Wednesday update

SHORT TERM: gap up opening retraced, DOW -239

Overnight the Asian markets gained 4.5%. Europe opened higher and gained 1.3%. US index futures were higher overnight, and the market gapped up to SPX 1985 at the open. The SPX had closed at 1969 yesterday. In the opening minutes the SPX hit 1989, the high for the day, and then started to decline. By 11:30 the SPX had closed the gap and hit 1968. Then after a bounce to SPX 1975 by 12:30 the market headed lower again. Heading into the close the market hit SPX 1938, then bounced to close at 1942.

For the day the SPX/DOW were -1.40%, and the NDX/NAZ were -1.15%. Bonds gained 2 ticks, Crude dropped $1.60, Gold slid $14, and the USD was lower. Medium term support drops to the 1929 and 1901 pivots, with resistance at the 1956 and 1973 pivots. Tomorrow: weekly Jobless claims and Export/Import prices at 8:30, then Wholesale inventories at 10am.

The fifteenth consecutive gap opening started the day. Then after hitting SPX 1989 the market quickly reversed and closed the upside gap by 11:30. After that the market went sideways for a while before heading lower yet again. This has been a wild technical ride. Today’s high could be considered the end of Minor B. But we will leave the labeling as is for now. The last two declines have been 90 and 64 points respectively. This decline is already 51 points, and without the aide of a gap down opening. Quite possibly that is next. Short term support is at the 1929 and 1901 pivots, with resistance at the 1956 and 1973 pivots. Short term momentum went from extremely overbought to oversold today. Best to your trading this volatile market!

MEDIUM TERM: downtrend

LONG TERM: bull market


About tony caldaro

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121 Responses to Wednesday update

  1. torehund says:

    ..hopefully this is Tonys Bronco, preferable to the black swan :), and a good alternative. Go ride it…..

  2. johnnymagicmoney says:

    Maybe Tepper is right …………………sell every rally now. How long before the masses think the opposite of what has transpired over QE. Who knows where this thing is next week, next month, or next year but you have to be delusional to think this isnt in the latter innings. Its amazing too because the writing is all over the wall. Mr. Market has its own will UNTIL it wakes up from its dream and follows fundamentals like a sheep. Bahhhhhh Bahhhhh

  3. reddragonleo says:

    SPY Late Day Update – Possible BIG Move Down Coming SOON:

  4. EL MATADOR says:

    Just about every bear and their Mom and Pop are waiting to short above 2020 and just about every Bull and their Mom and Pop are waiting to buy below 1867. Me starting to think it’s not going be either of the two but a bigger surprise. My last 2c

  5. fotis2 says:

    So far looks like 3waves up on 15min could be busy with wave 4 and maybe 5 will soon know.

  6. Im crazy. I think we end red. Didn’t clear 1963 by 2PM Im short

  7. Just thinking, if you take 1993 as the top of wave B (or wave 4 if you like numbers better), it was followed by a move down to 1903 (possibly a of C or 1 of 5). From 1903 we’ve had 3 waves, up to 1975, down to 1911 and back up to 1988 yesterday. It is possible those 3 wave could have been b of C or 2 of 5. That would make 1988 the start of c of C or 3 of 5 (or more specifically 1 of 3 of 5). Remember INDU, which has the exact same pattern did go down over 500 points if you include AH trade from yesterday’s high which makes sense if that move was 1 of 3 of 5. Just putting it out there, this is only one of many possibilities. Theoretically this count would be still be valid whilst the market stays under 1988.

    • GYN LAB says:

      So in this case this move up to 1965 would be 2 of 3 (just over 50% retrace of 1989-1937) and then we will have a monster drop just around the corner as 3 of 3 of 5/C ?
      If we get a big selloff in the next 1.5 hrs this could be interesting.

    • EL MATADOR says:

      That is my preferred count. Nonetheless I am 99.9% confident that bears will eventually take out 1867.

    • If you look at the price action for the 70 minutes just prior to the spike to 1965 on a 1 minute chart it looks like a nice small symmetrical triangle. I believe triangles represent the penultimate move in a sequence. We’ve had our fill of triangles lately but still worth pointing out the possibility at this juncture. But over 1965 and another triangle comes a cropper.

    • GYN LAB says:

      On hourly and daily RSI looks sufficiently bought up to allow room for some monster drop… If this really is start of 3 of 3 of C/5 then there will be no mercy this will just keep dropping just like those days in August, certainly will break 1867 at this wave.

    • reddragonleo says:

      Hmmm… rally looks tired. We may have already ended here now? Wave count wise we could have started some 1 down, 2 up (ending now?) inside a C down? Tony would know better then me but this “feels” like it’s going to drop now, and drop hard.

  8. soulsurfer says:

    yesterday no zweig breadth thrust event occurred. this adds weight to the evidence that primary IV is still ongoing:

    GL y’all.

  9. The rally is not sustained but the correspondent volume bar. Mean is forced, at my advise. This time they will have to do without my money, am not a buyer. Expecting FRB to give us a sell signal soon.

  10. mjtplayer says:


    Market is bullish until Monday or so, to complete wave E – IMO. Light volume today, should be even lighter tomorrow, so beware of suckers rally.

    Using indicative futures – SPX in wave E to complete an int C bear flag and major B:

    Using SPY, wave E to finish an int C ED and major B:

  11. rc1269 says:

    who feels like today’s intraday action looks bullish, rather than just a little bear flag?

  12. Come on Bulls push it thru 1956

  13. torehund says:

    looks like w-3 from bottom may have begun, judging from the rut

  14. johnnymagicmoney says:

    Right back up to the 1956 pivot……………..then the oil inventories come out in 6 minutes (they probably are bloated), oil drops, and takes market with it


    • Dex T says:

      Indeed. So far this morning it bounced off the trendline established by the 1867 low and 1903 and it’s been contained by the 1956 area.

      If it can’t rally to break it and the 13 day EMA at around 1963 by later today then down to test 1911.

  15. cicelyalaska says:

    My longest term trend indicator now has us in a new bear market. This was accurate for 2008 and it remained bearish through end of March 2009. Lets see how low we go now. Will be interesting to see if we have been fooled with a PIV or we are in for a real decline. Good luck all.

  16. Bulkowski…who hasn t been right too often on a daily,weekly or monthly basis–yesterday said we were in a symetrical triangle.His pattern shows the initial break is often wrong–and leads to the real trend.It broke out above at 1990 and a drop below 1920 would confirm the reversal bearish trend.Looked interesting and he was actually not looking at it bearishly so I am…lol.Good luck all.

    • blackjak100 says:

      Not sure how it’s symmetrical when you have 1993 & 1989 as the tops. Trendline is virtually flat. Ascending triangle makes more sense

      • tommyboys says:

        He’s saying prior to yesterday we had a symmetrical triangle that made it’s first break higher (yesterday) which is typically the head fake move – and he’s right it usually is a head fake. Given this market however and the volatility I doubt many patterns are working in typical fashion. Plus once the majority are aware of how a pattern unfolds it really can’t. We’ll just have to wait and see.

  17. mjtplayer says:

    SPY tracing out an int C ED to complete major B? If the SPY drops a but further, than the ED could change to a channel (bear flag), but the result is the same – one more rally above yesterday’s high and SPX 1,993 to end the pattern.

  18. spindoc73 says:

    Unusual broadening pattern in ES. From 1935, let’s see if it can tag 1973 before the session is out in a straight rip higher.

  19. simpleiam says:

    Got to love that Dave Tepper! LOL! That’s right, Buddy, keep on talking; 1750-1800 sounds good! Hope Everyone is doing well.

    Howdy Tony, you sweet thang. I’ve developed a great fondness for Italian men!

    Ciao Baby! M

    • tommyboys says:

      Good to see you Simp! I actually like Tepper. Always arrogant but significantly more right than wrong over time. Hope all is well with you 🙂

  20. blackjak100 says:

    Seen some talk about an ascending triangle forming from 2 different TA’s. A big reversal at the low end of 1929 pivot would give it even more merit. A break through this pivot and big problems could arise. gL and cheers!

  21. 1:40am…Nikkei down 670 points, DAX futures called down 130…US futures???
    ——-Why UP 80 of course.Interpretation:Japan didn t give all its previous nights 8% gain back=bullish for US stocks…lol.Whatever….these markets are bonkers….enjoy them.I know I am.

  22. rc1269 says:

    FRB: Hopefully nobody here takes you seriously

  23. blackjak100 says:

    Nate Kautz should rewrite Frost & Precther EW analysis to include most waves end in truncations. I feel sorry for anybody who actually pays this dude for EW analysis. This analysis may be right in the end, but I cannot continue to support someone who thinks every wave ends in a truncation. I’m guessing most here wouldn’t either.

  24. Just looking at the Nikkei thrash around…looks bearish to me.But then, what doesn t at this point?

  25. Everyone should be talking about the ticking BOND Time bombs the world over, not the market… the market will crash but the impetus will be the Fiat currency debacle coming. Dont be fooled by the pullback in “Paper Gold” , as the banks are taking out as much physical as they can into their inventories.

    Now, we are not Gold bugs at all…but just calling it like we see it

    This market looks ready to fall hard again any day and in the next 2 weeks after this week it could get real ugly real fast

    Once again, all of our subscribers are in cash and have been for a few weeks and looks like its TZA ETF time again as well

    The 7 7 7 cycle should never be ignored…

    This is not the time to be a hero, its time to be in cash and sit on your hands

    WE view the likely Elliott Wave analysis that will come from Tony and many others in a few months , but too late… will be that the rally was a clear ABC pattern from 2009 to 2015 top… so the decline could be ugly and fast as it picks up steam

    Best to be safe in our opinion…

    Good luck

  26. torehund says:

    Tony one question; EW doesn’t take into account currencies, so even a short bear market might look well in the US as long as the dollar keeps up ? If we are nearing some sort of a Sovereign debt crisis, one just holds onto something that still floats (US) ?
    Europe is in some kind of a decompensated/paralytic state right now, the tumults in Syria have to be the final acid test for the vitality of the union.
    A strong common enemy makes the team, and Christianity vs Islam has united a fragmented Europe before (in history).

  27. uncle10 says:

    Thanks Tony.

  28. Tony, Thanks for all you do.
    I’m going to beat a dead horse here re the 1867 level since I’ve noted several inquiries over the last few days. You mentioned that violating that level “could” confirm a long term downtrend, leading one to believe that we also could drop below that level and not confirm a long term downtrend. What would be the other factors in that decision? Also, just based on Elliott (without the magic quantitative dust that you add), couldn’t we go as low as 1370 ( the top of P1) and still have a valid P4?

  29. Brazil just got cut by the S&P to junk… Brazil etf is down over 5% after hours.

    I think this is the event to trigger a flush to the next wave lower.

  30. Lee X says:

    Thanks Tony

    Nice job R C u have been el fuego amigo
    You kids should be making a killing in these markets, trade well.

  31. I remain open and flexible. P4 remains a possibility. A diagonal triangle is not out of the question here. It might be an (A) wave upward. But so is W-X-Y because not all five legs, or the required higher highs, of a Leading Contracting Diagonal have been made yet. But, they could be. Notice, the (A), (B), (C), up, we started the count with has not changed. Meanwhile, the interior legs of the pattern are sloppy as all get out – which is very characteristic of a triangle, even a potential diagonal triangle. More text below chart.

    DOWI - Half Hour - Sep-09 1556 PM (30 min)_TC

    One of the benefits of Elliott Wave analysis is that a good analysis provides a clear invalidation point – a “where am I wrong?” point. In this count, as contracting diagonal would invalidate below the low of circle 2, because the fourth wave in an upward contracting diagonal may not exceed it’s wave two to the down side. That level is at Dow 16,026.60. This is a very specific clue to the puzzle and is not some ‘generality’. It is actionable. If price goes below there, then, somehow, lower further lows are expected, and the W-X-Y count with a slight truncation in Y would be the winner.

    Cheers and best wishes in trading.

  32. timing101 says:

    Tony, the market looks like it wants to go down. The count says it should go down. But, we are dangerously close to ending this Bull market if it goes down much further.

    In the weekend update you said, “Should the market break last Monday’s/Tuesday’s SPX 1867 low, any time in the future, a long term downtrend could 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.”

    How do you relabel the charts if this were to occur? Where do you put Primary IV? Primary V?

    • tony caldaro says:

      October 2014 would be III and IV
      But it’s unlikely that change will be needed

    • it is a bear market now… the trend is down… the bull market is over unless confirmed on the upside with a weekly 13/34 cross… best not to hold your breath

      • timing101 says:

        You say it’s a bear market; I say it’s a healthy, and much needed, correction in a bull market. This “could” propel the bull much higher. See 1998, 2010, and 2011 for examples (death crosses not working).

        If it is a bear, watch out for those bear market rallies, especially if short and using leverage. Good luck!

        • tommyboys says:

          Yes this is a technical correction in the bull. Fundamentals continue their grinding improvement. Sentiment is in the tank herding psyches bringing out ultra-doomers – calling the whole run from ’09 a “bear rally”. Who knows maybe Prechter, Dent, Faber, Bonner etc…were right all along – ha! Pay close attention to typical sentiment ranges at the head and tail of bear markets…

          • TB, Agree, all this talk of mkt turmoil, Jeez mkts go up and down in a bull, get used to it.
            Also agree on sentiment, we need to see it swing hard the other way, and extreme bullishness is want i want to see before I start to bail out. gl.

        • stormchaser80 says:

          You’re NUTS! Haven’t you seen the Hindenburg Omens (the ones I calculate, not the ones elsewhere)? Numerous signals since Nov 2014. None before that since 2008. NONE.

          • tommyboys says:

            HOs have called perfectly 17 of the last 2 catastrophes while numerous collapses have occurred without any HO…don’t put too much stock in it 😜

  33. rc1269 says:

    Thanks Tony. hope you’re well amigo. lovely weather here today; can’t wait to get out for a walk in the park. cheers

  34. blackjak100 says:

    Everybody talked about a retest of 1867 and yet nobody talked about a retest of 1993. Jeff cooper and pretzel had it nailed thankfully let me unload upro on strength and get short!

  35. fotis2 says:

    Thanks Tony one of those days again.Hope no-one lost too much and if yes no train smash tmrw new day new trade.GL and trade safe.

  36. Gary Lewis says:

    I don’t know about everyone else, but I love this market!! Yes, I’ve been bearish for a long time, but I love trading and the past couple of weeks have provided great trading opportunities almost every day! I have no clue how it will finally resolve. As such, I have both January calls and puts. I really hated that insufferable one-way market that we’ve had for so long. Hope that volatility will reign for lots longer. 🙂

    • Agree completely Gary; one can make money in any market but ones like this accelerate the profits exponentially.

      For those following, I’ve just been selling half of my 4x bullish position instituted just before the close on Aug 25 as posted real-time here at 4:01 pm ET (3:01 pm CT on this blog), selling when the Dow breaks 16,500 and buying back at Dow 16,000-16,200, have done this 3 times in the past two weeks, rinse and repeat, free money. Have been and will continue to hold the other half of my 4x position until my indicator generates its next major Sell signal, at which time I’ll take full profits and go 4x bearish. Could get that signal soon.

      With all of the doom-and-gloom and the-world-is-ending talk, keep in mind that the Dow is still 600 points above the reAug 25 Buy signal and hasn’t been able to get within 400 points.

      • nsteve24 says:

        “have done this 3 times in the past two weeks, rinse and repeat, free money”
        frb, your arrogance kills me, absolutely hilarious!

        • Not arrogance, just supreme confidence borne of actual results. I’m sure those results will change some day but am making a fortune in the meantime so won’t care if my indicatore stops working at some point. GL

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