Wednesday update

SHORT TERM: gap down opening selloff, DOW -373

Overnight the Asian markets lost 0.2%. Europe opened lower and lost 1.1%. And there was another round of DC drama. US index futures were lower overnight, and the market gapped down 20 points at the open to SPX 2381. The market had closed at SPX 2401 yesterday. Around 11am the SPX hit 2368, bounced to 2376 by noon, then headed even lower. At 2:30 the SPX hit 2360, bounced to 2368 by 3:30, dropped to 2356 in the last few minutes, and closed at 2357.

For the day the SPX/DOW lost 1.80%, and the NDX/NAZ lost 2.55%. Bonds gained 28 ticks, Crude rose 30 cents, Gold rallied $21, and the USD was lower. Medium term support drops to the 2336 and 2321 pivots, with resistance at the 2385 and 2411 pivots. Tomorrow: weekly jobless claims and the Philly FED at 8:30, then leading indicators at 10am.

The market gapped down at the open for the first time since last Thursday. In fact the market has had one gap down opening each of the prior three weeks, without any gap up openings. Today’s decline opened below the previous 4th wave at SPX 2382, confirming the five waves up from SPX 2329 was a completed pattern. During the day we updated the SPX chart to display a tentative green Minor 5/Minute i. Should the market continue to decline to SPX 2329, then the Minor 5 is the correct label. Should it not and resume the uptrend, then the Minute i label is the correct label. After five waves up the market was due for a pullback of some degree. What degree it was we could find out during options expiration: Thursday/Friday. Short term support is at the 2336 and 2321 pivots, with resistance at the 2385 and 2411 pivots. Short term momentum hit extremely oversold this morning and ended the day with a positive divergence. Trade what’s in front of you!

MEDIUM TERM: uptrend

LONG TERM: uptrend

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

About tony caldaro

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146 Responses to Wednesday update

  1. H D says:

    The rumor is Michael Flynn has defected and is taking shelter in the Russian Consulate in DC. Allegedly under the counsel of Mike Pence, ignoring his subpoena, and claiming diplomatic immunity.

    Any whiff of weekend drama and another -55 wave puts Tony’s 2321 pivot in play.

    One of those statements may be fake news but here it is on the internet for validity.

    • tony caldaro says:

      Flynn lied to Pence.
      Why would Pence give him advice?

      • aahmichael says:

        Well, the “story” is that Flynn lied to Pence regarding speaking to the Russians about sanctions, however, we don’t know if that’s true or not. After all, Flynn told Pence on January 4th that he was under Federal investigation for being a lobbyist for Turkey, yet Pence completely disregarded that fact and recommended that Flynn be hired anyway. It’s possible that the WH simply threw Flynn under the bus and and claimed that he lied to Pence…in order to protect Pence from being busted for lying on national TV.

      • H D says:

        I just hope they make a movie out of it someday and I hope it involves Jason Bourne. Gonna be a thriller.

      • purplember says:

        it’s kinda like why would Trump fire Flynn then next month fall on his sword to Comey to get Flynn off. this don’t add up but then again it’s the liberal media

    • gtoptions says:

      I’ll have to go to Zero Hedge for confirmation. 🙂

  2. micky says:

    Need to see if/when we get to the lower 2380 area where my second R line is atm.

  3. vivelaamo says:

    Sorry Tony my fault. I just get frustrated when people post numbers like it’s fact but offer no help or advice on why they think that way. I don’t see any reason one would post that way other than massaging their own ego.

    But again sorry for venting on the blog.

  4. scottycj1 says:

    As I posted last week….the 17th held the likely hood as a CIT 225 years from the beginning and that some fireworks might be seen.

  5. They were just warming up.Dollar buying first,save IWM and Trannies,pound gold and silver.The only anamoly is bonds…can’t do it all.That will take some Fed speakers to get those rate hikes in everyone’s head again.Remember sell your GDX under 22.50.Later.

  6. mjtplayer says:

    A break of support/resistance areas could be backtested today or in the days ahead. The Euro broke through 110 – now backtesting? Gold broke above $1,240 but failed at the next resistance area of $1,265 – now backtesting $1,240? The Dollar Index broke support of 98 – now backtesting? The S&P broke support at 2,380 – now backtesting?

  7. tommyboys says:

    April 24th was a gap up day. Yesterday was gap down. Can this be an island reversal or does the fact that we filled the gap yesterday negate this?

  8. ajaysinghi says:

    Short term bottom is in. Use tomorrow’s pullback to exit from shorts and go long for tgt of 2400 and higher again.

    Fall is in June.

  9. tommyboys says:

    Volume actually 14% higher than yesterday on the NYSE…mmm
    Was wondering when Brazil would implode with the inflation and economic problems they’ve had for months/years.

  10. long until 2376, then will switch short

  11. stcoleridge says:

    Tony, are you ascribing any odds yet to the Minor 5 vs Minute i options yet?

  12. johnnymagicmoney says:

    question

    is that an island reversal on Home Depot that just occurred on the daily?

  13. Conundrum of the moment:Beautiful +div on weekly transports.But as I said,bear flag broken with a downside target pinpointed around 8400.That would probably wipe out the +div.Weeklies take a while to kick in,so a real tough chart to analyze.

  14. phil1247 says:

    http://tos.mx/m7kfYP?image

    BONDS
    tore…..
    i am waiting to see if the 3 month cycle turn is a high or a low
    it should be a low but the last couple of days threw a monkey wrench in…
    the mid cycle high came right on time at arrow on april 19
    bot tbt right after that peak
    and thought it would go down till early june low
    which is also the 1 year cycle turn
    that gave you the 143 peak in TLT a year ago
    that cycle allowed me to sell almost all my. long bonds near the peak…see chart

    • Gary Rodgers says:

      Hey Phil1247, what’s shaking? got back in the saddle on the bounce (about 2 full points spread) and am long the NOB spread in futures avg. around here 27’15. so let’s see. If the rally is real and has big legs may have to abandon ship but if it’s still just range bound it pays.
      Hope everyone on here is making coin.

  15. gtoptions says:

    Thanks Tony
    SPY ~ Retest WP Test/Fail Zone?
    GL All

    https://www.tradingview.com/x/l7HBB6zI/

  16. vivelaamo says:

    After such a drop this bounce looks pretty weak Wouldn’t be suprised to see a another sell off soon in stocks.

  17. STEPHEN BARTLETT says:

    Closing dollar yen short. Wave d higher dollar should start from this area
    Looks like a wave d of a triangle S&P. Wave e to take us past highs

  18. blackjak100 says:

    Spx +10, NYAD -100, this bounce won’t last. ES has a clear wave structure on the 4hr chart suggesting wave 4 should finish up today followed by a decent fifth wave possibly extended.

  19. GDX held 10d at 22.56.Currently 22.74.Definite warning sign the +div has run its course on a break of 22.56 and 22.50 (20d).

  20. phil1247 says:

    long spx

  21. H D says:

    almost 600 IPO’s YTD in 2017, 3rd only to 2000 and 2007. Probably just a coincidence.

  22. gary61b says:

    ES looking for 2362 to2363.25 for reversal, but Treasury Sec Mnuchin Speaks… need to learn what effects he has on market in near term in 11 min. 🙂

  23. mjtplayer says:

    I’m surprised nobody has mentioned Brazil. Both the Bovespa (-17%) and the Real (-7%) are outright crashing. While the media and market pundits are all watching the Trump soap opera, Brazil could be the bus that runs over the bulls in the near term.

  24. phil1247 says:

    /ES .. 2339 next target

  25. vivelaamo says:

    Wow my RUT targets have hit a lot earlier than expected. What now? Extension shorts are still trading.

    stcoleridge did you like my views on RUT last week? 😊

    • torehund says:

      EW- Counts arent always easy, especially when encountering intercalated segments. First and easiest pattern may not be the right one, but a difficult pattern may not be the right one either. Lets see.

    • phil1247 says:

      KABOOM as in TBT blows up?

      things have changed tore.. counter trend bond rally back in force
      TLT headed for 125 possibly 127 as long as ext long 122 holds….
      …buying dips in bonds for now

  26. torehund says:

    ..still something hitting the fan…nevertheless jump :::..;;;;

  27. stormchaser80llc says:

    If you are stuck long, what can you do? Well you can ‘hope’ for a significant bounce higher. One may happen but not sure if its tomorrow or next week. I think I will let VIX guide the way, once it has topped for good (with strong negative divergences), then keeping a close eye on shorter term trends as SPX recovers some.

    Today was the 5th day in a row both my signals were bearish. Breadth is significantly weaker. My proprietary technicals model turned negative for the 4th straight day, and have two negative divergences.

    Oil looks fairly stable here.

    Much more FREE analysis at my site (http://navigatethemarketstorm.com) However be advised that I do ask folks to take a few seconds to register for a log-in, making sure you agree to my legal documents.

  28. CB says:

    Thanks Tony. Good. call on that div.
    “And there was another round of DC drama”.. . Well put, Tony.. : ) First we sell off ’cause we’re not sure know who said what to whom , then we rally ’cause Putin actually has all the “transcripts.” 😉 Whew…at least someone has a sense of humor…lol

  29. cj32 says:

    Cr.CBZ

  30. Ira highlights:Bull trap if oil goes under 48.37 within next two days…probably back down to lower bb area.
    Triple top confirmed at 21010.Dow.
    Gold has room to run to 1280.
    Bonds bullish.
    My take on the dollar now–as it was then (then being the time it wouldn’t break down from the H&S)is 103 head,98.50 shoulder leading to a 94 and change PO.
    Trannies should lead us down with the Russell and Nasdaq.
    Good luck all.

    • Also,looking back at 2014,when the $Compaq started breaking down,it dropped initially about 2%,rallied back to its previous level-with a second negative div and fell apart.Will be watching for the same.

    • fionamargaret says:

      The Welsh choir playlist is an absolute delight.
      If you or your parents/grandparents have Welsh connections, you will love seeing the old photographs…and Sir Harry Secombe. Number 9 is the Welsh National Anthem.
      I hope you enjoy the collection….
      …and the kids wondered where the Stones, Beatles, Animals, Doors came from…they just came from a whole line of music…just did it differently….but music was around them everywhere….x

  31. soulsurfer says:

    WOW, I couldn’t have posted the SPY:TLT update, which I shared yesterday here, any later. It was once again right on the money! 🙂

    https://investingintelligent.com/2017/05/15/spytlt-ratio-suggests-a-pending-correction/

    similarly to the SPY:TLT ratio, the % of stocks in the S&P500 above their respective 50d and 200d SMA were heavily negatively diverged:

    http://stockcharts.com/h-sc/ui?s=%24SPXA50R
    http://stockcharts.com/h-sc/ui?s=%24SPXA200R

    Another tell tale of the pending correction. Keep these two on your “to watch list” as they are helpful regarding understanding what’s going on under the market’s hood so to say. Yes, the “Trump news” was only a catalyst needed for the already bearish divergences that had been on going for some time: indices correct when many of the stocks they are made up off have reached a peak. Simple. It’s a market of stocks, not a stock market. Poor Trump’s got nothing to do with it 😉

    Next great buying opportunity is around the corner imho: I for one will take advantage of buying stocks at a discount, i.e. at prices they were at weeks/months ago 🙂

    Trade safe folks!
    Soul

    • scottycj1 says:

      Around the corner ….. how specific is that ?

      • soulsurfer says:

        Specific to the day to be exact. If you read all my older posts you’ll clearly see I’ve been anticipating today for quite some time.

          • rcun says:

            On May 1, S&P 2393 Soul posted this on his site:
            Bottom line, and as we advised our premium members last week: “we should turn cautious the higher the market goes shorter term, especially when price is reaching the SPX2390-2410 zone as that zone has a very good potential to present a challenge to the current rally.” In addition, the market is currently giving mixed signals (TECH booming, DOW lagging, breadth lagging). And although this is -most likely- not a long term top, with the current ambiguity it may be wise to cash in some chips until things clear up.

          • soulsurfer says:

            yesterday. always appreciate online heros picking on others, must be satisfying, while meanwhile adding 0 substance themselves.

      • My guess is this is minute 1 or minor 1 finished at 2406. Minute 2 /minor 2 finishing soon, minute 3 / minor 3 to start very soon as in Friday or Monday. When this wave finishes expect a rocket 100 sp point higher. Then finish 4 and 5’beforemam6-8 percent retrace.

        Good day trading ahead

  32. ony question at want level do on the EURUSD do we get long-term bullish on EUR, its interesting that now Europe is getting some economic growth some of the poltical issues are melting away althougth the Italian election may pose a problem, the economic outlook is improving quite a bit. Tks

    • 123 abc says:

      Bullish uptrend already appears to be underway; probably negated if support at 1.05694 is taken out. More conservatively, exceeding 1.16163 ought confirm a bullish uptrend to be underway. Speculative thoughts of course.

      • Tks, I am long USD as an offset to NZD, but being long EUR would be a better return. There was a long and sustained base formed knocking out shorts seems highly unlikley that Europe will breakup if the economy keeps improving. But it would nice if the Euro dipped one more time as it seems like the best currency to own on a 6 year view based on continued economic improvement and increased intergration is Euro & Yen. Trying to get rid of my NZD as we have a housing bubble and commodity oversupply challenge to deal with here over the next 10 years.

        • mjtplayer says:

          It’s just a bounce in the Euro, nothing to get excited about. The Euro made it through resistance at 110, next resistance level is mid 113’s

          I’m short the Euro from high 109’s, will add to short around 113

  33. jjjzzzwww says:

    SPECIAL COUNSEL

    • purplember says:

      Media for 8 years gave free ride and never did their job; Now they work with 1 goal. “get him out”
      liberals are amazing – Bill clinton meeting privately with Atty general Lynch wasn’t obstruction of justice but comey memo notes are (even after trump fired flynn).

      this is he said, she said and going no where. Media screaming impeachment. i’ll take any dollar bet

  34. captbara says:

    Vix way out of the BB. Next buy signal will be juicy.

    • blackjak100 says:

      agree, now think this is the C wave of Minor 4 that I predicted 6 weeks ago. Earlier today I thought 2361 may act as support for ii of 5, but the close below seals the deal for me. Any lower low below 2322 will complete the Minor 4 flat. My bet is the lower end of 2321 pivot (2314-2321).

  35. lunker1 says:

    Deep Thoughts by Newbie
    “I’m glad I went cash in 2013 so I didn’t get hammered today”

  36. bouraq says:

    Chart of the day is #ES at http://www.tradingchannels.uk

  37. Complaint of the day:Gold up more than the miners.Just not right.

  38. elmer510 says:

    The one who’s in power. Duck or the other one. And the nephews.

  39. purplember says:

    UGLD made me good money today. everything else not so good

  40. Tarun Varma says:

    Tony, what would it take for you to reverse your view of minor 5 vs. wave B (minor 4) that had been previously discussed? $INDU made no new highs (unlike $SPX) in last few days. Do you see $INDU in minor 5 or is that index (higher probability) now in minor 4 wave C?

  41. 123 abc says:

    Thank you Tony for the great OEW update.

    I’d like to present why I think the rise from 2328 to 2405 was a b-wave instead of a fifth wave; any thoughts appreciated…

    a. The DJIA cash, SPX and DJIA futures exhibit fifth wave failures; i.e. no new highs.

    b. Minute-iv of Minor-5 (i.e. from 2381 to 2405) just consisted of three Micro waves instead of five (see first chart below).


    • 123 abc says:

      CORRECTION:

      b. Minute-v of Minor-5 (i.e. from 2381 to 2405) just consisted of three Micro waves instead of five (see first chart below).

      • Tarun Varma says:

        Haha! I just asked Tony the same question, but with a lot less detail/background that you!
        Tony – I defer to Steve’s question as being of a higher fidelity and providing more support for the revised count view.

    • tony caldaro says:

      a DOW B wave looks possible
      don’t follow futures

      • 123 abc says:

        Appreciated Tony, but how are you seeing five Micro waves for Minute-v of Minor-5 wave? Just see three: 2395-2387-2405.

        • tony caldaro says:

          not, just seeing one wave 2382-2406

          • 123 abc says:

            Indeed just one wave from 2382-2406, but it constitutes of three waves not five. Apologies for being over scrupulous, but I’m wrestling to see how the rise is motive; i.e. not seeing five impulsive waves neither a diagonal. Does OEW allow a fifth wave to consist of three waves?

    • chrisk44342 says:

      minute 1 instead of A, minute 2 instead of B, etc. You can count this either way. The best use of EW in my opinion, is to use it as risk planning. The worst case scenario is that this ended a minor (or worse) count, so you plan around that as a long term investor.

  42. mtu MTU says:

    [EOD] Stocks-
    SPX filled its Mar-Apr gaps and closed below its 50-day moving average (Chart 1). The speed of the sell-off is consistent with the prior wave being an expanding diagonal triangle highlighted in recent updates (Chart 2). There is more to go if we had an ending DT (Chart 2-blue), less to go if we had an leading DT (Chart 3).
    http://market-timing-update.blogspot.com/2017/05/market-timing-update-51717.html

  43. elmer510 says:

    Now I hope Donald makes the SPX climb again and stay above 2329.
    It’s too early for another correction, I hope minor 5 will go on for some time.
    It’s up to my good old friend, Donald.

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