Friday update

SHORT TERM: gap down opening, DOW -394

Overnight the Asian markets lost 0.1%. Europe opened lower and lost 1.1%. US index futures were lower overnight, and the market gapped down to SPX 2165 at the open. The market had closed at SPX 2181 yesterday. As the decline continued to unfold, at 10am wholesale inventories were reported unchanged. The market then dropped to support at SPX 2157, bounced 5 points, and headed lower again. The decline continued lower until just past 2pm when the SPX entered the 2131 pivot range (2136). It then bounced to SPX 2143 by 2:30, but headed lower again. It the last hour of trading the SPX hit 2128 and closed there.

For the day the SPX/DOW lost 2.30%, and the NDX/NAZ lost 2.55%. Bonds lost 12 ticks, Crude dropped $1.75, Gold slid $8, and the USD was higher. Medium term support drops to the 2085 and 2070 pivots, with resistance at the 2131 and 2177 pivots. Today the Q3 GDP estimate was lowered to 3.3% v 3.5%.

The market gapped down at the open for the first time in two months, July 6th. Gapping below the 2177 pivot range the market then dropped to the SPX 2157 support. After that failed the market continued lower until it hit the 2131 pivot range. Quite a decline after spending the past two months in a 1.5% range. The 5th wave diagonal triangle pattern, noted in yesterday’s update, was confirmed today with the large selloff. This is how markets usually respond when a 5th wave diagonal ends. More on this and a review in the weekend update. Best to your weekend!

MEDIUM TERM: downtrend

LONG TERM: uptrend


About tony caldaro

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76 Responses to Friday update

  1. torehund says:

    1 D chart, it becomes clear a Complex 3 up, 3 waves of equal length before the watershed. retracing more of it to 2050 maybe ?

    • micky says:

      That’s possible Tore, but I think if a bigger correction is underway we might be in a bigger wave A with a wave B to follow, and then a C wave down . In that case we would prolly take out the 1990 low.Would like to see what Tony has in store for us today.

      • torehund says:

        could be, but whats so amazing with Fridays decline is its total lack of resistance, like a micro flash crash…If it is of higher order than 20150 area, then we have to rethink in a major way 🙂

  2. micky says:

    I see this as an abc with the b at 2186 as stated before and c in progress with targets at 2120 for c= 1,6 or 2090 c= 2,6 of a. It fits with a slow a followed by a fast c scenario. It is an abc until its not is my way of counting. Below 2068 my count of 2194 being a wave 1 from the low of 1990 may be in jeopardy .

  3. Thanks Tony. I have NO idea what is next. All I can say is the bears sound 100% convinced. Not sure if that is good or bad. Skew which is usually somewhat predictive released ST from warning levels to normal levels on Friday. CPC did not get overly worried though so not enough reset?

  4. learnedmylesson25 says:

    Showed this chart before–here it is again.Never know how far the rubber band stretches out before it snaps back.

  5. Sethu N says:

    Dear Mr Tony
    I am from India. I trade actually on Nifty Index. I have developed EMA based distance model which shows the reversal very clearly. I back tested and it works very well. In fact, I was able to find the reversal very easily. It worked also very well in the latest reversal of Nifty which I expect to GAP DOWN on Monday . I initiated shorts @ 8970 when the whole India talked about ATH. If you can send me the hourly data ( OHLC) of SPX or Indu , I can back test and share it with you.

    Thanks & regards,

    This is posted properly unlike the first one where I replied to somebody else. Can you please delete the other one so it does not give an impression of spamming. Thank you.

  6. rd3777 says:

    The NDX clearly shows the large EDT and then also shows the final C wave up EDT a,b,c,d,e and then the thrust down. I would be very surprised if this thrust down is held by the 4350 area. This pattern is 8 years in the making and very rare in a stock average. Common in commodities and forex but not stocks. I have only seen one hypotenuse top and that was in 1987. This market is very similar as it has gone pretty much straight up from February and many stocks have done so since 2008. It is a exhaustion pattern,plus a double or twin top in the NDX. Setting historic levels of sentiment and margin debt.

  7. cosmos77 says:

    Nice call Tony. Looking forward to the weekend update. Based on the selling at the close, Monday should start down. Then we’ll see.

  8. Still the possibility of a wave II of 3. If not, it will be a wave c of B taking us higher. The drop seams too fast to be trusted and the 5 main waves up looks disproportioned to dont forsee a potential fractioning.
    Plus OPEX week; that said traders are selling the December contract at the start of the season to protect long holdings and to keep rotating for at least the next few months.
    At the opposite of what it looks, this huge drop could be a good sign. And of coarse I am also expecting a gap down for Monday since the closure was a sold and also because for China the N. Corean fool is a huge spooky risk and consequentely will be some clear reaction on Sunday night.
    Any way, this is not so scary since the metals were dropping as well and financials were not too bad on the board and creating divergences whit a bear case.

  9. ariez5 says:

    Awesome call, Tony.

  10. bfquant says:

    Nice call TC. May everyone’s memories become longer …

  11. 123 abc says:

    Tony et al, an outstanding OEW call on the inverted diagonal triangle pattern; superb guidance and unparalleled expertise.

  12. pooch77 says:

    Just for shits and giggles I posted Tuesday trend was changing based on last weeks trading going into this week

  13. learnedmylesson25 says:

    A 24% chance of a rate hike in September up from 18% yeaterday.There’s no chance of a hike,with those percentages.Three more days for them to jawbone until the Tuesday blackout time starts.They’ve done enough damage though,already.Quite a worthless group.

    • Page says:

      Agree and I think we on this blog can do better job than these jawbone fed governors.

      • learnedmylesson25 says:

        I ‘ll always agree with someone who agrees with you agree with me on that?Seems to my amatuer analysis that the RSI for is at 39,while the price is a little over a dollar from the previous low-hit last week.I don’t see how there isn’t a big fat +div at the moment that low is breached.
        Caveat:If they ignore that +div and keep going lower to wipe it out.That’s a risk worth taking.Have a good weekend all.

  14. torehund says:

    Good weekend all of you.
    Classic rollover, looking at 60 min chart (on Tonys site) a wave 2 has some more deep stuff to do in order to close the gap on the macd. Shorters market indeed.

  15. Thanks Boss. Let’s have some fun now.

  16. Page says:

    Thanks Tony. Have nice weekend.

  17. Lee X says:

    Nice CL chart with waves by H D yesterdays also, the rest of you really phoned it in as usual 😛

  18. Lee X says:

    Thanks Tony
    Have a gooden

  19. blackjak100 says:

    60min RSI(5) around 3 (near or at 5 low), $SPX 1% below daily lower BB, $SPX McO close well below lower BB ALL lead to a HUGE bounce coming and a possible int low today or early Mon AM. A huge bounce 3% below ATH by the way. It’s very simple IMO at this pt…if the bounce does not hit a new ATH, watch out. This looks more like capitulation then the start of a larger correction. If we fail to make a new ATH on the bounce, then I would say P5 is forming an ED and Major 2 is underway targeting the low 1900’s.

  20. Ajney says:

    Thanks Tony for bringing a new technical formation to our attention. Today was an energy date and apart from the downturn in indices, led to reversals in crude and bonds as well. However, according to the reaction from the energy date, we got some validation for our stress models and puts DOW on a crash path in the next 1.5 months. This is not the starting/ending of a 3-5 percent correction. Details at

    • John Arella says:

      Guess that means they’ll increase interests rates in September 😦

      • Ajney says:

        John, hard to predict the bankers! Hints in the bond market perhaps!

        • vivelaamo says:

          How do you tell an energy day? Do you feel it in the air?

          • Ajney says:

            No I spread a calendar while reading Tony’s weekend update and whichever date the coffee marks come on, that’s the energy date. Jokes aside, properietary model.

            • vivelaamo says:

              If it works for you it’s all good. Just seems a bit far fetched when based on energy? No disrespect intended, happy to be educated… long as it’s free 😊

              • Ajney says:

                None taken 🙂 I understand the skepticism as I have encountered it often!!! Hopefully, these dates help in trading and more importantly preserve capital.

            • Success rate using your proprietary model? In 2016? I also find it hard to believe a pre-election crash is coming.

              • Ajney says:

                Sorry for the long message but could not come up with a pithy reply. Model is composed of two main components, stress models and energy dates. Energy dates, you can look at my blog to see past dates and turn repercussions on various markets. Since the blog only dates back till July, would like to add that (as often stated in statements of mathematical theorems) energy dates are almost like a necessary but not sufficient condition for turns in a given market. Usually, I have found that it creates turns in a market which have been moving sharply, sometimes in affects most markets. Its not a perfect system as sometimes I fail to spot a date, which then gets incorporated in the model going forward. But if were to look at the DOW (or other indices with depth) movement in 2016 and check when major turns happened, it is invariably an energy date. If I were to give a ballpark probabilistic interpretation, accuracy of somewhere in high nineties.
                However, crash (10-15% atleast in short span of time) is being predicted due to the stress model. Reasons being many components which have caused previous downturns are showing up simultaneously in my stress model.
                To be frank, stress model a relatively new addition to my model, and past performance may not translate into a correct future prediction. In contrast to energy dates, I don’t have adequate statistics to back this one up.
                As for the elections, we can have a sharp downturn with sharp pullback leaving average Joe and Mary’s 401k unchanged.

      • fionamargaret says:

        The UK managers certainly seemed to think something was in the works for September, even suggesting going to cash……maybe NK spooked them, and The Telegraph saying “Draghi had lost his magic while deflation closes in” did not help things any….I even felt sad writing that…..and we have Greece with problems, Italian banks, and the PBOC which is suggesting, in a not very subtle way, not to mess with their currency…

        • vivelaamo says:

          Fiona all those issue’s have been going on since the financial crash and they are used over and over as reason for market pb’s. Europe is a mess and is getting worse by the day. I’ve been burnt hard in the past trying to short the hype and then ignoring the techincals. There is so much support and trend lines not to mention weekly MA’s to breach before we could even consider a ‘crash’. People on here think I’m just a blind bull that has no idea that markets go down. But the reality is all my losses in trading have been on the short side. Longs have always eventually come good and are totally out of sync with reality. If the US can manipulate markets to such an extent then why can’t the European bank? It’s a rigged market, so why try beat it? By the way love your posts and respect for all posters. Almost seems like you’re are British 😉

          • fionamargaret says:

            Of course I am British Vive, but my loyalties are divided…..and the last time I looked I was bullish.. I can’t see why “they” would have a rate increase before the election…
            “Just trade what is in front of you” is good solid advice from Tony, and is geared to prevent us getting into trouble.
            I know you will be interested to know of a Chinese commodity fund Manager who has made about 2015% this year, not by algorithms, but by studying supply/demand….there is hope for us all.

  21. Pattern suggests either a 3 day drop or 5. Today was the 3rd day. SPX should hold above 2103.
    Tuesday is the Small business Index. Most of job creation thru them. I suspect it holds at or above 94 based on all other data points. Market now focused on domestic strength and any sign of rate hike need. Considering we are still below where we should be I suspect a minimum of 1 rate hike this year.

    Watch data points immediately after rate hike. I suspect spending will pick up significantly on big ticket items.

    No internal or external news to derail this market yet. Earnings in late October could do it. Still view sharp drops as buying opportunities leading into election.

  22. vivelaamo says:

    Second long position for next weeks bounce. Not missing this baby.

  23. rd3777 says:

    Nice call Tony too…..glad to see that we somewhat agree. A great start to the super cycle C wave down or it could be a big wave A down which can really take the cream off the top. Anyway whether this is the real deal and(I think it is) for a 1 day decline off the top,the market acted like it should from a Z wave finishing. Total exhaustion and basically very little bids and lots of sellers.
    Mind you this is a weekly chart but this weeks bar is 95 pct today…very impressive.

  24. learnedmylesson25 says:

    I’ll reiterate, the Nasdaq H.O. started warning this a week ago.What % down from here is the question.Seems like 17,800 minimum on the Dow–maybe through it a bit.Monday will be interesting to see if GDX bounces after filling its upside gaps from the last 5 days.That’s the whole ballgame in a nutshell.Good luck all.

  25. fotis2 says:

    Great stuff and thanks!Well worth a download for future reference.

  26. gtoptions says:

    Thanks Tony
    60min 5rsi @ 2.56 (Schwab #)
    At Brextortion low 5rsi was @ 5.75
    Wonder if this will be a similar two day selloff then off to ATH’s? 😉

  27. vivelaamo says:

    Thank Tony. A bit of action at last. Look forward to your weekend update. Remember every substantional pb/correction since this bull market begin has lead to a very large rally fuelled by central banks even though the general consensus has always been they have run out of ammunition. If this time we are to see a deeper correction that resembles a crash then it can surely be deemed as ‘different this time’.

  28. John Arella says:

    Great call tony 🙂

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