Wednesday update

SHORT TERM: gap up opening crushed, DOW -365

Overnight the Asian markets gained 1.6%. Europe opened higher and gained 0.1%. US index futures were higher overnight, and the market gapped up to SPX 1948 at the open. The market had closed at SPX 1939 yesterday. In the first few minutes the market ticked up to SPX 1950 and then began to pullback. By 10:30 the SPX had hit 1931, bounced to 1941 by 11:30, and then the bottom fell out. After 2pm the FED released the Beige book: Plus the Budget deficit was reported larger: -$14.4B v +$1.9B. The market then broke the OEW 1901 pivot and traded down to SPX 1886 by 2:30. After a rally to SPX 1903 by 3:30 the market pulled back to close at 1890.

For the day the SPX/DOW lost 2.35%, and the NDX/NAZ lost 3.45%. Bonds gained 7 ticks, Crude added 35 cents, Gold rose $5, and the USD was lower. Medium term support drops to the 1869 and 1841 pivots, with resistance at the 1901 and 1929 pivots. Tomorrow: weekly Jobless claims, and Export/Import prices at 8:30.

In yesterday’s update we noted that the rally from Monday’s SPX 1901 low looked choppy: 1917-1905-1947-1914-1950. However, after the report we noted in the comments section that the rally could continue to the 2019 pivot, after the market had closed at 1939. The market only made it to the 1956 pivot this morning before breaking the recent SPX 1901 low. This does not look good for a continuing bull market. We had thought the 1901 pivot would provide support for this downtrend. While OEW has not confirmed a bear market yet, we believe it is prudent to offer this possibility on the charts. Even though we have never seen a failed fifth wave of this degree before, we, nor anyone else, have experienced this type of bull market before either. A drop below SPX 1867 will probably confirm a bear market is underway. Short term support is at the 1869 and 1841 pivots, with resistance at the 1901 and 1929 pivots. Short term momentum ended the day quite oversold. Best to your trading this volatile market!

MEDIUM TERM: downtrend

LONG TERM: bull/bear market at inflection point


About tony caldaro

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408 Responses to Wednesday update

  1. kvilia says:

    Tony mentioned support levels for oil, anyone remembers what was below 27? Thanks

  2. perversionofthemean says:

    The NDX daily semi-log close-only chart shows the nicest of trendlines that got breached yesterday after a brief stint above on Tuesday. The failure to hold yesterday was met with selling this morning, but the bots were able to rally it all the way back above the TL……until noon. Then, the dark-side bots came in, and they punched it back down so that the close was just below the TL. A clean line of demarcation (if you only look at the closes, which means you like to ignore facts like the QQQ was at $85 last summer). Theoretically, bots could take it higher, but my money is with the dark side now (I got stopped out of my long with this a.m.’s push to new lows. Duh!) The gap at $99 and perhaps back to $85 seems doable.

  3. EL MATADOR says:

    4.5 : 1 up/down volume day and shorts most shorts have not even reached for their pants yet …. either they are going to be right to keep their shorts or will get squeezed manana

  4. mike7x says:

    From @NorthmanTrader: Well look what just happened with the $NYSE today the weakest of all the indices. So the question must be asked: Are we witnessing a major bottom being made?

  5. uncle10 says:

    Thanks Mr. T.
    What a great trading market. 50 is the new 10.
    gl all

  6. Well, uncle, this is one humdinger of a rally you’re putting on 😉

    Nice going!

    • EL MATADOR says:

      CN, do we have a BU set up today? I guessing it is, I’m I right?

      • If it were, the gap open we are about to get would have disqualified it at the opening bell. I actually think that the choppy overlapping price action this week would not make for a good BU set up. I did get long near the close 1/11, but I was short by 1/13 in the AM,

        Bears need to close this thing >1% below yesterday to accelerate the downtrend, in my opinion. Any close within yesterday’s range and we might see more choppy chop next week. Of course, Monday cash is closed and futures open, so that is a strange situation in itself.

  7. torehund says:

    Maybe putting a 2 under it 🙂 RUt also turned at the multiyear breakout level. Rally.

  8. makiori says:

    this was posted by ABchart in previous sessions

    The fifth session from last Thursday will be Thursday 14. +3%? time will tell.

    ABchart, I have no idea if the above comment that you have posted several times in the past few days was the result of a defined approach or just a feeling.
    If it was the result of a defined approach, you are definitely into something, chapeau ! well done!

  9. blackjak100 says:

    I see PUG stopped in here to gloat his ‘correct call’ of a bottom near 1884. That was very nice of him! Now, we get to see if his next call of 1998ish holds for Major 2 rebound. It’s easy to be right once, but twice in a row not so easy.

  10. Wow, just stellar.

    Not in the bull camp just yet as I need to see a close above 1937.64 today or 1941.07 tomorrow to signal a likely change in trend. Would be quite nice.

  11. H D says:

    At the highs of the session, just like CL right,,,, 19(34) SPX is (55) off the lows. Have a great weekend all.

  12. captbara says:

    $TRAN maybe done a w-x-y off the highs. Also pierced and possibly close above 233 weekly MA

  13. Page says:

    So Bulls are happy today? you will be even happier tomorrow 🙂
    Watch for shorts squeeze and VIX collapse at close.

  14. rc1269 says:

    Trivia question:

    Can anybody name the last time the weekly SPX chart put in a major triple bottom low/base where the first low was the lowest level of the three? (such as, 8/28 vs 10/2 and today)

  15. phil1247 says:


    like i said >>>>>>>>haahhah

    that little triangle { click chart } near the low marked the 4th wave then we reversed up

    i believe that subsequent action shows the entire wave down from 2082 may have completed and we could retrace back near 2000

    just holding my 10% short for now from 1915 ..\

    not anxious to add shorts until we get up higher

  16. tradeanimal says:

    Yesterday is but a distant memory…

  17. budfox9450 says:

    from Bud – my BoYu indicator has been Bullish since 1/13
    and my post here, yesterday….1884 was it? about that price level.

  18. EL MATADOR says:

    If we rally manana again we will record a weekly hammer….and that means ____ I am not gonna say it

  19. budfox9450 says:

    Actually, the Bull Market Lives….OEW comments
    amount to over 300, if the counter is correct…good
    work — OEW

  20. thecustomer14 says:

    Fionamargaret, awesome call on UWTI yesterday. Just curious: What did you see in the chart/technicals that led you to proclaim that the time was right to buy?

  21. H D says:

    Remember FIT? $10B,,,err $4B dollar bracelet co, they count steps, Worth more than entire shipping sector? has lost -$34. 17.77 interesting numerology price. I’ll walk away. #justonegoodtrade on to the next.

  22. 123 abc says:

    Speculating current squiggle count, structure-wise, ignoring degree: first wave of Major-3 complete and now sideways chop for an irregular second wave for the remainder of the day…

  23. Gary Lewis says:

    Appears that it’s Bullard to the rescue again! In an interview, he says that nothing will happen until oil recovers. Implies that Fed will goose the oil market. Market goes crazy! (gotta buy those -2s).

    • Dex T says:

      I doubt the Fed will do anything for oil. It’s natural supply and demand issues that they have no control over. People just have to get use to it.

      I interpret his comments to mean they are probably going to wait and see if there’s a price rebound and any ramifications.

      Of course if oil starts moving north of $40 this increases the likelihood of another 0.25 rate rise later this year.

      Until then we’ll have to wait and see and be subject to more weekly Fed comments.

  24. manunidhi21 says:

    At least someone making money from Crude 🙂

  25. rc1269 says:

    1925.23 is a perfect price analog to the rally from 1901-1947 on 1/11-1/12

  26. simpleiam says:

    Guess that was a few C&H’s I saw; just now looked at the charts again. This seems nicely impulsive. Another couple days like this (?) and it might be the start of some nice upside. GL All!

  27. Aleksey Zimin says:

    Tony, I wonder why are you so strongly inclined to assign high probability to the bear market if we break 1871? IMHO, we could still be in PIV. I understand that OEW is not EW, and I am not a pro in either. Is there a voilation of OEW to consider the following:
    A count of a-b-c for PIV does not violate any EW rules:
    a:5 waves 2135-1868 (267pts) possibly with an extended fifth,
    b:3 waves 1868-2116,
    c: (now, must become 5 waves) 2116-1849(c=a) or 1684(c=a*1.618).
    Yes, I know that 1871-2116 was impulsive, and it was fine for a (c) wave of b. This scenario fits without any problems and it does not require a failed fifth.

    • tony caldaro says:

      If the market holds current lows that could work.

      • Aleksey Zimin says:

        Thank you! I meant to ask if even if we go down as low as 1849+-, thus breaking the 1868 and 1869 lows, this count of PIV ending at 1849+- and therefore pending PV is possible in OEW. I do not think going to 1684 is likely here but who knows…

  28. Reread Avi on marketwatch:”A break of 1895 would lead to 1750-1775 within a month”.He didn t anticipate it being broken…was going for a bottom there and more bullish behavior .Also fwiw.

  29. rc1269 says:

    after that first wave, it seems to have now stopped impulsing upward.

  30. As stated yesterday…today/tomorrow 70% upside bias historically.Then more weakness until late in the month.FWIW.

  31. jobjas says:

    2 hours agosmelltheglove61
    Jobjas, too extreme, plus you very rarely get it right.

  32. Page says:

    Gold/GDX/NUGT to watch.

  33. 4bolt says:

    Compelling Thursday AM 5/3 Rebound …

    15 Min SPX 01-14-16 :

  34. locanbbs says:

    Looks like a beginning sideways consolidation now (SPX, Dax) which will eventually break up or more probably down (c wave). 1901 is resistance for SPX, 1874 is support.

  35. kvilia says:

    2082 – 1882 = 200 (5 waves down)
    Retracement levels (in abc move)
    38% – 1955
    50% – 1979
    62% – 2003

    I am not holding my breath for PV any more until Fed comes out with QE# or something of that nature.

  36. simpleiam says:

    Someone please confirm possible C&H forming on 5 min chart. Most definitely shows on 3 min.

  37. HYG at 78.51…previous low 78.26.The path is down unless oil/HYG can rally mucho amount.Bounces happen but if HYG stays here the correlation is 1750 with a possible overshoot lower.There are indications HYG could drop to 75-76.Just a matter of how much risk and pain tolerance you have.Good luck all.

  38. Thanks TC; your pivots alone are worth the price of entry alone. Will re-engage soon sir.

    Things are starting to look a bit constructive here but no clear resolution unless a break above 1925.64 to challenge the bear (1918.5 tomorrow; give or take). So, still sidelined for now, leaving it to the day traders and momo chasers.

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