Friday update

SHORT TERM: gap up and go, DOW +314

Overnight the Asian markets lost 2.0%. Europe opened higher and gained 2.7%. US index futures were higher overnight as well. At 8:30 Export (-0.8% v -1.0%)/Import prices (-0.2% v -0.3%) were reported lower, and Retail sales were reported higher: +0.2% v -0.1%. The market gapped up at the open to SPX 1847, ticked up to 1848, then pulled back to the low of the day at 1838 by 10am. At 10am Business inventories were reported higher: +0.1% v -0.2%, and Consumer sentiment was reported lower: 90.7 v 92.0. The market then rallied to SPX 1859 by 11:30, pulled back to 1850 by 1:30, and then moved even higher. Heading into the close the SPX hit 1865 and closed there.

For the day the SPX/DOW gained 2.00%, and the NDX/NAZ gained 1.55%. Bonds lost 28 ticks, Crude rallied $2.75, Gold dropped $7, and the USD was higher. Medium term support rises to the 1841 and 1828 pivots, with resistance at the 1869 and 1901 pivots. Today the WLEI was reported lower 47.4% v 47.7%, and the Q1 GDPn was reported higher: +2.7% v +2.5%.

The market gapped up at the open today, pulled back, and then continued higher throughout the day. The rally in Crude and the rebound in the financial sector led the way. While several smaller waves can be counted from yesterday’s SPX 1810 low, we are simply counting this rally as three waves thus far: 1836-1822-1865. With China’s market opening for the first time in a week on Monday, and the US markets closed until Tuesday, it should be an interesting weekend. Enjoy it!

MEDIUM TERM: downtrend may have bottomed

LONG TERM: bear market


About tony caldaro

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55 Responses to Friday update

  1. stan502 says:

    Thanks TC. Keeping an eye on the Yen (positive correlation gold, negative stocks)

  2. frommi2 says:

    Thanks Tony!
    There was an overlap in the wave v of A but you still labeled it as an impulse, isn`t this a violation of the rules?

  3. rd3777 says:

    I expect crude to crash with the markets,as this chart is ugly. I don’t think I can really say what if anything will be good accept dollars in the mattress and gold and silver. This coming deflation is going to be epic. IMHO Tony I can see $10 crude out of this chart.

  4. vmahambare says:

    any view on lnkd. bought at 115. keep/sell?

  5. max torbreck says:

    Hi Tony,

    I note you relabelled SPX 1810 as A… so I assume being in Major C is now off the table?

    Can you advise what confirmation is required for 1810 to be A and now be in Major B?


  6. jobjas says:

    EW count for Crude – long term / intermediate term / short term

  7. rd3777 says:

    Just looking at the chart,I can’t see the count any other way. Todays move up tagged the neckline on low volume…a chance we start to waterfall next week.

    • CampFreddie says:

      rd377 Disagree strongly, perfect profile of a bear trap imho.

      • valunvstr says:

        How about you’re both wrong? We get 1880-1900, less than the bulls are looking for, and then sell off to the mid 1700’sish, less than the bears will be call ing for as they claim collapse because 1810 got taken out. Then we get the rally back up to 1900-1950. I’ll go with that call since no one is looking for it.

  8. Tony – thanks for the great analysis, charts, and market insights. This blog has become my go-to reading source firstly for your content, and secondly for the many sage traders and market observers here. You’ve created something really nice here.

    I’d like to say that it’s fascinating observing the psychology here and elsewhere, and as I see it, there are still way too many bulls around for us to be anywhere near a significant low. Too many optimists, too many rosy calls for the next rally, too much questioning of the count. If the sentiment gauges say otherwise, I think they’re wrong. My patented high-tech Seat-of-the-Pants Sentiment Indicator (SoPSI) sees far too many crazy upside scenarios posted everywhere (including here in the comments) every time we have just one single good day – even after 5 consecutive days down. Every little rally brings all the “We’re going to the sky!!” optimists out of the woodwork. A high proportion of the community have every next move, every day, every chart, pointed straight to the moon, or at least 1,950, in some way or another (for equities), even right in the middle of that last brutal downdraft. Then the next day, after their asses are handed to them, come the claims of “I knew that would happen right before it did [never mind the -20 gap opening], and I traded it quick in-out and made money!”, right before they post their next “tomorrow’s the big rally” chart. Wash-rinse-repeat. Only when everyone’s out of happy gas will we truly be getting close. We all know this…but do we all act on it? That’s the fascinating part of the psychology – analytically people know the answer, but still act emotionally instead, mostly against their own self-interest.

    From what I can tell, Tony’s count and general direction have been pretty much the only right one so far. (And I mean both in these comments, and everywhere else on the interwebs.) There are others that seem to be on the same page, but they are few and far between, many driven by either their own biases, or an unwillingness to make a call based on a system they know works. You can’t say, “It could go up, or it could go down” and the next day claim you were right, whatever happened. Tony has the courage of his convictions, confidence in his method, and to his credit has been bang-on for quite a while now. Pretty amazing stuff I think.

    • curious, I have the same feeling but the opposite. I even dare to say that we have now more bears than in last August…and bears seem to be in the wrong time and wrong place in last years… Fear in August was worse than now and less bears then…back then they could had broken all supports… now with so much bears, it’s impossible.

    • tony caldaro says:

      welcome Daniel
      Our long term market sentiment reading of 52.5% bullish agrees with you.
      When the bear market bottoms it will be somewhere under 35%.

      • torehund says:

        Tony those figures stand high considering the slaughter that has been ongoing from 2011. I agree, the indexes have fared well for a long time lifted by a few high flyers..
        Normally the amount of bulls may actually decrease during fast rallies, a bottom may not have to concur with record low amounts of bulls.
        Anyway its spectacular that bulls have been clinging on during such a horrendous macro-economic environment.
        Good weekend to you, and the whole board of dedicated, lively contributors.

      • max torbreck says:

        Hi Tony,
        Where do you get ‘long term market sentiment reading of 52.5% bullish’?

    • camper1888 says:

      i agree,they were wrong to start but some how made the money back during the day..and then continue to post the day after like nothing happens.. what an embarrassment..

    • Bob Sagget says:

      And Mr $VIX doesn’t lie. I have been day-trading XIV and TVIX (both $VIX derivatives) every week since Jan 1 of 2016. Just look at today. Yes TVIX dropped a tad from Thursday’s. Now take a look at how much higher TVIX is now, still, since Dec 2015. TVIX is fluctuating but not “Giving up the ghost completely” Now I wonder why that might be?

    • I agree with you that general sentiment is still bullish but I think here at OEW most agree that we are in a bear market. But there are uptrends in a bear market and I do believe that most here are expecting one soon.

    • bud67 says:

      Interesting. But, if a person were to trade/invest.
      Not predicated on mass “investment sentiment numbers”,
      then what? Suggesting, a buy, made not at all on sentiment,
      but pattern, or an indicator signal….Bud

  9. Roxie97 says:

    I am reluctant to mention this but In my system ES 1800.75 had to be broken to confirm a 5th wave failure – it didn’t break. It is still possible to get a 5th to ES 2261 then 50-60% retrace of the of the last 6 yrs. The only way to confirm ES 2262 tgt is a break above ES 2007. . I am still watching if we head up to 1975-2007 without much of a pullback – that may signal a short set up at that level. Normally get decent pullbacks if they want to REALLY take it higher – If it heads straight up they want to just sell it at a higher level JMO

    Just a FWIW

    • I find that interesting because I am bothered by the fifth wave failure because apparently it is very rare at this degree. So it seems too convenient. I would ask any who care to share, hypothetically speaking, what would be another valid oew count if it is not a fifth wave failure.
      Roxie, in your opinion, who is “they”?.
      If you could post a chart, that would be nice.

  10. 123 abc says:

    Thank you Tony et al, and to the OEW group.

    Either ongoing Major-a (see SPY), or Major-b has started (see SPX) —mixed feelings could go either way, must be Valentine’s Day…

    — SPY:
    — SPX:

  11. lunker1 says:

    1810+55=1865 close

  12. kvilia says:

    Thank you Tony.
    How overbought is gold?

  13. blackjak100 says:

    Highly skeptical of rally due to low volume and relatively weak internals. Could be wrong, but still think major A low occurs next week during the Gann panic window

  14. 1882 and 1926 are wave 4 pivots

    Once done 1810 will finally give way

  15. bhuggs52 says:

    Thanks Tony, good stuff as always. Between you and the bloggers, OEW is the place to be.

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