Wednesday update

SHORT TERM: another gap up opening, DOW +619

Overnight the Asian markets gained 0.2%. Europe opened lower and lost 1.5%. US index futures were higher overnight, and at 8:30 Durable goods were reported higher: +2.0% v +3.4%. The market gapped up at the open to SPX 1905. The market had closed at SPX 1868 yesterday. In the opening minutes the market rallied to SPX 1915. It then pullback to SPX 1889 just past 10am, bounced to 1908 at 10:30, then dropped to 1880 by 12:30. After that the market started to rally again. By 2pm the SPX was back to 1908, dropped to 1897 by 2:30, then rallied to 1943 just before a 1941 close.

For the day the SPX/DOW were +3.90%, and the NDX/NAZ were +4.65%. Bonds lost 9 ticks, Crude slipped 35 cents, Gold dropped $15, and the USD was higher. Medium term support jumps to the 1929 and 1901 pivots, with resistance at the 1956 and 1973 pivots. Tomorrow: Q2 GDP (est. +3.1%) and weekly Jobless claims at 8:30, then Pending home sales at 10am.

The market gapped up at the open today for the second day in a row. This time, however, the market did not selloff into the close, losing 3% in the last hour of trading. It rallied into the close gaining 1+%. Market is still quite volatile as today’s range was 3%. We noticed several things this morning before the open and posted a tentative green Primary IV at yesterday’s SPX 1867 low. First a short term positive divergence and a double bottom (many of them lately) at SPX 1867. An extremely oversold daily RSI, and the most oversold weekly/monthly RSI since Primary II. The SPX had corrected 12.6%, the DOW 16.2%, and the NAZ 18.0% – the largest corrections since P2 as well. Plus the low occurred within the 1828, 1841, 1869 pivot range, and it occurred this week. Both expected. The potential for a downtrend low is there. Let’s see what the market can do with it. Short term support is at 1901 and 1929 pivots, with resistance at the 1956 and 1973 pivots. Short term momentum touched overbought after yesterday’s positive divergence. Best to your GDP trading!

MEDIUM TERM: downtrend may have bottomed

LONG TERM: bull market


About tony caldaro

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279 Responses to Wednesday update

  1. johnnymagicmoney says:

    “the 1956 pivot comment is reserved for those that believe the rally was impulsive. I warned yesterday that it was not”


    Yeah the end of the day defintely wasnt impulsive action =)

  2. Page says:

    China will have another nice rally tonight.

  3. nardobeme says:

    Received a projected red opening, which I’m speculating we’ll gap down near/ at yesterday’s closing price, and then resume higher.

    • Thanks Nardo. Might explain why Dow is +300 yet XIV is down (they almost always trade in tandem). I could see and would be fine with your drop-then-resume-rally scenario (would buy back what was sold today), might also rally tomorrow and Monday and then drop-then-resume-rally (this is the track the Jan 15 Buy signal took but doesn’t have to repeat).

      My bottom line is this: no Sell signal close yet so recent low will be bought against if we drop with HH expected.. GL

  4. Locked in partial gains when Dow pulled back 75 points per the action plan posted here pre-open.

    I’ll let my indicator dictate but would not be surprised at a repeat of the Jan 15 (same) signal – nice rally, retest of the low, then back up up and away.

  5. gtoptions says:

    SPY @ .382 ~ Ideal would be a HH to complete 5 ~ Watch for overlap of w1.

  6. wildmick says:

    well this is starting to look familiar. wonder if indices will be red at the close? great for trading, if your heart can take it.

  7. gtoptions says:

    SPX ~ Symmetry @ 1955 for wave 4

  8. pbnj123 says:

    Good afternoon Tony
    Been here all along just reading your words – great work.
    I have one question – I remember many months back you stated that when primary IV completed that PRIMARY V would be a one shot run meaning not many opportunities or pull backs to get in – just a straight ride higher until completed – is that still your thought?
    Thank you

  9. perversionofthemean says:

    There goes the 1973 pivot.

    • perversionofthemean says:

      So, party pivot people, would you short on the re-test of the underside of this pivot, or just assume the 1965 reaction low was still within an acceptable zone of pivot support?

    • EL MATADOR says:

      the 1956 pivot is the key support for wave 4 to provide EW symmetry…..break it and it’s game over for those that believe the rally is impulsive

      • perversionofthemean says:

        Measured move target reached at 1947. Boom/pow — 1956 pivot was no help either. Gap opening still not filled. Wasn’t necessary, as the gap up met Monday’s gap down for an island reversal. At least in the old days, an island reversal was a big deal. Now I see even those gaps routinely filled.

        • EL MATADOR says:

          Gaps have a different meaning nowadays, he gap repeatedly now due to park pools and HFT crap. 1956 pivot comment is reserved for those that believe the rally was impulsive. I warned yesterday that it was not. The way we just knife through those pivots reinforces my belief that it was not impulsive. 🙂

      • perversionofthemean says:

        Also interesting is how the VXX gap up on Monday has NOT been filled, despite equities “healing”.

  10. llerias7 says:

    The game plan: upwards until FOMC day, SEP17 (SPX 2040´s). Then, well (when EVERYbody is looking up) C wave will come by surprise testing 1800´s…

  11. vannic99 says:


    I assume the goal here is one more push higher in the next day or two(for a -div), then down to 1901 and then off to the races with P V being the old P III target(2530-2630) by Q2?


  12. john b says: futures 85 area turned out to be 86, ,looking like spx busy with a w4 now.. then 5 which could be a 3 of 3 or a C, in which case lower low could happen

  13. Jim Guthery says:

    Xiv, uvxy both are not convinced of this rally

  14. uncle10 says:

    Our friend the cnn fg index nailed the bottom again haha 😉

  15. Sure looks like the Bull is back in town

    • Dex T says:

      It’s only been 2 days. It’s not like all of the other issues that caused the fall have disappeared.

      The drop will resume and then everyone will be screaming bear again.

  16. So is this 120 point plus move minor 1?

  17. EL MATADOR says:

    2000 replay is my biggest fear. it can be argued from EW perspective that that last Primary wave truncated with due to the wedge. look at the fast deadly first drop then the fast two day rebound by time the first rebound was complete it retrace 66.6% (a fib ratio) of the entire first drop (or 75% of W3/C). Just say we need to be objective and cautious. This is why I always take CN’s comments seriously.

  18. kvilia says:

    Already waiting for the weekly update – thanks, Tony!

  19. torehund says:

    Growth and inflation is saving us from further delaying the Sovereign debt crisis. Solution is the problem….. Or as they say, whichever way you turn your buttocks will always be in the back. Perplexing world.

  20. mjtplayer says:

    SPX near the highs of the day at 1,982

    Just one problem: the VXX is only down 1.5% and is 2% off the lows of the day.

    Beware of the afternoon rug pull

  21. johnnymagicmoney says:

    I find everyone on here funny and I will tell you why. I myself have questioned Tony and his counts most notably that he thought October 14 lwas PIV and it turned out to be an extension of III. That being said he is more right than I surely am and yesterday he quickly put a Green PIV label on the charts yet many kept going on and on about it being a bear market or that we HAVE to visit this level or that level most of them lower than where we bottomed recently. Here is what i find funny: So many people on here are quite knowlegable and have great instincts yet somehow they manage to collectively trick themselves into thinking that they are different than the masses. Aside from being more knowledgable and smarter than the masses but when most on here are doom and gloom we seem to be near the wash out and when most on here have strong convictions that the market is going higher its uncanny how often the market has a pause or downturn. Intelligence breeds arrogance and arrogance brings mistakes. Tony meanwhile seems to be quite calm and my guess is thats part of his strength as a technician – he seems to have no problem changing his forecasts and seems to divorce himself from his emotions or intelligence. He sees what he sees and shares it with us. I have much to learn in this regard. I went long near the lows yesterday and so I am happy fot the time being. I will do my best to trust the count in the meantime. Can’t say that I will LOL Thanks T

    • Page says:

      You are the chosen one, need your blessings.

      • fishonhook says:

        Page no need to mock others. One day you are saying you see 666 being breached on the way down and then new ATH and going long. You swing with the market. At least this poster is trying to add something.

    • In 2008-2009 we had selloffs and rebounds of this magnitude all the time.Then more selloffs.If this is a W bottom thats fine.I m more in now
      than I was 3 weeks ago and will add more if this P V.If it isn t, I won t lose much as I ll sell at a failure of 17100 or even later today (if we sell off late).I think I mentioned before I m lousy at picking bottoms but doing okay this time.Good luck.You can t go by 2 days into a reflex rally to analyze the next 3 weeks.Take it one resistance level at a time.

    • Dex T says:

      Granted but if you continuously flip flop then how do you maintain a direction? You have to have some confidence in your counts and most people certainly don’t!!

      While this doesn’t apply to Tony, there are plenty of traders who change their view at the slightest turn. I don’t see how they can make money that way- and many don’t.

      We once again saw just how swiftly market turns can wipe out months to even years of profits. There will be a huge difference if this turns out not to be the beginning of P5 but just a rally before another plunge or the beginning of a bear.

      • fotis2 says:

        Many here are day traders as such every day is different and may change direction of trade 2 or even 3 times in a day.

    • spindoc73 says:

      The MO of this market = fueled by fear. That being said, the wheels are getting ready to pop off down to 1780, haha.

  22. I thought we might get a 20 point pull back, But we might just going higher all day

  23. Page says:

    At close shorts covering will push SPX close to 2000 (1990+).

  24. next entry for day trader ES globe, i have 2 1950.60 with strict stop @ 1944. to go up on a potential 5 of 1. SPX 1948, stop 1940. SPY 196.5 and stop strict @ 196. cheers

  25. bolderbob says:

    Thanks Tony then you think P4 is finished and this lift off is P5?

  26. Only observable comment, is that tis wave 1 is a beauty of harmony. Quite and gentle like an “aria”

  27. bolderbob says:

    Hi Tony,

    Do you think that this is sill part of the B wave up and that the C wave down comes next to set a lower low in P4? It seems that P2 was a flat so P4 should not be.

  28. blackjak100 says:

    My gut tells me Bears will be surprised how far this rally runs. again, still no 5 waves down from top to indicate any impulsive move. Could P5 complete in 3 weeks for double top similar to 2007? I think yes.

    • EL MATADOR says:

      not sure about the 3 week time zone it should take much longer then that, but yes one of my fears for P5 is truncation the wave form structure is there. I hope we don’t see truncated P5. truncation is deadly

      • blackjak100 says:

        Time is not as important as price

        • EL MATADOR says:

          agree but you won’t see a Primary wave complete in 3 weeks time no friggin way. If P5 is to truncate I would expect it to wedge and take at minimum about 2 months time.

          • Dex T says:

            I agree and was considering the possibility of a truncated wave that would fool everyone! Glad to see that it’s on the table as an option.

          • gtoptions says:

            P2 was 15 weeks High to weekly low @ 8/8/11
            P4 so far is 15 weeks
            Like I said if the weekly candle ends in a Hammer, could be it. Not saying it can’t retest that low.

          • Gto, no offense intended but I’m always amazed that some people adhere to a method which misses out on the meat of a move, the easy (so true) money, “waiting for confirmation”, etc. Why not rather find a method that FORETELLS the move and captures ALL of the profits? GL

        • Blackjack, you’re halfway right – price is ALL that matters; time (volume, etc.) is irrelevant.

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