Wednesday update

SHORT TERM: another volatile FED day, DOW -223

Overnight the Asian markets gained 1.2%. Europe opened lower but gained 0.8%. US index futures were lower overnight and the market gapped down at the open to SPX 1896. The market had closed at SPX 1904 yesterday. After an opening bounce to SPX 1903 the market dropped off to 1887 just past 10am, and then started to rally. At 10am New home sales were reported higher: 544K v 490K. The rally continued until 12:30, along with a rally in Crude, to SPX 1917. The market drifted lower to SPX 1906 just ahead of the FOMC statement and forecast at 2pm, and then started rising just before their release:, Right after the statements the market hit SPX 1916, an then headed lower. The initial reaction was down to SPX 1894, up to 1904, and then selling to 1873 just past 3pm. After that the market rallied to SPX 1885, then dipped to close at 1883.

For the day the SPX/DOW lost 1.25%, and the NDX/NAZ lost 2.35%. Bonds gained 2 ticks, Crude rose 50 cents, Gold rose $4, and the USD was lower. Medium term support drops back to the 1869 and 1841 pivots, with resistance at the 1901 and 1929 pivots. Tomorrow: weekly Jobless claims and Durable goods at 8:30, then Pending home sales at 10am.

Volatile day! After the market opened with a gap down, hit SPX 1887, and then rallied past 1909 we marked Monday’s 1876 low as Int. B. Then the market hit SPX 1917, dipped, and hit 1916 just after the FOMC statements. After that it was all basically downhill for the rest of the day. In the last hour of trading the market dropped below SPX 1876, suggesting the entire pattern from 1812-1917 had completed with a complex double zigzag: 1909-1876-1917. At first glance this rally looks too small to be a Major B uptrend – no confirmation either. Some in our group have mentioned it could be just Int. A of Major B – possible. With the market in bear mode, and risks mostly to the downside, will accept the completed pattern, await more market data and see where it leads. Project, monitor and adjust. Crude, btw, hit its highest level of the week just before the market sold off. Overall, being long in a bear market for anything more than a short period of time, is as risky as being short in a bull market. Short term support drops to the 1869 and 1841 pivots, with resistance again at the 1901 and 1929 pivots. Short term momentum hit overbought right at today’s high and went right down to oversold. Best to your trading this volatile market!

MEDIUM TERM: potential uptrend hits inflection point

LONG TERM: bear market


About tony caldaro

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276 Responses to Wednesday update

  1. manunidhi21 says:

    What if Russia and Saudi do reach a deal and cut production as they did on 15th March 2009 to the braoder markets.

  2. uncle10 says:

    Been going through charts of all the companies after earnings. Wowza! More proof there is no liquidity in the markets. up or down.

  3. b already had an a, a b and a c1 now in c2

  4. kvilia says:

    Speaking of gut feeling – Tony, anything you could share with us today?

    • tony caldaro says:

      Q4 GDP tomorrow might be better than expected

      • kvilia says:

        This would be a nice break for those of us trying to unload long positions and enter short positions if this trading range broke upside for a few days.

      • EL MATADOR says:

        GDPNow as of today expects 1.0% while estimates are calling for 0.7%
        ….. nonetheless, this will be the 2nd weakest 4Q GDP of the 2009-2015 C1 bull market.
        Year 4 Qtr GDP
        2015 0.70% estimate
        2014 2.10%
        2013 3.00%
        2012 0.10%
        2011 4.60%
        2010 2.50%
        2009 3.90%
        2008 -8.20%

  5. phil1247 says:

    bought bonds looking for post triangle thrust to 163 ZB

  6. Gary Lewis says:

    Tomorrow marks the end of January trading. The August SPY low was 191.61. Ummm, that would be an analytical challenge as I’ve been thinking that if we held monthly support at that level, I would be looking for the impossible – P5!. Unfortunately, think I’m spending the long (Mexican) weekend in Atlixco, un Pueblo Magico, outside of Puebla. Wife will be grumbling if I am looking at my computer. 😦

    At this level, SPY will also be hitting the downward trending 20 DMA. Perhaps By Feb 29, the market will have been shaken out and be making progress on the upside? Better we just sell off tomorrow so I can have mole and cemitas on my mind instead of puts and calls this weekend

  7. Dex T says:

    RAY DALIO: The 75-year debt supercycle is coming to an end

    “We are seven years into the expansion phase of the business/short-term debt cycle — which typically lasts about eight to 10 years — and near the end of the expansion phase of a long-term debt cycle, which typically lasts about 50 to 75 years.”

    What I am contending is that there are limits to spending growth financed by a combination of debt and money. When these limits are reached, it marks the end of the upward phase of the long-term debt cycle. In 1935, this scenario was dubbed “pushing on a string.”

    “As a result, it is difficult to push the prices of these assets up and it is easy to have them fall. And when they fall, there is a negative impact on economic growth.”

  8. mike7x says:

    From NorthmanTrader: January 28, 2016 – A fascinating chart: Daily high/lows…

    • That looks like a good case for an on-going P4.

    • bolderbob says:

      for sure…the implication from Aug/Sept is the market will go higher but that is only one point of reference…what is your thinking Mike?

      • mike7x says:

        The SPX may be starting an Uptrend (at Tony’s inflection point). Whether it’s P4 ending, P5 beginning, or a Bear market rally remains to be seen. In any event, for the short-term it doesn’t matter to me. What matters is the current trend. (As I write this the SPX once again seems to be giving back today’s gains, again. Guess we have to “bear” that in mind.)

  9. bear flag forming the last day and half within a giant bear flag that has forming the last month.

  10. purplember says:

    small triangle from 1915 to 1872 which way does break ?

  11. phil1247 says:


    i didnt post this over theweekend ..but i was wondering if this last decline is five waves…
    .down to boll band for wave 1 ….bounce up for 2

    push boll band down in wave 3

    the overlapping ending diagonal for wave 5

    with sharp rally after diagonal
    the rally so far has retraced 38 % and we cant get above ext short level

    what if the decline is only wave 1 of c down??? weak bounce wave 2 up with 3 of c down ahead…… anyone ? anyone??? bueller ??

    • alexhartley1 says:

      I tend to think this is a wave 4 with a wave 5 to come Phil – target 1770 ish into 3-5th Feb where the Bradley turn is waiting.

      • phil1247 says:

        those bradley turns work best when there is wild emotional trading and not sideways chop right ??? at least thats what arch crawford used to say

        • alexhartley1 says:

          I think you’re likely right Phil but we’re still a few days away from 3-5/2.

          My point being it’s choppy right now before a final (perhaps terminal move) down that finally actually scares the sh*t out of people and then the TURN kicks in. We’ll see come the date.

          Personally I see a lot of people saying there’s a lot of pessimism around and panicking etc. but if you ask me I simply don’t feel it just yet. I don’t feel there’s real panic yet. Mind you it’s potentially only Major A. What will Major C of Primary A feel like let alone Primary C.

        • Just jumping in to say that I’d done a study for the past few years for em, and that’s a good way of describing it. The way I put it was that at 5+ week extremes (high or low) near a Bradley date, that’s where reversals were often marked. Not always though.

  12. EL MATADOR says:

    Wow you can pin today’s rally on FAG = Facebock Amazon Google

  13. GYN LAB says:

    Chop fest – looks like some triangle formation since FOMC…

  14. ko68 says:

    XLE breaks resistance in 3 months declining channel

  15. phil1247 says:

    short 1890 es

  16. mike7x says:


    • Dex T says:

      Why would the Fed undo the 0.25 rate hike?? What is the impetus for it?

      It would be a much worse move to undo it and publically acknowledge that the U.S. can’t handle such a minor hike. and if they did… then what? Hold hands and pray that Facebook keeps the markets going up forever?

      The real problems are that there is way too much leverage in the system (again) and far too many $hitty bankers and investors who can’t survive without direct deposits from the Fed into their bank account.

      Technological innovation opened up much more oil to the world leading to a glut, low prices and collapse of the EM economies. The Fed isn’t responsible for that.

      • manunidhi21 says:

        “Why would the Fed undo the 0.25 rate hike?”
        Was this a discussion in the report or by FED members yesterday or just media ?

        • Dex T says:

          Just the media. No discussion by the Fed. Nothing changed yesterday and they left the possibility of additional hikes open.

          Unfortunately the rumors continue.

  17. torehund says:

    Not much to convey, lets see how far the dead walks🙂

  18. tomasso60 says:
    don’t know if anyone would call this a bear flag but it is interesting to see at this point in time.

  19. fionamargaret says:

    Here is a thought.
    In the Telegraph, their folks were suggesting China does not have the same amount of problems as Europe. This coupled with the chart of ratio of commodities/stocks, maybe commodities along with all the unloved (really cheap) emerging markets are the way to go.
    RUSL, YINN, EDC, LBJ. and of course DBC for commodities with an extra splash of UWTI, and UGAZ.
    Now we have to have representation from the States – TLT, SPXU (overpriced stocks)
    There you go – no waves, but they do look good in my charts, and most likely to make you money.(maybe). Think of penny stocks!

    • fionamargaret says:

      …and in case you think ‘fat boy’ is going to get his – CCJ (Cameco).

      • fionamargaret says:

        ..there was a commodity guy (expert!) on Bloomberg Europe who said to buy oil – nothing to do with who is talking to who, but the length of time the ships with oil are waiting at ports (better). He thought the time to get in was now, but will not be a smooth ride.

        • Jim Guthery says:

          So, what you’re saying is buy the dips and sell the rips? and hopefully the dip does not become a dip from hell..

          • fionamargaret says:

            Jim, I am thinking short the S&P, buy TLT(TMF),commodities, and emerging markets – keep as long as they are doing well. The ratio of commodities to SPX is totally out of whack, so am taking the underdogs. As long as oil holds up………….All the emerging markets got totally whacked with the Fed easing, so they should do better in a tightening (or nothing) scenario, and they are cheap.
            This is not instead of our fast money daily ideas, just an addition.

            Some hand holding may be involved.

  20. johnnymagicmoney says:

    Tony let’s say like aaMikey has been saying that PV ended at 2134 and there was no failed 5th…………..if that alternative count was a reality, where then would we be in the count ?

  21. johnnymagicmoney says:

    If I want to put a story to the charts what I think the market wants to do is undo the last QE move. It makes sense. Without the intervention the bull probably should have come to an end in 11 but global QE and risk taking postponed it. Thank you Mario and Ben you green sluts!! Getting rid of that fluff would be bringing us back down to 2011 levels which falls in line with Tony’s long term bear projection and a typical 50% retracement of a move that was insane.

  22. Well because GDX bounced back above its 50d I ll hold off on selling.I m in a gold fund so I have until 3pm to make my trade.Will watch closely.

  23. manunidhi21 says:

    Namaste Tony!
    if i want to revisit counts then the SHARP rise from Sep 2015 makes me feel it was P5 than ongoing P4 as many look at. Can you give some reasons of failed P5 as I am not finding it anywhere and it is bothering my counts again and again.

    • tony caldaro says:

      The reasons always come after the market action.
      The bear market in commodities, coupled with the speculative frenzy/collapse in China has investors/traders on the alert. What would have been just a correction after the 2116/2104 high turned into some thing a bit more serious after China had, and continues to have, massive capital outflows. The rate hike didn’t help as manufacturing was already in recession at the time of the hike. No FED chair has started a rate cycle with ISM this low in 35 years. In the mean time the negatives continue to pile up.

      • manunidhi21 says:

        Commodities started moving down from 2014. China went up from 2000 in mid 2014 to 5000 in mid 2015. Its the downfall which is always talked about. FED forgot that its Central bank to the world than only US. Its looks like a deliberate effort from FED.

        • Dex T says:

          The Fed isn’t and shouldn’t be the Central bank to the world. The Chinese and EU have their own banks and policymakers and are/need to be on a different path since they have different economies.

          The actions of the Chinese are their fault alone because of their controlled economy and their bad bets. They invested far too much in worthless real estate- building cities for nobody and invested too much in commodities banking on the strength of the U.S. consumer.

        • Dex T says:

          The Fed isn’t and shouldn’t be the bank of the entire world. The EU and China have their on banks and need to determine their own policy and economies rather than rely on the U.S.

        • tony caldaro says:

          The FED only manages the US economy.
          The ECB Europe, the BOJ Japan, and PBOC (which should be the BOC, since their people have nothing to do with it) mismanages China.

          • manunidhi21 says:

            Its like saying US has no role in middle east wars till date.
            A .25 raise has made USD almost unavailable in the world markets. Shortage of USD. EM’s have all debt in USD not in INR’s or Yuan’s.

  24. phil1247 says:

    added shorts 1884.5 es

  25. lunker1 says:

    Tweezer bottom 1929P next?

  26. johnnymagicmoney says:

    What is difficult for me with this market is with this selloff there are actually segments of this market that are extremely attractive from a fundamental & price standpoint but then you have this bifurcation with things like Facebook holding up the general indices. They just had to beat big to spur the bifurcation further! Rat Bastards! I am actually hoping Microsoft and Amazon miss at this point so this bifurcation f-in ends. It would be so much easier if this whole thing just crapped or surged together

  27. gtoptions says:

    Thanks Tony
    SPY ~ WPP @ 187.44 Third test this week. Holds then WR1/2 @ 191.16/193.46
    Below WPP then WS1 @ 183.72

  28. johnnymagicmoney says:

    here is where I think most people are…………..

    what the F is the count?

    I think that sums it up

  29. I said this yesterday before the close.

    Facebook is now what Apple use to be to the market. FB is going to smash earnings after the bell and take the market higher tomorrow. I own a Digital Marketing company ( and I can tell you that online marketing money is now shifted towards FB. Let’s see what happens.

  30. lunker1 says:

    Market is cray cray

  31. phil1247 says:


    broke ext short decisively..went thru -23% target of long at 33.56
    extension long at 33.54 failed its .618 level ..note thats the same as – 23% level this happens often

    next meas move long at 32.04 for .50 level

  32. aahmichael says:

    …and now we take you back to our regularly scheduled program.

  33. phil1247 says:

    33.50 ex long cl too risky for me to buy ..could see quick plunge if if fails

    holding what i have from below and waiting for next meas move

  34. llerias7 says:

    This is final part of a tiny wave 4 of a larger major 1 down…best case scenario oew1929…tomorrow(?).

  35. ariez5 says:

    I got very good at the art of shorting in the bull market.
    I covered a bit too early in this bear market.
    I have no clue how to go long in this countertrend rally.
    Lying in wait for the next short. Anyone thinking this is PV is not looking carefully at the waves.

  36. lunker1 says:

    next 1869p?

  37. phil1247 says:


    ext short broken decisively

    i want to add uwti on pullbacks now

  38. Think a pullback in gold/GDX is here.Confirmation of GDX breaking 50d at 13.85.Gold needed to stay above 1120–did not.Silver failed above 14.50 as well.Key levels to keep the rally moving.I ll be cutting back a majority today.Good luck all.

  39. Gary Lewis says:

    Seems that many were looking for the big down move today but the pre-market is rallying. As I observed the other day, the volatiity is reversing.

    When that happens, prices regress to the trend line. No surprise that we are drifting. Don’t expect any big move down until price meets the 20 day average.

  40. fotis2 says:

    Futures hour chart cluster of 3 3BR’s

  41. phil1247 says:

    zb 4hr

    looks like weekly


  42. phil1247 says:

    look at zb 4 hour and weekly

    they look exactly the same


    maybe the 4 hour can guide us to the weekly resolution

  43. mjtplayer says:

    Wow – Dec durable goods just printed -5.1%

    Great economy huh, I wonder what data the Fed is looking at?

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