Tuesday update

SHORT TERM: another gap down opening, DOW -296

Overnight the Asian markets lost 0.9%. Europe opened lower and lost 2.0%. US index futures were lower overnight and the market gapped down to SPX 1922 at the open. The market had closed at SPX 1939 yesterday. The selling continued until the SPX hit 1909 about 10:30. Then after a bounce to SPX 1919 by 11:30 the market headed even lower. Heading into the last hour the SPX hit 1897, then bounced to close at 1903.

For the day the SPX/DOW lost 1.85%, and the NDX/NAZ lost 2.20%. Bonds rallied 30 ticks, Crude dropped $1.75, Gold was flat, and the USD was lower. Medium term support drops to the 1901 and 1869 pivots, with resistance at the 1929 and 1956 pivots. Tomorrow: the ADP at 8:15, then ISM services at 10am.

The market gapped down at the open for the second time this week. Today’s selling did not find a low in the first half hour like yesterday, but heading lower for most of the day. The completion of a seven wave pattern from the recent SPX 1874 low, and complex zigzag from the SPX 1812 low, noted yesterday, was confirmed today. Labeled the SPX 1947 high with a tentative green Major B. While the market is starting to look weak again, today was the largest decline since SPX 1812, our first preference is a trading range between SPX 1812 and SPX 1947 for the rest of the month. Should the market take out the SPX 1812 low before confirming an uptrend, we would consider Major wave A still underway. Short term support is at the 1901 and 1869 pivot, with resistance at the 1929 and 1956 pivots. Short term momentum declined to oversold after yesterday’s negative divergence. Best to your trading this volatile market!

MEDIUM TERM: Major wave B done, or more of Major A ahead?

LONG TERM: bear market

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

About tony caldaro

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276 Responses to Tuesday update

  1. fishonhook says:

    I see Tony has put a little blue a up on the chart . so this would be b of C, yes?

  2. john b says:

    (FROM 1945 -1909 =A 1918=B 1896=a 1915=b 1870=c=C Then abc up)=pingpong

  3. kvilia says:

    Looks like a bear flag to me – targeting 1964. I will try to take some cheap shorts there.

    • Jake Ladd says:

      I regret that I only found this blog recently, but agree with bear flag as most likely for now

  4. mike7x says:

    FWIW: Gold…

  5. purplember says:

    tony any thoughts what’s going on? we’re in Int C of major B or from 1812 abc then X wv down to 1872 and now abc up to complete major B ?

  6. Dex T says:

    The oil rally looks like a repeat of last week- based on rumors of supposed “production cuts” while supply continues to hit record levels.

    Dollar weakness or not the oil supply continues to keep building.


  7. Jim Guthery says:

    fionamargaret – Nice call on DUST last week. Thank you very much for sharing your chart with me, I greatly appreciate it!!

  8. stmro says:

    Eh. I’m buying back my longs if we close above middle BB at 1908. I like the look of that spike low.

    Very volatile markets. Not good for a swing trader like me.

  9. Very obvious channel going on here; Sorry about the colors


  10. rd3777 says:

    What a ugly pattern on all these charts. The Dow’s abc is so weak it hase a declining bias. Weak!

  11. H D says:

    The DJI did a very nice HWB, another potential HL, again. It doesn’t have a bear market look at all. SPX 1869P. Guess that’s the line in the sand.

  12. tomasso60 says:

    the levels are quite obvious for U.S. – JY (below 115.4 weekly basis)
    then I would guess some fireworks.

  13. DXY looks like its going to test 96.50 TODAY!!!Huge one day loss.Can t believe that level(uptrend line) doesn t hold the first attempt but hopefully give way eventually.Everything looks like 1200-1230 on gold–16.50 GDX unless the CBs starting poking around.Good luck all.

  14. llerias7 says:

    Folks, how do you explain the eurusd explosion today (+2%)?

  15. Millan Tomic says:

    The big currency warfare may be restarting again. Both JPY and EUR are at 0% positive YOY (vs USD) meaning no net positive effect which means further desperate moves from both BOJ and ECB are given in short order. Now, it seems increasing number of Fedheads are recognising the deflationary impulse they triggered with the pathetic hike speak, so rising chances of Fed backing down. If this happens as it is, on can have a bounce in industrial activity which will be positive and support market, and investors could be buying (since w/o recession, attractive levels in 1750-1800).

  16. EL MATADOR says:

    Not only does WS want to do away with retailer stop orders but it also wants to do away with some or all of the circuit breakers as they blame both for the August crash mayhem.


  17. uas2014 says:

    Hi tony
    Canadá You see a +div on spx 60?
    Or wee Need a New low for it ?

  18. stan502 says:

    USO – interesting setup, OBV is not confirming backtest of 30, Full Stoch in up-cycle
    cycle work I follow suggests potential for lower, but it is what it is at this moment

  19. Thanks TC! The pivot magic happened again near 1869; nice.

    Long hedge was taken off this morning. A move above 1899 ES would make things interesting. Technically, system doesn’t signal long unless above 1925.94. Sell yesterday was set at 1903.01. Today it is at close below 1894.52. Interesting developments all around, with significant consequences. I like it.

  20. buddyglove says:

    Bullish setup still looking good on the daily continuous SP future, and have def seen a reasonable bid here today. Still happy to be long and looking for a very sharp move to 2030/40. Aimho and Gl/health to all.

  21. rd3777 says:

    The Nikkei futures and this mornings action so far…IMHO very bearish.

  22. iamwhoiis says:

    For those of you that are watching the miners:
    Richmont Mines is looking bullish to me:
    I am long with a long range target of 6.37…

  23. kvilia says:

    Bought a bit of XIV@18.40. Let’s see if this was b of c…

  24. tomasso60 says:

    could there be H&S forming on the Trans, S&P?

  25. DXY made a good break of its 60d and thats why oil,gold is up.Next stop is 96.50 (currently at 97.69).Hopefully more than that with no rate increases.

  26. Jim Guthery says:

    Anybody here just plain short and remain short through all the squiggle counting – meaning take all the a, b,c wave stuff out and just remain short until around SPX 1100?

  27. tomasso60 says:

    fed rate hikes? bloomberg

  28. lunker1 says:

    again gto’s numbers
    S1/S2 @ 188.95 ~ 187.34

  29. CampFreddie says:

    Looks like LeeX has started buying oil … with both hands !

  30. ariez5 says:

    Gonna stick my head out (although I think Tony’s update alluded to this as a possibility with his “trading range” comment): I think this is Intermediate B.
    Reason: The daily candle on Feb. 1 was not a convincing reversal and there were no daily divergences in the indicators I track. The candle looked more like the Aug 28, which lead to a sharp selloff over 2 days followed by a resumption of the bear rally. The 2008 analog shows the same. The selloff in Dec – Jan was so intense that I think we need more time to work off the bearishness.
    I have covered 50% of shorts from yesterday. Holding on to rest to see close.
    Also, AAPL is a cheap long here against the Jan 28 low.

    • mjtplayer says:

      FYI – Monday’s daily candle in the SPY was a “spinning-top”, which is a reversal candle.

      • ariez5 says:

        MJT, How do you calculate it? The body looks too big to me, and it closed above the open and in the top half of its range. Not a strong reversal (only a short term reversal) in my book.

        • mjtplayer says:

          Agree that the body is a bit “fat”, it’s a borderline call. But the confirmation came on yesterday’s gap-down, plus add to it the dark cloud cover on Monday’s hourly and yesterday’s LD pattern and you have 3 bearish candlestick formations in the last 36 hours. Since, the SPX has moved straight down.


    • Millan Tomic says:

      Second that, another higher high base case in large cap indexes into Spring, We are looking for higher low now, worse case retest of Jan low, then bear rally resumes.

  31. learner3078 says:

    Hi Tony, what probability would u assign to the following scenario currently: 1812 to 1947 first wave up, currently 2nd wave down, with a 3rd wave up to follow very shortly, targeting 2019 or 2040. Seems to be capitulation today which usually marks short term bottoms. Noticed u mentioned take out 1812 but conversely not 1947 in your report.

  32. gtoptions says:

    Thanks Tony
    SPY ~ Sitting at MS & WS2 @ 187.35 ~ Below then WS3 @ 184.73
    GL All

  33. stmro says:

    The recent rate hike is looking like one of the most premature decisions in FED history. Bet they’re busy scratching their heads up in that ivory tower🙂.

    • Dex T says:

      If the U.S can’t handle a measly 0.25 rate hike then there are issues with the economy beyond the ability of the Fed.

      Corporate earnings have been declining months before the rate hike. We can’t avoid a recession forever!

  34. fishonhook says:

    award for best call of the day


    see below for why

  35. rd3777 says:

    Sure acts like a 3rd wave…..3 of 3

  36. mjtplayer says:

    I’m changing my short-term count, the dark cloud cover on Monday and LD yesterday are too strong to ignore, we’re heading lower. I think the entire move from 1,812 to 1,947 is an int wave as it’s too difficult to identify qualified int and minor sub waves for the move to be a major wave. This leaves 2 options: the rally from 1,812 – 1,947 was int A and we’re now dropping in int B – or – the rally was an int D from an int C low at 1,812 and we’re dropping below 1,812 in int E to complete major A.

    SPY, 60min candles. Check out the hourly candle we’re about to print – that’s very ugly.


  37. Look at the Dax freefall.Talk about bear markets.Guess they describe that as the Draghi call (instead of the Bernanke put…lol).

  38. So Dudley did right and suggests no rate hike?Dollar down to 98.2 this morn.Nice to see.

  39. Hugh Jazole says:

    I’ve seen some comparisons to 2008 in the comments. Wasn’t there a sharp run up in oil prices prior to that decline?

    • And a huge drop in the year prior to 1987 and 1998.Big swings either way affect equities eventually.

    • valunvstr says:

      Yes there was but there was also a commodity bubble. That said, the call everyone will get wrong again (go against the crowd) is that the de link between oil and the SP is going to happen but not oil down and stocks up. It’s going to be a base in oil (not a big ramp up) and stocks down. It also happened in the late 90’s. Oil down during late innings of bull market then a rally into the topping process. Good catch.

    • chrisk44342 says:

      Leo I like your analysis and way of looking at the charts. The only thought i have to pass along, and take it for what it’s worth, is your references to ‘skynet’, the powers that be, etc. Perhaps you don’t mean it this way, but I think many traders hide behind their failed trades because the Fed, the PPT, or the conspiracy de jour wrecked their trade. There is an enormous amount of luck and randomness in trading. If you get 60% of your trades right and properly control your risk then the big players should be meaningless. Again, perhaps you understand that, but you may be passing the wrong message to your followers.

      • reddragonleo says:

        I call the super computer that runs the market SkyNet. Has nothing to do with conspiracies… just that you have to understand that the market is programmed to runs both bull and bear stops, so I try to include that in my thinking. Meaning, which direction would hurt the most? I don’t blame any bad calls on SkyNet… they are just bad calls, nothing more.

        • chrisk44342 says:

          Ok, in that case I agree with you. The market is designed to run stops

        • aahmichael says:

          With all due respect, I think your claims that the market is controlled by a super computer, hidden in the depths of Goldman Sachs, is one of the most absurd claims about the stock market I’ve ever heard. The size of the market is beyond the grasp of any of us, and can not be controlled by anyone. There are no conspiracies in the market. It isn’t controlled by HFT, and it isn’t controlled by some mysterious group of people with a super computer in a dark room in Goldman Sachs.

          • reddragonleo says:

            I guess calling the crash on August 24th, 2015 based on a passport in the movie Lucy is nuts too, but it happened. I don’t make the rules, but someone does… and they put out clues for us to see. A conspiracy is something NOT true, but the market did crash on August 24th, 2015 (which is true) and I told everyone here in advance about something bad happening on that date.

            As for Goldman Sachs, the facts speak for themselves on that group of criminals. There’s plenty of evidence showing clearly how they seem to NEVER lose, winning every trading day of the year, for who knows how many years? And they always seem to be positioned to make a fortune just before some false flag event.

            Anyway, I’m not here to argue… sorry. Just here to help others try to make sense of the market the best way they can. No offense meant or taken.

  40. Lee X says:

    Read the updates you redundent question asking sons of boogers !

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