Friday update

SHORT TERM: gap down opening then rebound, DOW -22

Overnight the Asian markets lost 0.5%. Europe opened lower and lost 0.5% as well. US index futures were lower overnight, and at 8:30 the CPI was reported unchanged. The market gapped down at the open to SPX 1911 and continued to pullback. By 10am it hit the low for the day at SPX 1902 and then started to rally. At 11:30 the SPX hit 1919, then went into a drift to downward pullback until hitting 1912 at 3pm. Then a bounce into the close ended the week at SPX 1918.

For the day the SPX/DOW lost 0.05%, and the NDX/NAZ gained 0.35%. Bonds lost 1 tick, Crude dropped 85 cents, Gold slid $7, and the USD was lower. Today the WLEI was reported lower: 46.9% v 47.3%, and the GDPn was reported lower: +2.6% v +2.7%.

The market gapped down at the open, sold off to the 1901 pivot, rallied back to unchanged, and like yesterday spent the afternoon in a trading range. With today’s early selloff we posted an Int. wave a label at SPX 1931. Int. wave b is currently underway. When it concludes Int. wave c should carry the market to the resistance pivots ending this unconfirmed uptrend. Short term support is at the 1901 and 1869 pivots, with resistance at the 1929, 1956, 1973 pivots. Short term momentum ended the week around neutral. Best to your weekend!

MEDIUM TERM: uptrend likely underway

LONG TERM: bear market


About tony caldaro

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54 Responses to Friday update

  1. torehund says:

    ..couldnt help it :), but I promise Tony I will keep within the OEW curriculum after this funny one.
    However there is no Elephant in the room, maybe not even a real Bear, but a Gorilla.
    Good luck to Trump, but a message to him, don’t step on the banana peel…Terrorism can never be solved by terror, convert to an apple a day…

  2. Checked the COT charts for gold.Starting to look a little bearish.The only positive is the open interest isn t at a high level yet.I think gold has a correction coming soon.We might get to new highs firat—its possible.But I m thinking more pullback then new highs.That would fit with the cup and handle also.Good luck all.

  3. Caldaro spring training around the corner. I like the Mets chances

    • zvyezda says:

      I had not noticed the overlap. Your count makes sense especially when considered against the action in the Transports.

      Are you counting the a-b-c you illustrated as Intermediate IV with a possible multiple of Intermediate wave I of 1.382 or 1.618 targeting a wave V to the 1700’s to complete Major A or do you think the entire move down from 2104 to 1812 was an A-B-C constituting Major A, everything subsequent to that was Major B, and now Major C will commence targeting the 1650 area?

  4. purplember says:

    Tony / others, topic way at bottom of page: NO STOP ORDERS after feb 26. this seems like a big negative for retail investors but i’m curious what others think ? is it positive or negative ?

    • 123 abc says:

      Personally think its a negative as exchanges ought to offer a wide range of order types and choice, and leave risk management to the trading participant. However, there are positives and negatives to the market as a whole.

      In a bear market, it is likely that futures sell-off heavily overnight, and the market gaps down the following morning at the open fairly wide. e.g. If you had a stop-loss order (which is being removed) on XYZ at $50, and the market gaps down to $45, then your order would execute at the prevailing market price of $45, or better or worse. However, if the market then bounces back to $50, you’d feel pretty terrible. On the flip-side, if the sell-off relentlessly continues (as it often does during bear markets) to say $35 with no return in sight, you’d feel fairy blessed for your stop-order executing at the opening price of $45.

      A stop-limit order on the other hand (which is not going to be discontinued), is more strict. In the aforementioned example, it will only execute at $50 despite the opening gap down to $45. Only a bounce back to $50 would trigger the stop-limit order, hence giving the risk manager more context to re-evaluate and adjust positions accordingly.

      One could say that the removal of stop-orders would ‘stabilise’ the market during panic sell-offs —there is no automatic waterfall rush for the exit. Instead, stop-limit orders provide a more orderly exit and a methodical calculated approach to risk management. But, with all those stop-limit orders stuck at higher prices, one may argue that this would ‘prop-up’ the market (conspiracy PPT), or produce wild counter swing rallies as market forces seek to offload their exposure at their higher trigger prices.

      Watch out, the b-wave rallies in this bear market could get quite wild and knock-out short positions; which would in turn, add fuel to yet stronger subdividing b-wave rallies!

  5. Interesting Daily chart pattern with NUGT, Possible triangle forming, implies final movement I believe.

  6. blackjak100 says:

    I’ll say it again, if this is a bear market we need to see a pullback to 38.2% retrace at a min for int B early next week. Daily RSI near 66 and VIX at 20.50 does not allow for much upward movement to start the week.

    • EL MATADOR says:

      how low you think the VIX can go and still be a bear market? 18, 17, 16?

      • blackjak100 says:

        I believe 17 is the magic number of last 2 bears. I believe it traded sub 16 during primary B in 2008, but quickly reclaimed 17. It is oversold and beneath 50dma for first time since DEC. it fits the int B scenario perfectly and strong pullback IF this is a bear.

        • EL MATADOR says:

          Yep hit 16.53 and 16.3 respectively during last two bear market….would love to see one of those 16’s hit during this bounce and if it happen I’ll be anticipating a relentless +330 handles blood bath. Cannot wait.

          • mjtplayer says:

            IMO – the VIX won’t drop to the levels you’re discussing until primary B. Generally speaking, the VIX stays within a trading range of 10 – 20 during bull markets, with spikes higher during deep corrections. The trading range during bear markets, generally speaking, is between 20 – 30 with spikes higher during larger drops.

          • blackjak100 says:

            actually sub 16 during Primary B. However, it never traded below 18 after 11/2007 until late stages of Primary B in May 2008. It closed below 50dma a lot so no worries there. It always popped from slightly more oversold levels reiterating there is not much room for upside movement early in the week

    • valunvstr says:

      200 day EMA or SMA will likely be hit. Bears will question whether they are right. Many/most will capitulate. It is very normal to hit the 40 wk/200 day early in a bear market. Go back to 2000 and early 2008. Happens frequently. It is likely to happen again around the 2000 area. Might even peek a boo above it since the 200 day SMA is still slightly north of 2000. Don’t question yourself. This is a brutal bear. It will be a GIFT to get back to 2000.

  7. mjtplayer says:

    Honestly, I can’t remember a more boring day in the markets, especially for an OPEX.

    Nice rally on a weekly basis, but with very light volume. in fact, it was the lightest volume week of 2016 for the SPY by a long shot, even when factoring-in Monday’s holiday. Yesterday the SPY printed the lightest volume day of 2016; today was the 3rd lightest – which is remarkable for an OPEX, which typically prints much heavier than average volume. 3 of the trading days this week were of the 4 lightest volume days for 2016. The rally with no juice.

    I know this is a quasi-holiday week and all, but with OPEX and the sizable point rally you’d expect at least average volume, but no dice.

  8. Ok the truthtrader said that Market will run after Yellen. So far S&P up 100 POINTS.

  9. “… ending this unconfirmed uptrend.”

    Thanks TC, I was just going to ask if we’ve confirmed yet…happy weekend everybody!

  10. fotis2 says:

    Tx Tony so stronger possibility for 1888 and if it closes the gap looking for a possible IHS
    And this week has just been..

    • ABchart says:

      Very nice Fotis! 10/10

    • ABchart says:

      Rare song by David Bowie (1970)

    • valunvstr says:

      The bullish divergence in trix and MACD suggests this was just a pause and the market will move higher again next week. No move to the 1800’s. Look at the prior double bottoms last year with the bullish divergence. There was a quick pause the. A reramp higher. That looks to be the case here. Look for one of two scenarios.
      1) market hits 1950 then gets a manageable pullback. Bears claim victory and are wrong resuming run to 1970-2000
      2) blow right through 1950c bears capitulate and Bulls claim victory. Both wrong and top near 1970-2000 both the 200 day EMA and 10 month EMA. Worth case is 200 day SMA just north of 2000 that would panic bear beyond recognition.

      Everyone is talking 1950. EVERYONE. Which is why it is going to be where bears get squeezed and Bulls burned. It always seems to happen that way. And clown tv and clown street just help the retail guy screw himself by talking about it.

      • Valunvstr – I’m thinking scenario2 with a Major B wave top in the 1970-1980 range. At that level, I plan to sell most of my remaining stock position. Good luck.

        • valunvstr says:

          Yeah might be. I’m selling all longs in that area anyway so I’ll be around 35% short just by selling my longs. If we get 2000 I’ll take that gift and get 45% short. I’ll also buy the long bond on any move to that area with 30% or a gap fill should it happen earlier. Tlt and EDV have small gaps to fill about 2 1/2% from here. That might get filled as the market hits those levels in the upper 1900’s to 2000. If we get it it’s going to be the gift of an investing career (well 2008 was but most missed it)b I hope people take advantage of it and stick with it and don’t try to trade too much the small moves when the big move down is going to be so massive. GL

    • jhjoyner says:

      please don’t post this nonsence again!

  11. Thanks, Tony…I’m still trying to catch on with OEW wave counts. I do not understand why the low spike to 1810.10 was not the 5th wave down (since it broke below the prior low at 1812.29). You have us in a minor wave “a” up and (i assume) we are now working a minor “b” wave down, to be followed by a wave “c” up. It looks (to me) like any new high would be “impulsive” and note a trend change from down to up. I think your pivots are well defined and work really well. Lots of locked in bears here and the market does not favor one sided thinking. Buona Fortuna.

    • ABchart says:

      But 1810 was the 5th wave on Tony’s count 😉
      We are now in the retracement of the entire wave down from 2104. intermediate a (purple) done, now in intermediate b. When it concludes we will have intermediate c up.
      Have a nice weekend Steeve.

  12. 123 abc says:

    Thank you Tony et al, much appreciated.

  13. EL MATADOR says:

    Thx Tony, next week is also last week retailers can place/use stop orders then the real fun begins 😉

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