Wednesday update

SHORT TERM: market pulls back, DOW -51

Overnight the Asian markets gained 1.2%. Europe opened lower and finished mixed. US index futures were higher overnight. At 8:15 the ADP was reported lower: 182K v 200K, and at 8:30 the Trade deficit narrowed: -$40.8B v -$48.3B. The market opened four points above yesterday’s SPX 2110 close, ticked up to 2115, then started to pullback. At 10am the SPX hit 2104, ISM services was reported higher: 59.1 v 56.9, and FED chair Yellen gave her congressional testimony: The market rallied to SPX 2111 by 10:30, then headed even lower. Just past 1pm the SPX hit its low for the day at 2097. Then it rallied to SPX 2106 by 2:30 before dipping to 2102 at the close.

For the day the SPX/DOW were -0.30%, and the NDX/NAZ were -0.05%. Bonds lost 6 ticks, Crude dropped $1.35, Gold fell $10, and the USD was higher. Medium term support remains at the 2085 and 2070 pivots, with resistance at the 2131 and 2198 pivots. Tomorrow: weekly Jobless claims at 8:30, and a speech from FED governor Tarullo at 1:30.

The market opened higher today, ticked up, and then pulled back for the rest of the day. Thus far we have six waves with an overlapping wave, for Minor 5: 2085-2063-2094-2079-2116-2097. Should the SPX 2094 level hold, as noted yesterday, Minor 5 should make higher highs before completing. If it doesn’t hold, Int. iii has probably completed and a pullback to the 2085 pivot range may be underway. Short term support is at the 2085 and 2070 pivots, with resistance at SPX 2120 and the 2131 pivot. Short term momentum hit slightly oversold at today’s low. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: bull market


About tony caldaro

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174 Responses to Wednesday update

  1. torehund says:

    gold rolling over hard, dollar breaking out.
    Concomitantly, (here in Norway) its brewing into a crisis in the coalition government due to dispute on migration. There are 3 million refugees headed for Europe, and its irresponsible of the politicians (across the board) not to address ” how to cope”.

  2. Jim Guthery says:

    Wow, guess I’ll just wait for 2120 to go short. trying to play some of these moves are tough.

  3. mjtplayer says:

    What a boring afternoon, market obviously waiting for the jobs report tomorrow. ZZZzzzz….

  4. johnnymagicmoney says:

    “The Day is Coming”

    Twenty One Twenty a target for some
    Two One Three Five who may call me dumb
    Then Major Four with a drop about sixty
    Then all time highs with dust made of pixie

    Where it will end who the F knows
    One thing I know is that earnings do blow
    Along with the asians who lie like the Prez
    Down will go stocks that’s just made of Pez

    The buy the dip crowd will echo for months
    But soon they will don a cap that says Dunz
    And then I will laugh with Newbie and friends
    Reading Z-H call for the end

    But one day I’ll buy with blood in the streets
    Cheap stocks galore I’ll feed on dead meat
    The buy of a lifetime will come again soon
    Before that you longs can look at my moon

  5. johnnymagicmoney says:

    “How It Works”

    Fed looks at Market and asks what to do
    Market hears Fed and then takes a poo
    Fed looks at Market and then changes course
    Market then cries Foul until it is hoarse

  6. johnnymagicmoney says:

    blackjak100 says:

    November 5, 2015 at 1:00 pm

    Correct so my guess is minor 4 if 2090 holds or int iv if it breaks. I’m saying the rally off 2090 appears impulsive so leaning minor 5 underway.

    the move off 2090 does not look impulsive at all

    • blackjak100 says:

      Yes, I could be wrong and was wrong yesterday when I said move looks impulsive from 2097. Squiggles are tough. That’s why I laid out the parameters TC will probably lay out in his update with 2090. If 2095 gives way, 2080ish is next which then would end int iv.

  7. phil1247 says:

    lowered stop to 2093

    basically want to be flat tomorrow am and see what NFP reaction is


  8. johnnymagicmoney says:

    So lets say 2090 was the Intermediate 4……………………..2103 then Minor 1, and we are in minor 2 now?? Then whatever stupid rationalization tomm employment number is 3 (bad is good good is good) pushing it to retest ATH’s ??? Anyone look at it this way?

    • I am Johnny. I think we’ll see Intermediate 5 up complete tomorrow and end Major 3 up. I suspect it will truncate and not make a higher high as it should do. Then down we go next week for Major 4 with the first important low on Thursday or Friday.

  9. EL MATADOR says:

    2080 Pivot coming, like it or not, believe me or not don’t care cuz it is in the bag and coming

  10. After the run up and probe of 2120 pivot, market has backed off modestly. Seems like consolidation of the huge run off of 1872 to work off some overbought momentum and establishing solid footing for a push through to new ATHs….pending a catalyst. I thought the pullback would be deeper and quick enough to prompt some selling/profit taking. Now I’m not convinced. I’m tempted to go to cash and await some clarity.

  11. lunker1 says:

    4 hour candle closed below 2102/3 likely more down to come

  12. sibyn says:

    NybisSibyn ‏@NybisSibyn
    RCH handle done2100 Now RCH Goal 2073,82
    RCH Max Pain 2106,2
    We are going to 2073
    Regards NybisSibyn

  13. mjtplayer says:

    SPX 2,103 = 50% retrace from 2,116 to 2,090. Also, it tags a potential parallel channel that’s formed and is a perfect back test of the minor 4 uptrend line. A failure here, then drop into minor C?

    Minor C = A @ 2,077 which just so happens to be where the uptrend line comes in tomorrow morning, connecting the int ii and minor 2 lows – that line currently stands at 2,074 and is rising by 5pts per day.

    • blackjak100 says:

      Problem is the rally looks impulsive from 2090 or 9 waves. If 2095ish holds, minor 5 underway IMO.

      • mjtplayer says:

        Minor 5? Impossible to count 5 minute waves up from minor 2. Also, you have a clear 5-waves up from the minor 2 high to minor 3 with a “3 of 3” point of recognition. Minor 4 is an expanding triangle, no other count fits other than a triangle due to overlapping. Triangles, whether expanding or contracting, are a wave “b” or “4”. Since we’re in an uptrend, it has to be a 4th wave – which I have as minor 4. Sorry, no other count fits without violations.

  14. Gary Rodgers says:

    TC what caused you to add the 3 to the iii? Thank you

  15. gtoptions says:

    Looks like 5 off the low. Holds 2095 the little pullback may be done. We’ll see. 😉

  16. GYN LAB says:

    Good morning!
    With this morning’s LL it is clear that 2116 was a local top. Now the drop from 2116 is sloppy at best… Bullish case is obviously tracking Mr TC’s count of int iv at work. I can also see 2 more bearish alternatives:
    1. Int v and Major 3 complete with a bigger pullback (room to the September FOMC 2021 top, ideally around the former support-resistance-support again at 2040-45 area). My reasoning is that I can still see Int ii at 1927-1893 and Int iii 1893-2023, Int iv 2023-1991 and extended Int v from 1991-2116
    2. Major B of P4 done and this is start of C (very low probability right now, will only get looked at seriously once this breaks below 2019 pivot impulsively)

  17. phil1247 says:

    initiated 25% SHORT @ 2095

  18. lbhkinqa says:

    Hi Tony, I thought there were only 6 waves so far to end of yesterday? I understand the int. iii green label but how can there be enough waves for Major 3 to be complete? Thanks.

  19. Arthur Knopf says:

    Why am I worried about a selloff in Dec-Jan? Namely CHINA.

    As I posted a couple of days ago my sentiment model gave a sell signal, but I thought
    it might be early and that the real risks are in Dec-Jan, aka 2007 Oct top.

    So why Dec-Jan?
    1. China’s SSEC index has formed a massive H&S pattern going back 18 months with the
    RS at 3200-3500. A break below 3000 indicates 2000 is likely.
    2. China’s New Year is early Feb, if their tax-loss selling is like ours, Dec-Jan
    should be it.
    3. If you remember. China devalued Yuan right before Aug crash.
    4. This could be an coincidence, but I noticed several months ago that the price of
    gold seemed to be a leading indicator of the SSEC.

    As you can see from the chart the current lead time is about 1 month, and the current
    downtrend in gold looks bad for the SSEC. Not sure why, but could have something with
    fund managers threatened with jailtime for selling stocks, so for liquidity you have
    to sell gold.

  20. ABchart says:

    More downside comingn despite the bounce.
    ES daily from yesterday:

  21. llerias7 says:

    Tony, those blue lines on spx 60min chart are short-term OEW pivots?

  22. berniebaruch says:

    Wish I could have been one of the “genius traders” in amzn. Up 18 percent in three short weeks.
    What a great country!

    • johnnymagicmoney says:

      I dont care how much it goes up. Will never ever ever go long in this piece of crap. 300 billion market cap at 950 times earnings. This is by far the biggest combination of market cap and overvaluation ever in the history of the market ever. Like I said if people want to claim they are buying because others are buying it hats off to your balls. But to make a fundamental case for this compnay is the laugh of a lifetime

      • aahmichael says:

        The secondary market often has no connection to the company itself.

      • purplember says:

        you obviously forgot of 2000 dot com when companies had no profit or business model to ever make a profit but the stock was going to the moon

        • johnnymagicmoney says:

          No I did not. I think this is worse than dot com. There is a diminishing ability to grow into your valuation once you reach a certain market cap. As silly as dot com was many people bought on the possibility that this new internet paradigm shift would create the earnings the caps comanded. Although the majority of the “new economy” companies would go to go banktrupt or not become leaders you could make a case for many of the companies fufilling expectations at some point. The fact that the market bought the majority of these new economy companies on the assumption that most would be justified was what was insane but the thesis wasnt so ridiculous. Fast forward and you have companies like Facebook and Google who ended up being leaders of the entire market and have incredible growth and earnings. The thought process was correct. The market just wasnt patient enough to wait for the true leaders to emerge or selective enough to choose what would be more likely to be the real leaders. Amazon is here to stay no doubt but at a 300 billion market cap there is no possible way the company can continue to justify a further expanding market cap with the earnings it has or will have. If it was a 50 billion market cap sure but its a 300 billion market cap trading at 651 a share with just reporting 17 cents this past quarter. Have you ever remotely seen a 300 billion market cap trading at 1,000 times earnings? Nothing has come close ever.

      • kckim04 says:

        Bernie, as much I agree with your valuation argument, you have to consider the level of investment the company is making to fuel their 20%+ growth. If they grew at 10%+ but delivered 10% OMs and a 25% tax rate, you can see $25 in earnings a couple of years out which translates to 25x earnings. Given that their AWS business has 70%+ incremental EBITDA margins and is growing at 50%+, the $25 of intrinsic “earnings power” could prove quite conservative. I don’t know if that changes your view, but, everyone is entitled to their opinion.

        • kckim04 says:

          Sorry, Bernie, the post was meant for johnnymagicmoney

          • johnnymagicmoney says:

            KC – how many times Have I heard these incredibly optimistic forward numbers for Amazon? How many years now? Seriously they WILL NOT grow at that rate. They won’t. I dont know where people get these numbers from. THEY DONT EXIST! Now Amazon is opening up retail stores to make it even more hysterical

            They are a retailer with bad margins. Why cant people accept that?

          • kckim04 says:

            johnnymagicmoney, I would encourage you to look at their unit economics and the tremendous scale they have. As for their ability to grow, Amazon has over $100B in revenue, Walmart has $500B in revenue. The market for global consumer is in the Trillions. AWS is on an $8B run rate. this is growing 50%+. the Global IT Infrastructure market is north of a Trillion $. I understand the law of large #s but they’re dealing with some of the largest markets in the world…So help me understand why they can’t continue to grow given their unit economics?

  23. The wedge in the wedge count .. a fractal of a fractal. The main purpose of this chart is to show downward overlap in the futures.

    ESZ15 - Hourly - Nov-05 0953 AM (1 hour)

  24. mjtplayer says:

    Updated count. The TL connecting the int ii and minor 2 of int iii lows comes in at SPY $207.10 and rising at $0.50 per day (5 SPX pts). If int iv were to bottom in the 2,080’s, then you’re looking at Monday or Tuesday. If we bottom tomorrow, you’re looking at the mid SPX 2,070’s – so about 40pts total from the int iii high of 2,116.

    • johnnymagicmoney says:

      Multi – in your opinion is it “possible” this is Major 4? Many times people look at the ideal squiggle (many people for instance refused to look at 2116 as Intermediate IV).

  25. Tuesday afternoon’s Sell signal working as expected, full details and ongoing commentary at

    GL everyone, thanks Tony.

    • thanks.
      what do you expect from this sell signal?

      • See my blog, don’t want to re-type.

        • good. that’s very interesting ‘roadmap’.
          do you have any targets on downside, or you just wait for your next buy signal?

          • I’ll write a post that answers both your and Michael’s question.

            The quick answer is someone can simply wait for the next Buy signal, or one can close the position – in part (usually half) or whole when the profits are acceptably large. I’ll elaborate further in the upcoming post, probably tomorrow or over the weekend as I will be unavailable after 2 pm today.

        • aahmichael says:

          I see on your blog that you already exited your short position. Does that mean that your signals are only for scalpers trying to take pennies out of the market?

          • Heavens no. Did you read my posts from Tuesday and yesterday? Nothing has changed. If it does I’ll post an update accordingly.

            The options I bought Tuesday afternoon were up 100% (doubled) yesterday and more this morning so per my post of 11:55 AM, I couldn’t pass up that kind of profit and will look to re-short likely tomorrow, will post at that time as I did this morning. Will also write a post (probably over the weekend) elaborating on various ways I use my indicator/lSignals to maximize profits. GL

          • Typo, should say 10:55 AM

  26. uncle10 says:

    That’s it folks. see y’all at SPX 1956. gl 😉

  27. Jim Guthery says:

    Anybody have this turing at spx 2088?

  28. gtoptions says:

    Thanks Tony
    Int iii complete?
    SPY ~ WPP @ 207.89

  29. fotis2 says:

    HS break and close bellow 2095 goes to 2074 (hopefully)

  30. GDX finally filled its gap at 14.50.The last one on the downside.A lot of small gaps from 19-20 from the June timeframe.When gold turns up, that will be the area I point to.Buy now? I think mid December.Stocks in general, just watching.Not much to see here, as they say.

  31. ABchart says:


    Actual auction is large from 2074 to 2115. At this time I have no idea where the algos will go between this levels. Short at the high (for int.iii), buy at the low (for int.v), to put it simply.

    For my part, I am waiting to buy the low.

  32. pruthvi says:

    As per chart of NSEI,

    Tagged as 4th finished @7540 , (How much chance that now 7540 was 4th)??


  33. Page says:

    I think it is giddy up time for gold and miners.

    • Jim Guthery says:

      Comes down to the jobs report tomorrow. People betting on no rate hike. If we are going to take off soon we have to have a catalyst

    • mjtplayer says:

      Any rally in gold should be a dead-cat bounce, gold looks terrible. Clear ABC channel rally from the recent low a few months ago, which has been broken – new lows ahead for the yellow metal. You may get a throw-back to backtest the broken channel at some point, but the overall trend is still lower.

      • Page says:

        agree … it will be just a bounce … may last few days

      • Aren’t Gold and Market contradicting after Yellen Speech.
        One Thought
        If Interest Rates are going up for sure, the Market should trend down along with gold.
        If they are not Gold and Market both should be going up.
        Currently, it seems like Market is going up and Gold getting hammered.

        Second Thought
        If FED believes that it is time to raise interest rates, doesn’t that mean that they are seeing inflation. I always thought Gold did well in inflationary environment.
        I understand the strong dollar is bad for gold, but every other aspect points to gold going higher and not lower.

        Additionally, Minors in GDX are getting stronger in terms of Balance-Sheet.

        Am I thinking of it wrong?

        BTW, thanks MJT. I got out of GDX last week without a loss. 🙂
        Looking for a good entry point now..

  34. manunidhi21 says:

    Namaste Tony!
    For you..

  35. $SPX tracking nicely into minute wave-5 (n5) of minor wave-3 (m3) of intermediate wave-3 (i3) of major wave-3 (M3) of primary wave-5 (P5).

  36. lunker1 says:

    H&S neck 2097 target 2078.
    RS today 2106/7?

  37. ABchart says:

    Thanks Tony and all.

    November 4, 2015 at 10:05 am
    Hello! I think the ES topped yesterday for int.iii and headed now to 2074. Target today at 2090.

    Today: ES, resistance at 2100. Bearish target at 2082.

    Bad data: Germany factory orders September: -1.7% vs expectations +1.0%

    EURUSD: bearish > 1.07 > 1.11 > 1.04

    Good luck!

    • GYN LAB says:

      Right at 2100 at this minute – I still think one more HH is coming before drop… DAX a massive bear trap in the first hour!

      • fotis2 says:

        DAX!Tell me about it managed to reverse it but took a proper loss today.

      • ABchart says:

        Possible GYN LAB. This beareash is from yesterday. The resistance at 2100 is broken right now, but no volumes at this time to change the scenario. Will see at the RTH opening.

  38. Yesterday I said “Today’s top in S&P will not be breached for next two years. I believe this is 2nd wave up. 3rd down will start from today or tomorrow.”

    Since it did not cross recent highs yesterday, there is one more chance of crossing recent highs today. If not, then 3rd down has started.

  39. fishonhook says:

    In case you wonder why it is so hard to make money shorting.
    On shorting, he opined that “It’s very hard to short stocks. It sounds great in theory, it’s very difficult because you’re basically playing against the house.”

    • That’s an indictment of CBs and HFT. Between the two, the distortion is exponential and nobody has any idea what fair value is anymore. Not coincidental that so many hedge funds have closed up shop since the “recovery” began and a cascade of regulatory reform besieged the financial community. Some legendary managers saw the writing on the wall and quit when times were decent; it hasn’t just been funds getting blown up by wrong way commoditity bets. When this market finally does turn Bear, it’s going to be fugly – can only hope that we’ll all be positioned accordingly.

  40. $XVG Geometric Index looks healthy!

    Next stop on weekly is 40 week moving average

  41. mjtplayer says:

    Thanks Tony!

    The SPY must hold $210 to stay inside the rising channel. This afternoon it came VERY close to breaking it and actually peaked below just briefly, before a 4pt SPX rally into the close saved the day.

    Breaking the channel would certainly favor the int iv count, otherwise a rally to slightly HH above 2,116.48 in minute v to complete minor 5 and int iii. We should get a good idea tomorrow, break below the channel in int iv OR start rallying in sub-minute 3 of minute v of minor 5.

  42. llerias7 says:

    A stretched minor 5 for sure…Friday things get clear though.

  43. GYN LAB says:

    Thanks Mr TC!
    Inside Minor 5, 5=1 at 2123

  44. skmcobra says:

    Tony and Avi are perfectly aligned right now with the 2094SPX being the pivotal level to hold. Below and down we go. Above and up to 2140.

  45. gtoptions says:

    Thanks Tony
    “six overlapping” ?

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