Tuesday update

SHORT TERM: bungee Tuesday, DOW -50

Yesterday, after the close, FED governor Brainard gave a speech in Wash, DC: http://www.federalreserve.gov/newsevents/speech/brainard20151012a.htm. Overnight the Asian markets lost 0.6%. Europe opened lower and lost 0.8%. US index futures were lower overnight, and the market gapped down to SPX 2008 at the open. The market had closed at SPX 2017 yesterday. In the opening minutes the SPX dipped to 2006, then rallied to a higher high at 2022 by 11:30. After that the market pulled back yet again. Heading into the close the SPX hit 2002 by 3:30, then bounced to close at 2004.

For the day the SPX/DOW were -0.50%, and the NDX/NAZ were -0.75%. Bonds gained 6 ticks, Crude lost 45 cents, Gold rose $5, and the USD was higher. Medium term support remains at the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots. Tomorrow: the PPI and Retail sales at 8:30, then Business inventories at 10am, followed by the FED’s Beige book at 2pm.

The market gapped down at the open today, hit SPX 2006, then quickly rallied to 2022. However, instead of continuing to rally it pulled back, and then broke the lows of the day. At today’s SPX 2022 high we can count 9 waves up from 1872. We had counted the first five waves up as Int. i, then a pullback for Int. ii, and Int. iii underway. This count is does not look likely now. With this afternoon’s pullback there is another possible count. The 9 waves up from SPX 1872 represents all of Int. i and an Int. ii pullback is now underway. Int. ii support would be at these levels. Short term support is at SPX 2000 and the 1973 pivot, with resistance at the 2019 pivot and SPX 2040. Short term momentum hit oversold after another negative divergence. Best to your Beige book trading!

MEDIUM TERM: uptrend

LONG TERM: bull market

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

About tony caldaro

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172 Responses to Tuesday update

  1. stephenk1980 says:

    Futures ramp up was unexpected, but I’ve recently seen the algos break 50% retrace but not follow through and then make new lows in recent months (more than it used to) and it did the same again today, so I stayed in.

    Because of the retrace that the Dow has put in from the 18xx low to 21xx top and the reversal from that level, plus the recent yen strengthening, I’m going to hold short until we retest the lows, unless we convincingly break this weeks highs. I’m not a believer that this rally is the real thing yet, although I’ll admit I’m not massively convinced that I’m right. Giving it 60:40 for now.

  2. johnnymagicmoney says:

    that 1993 pivot is waging a war right now.

    • johnnymagicmoney says:

      Here comes the computers. The algorithims must have picked up negative growth & deflation data =)

  3. GYN LAB says:

    Good afternoon,
    The decline looks sloppy, no clean 5-wave impulse… At best looking like an LD (should end around here at 1991) which typically has deep retracements such as .786 and with OPEX coming up this could whipsaw all the way back to the 2019 pivot range (.786 of 2022-1991 at 2015)

  4. lunker1 says:

    Tony’s MA’s at 79, 80, 82 for A?

  5. johnnymagicmoney says:

    Sir Newbie

    We all know the Turtle had just shown his head
    So no need to cry and stay home in bed
    Big Mr. M he might eat your lunch
    But Caldaro and crew a very smart bunch
    Walmart, JP, and bad earnings growth
    Deflation, Recession? Or maybe there’s both!!
    But data is data as many have said
    The market will move higher until it is red
    China quite full of liars galore
    G-D-P Seven, goodbye and no more!
    Japs and the Euro a hillarious crew
    If we Q-E forever, will inflation ensue?
    Primary Five, could the market go more?
    Posibly so with Jan the green whore!
    While CN, and RC, and the Bull master think
    Provide us the data and show us the links
    Joe the truth Teller can inform us whose better
    But all I know is that the answer is cheddar
    Fiona, Player, Gary & Dex
    I hope that you continue to bring in the checks
    Pattern, & Lesson & Market, HD
    To short or to long is the question I see
    Whoever I missed forgive me I say
    I Must make some money before the end of the day
    Want my opinion of what a trader should do?
    The prophet has spoke
    and he spoke very clear
    Sir Newbie said loudly
    it is the Bear you should fear!!!!!

  6. blackjak100 says:

    From the naked eye, the rally from 1872-2022 looks like an impulse which triggered a ZBT. The pullback so far looks corrective on low volume. Not trying to overthink it here. Fib price & time levels

    38.2% = 10/16 2:30-3pmCDT 1965
    50% = 10/20 9amCDT 1947

    Not trading like Todd Gordon just levels and time I’ll be watching. Not anticipating anything deeper in this bullish scenario.

    • aahmichael says:

      As I posted yesterday, I got short the S&P at the SPX equivalent of 2011.94. I still believe the major trend is down and that the move from the 8/24 lows is a flat (3-3-5 or 3-3-3.) Bear market C wave rallies are always the fastest and seemingly most powerful of any kind of rally, and I believe that’s exactly what we have seen. The jury is still out as to whether that wave is over or not, but I put on the trade yesterday because I got the hourly sell signal, and I always take every signal I get. My stop is currently at the SPX equivalent of 2019.34.

    • tommyboys says:

      +1 BJ

    • frommi2 says:

      Pullback can easily be counted as one impulse down since yesterdays top to todays first low. After that we had a correction and now we are impulsing down again.

  7. fotis2 says:

    Double top target 1990 lets see.

  8. johnnymagicmoney says:

    Now I say we retest the lows for the day. TLT might be breaking out. Look at the Bull Flag on the daily

    • mjtplayer says:

      Yup, 10yr just broke 2% on the cautious beige book, now trading 1.988%. If the 10yr doesn’t quickly recapture 2%, then down to 1.90% we go, again.

  9. Dex T says:

    The Venezuelans are looking to artificially increase the price of oil to $70 and then to $100 (haha). But this has no chance of happening. They should have managed their economy better.

    A $70 oil floor? Fat chance, but OPEC price plan may be first step

    “Saudi Arabia, the group’s de facto leader, has shown zero interest in returning to a strategy of supporting prices; big producers outside the Organization of Petroleum Exporting Countries, namely Russia, have essentially ruled out cuts. And most analysts say attempting to set a price range is futile, or that the $70 price is unsustainably high, or both.”


  10. johnnymagicmoney says:

    So lets look at the facts

    1) PPI fell .5 this month and fell .8% last month and is down 1.1 in the last 12
    2) Retail sales is down .1 percent this month with a revised down number from previous month
    3) Walmart the bellweather reported absolutely disasterous forward guidance
    4) JPM missed
    5) China import numbers down 20%
    6) China had its 48th consecutive drop in PPI (that is hysterical)
    7) The Eurozone just reported a negative print
    8) Japan has done how man trillions of WE and has decimated their currency and still has a negative inflation print (that might be even funnier than China’s PPI numbers)

    What does this mean folks? It means that the world central bankers are hitting their inflation targets, there is no deflation, and thus we should all buy the dip. Never ever in my life have I seen such delusional rationilaztion before.

  11. H D says:

    classic whipsaw Wednesday

  12. If retail is in bad shape, how can the rest of the market levitate? Now the spin they re trying to put out is this is WalMart specific.Hilarious.

  13. rc1269 says:

    XOM really saving the market today

  14. blackjak100 says:

    TC, no harm with count unless 1956 pivot broken?

  15. mjtplayer says:

    Those who are bullish, looking for an int iii in the weeks ahead, may want to start paying attention to the goings-on in DC, especially regarding the debt ceiling – which was hit back in March and will run-out of “extraordinary measures” on Nov 5th; just 3 weeks away.

    Everyone just assumes it will get raised with no drama, but don’t fall complacent and never underestimate the stupidity of politicians. The republicans are too busy trying to figure-out who will be the next speaker.


  16. rc1269 says:

    WMT sees FY 2017 EPS down 6-12%. Stock tanking 7%+

  17. mjtplayer says:

    10yr note still holding the 2% support area, will be interesting to see if it breaks or not. Next support below is the 1.90% low from Aug 24th & Oct 2nd.

    • rc1269 says:

      personally i’d call that ‘resistance’ not ‘support.’ that said, my bet is it gets broken

      • mjtplayer says:

        The 10yr is tracking more in line with the underlying economy, which is lousy, than the recent exuberance in stocks. GDPN tracking Q3 growth of just 1%, which may get reduced after this mornings’ lousy retail sales data.

    • johnnymagicmoney says:

      look at daily TLT ……………………..bull flag…………..Its at the top of its range again. Not sure if its ready to break to the upside but I would imagine its not terribly far away from doing so

  18. frommi2 says:

    AAPL looks bearish…
    Bear scenario will only be killed if we get above yesterdays high. Can`t see this happening today. Maybe i am wrong, but i still believe the bear will win. But the most important thing is to position yourself that you won`t get hurt regardless of what happens and still make a lot of money when you are right.

    • jhjoyner says:

      IWM is showing the bearish truth. A series of lower highs and lower lows. This suggest a 3 drives lower pattern. The turn back this week makes for a negative RSI reversal. This happens when RSI makes a higher high while price makes a lower high and then reverses back down. The pattern projects a price of 104.
      A 3 drives is a reversal pattern but does not guarantee a reversal higher.

    • johnnymagicmoney says:

      Look at the daily chart of AAPL ……………….it hit its upper downward trendline on 9/16, 9/21, 9/25, 10/9, and yesterday. Been following it for a month……If it cant break out my guess is its heading towards mid to high 90’s eventually

  19. EL MATADOR says:

    People like to single out the bears but there are just as many bulls right now. It’s a big battle field and another 150 point trading range could be the most likely outcome of all this bull vs bear battle ground.

    Bill Miller: Now is a perfect time to buy US stocks

    The Bullish Leon Cooperman post is in thread below

    • tommyboys says:

      Tons of crosscurrents right now – possibly the most I’ve seen. Huge bearish potential but really big bullish scenarios as well. Many criteria contradict one another. I’m buying this week’s weakness. Time will tell.

      • rc1269 says:

        TB- just curious but do you ever run out of money to be able to buy on weakness? given all the buying you’ve done the last few years, you must have a very well paying day job!

        • tommyboys says:

          Haven’t worked for a paycheck in 6 years…invest.

          • rc1269 says:

            well done! that’s great. really.

          • tommyboys says:

            Highly disciplined capital management…expense bucket, LT investment bucket, trading bucket (i.e. bought those steel positions a couple weeks ago from deeply oversold conditions and let them go as they became highly overbought ST). LT positions typically highly scrutinized microcap growth…only a few surface annually. GLTA

          • rc1269 says:

            i like it. very difficult to do and make a living from year in and year out. kudos to your discipline. keep it up!

  20. Thanks, Tony.
    $SPX looks like a possible wave-b in an intermediate wave-2 (down) scenario. If it’s not a wave-b to go along with yesterday’s possible wave-a (down) and blows through a .786 retrace of that action, we could be in the launch of intermediate wave-3
    of major wave-3 of primary wave-5 for a quick ride to 2150. Perfect timeing for a Halloween Rally 2015!

  21. manunidhi21 says:

    Namaste Tony!

    Hi Lee..
    Cubs winning. Lets hope for Blue Jays.
    The debate in Toronto is Dome open or close at Rogers centre for the game.
    Everyone call’in sick today

  22. rc1269 says:

    35 of the S&P 500 have reported so far.
    Sales growth: -1.89%
    Earnings growth: -5.6%

  23. Lee X says:

    Farewell ! Go Cubs !

  24. argento1 says:

    Expect higher prices soon….sentiment is still way too cautious and with an intact weekly buy signal next stop 2045 (downtrend line in place) or if she overshoots 2060ish (daily 200MA)!
    Seasonals is up and next wave down should only come near and into November, but should put in a higher high!(Major 4).
    But markets should be bullish bases into H1 2016!


  25. frommi2 says:

    Based on this i would argue that we have seen wave 1-4 so far of a bigger Wave down. Wave 5 can take us easily to 1640 in the next 2 weeks.

    • scottycj1 says:

      there is no chart there ?

      • frommi2 says:

        Strange, i can see it. It shows earning lines from 1925 to today, with the S&P500 nearly always between P/E of 20 and 10. We are at the top and earnings are declining. Looks very bearish for the medium term, as long as earnings are not growing like weed.

  26. ariez5 says:

    CN commented that lots of people are talking “Big Down” and he therefore remains wary of putting on his full bear suit. But in addition to the SPX Big Down setup at prior resistance, the following have already set up, triggered, and confirmed Big Downs: Oil (USO), High-Yield (HYG), Emerging Markets (EEM), FXI (China), and Russell 2000 (IWM).
    On the SPX, we had five waves up from 1871, with the fifth wave making a complete ending diagonal.
    Volume has been decreasing on the rally.
    Today was Day 9 of a sell setup on the SPX.
    The NYSE Comp, which lead on the way up (largely due to small caps and international listings) is now leading the SPX on the way down, as it did in August.
    The Yen, which has been trading inversely to the SPX for months, held its ground even during this blistering 10 day rally.
    $SKEW has hit an all-time record.
    And Alcoa missed on its earnings.

    IMHO, the bulls have little chance of overcoming this wall of evidence in the next week. I am very, very short, but I remain agnostic on whether we break 1867 or are turning down in a Wave ii.

    • fotis2 says:

      Ariez could you please describe the setup and trigger for a BIG DOWN on the Daily except the obvious 3bar reversal and decreasing volume.Thanks.

    • CampFreddie says:

      Ariez5, You appear to be very late to the party my friend, and more than a little behind the curve with all your confirmed “Big Downs”. All the mkts you stated above have already had their “big downs” and some of us here are watching reversals and basing structures, or have already started positioning for trading the long side. GL to you anyway.

      • fotis2 says:

        Based on past perfomance BIG DOWN as well as BIG UP setups have a very high hit rate of course to each his own but they remain EXTREMELY strong signals.

  27. patterntrading says:

    Hello Tony,

    FTSE 100 (FTSE) Technical analysis: http://www.patterntrading.in/ftse-100-ftse-technical-analysis-3/


  28. Gold just broke 1170 (1172) overnight after China PPI CPI data.Wonder what everyone thinks about China and US having a naval faceoff soon.Who s going to blink? Gold might be getting revved up for that too.

  29. sopriscap says:

    Hi Tony,

    Just looking for some clarification on where you are looking to find support on Int. ii? 2000 and 1973 pivots? or below?

    And below what level would have you looking at a more bearish count?


  30. 10-1 still alive…now if Mr C’s system works again, I can pop some champagne with the Cubs in 3 weeks or so.Cards had a great year and they ll be back again next year full blast.Hopefully its the Cubs year THIS YEAR.

  31. Hi all, I haven’t really commented here since August when I got blown out a bit in the crash expecting a slightly higher high above 2113 for a Bradley date extreme before selling. Instead we got the Bradley extreme at 1867 (anything below 2040 was a multi-month extreme).

    Anyway, I’m baaaack, with two patterns. One is the Bradley dates from last weekend 10/9 and 10/10, as above 2021 was a two month extreme so a reversal is basically expected at least for a bit.

    The other is last week’s gap up at SPX 1951, as those tend to close intraweek mostly, the next week next mostly, and the second week after next next mostly. Only three weekly SPX gaps in the past two years or so weren’t closed within the following two weeks, but up or down they were all ultimately closed.

    Anyway, reason I mention that is because I’d say the odds are we see SPX 1951 by next Friday 10/23. No idea if it would be much worse than that, but 1951 within another 8 market days seems doable. Wondering if that would fit as a 2 of 3 in the main count Tony’s mentioning.

  32. Fed “speak” said deflation in notes. If that comes to pass everyone loses: Jobs, commodities, stocks, bonds, gold, housing values, government revenues and bank accounts. Only thing that will go up is TAXES as they never go down. So best be careful on what you wish.

  33. torehund says:

    Thanks Tony.
    Wheels coming off again, but we have to keep making waves🙂

  34. Gary Lewis says:

    -So I questioned this last week – – Gary Lewis says:
    October 9, 2015 at 5:24 pm
    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.

    It looked like a wave 1 then and still does. How low can wave 2 go? Thanks (Go Cubs)

  35. Somebody posted the 2011 analog chart yesterday I think anyway looks like it’s still on target

  36. Gap at 1952

    Friend of mine was talking ABC to 2020 the other day…hmm not sure if right but

    1867 to 2020 to 1872 to 2022

    Is that some odd ABC?

  37. tommyboys says:

    Volume EXTREMELY light today. Likely get more of the same in some retesting balance of week – then some big rallying kicks off by mid next week. P5 will make itself known.

    • CampFreddie says:

      T.B. Agree, mkt up, or holding on light volume = Bullish (no selling), can’t work out why some here see this as bearish.

      • tommyboys says:

        Sentiment plays itself out in real time here. Admittedly there are many crosscurrents. Need these however to climb. Would hate to have everyone bullish with nary a worry – top. Most on this site are bearish as in the macro community…use it to your advantage.

  38. gtoptions says:

    Thanks Tony
    That count works for me. Go Cubbies!😉

  39. EL MATADOR says:

    Back during the late May when SPX was still trading above 2120 I post the following post on lack of market participation and aging leaders.

    EL MATADOR (@LoLo_MATADOR) says:
    May 28, 2015 at 10:34 pm
    I have been warning about lack of market participants and lack of new leaders to lead this market for a few month now. And even though the BuyBack Boys are working OT to keep the bull intact while only managing to pump out measly marginal ATHs, the overall market participation continues to show signs of decay/divergence. If it continues all I can say is what I see on this chart

    SPX Equal Weighted Index vs SPX Cap-Weighted Index Ratio
    snapshot chart: https://www.tradingview.com/x/c2ogzKxc/

    Just saying, Ya Know!

    So here we are 4 1/2 months later and what is the chart telling us now about market participants and it’s aging leaders. Well, IMO, for one market participation appears to have improved somewhat but not enough and a good chuck of the same old leaders are still driving these rallies. The chart also appears to favor a lower low is working its way in while the market attempts to work-out its leadership transition but it needs to work fast if market wants to avoid experiencing another shock similar to August which was mainly driving by its aging leaders all correcting in unison.

    Here is an updated chart with inflection points noted: https://www.tradingview.com/x/UMo3heU5/

    Just my 2c, take it or leave it.

  40. EL MATADOR says:

    IMO, bulls had last 4 trading days (since FOMC) to really rip higher and crush the bears instead they failed big time. Re-re-test of the lows coming up.

    • Jim Guthery says:

      would not be surprised if they ran it back up to 2019 first

    • blackjak100 says:

      Possible if it’s a big flat from August lows, but it’s still Looks like a 3 wave structure on all 3 major indices. The main question is the correction over? I looked at initial 2007 drop and it’s clearly a 5 wave structure from the top on the weekly chart.

      • Agree with the three-wave structure .. just pointing out on the DOW that the retrace is only 61.8%; and for a ‘flat’ by rule, the retrace must be at least 90%, so the DOW wouldn’t qualify for that. I tend to shy away from counts on the S&P that don’t also work on the DOW. Because it is so difficult to count the Dow as five wave down from May, it also gives more credence to the S&P just being three-down, as well. Simple A-B-C. But we know that doesn’t ‘preclude’ further downward movement. Cheers.


        • aahmichael says:

          From the top, both the DOW and S&P did a three wave move down to the 8/24 lows. Then they did a three wave move up to the 9/17 highs. Then another three wave move down to the 9/29 lows. Now, a five wave move up to today’s high is probably complete, which then completes either a B wave, or an x wave, from the 8/24 low. This count also works in COMP, NDX, IWM, IWR,XMI, and NYA. That’s the bearish count.

          The bullish count is that the move down from the top was an a-b-c-x-a-b-c-x-a-b-c which completed at 1894 on 10/2. That would mean the rally from 1894 is just the start of a much larger rally.

          My money remains on the bearish count.

          • scottycj1 says:


          • aahmichael says:

            I expect it to take more than one day to prove the bearish count. Also, there is still the chance that when they ran the stops in the S&P today, and took out the 9/17 high, that it was just the b wave of an a-b-c that began at the 2020 high on 10/9. Nevertheless, as I posted on this blog in real time today, I got short at the SPX equivalent of 2011.94 at 1:30PM (east coast time.)

  41. johnnymagicmoney says:

    Turtle head setup just confirmed Big Dump =)

    • chicotheman says:

      jmm, I saw your comments earlier and was looking for the exact same thing. Just uncertain as to duration/magnitude of the down from here. I like the idea that 1867 – today was a flat B, but we shall see.

      • He rc, just saw your question to me re: my thoughts on the higher high/low close – ariez judged my interpretation correctly – I’d call this a Big Down. FWIW, however, this is the first time I can remember when everything I look at is also saying “Big Down.” In fact, I’m seeing folks posting “Big Down” all over the place. For the first time in 10 years I turned on Cramer, and during his opening he said his super secret S&P oscillator was saying NOT to BUY stocks – that whenever his super secret oscillator hits current levels and turns over it is a not a good time to own stocks. So, given that everything and nearly everyone is saying … screaming even, “Big Down!!” I have to say that that makes me cautiously bullish lol. Don’t get me wrong – I’ll trade the Big Down trigger, and I’ll take the stop out if it comes. But when everyone is waiting for the opening bell to jump on the next downdraft, what happens if the only one with the stones to pull the trigger decides to hit the offer?

        BTW, super Big Up/Big Down kudos to ariez for his dedication and study in learning to hear the sounds of the BU/BD.

        • uncle10 says:

          Thanks CN. I’m curious how you play it. You going to short the futures when/if it triggers or you wait for the cash to trigger then short the future? thx
          btw. opex usually marks tops and bottoms, as you prolly know.
          Agree with you- prolly catch a lot of people off sides if we take off to the upside…. to say 2040ish by Friday afternoon.😉

        • joecthetruthteller says:

          CN, thanks! Your input is valuable.

        • rc1269 says:

          thanks my man, appreciate the response. yes, always leery of running with the herd.

    • So is the turtle head “peaking” or is it “peeking”?

      My interest is … piqued. 🙂

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