoWave FORECASTING service is to provide subscribers detailed predictions of future price action. Those are separate goals; as a result, my trading recommendations are sometimes out-of-sync with my wave forecasts. The rules required to make money trading are entirely different from those necessary to predict the future. As this fact became increasingly clear to me the last decade, I began to separate the techniques used in the Trading services from those used in the Forecasting services.

          At times, Wave theory can be great at predicting price action, but such forecasts may have little to do with how a market should be approached (trading should first focus on controlling risk, second on getting risk to zero and third on making money). Except under rare conditions, when major new trends are beginning or ending, Wave theory is not good at defining trading parameters (i.e., entries, stop placement, stop movement and targets). Even worse, when your focus is on where you think a market is going and how much money you will make from such a move, you may forget about managing risk. As a result, if the trade goes wrong, you could end up losing much more than originally planned.

          The recent upgrade to all NEoWave TRADING services is the latest in that process of separating the purpose of the Forecasting service from the Trading service. The NEW Trading service fully exploits NEELY RIVER trading technology, which focuses on trading strategy (i.e., money management, risk control, how positions should be entered, stops placed and exits determined). Neely River is never concerned with your beliefs about the future; it focuses on the things we have control over (i.e., when and where we enter, where we place stops, how much we risk, when and where we exit). Neely River techniques are founded in concrete price history (i.e., what we know about the past and what we can control, not what we don’t know and not what we can’t control).

          So, to answer your question, when trades in the Trading service do not appear in sync with wave projections in the Forecasting service, it is because I’m focused on controlling risk, reducing risk to zero and looking for current and past price behavior clues that allow us to move stops or exit a position at a profit. My focus in the Trading service is NOT on what I believe will occur in the future (based on a wave forecast) but what is best for preservation and enhancement of investment capital.

  44. NEWBIE says:

    Fed ‘close’ to hiking rates, economy near normal: Lockhart

    What a crock….Now I’m almost certain an orchestrated event is coming that wipes out the market and makes gold and silver go to the moon but of course this event will be seen as out of nowhere and it have nothing to do with the Federal Reserve and its trillion dollars of printing.

  45. EL MATADOR says:

    Thx Tony, it’s been a tough crowd lately so I’m just going to let someone else do the talking from here

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