Thursday update

SHORT TERM: choppy day, DOW +6

Overnight the Asian markets gained 0.5%. Europe opened higher and gained 0.7%. US index futures were higher overnight. At 8:30 weekly Jobless claims were reported higher: 274k v 270k, Retail sales were reported higher: +0.6% v -0.3%, and Export (-0.4% v -0.1%)/Import prices (-0.3% v -0.2%) were reported lower. The market opened two points below yesterday’s SPX 2086 close, bounced up to 2088 in the opening minutes, then dropped to 2078 by 10am. At 10am Business inventories were reported higher: +0.8% v +0.3%. The market then rallied to SPX 2087 by 11am, dipped to 2081, then rallied to 2093 by 1pm. After that the market reversed down to SPX 2082, then ticked up to close at 2083.

For the day the SPX/DOW were mixed, and the NDX/NAZ were -0.20%. Bonds lost 16 ticks, Crude dropped $1.10, Gold slid $9, and the USD was higher. Medium term support slips back to the 2070 and 2019 pivots, with resistance at the 2085 and 2131 pivots. Tomorrow: the PPI at 8:30, Industrial production at 9:15, then Consumer sentiment at 10am.

The market opened slightly lower today, bounced, pulled back, and then resumed yesterday’s afternoon rally. With today’s pullback and then reversal higher we now have three waves from Wednesday’s SPX 2052 low: 2089-2078-2093. This kind of activity has occurred numerous times over the past several months, and even the past several weeks: from 2045: 2074-2051-2133, from 2064: 2111-2095-2114, from 2087: 2103-2089-2113. The choppy market continues, and no change on the count posted on the hourly chart. Short term support drops to the 2070 pivot and SPX 2052, with resistance at the 2085 pivot and SPX 2114. Short term momentum hit overbought during today’s advance, then dropped to neutral. Best to your Friday trading!

MEDIUM TERM: choppy uptrend continues

LONG TERM: bull market


About tony caldaro

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106 Responses to Thursday update

  1. So, even though they could not break the high today, the lack of downward overlap implies a higher wave is still in progress; can be counted as (i), (ii), (iii), (iv) .. currently with the expectation of (v), up, to a circle-i, on Monday, then a short drop, to a circle-ii. Circle-ii should ‘not’ break the low of circle-i to remain valid.

    SPX - Intraday - Aug-14 1501 PM (5 min)

    The expectation is the blue C wave, up, should be about as long in time, or longer, than the blue A wave, up. This wave out of the potential triangle does not approach that yet. While the triangle’s structure is valid, the move out of the triangle is not confirmed until a higher high is made.

  2. john b says:

    I have resistance at 96,98 and 2100 area

  3. Hi Tony,

    On your hourly chart, i don’t see a label yet for micro c complete at 2052. So did we not complete minute a of minor c of Int ii yet ?

    I thought we were in minute b from 2052 lows…but not sure if u are seeing it differently now.


  4. We don’t have any higher highs for the move yet today on the major US indices. The Dowager has come closest and made it within 10 points so far. CAC and DAX moving up AHs also. Both these European indices need to go about 1% higher from current levels to make a double top which would fit nicely as a “4”. Wave 3 down in both cases was around 6%. If indeed we are in a C wave up then the next question is how far. If wave C was 62% to 78% of wave A then my maths says SPX 2106 to 2115. Not my strongest suit but I think there is a trend line running down from the top in that vicinity. Interestingly that would also require about another 1% higher.

  5. EL MATADOR says:

    Whatever happens just don’t get caught with your

    GL and enjoy your weekend all

  6. Was going to post earlier but wanted to watch a little more data. Bollinger band width on a 30 min chart is the lowest in 2 weeks. So I expected today to be a lazy August Friday with little volatility. This is proving to be the case. It also indicates a large move coming next week. Direction unknown. LOL Hows that for a conviction prediction?

  7. gtoptions says:

    Thanks Tony
    Enjoy the Weekend All.

  8. This is the formation of a “running triangle” in it’s larger context. The triangle would be B (blue B) of an A-B-C, upward (in blue). In order for a “running triangle” to be validated, it’s wave (e) MUST cross back over the high of the prior v in an A wave, or the prior 3 if it is the fourth wave in an impulse. This pattern has done that. Still, to “validate” the triangle, then it must cross the high. (More text below chart)

    SPX - Intraday - Aug-14 1219 PM (5 min)

    Still, triangles and diagonals are “tricky” to call. The (d) wave up ‘could’ collapse again, but if it did, then a new (e) wave MUST cross back over v of A. There is something very unique about this triangle – but still allowed. Frost & Prechter tell us that four of the five waves of the triangle ‘must’ be zigzags. But one wave of a triangle (usually the (a) wave is allowed to a flat.) If a flat is not found IN the triangle, then a smaller triangle can exist inside the triangle itself. A common triangle can be five or seven waves long, as one of the zigzags is allowed to be a double zigzag.

    • fishonhook says:

      So Joe- in the space of a few posts you have moved from showing us a C down to showing a C up.

      this demonstrates I think, once again, that even if you follow all the ‘rule’ like you or bend them like Tony, there is no easy way to trade the squiggle count.


      • We agree there, to a some extent, foh. The intra-day bars are less ‘stable’ because they contain fewer ‘votes’ .. fewer number of people who are making trades than an entire trading day’s worth of votes including votes from all around the world. But, where we disagree slightly is that clearly, after generating the impulse wave up, I was ‘only’ looking for a correction lower. It ‘could’ have been the c wave of a FLAT, but I clearly said the correction would likely end “sometime today”, and it did. So, the morphing into a triangle is absolutely not surprising to me. It’s like I say in the Elliott Wave Critique video posted earlier, “Always have a plan ‘B’ .. business people always do.” If you’re in this game for the long haul, and to operate your account like a business, having a “plan b” should not be viewed of as a ‘shame’, it should be looked at as ‘simply brilliant’.

      • tony caldaro says:

        Are rules that do not follow all historical data rules, or just guidelines?
        The actual number of EW rules are quite small.
        Various authors have presented so called additional rules based on a subset of data.
        Not all the data available from the year 1885.

        • Personally, I don’t know the answer to that question. Fortunately or unfortunately, I only start my work with the inception of the Dow Jones Industrial Average, so I work with one and only one consistently available data set for historical work. Yup, it means I was not trading the Great South Sea Bubble (thank goodness). And, I know the average is not ‘consistent’ itself – almost all the stocks have changed over but a few.

          On a more serious point, I am personally one who thinks a theory must have a foundation in logic – or it’s not a theory. For example, if one seeks to distinguish an expanding triangle from a contracting one, then (b)-(c)-(d)-&-(e) need to get ‘longer than each other’ in an ‘expanding triangle’, if one posits that (b)-(c)-(d)-&(e) get shorter than each other in a contracting triangle. Same with contracting and expanding diagonals. So logical consistency appeals to me. Is that correct?

          The market place consists of a lot of people who make irrational or emotions decisions. Should logic be used to try maneuver in such an environment? Benoit Mandelbroit tells us there ‘is’ in fact something descriptive about that environment – mathematically: the long tails. And yet, great traders & made and lost fortunes. Still, a few trading houses ‘somehow’ have profits .. every day .. every month.. every quarter for a period of time. Their stories have been in the news, periodically. Hence, I will be the first to admit, I don’t understand everything that is going on. But, I am always willing to learn.

          • tony caldaro says:

            Logic is what makes this theory more of a science of probabilities.
            Many, myself included, think they can just pick up a few books, written by those in authority, and know the Elliott Wave. Unfortunately I found out decades ago that does not work. Most just throw the books in the trash and move on. I didn’t.
            I set out to prove, or disprove it. It took a few years.
            But when I was able to quantify waves for labeling, and then looked at a long term chart, the theory was quite clearly a fact. And it makes sense.
            The universe unfolds in octaves. From the photon to the entire universe, the geometric progression has been in octaves. Since EW is somewhat a representation of the economic growth progression in humanity. It too should unfold in octaves: 1-2-3-4-5-a-b-c, and it does.

          • Tony,
            So the market is now in B above middle C ? LOL

          • tony caldaro says:

            agree with uncle Albert

    • gtoptions says:

      It should drop now. 😉

    • H D says:

      JMHO, I have it labelled C, H, O, P. . I do think since the days 10 handle range came on the rally side today it’s still part of the impulse up from 2052.

      Just FYI. Enjoying the charts. Sometimes we have a 3 post limit. Your posts r helping me refresh all the guidelines so I’ll happily give you mine for a while!

      Great weekend all!

  9. This chart does NOT make a prediction yet. If we bounce off the channel, a triangle is technically valid. Lower and we go on to finish the c wave of the original flat.

    SPX - Intraday - Aug-14 1149 AM (5 min)

  10. blackjak100 says:

    It will be interesting to see if Jeff saut is right. He said today we should see the low in the next couple of days. This probably means 2040-2045 which means an aggressive sell off mon & Tuesday.

    • blackjak100 says:

      This is based off his model and he forecasted it 6 weeks ago and is still sticking with it. Take it for what it’s worth, but this would match TC’s outlook.

      • alexhartley1 says:

        I think the potential sell off is leaving it a little later BJ. I have a turning point date 14-17 and next week is OPEX which is traditionally bullish. A lot of work to on Monday given we’re doing nothing today.

        The bigger sell off should come in Sep.

        • If everyone is looking for a low Mon-Tues….?

          • alexhartley1 says:

            Well the point is it isn’t really happening right now so I’d suggest not being short going into OPEX based on the belief we’re going to hit 2040 – I don’t think we will. I think we’ll probably hit it and possibly 1980 area in Sep – Oct. I think Sep will be the last down month of the year.

    • Agree and I know he’s a smarty with a great track record. I read that he was looking for it between 8/13 and 8/17, and I’m wondering if he was looking at the Bradley dates partly, maybe using the 8/15 from the sideograph site.

      Either way though, I’m wondering if he and other people who look at cycles were thrown off by the 8/12 low with the China thing, where maybe that was all that was going to come but it just came early and maybe stopped a bit short. Just a theory to throw out, as I’m thinking that the Bradley date forecast was met by going below 2064 (so a five week low) and then back above on 8/12. I’m wrong below 2064 again.

  11. So, with only marginal lower lows, so far, and upward overlap ‘already’, this is the diagonal possibility for ending wave ‘c’, lower. (More text below chart).

    SPX - Intraday - Aug-14 1033 AM (5 min)

    The typical target is ‘at least’ below the low of circle-a. But diagonals are ‘wedges’ and wedges ‘can’ break down further, so even lower is ‘possible’. We have to monitor …

    • So, in a contracting diagonal, wave (iv) CAN NOT be longer than wave (ii). If the market breaks 87.35, higher than a diagonal would invalidate. The would potentially leave us with a) a flat for ii of c, OR a larger triangle for a B wave, with a C to follow upward.

    • The market has been”suckering”people for quite awhiile with these small violations of trendlines.The trend itself is the key.

    • A wave (iv) of a downward diagonal would now be longer than a wave (ii). That invalidates a contracting diagonal lower.

      • Joe your comment “C to follow upward” looks reasonable from what I can see at the moment. Higher highs for the move will clinch it no doubt. Very easy to see 5 up for wave a for INDU, SPX & NDX followed by an abc down in all cases. What’s easy to see doesn’t always work out but, as I said, C wave underway for this move looks as good as any other idea at the moment.

  12. SP500 new Low of Day .. chart update below .. price movement continues lower in the channel. Notice how the channel lines are violated, regained, violated, regained. It’s telling …

    SPX - Intraday - Aug-14 1018 AM (5 min)

  13. ABchart says:

    Currently the PE of the SPX is at 21. But how would it be without buybacks? I know it must be difficult to calculate, but someone tried?

  14. So, yesterday’s 5-min chart made a prediction, it said a gap lower was possible , even probable, today. That did occur, and was quickly back-filled. There is now one five-wave structure down from the the top. It is either all of C in a truncation, or i of C. Either way there is now this small channel lower, the breaking direction of which will be a clue. Here’s an update. It is perfectly acceptable for a flat to truncate when the b wave is higher – that was covered in my “Critique of Elliott Wave Theory for Trading”. It is perfectly acceptable, but is not the usual case.

    The more common case is the ‘c’ wave travels below the ‘a’ wave.

    SPX - Intraday - Aug-14 0850 AM (5 min)

      • zepfan123 says:

        Ha..yea…there certainly was no gap down today. Now Wednesday..when we dropped 32 SPX points in the first hour..”that” was a gap down.
        But we’re just back to trying to anticipate when and which direction the next true breakout comes which obviously nobody here..or anywhere else for that matter has a clue right now. I just perused at least 10 other trading blogs and their comments and pretty much everyone is just as confused as we all are.

        • NEWBIE says:

          Goldman Sachs and their banker buddies now exactly how this plays out.

        • If we don t trend lower the next 3 months I ll be shocked…probably with one 5-10% pullback thrown in.My slightly bearish view.

          • zepfan123 says:

            With what I see.going on in the big picture of all stock prices,indexes and indicies and commodities…I still think the next true breakout is to the downside..meaning getting multiple closes below SPX 2040.- But we’ve first got to start closing below SPX 2070..which the market continues to heavily resist doing.- Dropping to SPX 2052 on Wednesday morning and yet still closing back over SPX 2080 on the close leaves that an “iffy” proposition still.

        • What’s to be confused about? Markets tend to chop 70-80% of the time. TA is our defense against the unknown; providing clear actionable rules.

          There will come a day where we will be really confused as to what happened to our account and currency (and hedging is key); but I’m hoping that will be well beyond my retirement age, and that is quite some time away. 😉

        • The “confusion” is typical in fourth and fifth waves, as was clearly stated in the video of the Critique of Elliott Wave Theory for Trading that was posted earlier. The problem is that the anger, the angst, the cartoons, the “I am always more right than you attitude” will not help one learn Elliott Wave, and it’s strengths and weaknesses, to any better degree. Whether you like it or not, it was, in fact, a gap down. I did not make a prediction for the ‘size’ of the gap down, and I ‘clearly’ said, the ‘c’ wave lower could either be a clean impulse or a messy, choppy, overlapping diagonal.

          Now, we ‘also’ have a downward overlap. That is more of a sign of weakness ‘of some type’ than a sign of strength. We shall see.

          • We closed yesterday at 2083…low of day is 2082.If you re going to argue that a 1 point drop is a gap down…and you were right, I can t assume you know what you re talking about on anything else.Even I know what a gap down is…lol

          • Just to share knowledge – there are several types of gaps: a) common gaps that are quickly filled, and b) extension gaps which are only filled much later. Within the category of ‘extension gaps”, there are 1) initiation gaps, 2) continuation gaps, and 3) exhaustion gaps. You will find all of this terminology in the literature of technical analysis. Yes, you are correct, it was not an “extension” gap. But I am also correct that it was a gap. It was a “common gap”. Is there any way to make the universe be a little less hostile?

  15. mjtplayer says:

    Tony, Atlanta Fed now tracking Q3 GDP at 0.7% That is 200bps below the average Wall St estimate of 2.7%

    If we don’t see a pick-up in growth ASAP, you’re going to have large cuts in Q3 earnings estimates.

  16. Jim Guthery says:

    Does the Bear party start today and end on Monday for Mr C’s 2040?

  17. EL MATADOR says:

    Just my imagination at work,

    • Have to say I prefer your contributions over Trader offense to Joe.
      The more complicated the system the more chances for interpreting it the wrong way.Just my preference.Good luck all.

      • jwmcbride says:

        Look at my update then look at trader Joe. Which is easier to follow and which one makes money. Don’t get me wrong he is a pretty fair Elliott wave tech. But so is Prechter.
        Use tony as guide but be a fly on the smart moneys ass so you go for the ride with them. That’s trading what Joe does is not.

        All I do is look for divergence setups. Buy at support levels of off the slow moving avg. Buy green sell red tight stops lower time frame and away you go

        • blackjak100 says:

          tough to say he’s a pretty fair EW tech when he was counting a diagonal as a B wave. Diagonals are 5 wave structures not 3. I never did get a response when I mentioned that.

          • I did reply. The five-wave diagonal would have been the C wave of (B) or (E) of the larger triangle. Maybe you missed it or maybe it didn’t post. There was a series of down waves ‘prior’ to the diagonal, that was A or 1, the up wave wave B or 2, and the diagonal then would have been C or the next sub-wave (i), down. ‘Usually’, diagonals ends waves so (B) or (E) is better until or unless the low of the diagonal is busted.

          • jwmcbride says:

            Why do people trade. TO MAKE MONEY!!!!! TraderJoe should change his name to professor Joe. PS Mr Joe If you want to teach then write a book. If you want to make money then learn to trade with the pro’s. I thought people were here to learn how to trade for a living. I am far too busy to waste my time sharing my knowledge of trading with people who do not want it. Good luck to all

        • Hi. I have no issue with what you do. I am even very happy you made $4,500 on a particular day, and I wish you many, many, many more. If you are trying to show people how to make money – that is up to you. I am not a registered investment adviser and therefore I can not legally, and will not, offer trading or investment advice. What I can tell you regarding my ‘profitability’ is that I made enough money trading Elliott Wave patterns that I was able to securely retire at a very early age from Corporate life – when I was I trading only “part time”. Most people look at me and say, “you’re too young to have retired”; it’s true, but the exact sum that was made is nobody’s business but mine.

          Divergences are good. As Tony the Tiger would say. They’re Great!! I use them in every wave I count.

          But I am not here to offer trading advice or financial advice. I am only here to help people see that they can learn EW theory if they put their mind to it, and therefore add another arrow to the quiver, but one they can be confident in as far as the theory allows.

          How much confidence does EW theory allow? Unlike Prechter, I did a full critique of it in this YouTube video. But it is NOT for the novice or someone trying to ‘learn’ Elliott Wave, but rather for someone who is experienced at it and wants an appraisal of the pitfalls.

        • trondack says:

          Are those custom scripts on NinjaTrader?

    • blackjak100 says:

      I’ll play devil’s advocate Fiona…how many inverse H&S have you pointed out in the VIX the last 2-3 years and none have panned out? This is not your fault, just sayin’ the reliability is almost zero.

      • I m more interested in trendlines and VIX buy or sell areas.Earlier in the year…right on the money with the 125d a few times.My opinion is we re testing all these moving averages and eventually breaking them.125d held a few times…200d acting the same way.Think we break it definitively soon.But I ve been looking for a breakeven to slightly lower year all year.Good luck all.

        • fishonhook says:

          It’s not either Fiona or Joe. All opinions and techniques welcome. We can judge pretty fast who is getting it and wrong.

          • True enough.I was just complimenting Fiona s style of analysis.Simpler is better in my book.When I have to get a magnifying glass out to see what s going on…well I don t stay with that method too long…lol.Good luck to everyone though.

    • VIX ticked down to 12.8 for a brief moment just before 10AM -low enough?

  18. nickokc says:

    any WTI count out there anybody? thanks

  19. Lee X says:

    Thanks Tony
    Go Red Birds

  20. Thanks Tony,

    Assuming the 3 waves up from 2052 is complete, and can be marked as b of C, we can possibly get another 3 wave or 5 wave down to complete c of C and Int ii or Major 5 of P3.

    Aug 14th, 2045 spx tomorrow could seal the deal n the bottom. In the comments section on the weekend update, you had alluded to this possibility replying to someone’s post about a Bradley date as the low.

    Also we have Opex next week,so typically get a pivotal low Thu/Fri before Opex….hoping that it’s the low tomorrow.

  21. torehund says:

    This market needs electro-shock therapy of some kind. Removing neurosis and weakness.

    A reset of the collective mind, towards Optimism…Someday it will change, with or without the magical belt 🙂

  22. So, one of the concepts of good wave counting that I have been wanting to illustrate over the last few days is the concept of “time”. In particular, the time of a correction usually exceeds the time of it’s entire impulse. In this chart, the time relationship is clearly shown. The correction is already longer than the impulse. That’s all that’s needed. The chart below makes a prediction ..

    SPX - Five-Minute - Aug-13 1505 PM (5 min)

    The specific prediction is that the circle-c wave will complete tomorrow. You probably know, if you are at all familiar with Elliott Wave work, that the gaps mark, the wave iii’s of 3, or C’s. So, it is ‘possible’ this circle-c wave will continue with a gap down, tomorrow. It doesn’t have to. This ‘c’ wave could itself be an overlapping diagonal affair, lower. But, often it does contain a gap down. Let’s see if that portion of the prediction occurs, as well. You will notice that I have intentionally ‘not’ labeled yesterday’s impulse up wave. It could be A or 1. However, there is something a little odd. That is that ‘usually’ .. as in ‘most often’ .. the second wave of an impulse is a “zigzag” (i.e. a “sharp” not a flat). Since we apparently have a flat under construction that ups the odds, that the impulse up is an A wave, more so that a 1 wave. But, if we do, in fact have a flat for a second wave, then the fourth wave needs to be a ‘sharp’ (i.e. zigzag) or a triangle to alternate with the flat in order to make a larger impulse upward.

    So again, the odds are ’tilted’ in favor of a corrective A wave for yesterday’s impulse, but a first wave for yesterday can not be entirely ruled out, yet. One thing that begin to quickly rule out a first wave for yesterday is if the next up wave makes and ending diagonal. That would very likely make it a “C” wave not a three wave.

    Read this carefully, review the charts and all the measurements that have been provided. I hope it helps. (Nothing is to be taken as trading or investment advice.)

  23. Thanks TC! Food for thought…

    Avg stock in SPX is 14% off 52-week highs. Median is 10% off highs. The SPY is 2% off highs.

  24. fotis2 says:

    Many thanks Tony.

  25. mjtplayer says:

    Thanks Tony – chop chop!

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