Tuesday update

SHORT TERM: third gap down opening in a row, DOW -470

Overnight the Asian markets lost 2.8%. Europe opened lower and lost 2.8% as well. US index futures were significantly lower overnight, and the market gapped down to SPX 1944 at the open. The market had closed at SPX 1972 yesterday. In the opening minutes the SPX dropped to 1931, bounced to 1943, then hit 1926 at 10am. At 10am Construction spending was reported higher: +0.7% v +0.1%, and ISM manufacturing was reported lower: 51.1 v 52.7. The market then rallied to SPX 1941 by 10:30, dropped to 1929 by 11am, hit 1940 by 11:30, and then headed lower. At 2:30 the SPX hit 1917, bounced to 1929 just before 3pm, then hit 1903 by 3:30, and closed at 1914.

For the day the SPX/DOW were -2.90%, and the NDX/NAZ were -3.00%. Bonds gained 11 ticks, Crude dropped $4.05, Gold added $4, and the USD was lower. Medium term support drops to the 1901 and 1869 pivots, with resistance at the 1929 and 1956 pivots. Tomorrow: ADP at 8:15, Factory orders at 10am, then the FED’s beige book at 2pm.

The market gapped down at the open again today. The gap opening jumped over the 1956 pivot heading straight to the 1929 pivot. Then after a few rally attempts into the SPX 1940’s, the 1929 pivot gave way in the afternoon and the market headed toward the 1901 pivot. A fairly solid down day of 2.9%, which nearly matched the 2.8% declines in Asia and Europe. While the market displayed five swings waves from SPX 1867-1993, we could only quantify a corrective three waves. It certainly looks like a retest of the SPX 1867 low is next. Short term support is at the 1901 and 1869 pivots, with resistance at the 1929 and 1956 pivots. Short term momentum hit extremely oversold today, then bounced some in the close. Best to your trading this volatile market!

MEDIUM TERM: downtrend continues

LONG TERM: bull market

CHARTS: http://stockcharts.com/public/1269446/tenpp

About tony caldaro

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190 Responses to Tuesday update

  1. gtoptions says:

    Thanks Tony
    Leaning towards 1993/1903 as a/b or 1/2?😉

  2. EL MATADOR says:

    Ya’ll ready for some of this

  3. Markets starting to act a little psycho again here at 3:15pm edt.Quick moves may mean an interesting last 15 minutes.We ll see.

  4. On the es globex 15 mint an infinite series of 5 and abc repeating at extenuation, but SPY 60 mnts chart, divergences becoming positive and ew osc. giving sign of changes. Still would be nice to close over 1942 es

  5. nickokc says:

    China market will be closed tomorrow and Friday I think we stay green until next week

  6. mjtplayer says:

    Volume sucks today. Over the past 10 trading sessions, volume has been extremely heavy, the SPY for example has averaged 290m shares traded per day. Today, we’re at 90m shares traded with :90min left – on pace for less than half the 10-day average volume.

    Just a light volume, oversold bounce…

    • blackjak100 says:

      correct, but can last another week IMO. While TraderJoe’s triangle is still valid, I think we could get a short squeeze towards 2040ish with a close above 1956 pivot.

    • Dex T says:

      With only 2 days until Labor Day weekend volume should be even lighter. Heavy selling to resume next week?

  7. I keep looking at the monthly MACD which is now quite a bit lower than the two fakeout instances in 1998 and 2012.Those two instances barely went negative–and reversed.We are now more similar to 2000 and 2008 in dropping below the 0 line.I said it before…if we reverse from here it would mean an unbelieveable rally to I m guessing 2200 first and then higher from there.How that could happen without QE somewhere–I have no idea.

    • Dex T says:

      Some good points.

      Assuming we are in P5-or will be at some time, it doesn’t have to take us much farther than the original highs. Tony made a great comment some days back that the P5 waves of this bull have been very weak so it’s reasonable to assume that the final one will be weak as well.

      A few other traders have brought up the possibility of truncation so we may not even reach new highs.

      It took trillions of dollars to move the market as high as it did so I am also very skeptical that we can go much farther than we already have without some major liquidity inflows. Once QE ended last October the markets made nominal new highs until May and then down we went.

      • True enough Dex T.Seems to me that if we were going to reverse the histogram to the + side…it would have happened, probably at 2040.Instead, we are now lower than anytime except for the bears of 2000 and 2008.Must mean something ominous unless China does QE out of the blue or some other miraculous event happens.If Shemitah years of the past repeat, the days around Sept 13th will be massive to the downside…700+ down days.Good luck everyone—AND me also!!! Lol

        • Dex T says:

          It’s entirely possible. Personally I think P5 already ended back in May and the bear is back- but try to keep an open mind. Confirmation won’t really come until we go lower-beyond the S&P 1814-1820 area. Right now the market is trading in an area that screws with everyone’s counts.

  8. I thought NDX performed an ABC down into yesterday’s low. Harder to get the same clean count on INDU/SPX due to minor overlap on some of the smaller degree stuff but with the market jagging around as it is I’m giving the NDX count benefit of the doubt & front running for the moment. On that basis we should have an ABC 5-3-5 zigzag (at the very least) from yesterday’s lows back upstairs. So far the A & the B could be in place with the market now in C. Interestingly the cash market retracement for B on this count is 61.898016%. At SPX 1921 I’d put the count as 2 of C trying to complete with 5 waves for C remembering that today’s high (1938.37 was A). This count will be invalidated if today’s low (1916.52) is taken out so not much room left to work with but the best option I can see on the evidence of the last few days. A more bullish count could be conjured implying we are in PV but I think this is unlikely. Navigation to remain tricky and volatile whilst the market is in correction mode. Best of British.

    • if A was at 1938 B 1916 C=A at 2054
      The big A from 1994 to 1903 was 91

      2054-91=1863 to end this leg down
      So, im looking to short at 2054 cover 1863


      • I think we may face a very complex contracting trading range within the 1900s for some time which may bamboozle and test the best traders. In particular if Trader Joe’s triangle plays out. For example, if the C wave I mention above is 1.618 times wave A that projects to 1973. This would fit okay as wave C (i.e. the move from 1903 to 1973) of a 5 point triangle if we assume wave A was 1993 and wave B was 1903. The triangle would finish with wave D down and wave E up (and end of wave 4) followed by wave 5 to new PIV lows. My consideration in present time is does this move have the horses to reach the pivot at 1973. If it falls considerably short it does not necessarily invalidate the triangle. 1973, or a level high enough for wave C of the triangle, can still be obtained by a 3 wave move from 1903 if we assume the current move is only the 1st wave of triangle wave C to the 1973 area. If you understand half of what is written here you’re probably doing better than me. Basically a very tricky beast. Every time the market will appear to be heading down it will reverse and go back up and vice versa as a measure of participants indecisiveness. Until we clear 1973 to the upside or 1916 to the downside the tricky triangle has to stay a valid option.

  9. Always laugh when I see CNBC headlines:”Market tries to stay out of correction territory”.What drama!!!!

  10. A dynamic move up is needed soon or forget it. = Tirato per i capelli.

  11. jeffbalin says:

    In pri 2, spx dropped about 12 sessions, 250 points from about 1350 to 1100, then bounced around for 7 WEEKS, sideways in about 100+ trading range until the final big low at about 1075. Wouldn’t that be something if we just went sideways for the next 7 weeks only to bottom at 1867.

    • rc1269 says:

      seams reasonable

    • spindoc73 says:

      3 wave chop down is the playbook I am navigating with as well. As for where it terminates, just following each wave as it comes and using a few well-studied stocks. I suspect that the old pattern will help this one go to new lows rather than play it over again though.

  12. need European indices to sell off into their close so we can follow them down. still looking for a Pri IV bottom around 1820ish for a great long entry (or add to longs in my case, UPRO at $61 c/b). feels like no-mans land down here in the 1930s, not constructive either way.

  13. mjtplayer says:

    The bulls better gather themselves and follow-through on the opening bounce, otherwise this has all the makings of just an oversold, light volume, dead-cat bounce.

    In the very short-term, the bulls have the calendar in their favor as we head into a 3-day holiday weekend. If the bulls can’t rally the market into a holiday weekend, then forget about any decent rally after as the bears own the seasonal calendar for the rest of Sept into mid-Oct.

    • alexhartley1 says:

      Not sure I agree with that mjt. I think the bull can stretch out till 11-14th Sep. Personally I see us down into the 4th and then one more sharp bounce. Then PIV continues.

      • mjtplayer says:

        Agree that we can rally next week of we continue lower this week and break 1,903 and 1,900. My general point was that the rally/bounce this morning looks weak and if the bulls can’t turn it around and rally back to the HOD, then it was just a dead-cat bounce and we’re going down.

        That said, if the 1,900 area is broken and we drop back to the 1,867 area (or lower) then I’ll shift my count to the alt and say that SPX 1,993 was all of major B and this drop is most likely int A of major C.


        • alexhartley1 says:

          I think we’re likely to be up today (not sure by how much). Should be clearer around lunchtime. Tomorrow will likely be down to re-test most recent bottom yesterday and then UP for a week or overall. Cheers

  14. rc1269 says:

    so once we get back down to about 1897 or so, looks like we should have a second move higher to about 2020-2035 area, maybe even close that gap from the 8/21 open. then likley back down. at least, that’s my base case over the next couple weeks

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