Wednesday update

SHORT TERM: pullback continues, DOW -66

Overnight the Asian markets ended mixed. Europe opened lower but gained 0.4%. US index futures were lower overnight, and at 9am FHFA prices were reported higher: 0.2% v 0.2%. The market opened three points below yesterday’s SPX 2187 close, ticked up to 2187, then started drifting lower. At 10am Existing home sales were reported lower: 5.39M v 5.57M. The market continued to decline throughout the day, except for a four point bounce during midday, and hit SPX 2171 around 3:30. Then a bounce into the close ended the day at SPX 2175.

For the day the SPX/DOW lost 0.45%, and the NDX/NAZ lost 0.75%. Bonds ended flat, Crude dropped $1.30, Gold slid $14, and the USD was higher. Medium term support slips to the 2131 and 2085 pivots, with resistance at the 2177 and 2212 pivots. Tomorrow: weekly jobless claims and durable goods orders at 8:30.

The market opened lower today following yesterday’s small pullback, bounced to unchanged, and then declined for most of the day. We continue to observe a lot of choppy activity since the wave iv low at SPX 2148. Three waves up to SPX 2194, a decline to 2169, three waves to 2193, and now another decline. It all looks corrective after a two month uptrend, and a downtrend may be underway. A drop back to SPX 2148 would confirm. Short term support drops to the 2131 and 2085 pivots, with resistance at the 2177 and 2212 pivots. Short term momentum was quite oversold at the close. Trade what is in front of you!

MEDIUM TERM: uptrend may have topped

LONG TERM: uptrend


About tony caldaro

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119 Responses to Wednesday update

  1. micky says:

    67/67 would be perfect

  2. H D says:

    Range 2,169.74 – 2,179.00 She’s been very nice to us this week. Takes some time to turn a ship this big. Still expecting some range expansion in the coming days. Have a great weekend.

  3. bfquant says:

    TC. In your bearish long-term scenario where we are currently in a B on the S&P. Can C go all the way down to 1100 as you’d mentioned before? I ask because that would make the C leg of this irregular flat quite long relative to B.

  4. vivelaamo says:

    Zerohedge. Bear and broke since 2009.

  5. John Arella says:

    Looking for a positive finish today and a strong rally tomorrow possibly to new highs. Futures did not do a failure but a slight low from yesterday which is still quite bullish since it went down 5 waves🙂.

  6. i would assume bulls will front run Yellens speech. close higher today gap up tomorrow and sell of late Friday afternoon. 2200-2214 lots of people short, make them cover, then tank.

    Enjoy the games

  7. Services PMI to a 6 month low.Analysis:
    “The ongoing lacklustre economic growth signaled by the flash PMI suggests GDP growth is failing to accelerate in the third quarter from the weak 1.2% pace seen in the second quarter.” Markit chief economist Chris Williamson warned.

    Williamson added that the annualized GDP growth rate would be estimated to be just under 1% for the third quarter based on the data for July and August.

    • Lets NOT forget Durable Goods orders that came out today.

      “The factory sector, after a frustrating first half of the year, is now definitely showing life. Durable goods orders jumped 4.4 percent in July in a headline gain exaggerated by a swing higher for commercial aircraft but including gains across most readings. Excluding the gain for aircraft and no change for autos, orders rose a very sizable 1.5 percent. And the strength includes core capital goods where orders jumped 1.6 percent to show new demand for business equipment and machinery.

      Though the gain for new orders points to future strength for shipments, shipment data for July are soft. Total shipments rose only 0.2 percent in the month with core capital goods shipments, which are an input into the nonresidential investment component of the GDP report, down 0.4 percent to get the third-quarter off to a slow start. And immediate negatives for tomorrow’s second estimate of second-quarter GDP are incremental downward revisions to core capital goods shipments in June and May, now at minus 0.5 and minus 0.7 percent.

      Unfilled orders are also a concern in the report, down 0.1 percent in July on top of June’s very steep 0.9 percent decline. Lack of unfilled orders is not only a negative for production but also for employment. On the plus side, inventories broke a long run of contraction with a 0.3 percent rise and are still very lean with the inventory-to-shipments ratio unchanged at 1.64.

      Turning back to new orders, other areas of monthly strength include both primary and fabricated metals, electrical equipment, and defense aircraft. A general trend reading underscoring the report’s strength is the year-on-year new order rate for ex-transportation, now at only minus 0.6 percent vs minus 3.4 percent in June.

      New orders in this report together with last week’s strong showing for manufacturing in the industrial production report point to second-half possibilities for the factory sector and its contribution to the nation’s growth.”

      Not exactly showing a problem and is hinting of a possible acceleration in the future. Why the whole time China and EU were having their problems we didn’t see any contraction. Since we are a service nation I would call that miraculous or perhaps resilient is a better word.

      Love the one sided reports to confirm the one-sided view of where we are and where we are headed. Forgot to mention the BIG JUMP in consumer confidence. How about home prices and sales? Perhaps a more balanced approach would be helpful in determining a definitive trend for the future. Unfortunately the same old muddled and mixed readings have kept this market humming.

      Yes GDP will once again be under expectations based on these factory reports over past 3 months.

      • purplember says:

        Gary must every post be a novel. pretend this is twitter…140 characters max

        • I never figured out how to capture the full detail of a message with just headline announcements. Many prefer headlines as support of specific positions. I prefer thorough analysis since the market is a complex beast. if you find my remarks obtuse ignore them. It certainly doesn’t require much to skim past them. In other words shut me out completely so I don’t tempt you to listen to my views. Was my response too long or offensive?

      • Lee X says:

        Please stop Thank you

      • Lee X says:

        Please stop cluttering the blog and honor your New Years pledge . Thank you

      • CB says:

        Have you ever thought about starting your own blog? That way you would have the freedom to say what you want and how you want to say it without anyone telling you what to do. A lot of smart folks here have started their own blogs exactly because they enjoy the freedom it gives them and because the things that interest them go beyond just EW. With your excellent analytical skills and business background you would certainly be able to attract your own audience. I personally think that it would be fun to be able to discuss things with you and ask you questions. I try to read your commentary whenever I have some time, and always appreciate the opportunity to get your take on things.
        So, since the format of your commentary apparently doesn’t meet Tony’s approval, why not start your own blog? I think you would be very successful doing your own thing, Gary. Think about it. if you want to be able to express yourself freely, setting up your own blog seems to be the best way to do it. If you decide to do it, please post a link for those who might be interested in following you. Variety is the spice of life after all, isn’t it? Thanks.

      • I don’t see contraction in the last 2 plus years. The years when China crashed and EU had a wee bit of problems. if these forced didn’t break our much diminished manufacturing segment what will? We have 9 percent of US workload related to manufacturing. 12 percent related to GDP. All are still contracting. Clearly we are a service nation.

        I would look more to the Corporate profit report due out tomorrow as opposed to GDP report. Both come out a 8:30. The already low expectation for both GDP and profits could still have an affect on market behavior. Pretty sure Profit report will be the bigger concern. Expected a year over year loss of 2.3 percent. Any WIDE deviation and it becomes a market mover. Earnings will drive the market going forward given the much talked about fact that valuations are stretched. The trend had better be improvement on profit potential or the bears will wake up.

        Look back on each individuals analysis of market behavior and draw your own conclusions. We are due for a nice corrective move based on historic prior reactions off a breakout event and seasonality. the catalyst? I have my views for what they are.

        • johnnymagicmoney says:

          Ill say it a million times ………….the ascension in price is price and price alone. There is no fundamental tailwind. Price has fooled you into thinking otherwise…………you are merely part of the herd. The herd can make money of course but stop debating the strength of the economy on here Holly, I mean Gary, I mean Goldman, I mean Janet.

        • H D says:

          so many words. reads like Marcel Proust.

  8. kvilia says:

    Anyone has a good silver chart? Interesting pullback occurring.

  9. ST Ng says:

    Very big moves is coming. How I know? Just take a look at the recent 2-3 months volume of UVXY. Do you think some crazy player are shorting big time at such depressed level? This is very much similar to NUGT over Oct-Dec last year before the rocket engine is fired off.

  10. Peter Sliney says:

    Even if this market does top. The bone breaking reactions and snapbacks will let only the most well funded and steadfast sellers participate. Trading short term or long term or investing all have their similarities but are vastly different in their disciplines.

  11. SPX: Yesterday was the first day since early July that the spx traded in the lower half of a box defined by the Feb low. If this is the start of weakness …. we will know in a few days.

  12. Jack Sparrow says:

    posts not going through

  13. Jack Sparrow says:

    what happened to my pevious post ,…anyway possible that we just completed C down (5 waves) after making B to 2193…the way waves are set up right now., they are useless. can point to a move in both direction depending on what the fed says tomorrow

  14. Jack Sparrow says:

    i am bearish by nature but a possibility that we just completed C down after completing B to 2193 and start of a new wave to upside….these waves are tricky and useless in this case- the way they are set uo they can justify moves on both sides depending on what the fed says tomorrow

  15. mjtplayer says:

    A bad day for gold miners yesterday via the GDX. The uptrend line has been broken, plain and simple.

    Gold itself hasn’t broken though. Gold would need to drop by another $20 or more to break the uptrend, which currently lies at about GLD $124

  16. johnnymagicmoney says:

    I’m gonna use logic here deadly I know). I hear people clamoring about this indicator and that indicator to support a bullish stance. There definitely are some positives technically and fundamentally but let’s be honest…..this is not a normal market and so just as much as fifty seven million negative divergences end up meaning squat so too I assign the validity of all your other meaningless indicators like fifth wave failures in futures and bollingerbands and breadth. It’s all baloney like the market. The biggest baloney I have heard lately is that we are in Primary 3. This market is in its final move and where it ends and when it ends few of you know but I wouldn’t be shocked that it surprises most of you.

    What do I know?

    That interest rate suppression has distorted all types of asserts in an unprecedented way and that’s a bubble. Failure to deal with the bubble is akin to China not wanting to deal with bad loans shadow banking and overcapacity. Kick the can but kickingvthe can has its consequences that inevitably can not be avoided. Wait and wait and you have more overcapacity or your further behind the curve or you have more distortion and leverage that needs to be unwound. Many of the Uber bullish people (which are increasing) just don’t want to face inevitable forces.

    Distortion overcapacity deflation inflation declining productivity wage pressure Europe negative rates China Japan negative earnings etc. Your squiggles are not stronger than these forces and one day you will wake up and say ” oh my the Fed screwwed us”.

    • 7dayyss says:

      True, but what’s that saying; “markets can remain irrational longer then you can remain solvent,” or something like that! Who knows when. How much have people lost out on thinking it wouldn’t last as long as it did. I don’t know either, but how can you rule out anything, even the PIII! Play the strongest probabilities on any time frame you choose, of any instrument you like. What more can you expect!

      Thanks for the nice cleaned up blog Tony, and congrats on the eleven. I hope you stay healthy and stick around!!!

    • joecthetruthteller says:

      Welcome back Johnny

    • tony caldaro says:

      no self-promotion on the blog

    • trondack says:

      You played with Elvis! Shouldn’t you be retired?

    • The cause of this very long recovery is a natural phenomena called deflation against the push by world banks to stimulate. Result has been a goldilocks situation for the debt strapped consumer. Jobs and housing are front and center to this recovery. Today we ae seeing a slew of economic numbers that have defied the bear’s case. No excesses yet and certainly we have room to raise rates here. I would start being concerned AFTER a sting of rate hikes. Can anyone tell me the domestic economy is in trouble here? In fact the street knows that the only problem going forward will be more rate hikes and the Fed starting to take the candy away from the market. We have had such a long string of job/housing growth that it can’t be ignored anymore.

      The next market drop should result from Fed action to raise rates. In this low inflation environment the winners by far have been the consumer. This trend has been going on for over 2 years now and has been at the expense of corporate profits, where the first 5 years was completely opposite.

      Does anyone bother to look at the string of economic data or do you stick to a theory regardless? Obviously thee is no pressure and excesses that can derail this economy in the immediate future. The mantra of housing/jobs dying has been premature. The consumers confidence while sitting in the upper range for a very long time is starting to breakout. That “could” signal an acceleration in spending and borrowing which should indicate the latter stage of the bull run. Until that happens we will have wild swings on a yearly basis but no sign of an ending bull pattern.

  17. fionamargaret says:

    Oil is nicely within the oil band 40/41 – 50/55……and it is up until the 50/55 is reached….then short…. the Saudis and Simon Whitehead were suggesting shorting at that level too….maybe the Saudis are going to be too busy with their bond sale……???…..shorting until what level…..??

    • fionamargaret says:

      numbers are positive…..just need to get through old resistance….then to the high end of the band…

    • fionamargaret says:

      53 seems to be the number to reach…then down….shoulder season is being bandied around…meanwhile Germany and France are unhappy with Putin and he with them….threats of defending Ukraine by Nato….Putin’s soldiers doing manoeuvres…oil stuck in the middle….
      Have a lovely long weekend Brits….take me to Brighton…or send a postcard….x

  18. ajaysinghi says:

    We may get a doji today. be careful at 2168 and 2164

  19. phil1247 says:


    another extension long to watch

  20. tony caldaro says:

    As a courtesy to others, let’s try to keep posts down to a maximum of three during market hours

  21. phil1247 says:

    when extension long support fails

    head for the hills

    can gold ignore this silver decline and hold its extension long?

    we are about to find out

  22. Lee X says:

    Thanks Tony

  23. phil1247 says:

    gold in extension shorts heading back to test extension long at 1317

    if ext long fails look for 1179

    sorry gold bugs …
    .but you have seen the devastation when ext longs fail

  24. blackjak100 says:

    don’t forget the VIX closed above it’s daily upper BB already at 13.45. That’s usually not indicative of a large correction.

  25. Bear Alert! Sandy Jadeja the latest GURU predictor of big market drops has a date range coming soon. August 26-30. For the record his latest OIL call was a bad miss.

    • vivelaamo says:

      We do look like there may be some sort of correction. But they ate normally short lived so need to take ad advantage on the long side. Good to see you back gary. Stick around.

    • aahmichael says:

      I don’t follow the calls that others make, but out of curiosity I did just take a look at his call in oil that you characterized as a “bad miss.” His call was that there was “an 80% probability for a decline in oil from July 2nd to August 18.” If you measure to the close of 8/17, oil declined by 6.70% during that period. If you measure to the close of 8/18, oil declined by 4.07%. Half way through that period, oil had declined by 21.65%. So, no matter how you choose to measure it, that particular call was 100% correct because it was a profitable call. It certainly wasn’t a “bad miss” at all.

  26. vivelaamo says:

    Some good analysis to support further moves down on this blog today. I’m still waiting for 2138 area to go long but we may not even get there. Holiday weekend in the UK approaching just before Yellen speaks and Jedeja’s date for a top. Could be an interesting few weeks. All the best.

  27. torehund says:

    A lecture that is actualized as we approach a major direction change in markets.

  28. John Arella says:

    I see a 5th wave failure on SPX futures so should be a strong up day tomorrow.

  29. jobjas says:

    RUT like all other indices in M4 of P3

  30. IMHO there is a decent chance that we have seen the high in the market. August is known for putting in the high. Also IMVHO, the market will correct sharply before the election. This year will mark the low in volatility for sometime to come. Just thought I would share a few wild ideas.

  31. NEWBIE says:

    Please tell me most of you are still bullish so this fed induced ponzi scheme can implode.

    • Judging by the posts, they seem to be. You might enjoy looking at the article I left a link to, below. It includes 10 charts showing why the market is due for a correction.

    • blackjak100 says:

      Depends what timeframe – I’m absolutely bullish int and long term. The breakout has held long enough for it to not be a false breakout. sorry nubes but it’s most likely going higher after a correction.

    • CB says:

      There was actually some fear in the market today, newbie. According to CNN, last week people were “extremely” greedy. Today they were just plain greedy😉
      Most folks are just transactional….buying and selling …. rinse, repeat.. =)

  32. fionamargaret says:
  33. I like to TRY to keep stuff simple…hoping what worked before,will work again.Tonight,looking at GDX for the year,there were two long candles,in May and June,that four trading days later was a bottom.Sounds good to me.Good luck all.

  34. prakashbkc says:

    GM Tony sir,

    Is ending diagonal scenario ruled out completely?

  35. stmro says:

    Busted through the middle BB today. If it manages to hold that from below through the end of this week i will go short looking for 2080 to 2100 target over next 2 weeks.

  36. Tony,
    Being doing quite a bit of historic work on US economic data around period 1942-50 a core challenge to getting super bullish on US equities. WWII featured a massive fiscal spend up. The US was also in a unique position to sell the allies war materials before entering the war. This helped drag the US out of the lingering economic effects of the depression period. A second factor was the strong population growth after WWII i.e. the baby boomers. So during this periods real GDP growth was very strong due to a large fiscal spend up and strong population growth. The current US demographic outlooks is for slower pop. growth and aging over the next 10yrs and politics is moving towards less immigration so lower GDP growth. The positive is that both political parties are willing to spend to expand the fiscal deficit and lift the economy to full employment. I think its right to take a positive long-term on equities given bond and cash yields but cautious step by step approach to your US equity counts make sense.

  37. mike7x says:

    Thanks Tony. Some sellin’ before Yellen.

  38. bouraq says:

    Chart of the day is $ES by

  39. 123 abc says:

    Thank you Tony et al; updated count suggesting 1992-2188 is an Intermediate wave…

  40. Ajney says:

    Thanks Tony. We saw a breakdown of the triangle in Gold while Bonds are still inside the triangular formation. The indices remain vulnerable but we saw Dow retreat from a head and shoulders breakdown today on the 120 min chart. We wait to see if 18300, and then August 2 low is taken out before entering shorts. We have a major energy date tomorrow that has demonstrated some head fakes previously.
    Details at

  41. mtu MTU says:

    [EOD] Stocks-
    A first break of the gray EDT line (Chart 1) on a five wave decline (Chart 2). Trend reversal (with respect to June low or Feb low) or the flat (ii) flat? We’ll likely know by the end of the week. As discussed in recent days, a drop below 2147.58 invalidates the blue (ii) and targets the MA50 (around 2140)

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