Friday update

SHORT TERM: consolidation day, DOW +34

Overnight the Asian markets gained 0.9%. Europe opened higher and gained 0.7%. US index futures were higher overnight, and at 8:30 Export (-0.6% v -1.3%)/Import (-0.3% v -0.4) prices were both reported lower. The market opened at SPX 2015, two points above yesterday’s close. Within a few minutes the SPX hit 2020, a new high for the rally. Just past 10am the SPX pulled back to 2011. At 10am Wholesale inventories were reported higher: +0.1% v -0.1%. A rally back to SPX 2020 followed by 11am. Then the market pulled back even further, hitting SPX 2008 by 1:30. A little rally into the close ended the week at SPX 2015.

For the day the SPX/DOW gained 0.15%, and the NDX/NAZ gained 0.40%. Bonds lost 1 tick, Crude added 10 cents, Gold rallied $17, and the USD was lower. Medium term support remains at the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots. Today the WLEI was reported higher: 48.9% v 48.3%.

The market opened higher today, made a new high for the rally at SPX 2020, then went into pullback mode for the rest of the day. The last time the market hit this level, in mid-September, we expected five waves down would follow. Which it did. This time we are expecting five larger waves up will follow. Time will tell. No change in the count. Short term support is at SPX 2000 and the 1973 pivot, with resistance at the 2019 pivot and SPX 2040. Short term momentum declined to neutral after today’s negative divergence. Best to your weekend!

MEDIUM TERM: uptrend

LONG TERM: bull market


About tony caldaro

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42 Responses to Friday update

  1. M1 says:

    Hi Tony
    By the way how many waves did OEW count from 18351 to 15370 (Dow) ?

    • tony caldaro says:

      We don’t track the DOW that closely

      • Tony, a few years ago you said the Dow was the best index for analysis and the SPX was the trading index, sounds like your perspective in the matter has changed.

        • tony caldaro says:

          Good observation. We recently had a discussion on that.
          Over the past decade the recent owners of the DOW, Murdock and the CME, have done an horrendous job in managing its components. Actually one could say it actually started before that with the addition of AXP in the DOW in 1982.
          Nevertheless, financial companies like AXP, JPM, TRV, C, AIG, BAC, GS and V have no business in the Dow Jones Industrials. They don’t make anything!
          Also, in recent decades there has been a tendency to add companies that do make things well after they have reached their peak: INTC, MSFT, CSCO, HPQ, and now possibly AAPL.
          As a result the DOW underperformed in the last bull market and this bull market too.

          • Thanks Tony, info appreciated as always.

            I’ve long thought that the make-up of the Dow Jones “Industrials” made little sense with regard to the individual components, but my strong sense is that whoever/whatever moves the market doesn’t care about the parts, only the sum/aggregate.

            My method is based entirely/exclusively on the DJI and, very interestingly, all of the changes to the individual components over the years have had zero impact on the results of my method, zero. So it’s not a big deal either way but I do lean toward your original perspective’s being correct: the Dow (price action) determines the overall market while the SPX is the trading index. (Surprisingly, as one index has 30 components and the other 500, there is enormous overlap and they usually trade in tandem so probably not a big difference either way.)

            Have a great weekend, congrats on the Cards’ win in Game 1.

  2. blackjak100 says:

    Now that the media and every joe blow is talking ZBT, it’s time to pullback at the very least. Can’t recall it talked about so much

  3. Lackey??? Really.? Cubs lose to Lackey or Lacker or whatever.Next Janet Yellen will be on the mound beating the Cubs.Well now I need P V to go to 2300 to make up for my Cubs bet (not really).Just never thought Lackey could do that.Cubs in

  4. Seems like a lot of gloom in Mudville today! and with little objection.

  5. ariez5 says:

    Tony, I truly mean no disrespect, but your current count makes little sense to me, because it does not reflect what second waves have done in this bull market. You are counting 1999-1976 as a second wave? It is not even a 23% retracement. How many second waves in this bull market have retraced so little? Very few if any. 50-61% has been much more typical. And you are saying this congestion in the last two days, with overbought readings and multiple hourly divergences, is the very beginning of a third wave? I may eat my words but it looks so clearly like a fifth wave, that I am baffled how you see it otherwise.

  6. interesting chart…

    • mike7x says:

      Very interesting chart indeed. Thanks for posting. Next week should indicate if the comparison holds. If so, a big pull-back is coming and bottoming in late October. That fits seasonally. Hope you can provide chart updates along the way.

  7. Gary Lewis says:

    Fellow wave counters, as I look at an hourly line chart of SPY over the past two months, it appears to be an expanding diagonal, developing right after the August 25th low. It appears that we are approaching the top of wave 5 at around 202.50 (SPY). As I read it, Expanding Diagonals are either A waves or Wave 1. So I assume this is wave 1 and it’s about to complete. Any thoughts? If so, where can we expect wave 2 to to to? Thanks for any thoughts you might have on this observation. I put on some Nov 20 200-185 put spreads.

    • Gary Lewis says:

      Oh Yah, Go Cubs – Beat our “Arch” rivals tonight

      • torehund says:

        Cubs to be wolves🙂 Congrats with your entry into, and growing interest in EW Gary !
        Good weekend, Tony and all contributors.

      • With you on the Cubs…thought you were on vacation from all this for a while.Puts too tempting at this level?

        • Gary Lewis says:

          Didn’t go to the beach yet but very soon. Want to watch the Cubs and enjoy the possible celebration here in Chicago. And yes, it looks like an interesting set up. I was watching for the 20 week average at 204 but that trend line continues to decline so with the down trend line close and this possible formation, something could happen. It’s worth the risk in my book.

          • Don t know if you saw it, but I noted yesterday that I saw some info on weekly gaps on SPX (there s one at 1950).Since 1990, they get filled pretty quickly.I saw 2 that went 6 and 7 weeks respectively–the longest time it took before the gap is revisited.Some then go charging past…others reverse.I m still bearish on this market.Good luck.

        • EL MATADOR says:

          It’s interesting to note that todays rejection of a LL below then the Sept 17th 2020.86 brings memory’s of the July 20th 2132.82 rejection of a LL below the May 20th 2134.72. Even the Doji stars reversal pattern are similar and the daily RSI5 broke +80 intraday. Back then most swore we where heading to the moon today most swear PIV is dead and Bull is back on and the moon is our final destination. Me, well, I’m gonna side along with history one more time for a little longer and see what unfolds in the next couple of weeks

          • I just go to cash….safer that way…lol.GDX, I think,may sell off with stocks.They re both linked now it seems.I m still looking at Chinas GDP out Oct 17th to be a hammer.If not…we DO go to the moon and beyond.Good luck EL MAT.

          • If that mentality didn’t exist… there would be no such a thing as Bear rallies..

            I’m not saying this is a bear rally .. just going with the whole thesis that bear rallies occur because of that mentality of the masses.

            If you look at the put to call option on the S&P 100 today… which is the smarter money… It was almost 10 to 1 puts to calls today….
            That’s the smart money .. retail doesn’t trade the s&p 100…

            Just stating some facts … Market is ultimately the boss!

  8. Wow. Top of Wave C of B? Well, considering today and tomorrow and a cluster of Bradley dates and big ones, could be. Considering the amount of shorts out there, I’d think there would be limited downside just because of that. But hey? Who the hell knows anymore. But if this next decline does come to fruition, could be one hell of a buy opp

  9. 56rambler says:

    Thanks, Mr. Caldaro

    Just noticed that you’ve taken the P4 still-in-play scenario off the table, at least on the chart. Looking forward to your weekend update.

    Have a great one – thanks again!

  10. Jim Guthery says:

    tommyboy you playing the New Moon scenario?

  11. blackjak100 says:

    VIX down 9 days in a row – first time since October 2011 – all time record is 10 days

    • mjtplayer says:

      Panic buying in stocks this week, panic selling in volatility. I got squeezed out of my VXX longs Wed and yesterday, very painful week. Started going long VXX last Friday at the close and added more on Monday’s close, even wrote calls against the positions to reduce downside risk, but it didn’t matter as I started getting squeezed out Wed, yesterday sucked, it was an absolute melt-up in stocks post Fed minutes, melt-down in volatility.

      Gave back almost 1/2 my gains for the year in just the last 4-5 trading days😦

      • Jim Guthery says:

        been there done that too many times. i recently go stopped out of DUST myself.

        • fishonhook says:

          Yup the there’s more to P4/ This is C scenario hurt a lot of us.
          I still have some deeply buried SDS calls.

      • EL MATADOR says:

        Your not alone buddy. I am still holding on to my Primary short position ESH6 which I accumulated from during April-to-May rounding top. Then I tried a swing short 1991 ESZ5 yesterday that only aggravated the pain. I do have a few longs ( NG, GC, GDX, CVX – closed today, FCX – closed yday, and a few others) that are alleviating the blow so not too worried here. Nonetheless I thing this set up is looking promising for a strong reversal next week

      • MJT, sorry to hear that you had a painful week. This last week for me was one of the best weeks in the past 2 years. I guess there’s two sides to every trade.

        You’ll do better soon; you have skills and I was just lucky for a change.

    • joecthetruthteller says:


      Interesting. Where did you get this info from??

  12. kurz873 says:

    Could we pull back a bit early next week? maybe to like 1980 or something?

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