Friday update

SHORT TERM: another gap down opening, DOW -272

Overnight the Asian markets lost 1.6%. Europe opened lower and lost 2.5%. US index futures were sharply lower overnight. At 8:30 monthly Payrolls were reported lower: 173k v 215k, and the Unemployment rate was reported lower: 5.1% v 5.3%. The market gapped down at the open to SPX 1929 and hit 1920 just before 10am. The SPX had closed at 1951 yesterday. The market rallied to SPX 1933 by 10:30, and then started heading even lower. By 2:30 the SPX had hit 1911. Then it rallied to SPX 1931 by 3:30, before closing at 1921.

For the day the SPX/DOW were -1.60%, and the NDX/NAZ were -1.10%. Bonds gained 11 ticks, Crude dropped 75 cents, Gold slid $4, and the USD was lower. Medium term support drops to the 1901 and 1869 pivots, with resistance at the 1929 and 1956 pivots. Today the WLEI was reported lower: 48.3% v 49.1%, and the GDPN was reported higher: +1.5% v +1.2% … mixed signals.

The market had its thirteenth consecutive gap opening this morning. Typically an abundance of gap openings only occur during corrections. The market opened at SPX 1929, dropping below the 1940 level. This confirmed the entire rally from last week’s SPX 1867 low was indeed corrective, as was the rally from Tuesday’s 1903 low. Corrective action continues, suggesting the downtrend is still underway. We now see support for this downtrend in the low to mid SPX 1800’s. More on this in the weekend update. Best to your three day weekend!

MEDIUM TERM: downtrend

LONG TERM: bull market


About tony caldaro

This entry was posted in Updates and tagged , , , . Bookmark the permalink.

59 Responses to Friday update

  1. kvilia says:

    Tony – hi,
    I am confused as many. So what is your point for the break below 1867? Is bulll market over or not?
    Thank you and have a nice weekend.

  2. End of the bull market? Naturally that question will always rear its head when the market takes a fall. The answer should be in the charts. Some index charts look more threatening than others. Some offer a good level of clarity whilst others are more ambiguous. Looking for an index where a bearish count can’t be realistically forced I think I found one … Daffy DAX. The DAX peaked in 2000 and had a very nasty 73% nosedive into 2003 (8136 down to 2188). From there it rose for 4 years into 2007 (8151 P1), then retraced 76.4% of the move back to 3588 (P2) into 2009. From there P3 has taken the DAX to 12390 earlier this year. It is not so much the numerical values but rather the structure of the waves. 3 clear waves from the 2003 bear market low to 2015. As long as the DAX stays above (8151 P1) on this correction P5 should follow and take most global equities along with it.

    • Actually I think I am describing Cycle degree waves rather Primary degree. The logic however remains the same as does the 8151 level.

    • ewmarkets says:

      From 12390 to 8151 would be a 35% correction, which would translate into 1403 on SPX. I think people would consider this a bear market. Also, this would mean P5 is over and this is Cycle 4 (or 2), which I think people would think that is a bear market.

    • ewmarkets says:

      The $DAX chart does exhibit very clear wave pattern. It looks quite clear that we’ve had 3 waves from 2009, with the third wave divided into 5 clear smaller waves, which would support the idea that P4 is currently going on.

  3. Rancho says:

    Thanks Tony. Have a nice weekend.

  4. I found those 2 items interesting. At list it gave me some relief.

    Jason Goepfert
    Small speculators went net short index futures by $2 billion this week, 2nd largest short position in 20 years.

  5. Caldaro you said below 1867 the bull market is over , so 1820s would end it am I correct

    • tony caldaro says:

      Should the market break Monday’s/Tuesday’s SPX 1867 low, any time in the future, a long term downtrend is likely to be triggered, and we too will be in a bear market.

      • mike7x says:

        Then lights out. Lock the door behind you. Thanks Tony.

      • blackjak100 says:

        September 4, 2015 at 4:25 pm

        TC, are you implying bull is over with your support levels? I believe you said a drop below 1867 would end it?


        tony caldaro says:

        September 4, 2015 at 5:14 pm

        no, P4 still on

        • tony caldaro says:

          September 4, 2015 at 7:00 pm

          Should the market break Monday’s/Tuesday’s SPX 1867 low, any time in the future, a long term downtrend is likely to be triggered, and we too will be in a bear market.

      • 56rambler says:

        Thanks, Mr. Caldaro.

        I’m confused – when you say “we too will be in a bear market,” does this mean that SPX 2134 achieved in May 2015 was actually P5? And that we have completed C1 and are now in C2? Or are you now expecting a 20% drop (classic “media” definition of a “bear market?”)

        More importantly, if we break below 1867, are you still expecting support in the low to mid 1800s to complete P4? or are you expecting a 20+% decline before P4 completes?

        Sorry, so many questions for clarification! Waiting anxiously for your weekend update!

        • tony caldaro says:

          Should the market break last Monday’s/Tuesday’s SPX 1867 low, any time in the future, a long term downtrend could to be triggered, and we too will be in a bear market. Naturally we will post this information in the daily update when/if it occurs.

    • As far as I could tell, the Mc O was +80 Thursday, went to -2 today.So on the rebound this week we did not stay below 0…we went above it.Therefore not bearish yet (unless we go even lower…then try to rebound and do not go above zero).I think I have it right…lol.

  6. 1730 on deck and P4 could end there…it fits the lower up trend lone from 1010 and 1074.

    Never thought p4 was over at 1867…silly talk

    38% retracement is a common p4 especially after a massive p3.

    Our indicators though say bear market until the 13-34 weekly cross goes Bullish

    • jwmcbride says:

      I tend to agree. Enclosed is 17711 tick chart. If we make a new low from here the you would have 7 waves down which is corrective. That should produce a strong move up on tues. However an abc to the upside from here and the rally only retraces 50% then a massive c wave should unfold.

      PS the last time this time frame had 5 waves down the market collapsed. Will watch for conformation.

    • ewmarkets says:

      P2 retraced 38%, would P4 retrace 38% too? Do P2 and P4 normally alternate in this aspect too?

  7. Don’t have a clue what the algos are doing but anyone can see the “3 of 3” on this decline from yesterday’s high at 1975.01 as the fishing line on any SPX cash chart. The major damage of course occurred AH. A little more weakness during the cash market today to finish off the rest of 3 created the low for the day. The 4 was the rally in the last hour back to region of the prior 4 which sets the market up for wave 5 down. How sure can one be? You can never be 100% sure but with this one my only consideration is the (slim) possibility the 5th wave also finished today. That would imply a bounce from today’s low towards the 1956 pivot. It is, after all, a game of probabilities and this what EW is telling me presently. Been wrong before but have enough conviction this time to leave a moderate short on the table over the weekend. Will see what Globex says out of the gate next week. TC glad to see you’re on the appropriate side now. Game of probabilities after all. Good luck everyone and have a nice weekend.

  8. robslob64 says:

    I expect to see something like:
    “market nearing bull/bear inflection point” or “bear market probable” in the near future on this blog.

    As mentioned before a break of 1867 and we enter a long term downtrend which has never happened in a bull market…guess we have to wait until we get there and determine direction but at least we get pivots…don’t no of any other better than Mr. C!

  9. blackjak100 says:

    TC, are you implying bull is over with your support levels? I believe you said a drop below 1867 would end it?

  10. mjtplayer says:

    Thanks Tony!

    The WLEI continues it’s relentless grind lower. The Atlanta Fed GDPN of 1.5% growth in Q3 is still lousy and unless there’s some type of growth miracle, Wall St will have to start dropping Q3 earnings estimates more aggressively. The 2.5% or 3% growth in Q3 is now fantasy; Q2 was just a one-off bounce-back from the weather induced Q1. All in all, GDP is on pace to average about 1.5% for all of 2015, which is worse than the 1.8% growth we’ve averaged since the recovery began in 2009. Nothing has changed, the economy still sucks.

    With the failure of the SPX to get above 1,993 and the subsequent drop exceeding the .786 retrace from 1,903, I’ve now flipped to my alt count – which is that 1,993 was all of major B. From 1,993 I think we’ve completed a minor A,B and now falling in minor C below 1,903 to complete int A of major C.

  11. pbnj123 says:

    rc – you have been spot on
    I have fought the tape but my line in the sand is very close for a break even so not all that bad.
    Just wanted to give you a virtual thumbs up for this one and we could be at your 1750 or lower area soon.

  12. Gary Lewis says:

    I was seeing the potential for a three-day test of the lows and around noon, closed out my September puts at the 192.40 level. Still got some Sept calls in the works starting at the 195 level so perhaps they will pay out. Weekly and monthly momentum remains negative so I will be looking for some short-term overbought signal to buy more puts.

  13. Roxie97 says:

    May see a run to SPX 2031 then collapse just my system

  14. rc1269 says:

    thanks Tony. enjoy your long weekend. have a cocktail, or three! 🙂

  15. pbnj123 says:

    Wow low 1800’s – that means bull is over
    Sorry to see it go

  16. Sandra Dons says:

    Good week end to TC and all
    For me will ne terrible
    I’m long leverage and P5 seems a far dream

  17. Page says:

    Thanks Tony.
    Have a great weekend.

  18. fotis2 says:

    Thanks Tony wow mid to low 1800s some way down that ok lets go with the flow.GL

Comments are closed.