Wednesday update

SHORT TERM: flat opening then lower, DOW -45

So far this week the Asian markets gained 1.2%, and the European markets have gained 0.6%. The SPX started the week at 2840, then rallied to 2863 by Tuesday. Just 10-points shy of an all-time high it started to pullback.

The Monday rally took the SPX over 2848, quantifying an impulse wave from SPX 2692: 2743-2699-2848-2796-2863. This is the first internal impulse wave we have seen since the early-April low. It suggests the activity prior to the late-June SPX 2692 low was indeed a leading diagonal Minor wave 1 followed by a Minor wave 2. Minor 3 is now underway.

As noted earlier the rally from SPX 2692 displays 5 waves up, suggesting there could be a significant pullback at any time. Previous significant pullbacks, during this uptrend, have been between 65 and 122 points. Also of note, during the entire SPX 2796 advance to 2863, the largest pullback has only been 7-points. Anything more than that could suggest a significant pullback has just started. Today the market pushed the current pullback to 10 points early, before rebounding the rest of the day. On the SPX hourly/daily charts we have negative divergences at Tuesday’s SPX 2863 high. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: uptrend

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

About tony caldaro

Investor
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331 Responses to Wednesday update

  1. phil1247 says:

    chris………… quick quiz

    if you took the long at oval you would only be risking one es point

    i did not take it….
    why ?

  2. phil1247 says:

    Theo

    very nice call on aug 1 bond low
    how and when did you come to that conclusion?

    barring total disaster today …bonds have turned the corner

  3. phil1247 says:

    phil1247 says:
    August 8, 2018 at 6:42 am
    es

    rogue traders……….. 2861 is good place to exit more longs now
    ext long nicked overnite
    phil1247 says:
    August 8, 2018 at 6:58 am
    support would drop to 2839.5
    should the extension blow out

    asa…………….

    this is why i keep my extension longs ” too tight ” lol 🙂

  4. fxaprendiz says:



    enuff said…

  5. rd3777 says:

    I think this top is going to stick
    YM and JPN225

  6. alexhartley1 says:

    Hi Tony – what odds do we have (if any) for this whole move since the intermediate iii high being an intermediate iv flat of sorts with the ‘b’ wave soon to top out a little higher perhaps than the intermediate iii high (2920-3000 for e.g.). This would be the set up for a vicious ‘c’ wave down to retest the ‘current’ proposed intermediate iv bottom? Thanks in advance.

  7. Thanks Tony
    3 of iii underway?
    let’s see if it breaks upper trendline
    https://invst.ly/898bu

    • Ashley says:

      This one is for the BEARS =)

      • Ashley says:

        This count is still in play and I forgot the lower TL on the RSI 5 on the weekly, note the wave structure and divergence….. This chart says it could be done NOW or not much later… OR the “invisible hand”, “Trumps” Da Bears…. Im hoping for a peaceful resolution is all =)

        • fionamargaret says:

          Nice Ashley x

          • Ashley says:

            Thanks =) I loved your story about the dog, I have a 10ish year old Male Pitt Bull I was given as a stray I named BEAR in 2008 =)

            I also have a little kitten I found out in MY barn, he was Orphaned … I found 3 kittens we estimate to be 2-3 days old… One “Male Calico, tiger tabby” and 2 female calico’s,one dead….. BARN cats =)

            Unfortunately I was only able to keep the female going 4 four days, (there’s a reason they were abandoned and Mamma knows best) The Male however took right to it and continues to run, I’ve just about got him weaned at 8 weeks, I hope =) Oh yea I named him Rocco .)

            • fionamargaret says:

              I do like the sound of your place (barns, wild grasses..and animals).
              My old girl that died (West Highland White Terrier)had been born with Legge Perthe , so had her hips operated on, and muscle implanted to replace her hip joints. Then she needed exercise to build up her muscles (and my running wasn’t sufficient), so I took 3 long-haired male dachshunds from a breeder who deemed them unsuitable for the ring. (I had to have little dogs so they wouldn’t unintentionally hurt her).
              This was Lucie’s new life.
              The Dachshunds were all 8 weeks when I got them, and she considered them her puppies, and soon she would chase them and they her, and she became like a Westie should be..
              Trouble is after her death, I have 3 bereft male dachshunds wanting her back…life is not simple…..
              Kisses to your crew…x

      • Hi,Ashley
        i don’t want to change this count yet,let’s see what will happen next days
        https://invst.ly/89v32
        thanks

    • Anne Day says:

      So familiar and yet so refreshing. Just couldn’t believe this was a teenager’s work?!

      • fionamargaret says:

        Shut your eyes Anne and let each section of the orchestra separate itself and float free..
        an infinitely hummable symphony that is not played as often as some of his other works.

        I am still smiling at your reply of yesterday x

    • fionamargaret says:

      I received two phone calls that Saturday morning.
      The first was from a vet friend, asking if I could come see him.
      A while back he had arranged the breeding of a Czech Great Dane with a championed male Great Dane, and he considered himself responsible for the puppies, which were now in their first year.
      “Fiona” he said, “we found one of the pups in a packing crate in a garage as they thought their child allergic, but the pup is alive and barely able to walk” Before he continued, I had agreed to take him.
      The second call was from a new gentleman to our group, a rather dishevelled fellow but friendly, interesting and a published writer.
      He invited me to drop over that evening to visit with his wife and family.
      He then, almost apologetically, told me his son had had a few problems, and their place was not too presentable.
      I felt relief, as I then asked if I could bring a dog with me as I. had just taken ownership that day.
      He greeted me at the door and showed no surprise at the dog, almost thigh high, placing his head against him.
      The son, who had been slumped in a chair, came over and put his arms around the dog’s neck.
      Here was a gentleman whose life had been turned upside down by his son’s drug habit but desperately trying to keep his family together, and a dog that had been dismissed from the affection of a family due to no fault of his own.

      The dog lived for another nine years, came with me to the office, and was a base for the neighbourhood kids when they were playing baseball…Marmaduke they called him…x

  8. Theodore Lerts says:

    I doubt any one pays any attention to my commentary, but I hope anyone trading bonds took heed of my advice a couple weeks ago. “Bond yields will fall after 8/1/2018”

    They will continue to fall.

  9. soulsurfer says:

    I’ve been tracking and updating on bitcoin since March this year, so here’s one for the crypto folks/followers:

    https://investingintelligent.com/2018/08/09/bitcoin-btc-update-has-anything-changed-since-may-a-walk-through-time/

    trade safe!

  10. phil1247 says:

    VIX sell signal has been confirmed today ( bearish for stocks )

  11. jobjas says:

    SPX 2880 target remains

    • Ashley says:

      I like that count, this is mine BUT this correction so far looks more like a 4 than a 2, either way we gotta bottom and rally hard, here’s my charts for today..

      • Ashley says:

        Intraday, microcharting the correction =)

        • jobjas says:

          I presume you are saying we are in minute 3 of minor 3 which when projected will mean minute 3 ending at 3050 and the complete minor 3 around 3200. And minor 4 and minor 5 to come – lasting 18 months + . More possible than probable.
          That is why I mentioned that when looking at waves have the full wave (here , at least from the end of intermediate 4 end ) in one frame so that one does not loose the bigger picture . Remember no wave is stand alone.

          • Ashley says:

            This is what Im thinking, but also Tonys shorter count, and I think 2016 was 4, and the Jan high 5 of P3, LOL Im trying….

            • jobjas says:

              too bullish .

              • Ashley says:

                It is short term but I expect a blow off top for the last 5 UP, then the 29 style depression, alternate bullish count would be more like Tonys….

              • Ashley says:

                Im saying for me anyway nothing has been determined, Im still questioning that abc looking wave 1 after the March low and I can still count a couple of bears…. This new ATH is being talked about like it’s already happened, something about “counting chickens before they hatch” comes to mind .)

              • jobjas says:

                do not foresee a 1929 type of depression any time soon .
                A 25 -30 % bear market – Yes

  12. Jack Lad says:

    Maybe Intermediate 4 is behind us. Maybe this is Intermediate 1. Correlation, correlation. My horse for some genuine, not family style, actual correlation. Swiss is on same planet, not? Even same hemisphere. Is it not normally of the same pro cap species? Or should it also be seen as totally alien? Sure it takes the rest of the planet aligned to cause any question. Unless you chose the wrong option, like close but no cigar this time for a change…
    https://wavecount.blogspot.com/2018/08/swiss-smi120.html

    • Lee x says:

      20 cents a dozen is a great deal !
      Peaches are next 😉

      Never feel sorry for a crow , man the PP got screwed

      Thx Fotis

      • torehund says:

        Lee until investors starts to get bearish on the softs we have to rely on Ethanol, cant beat that at 1,43 a gallon. Folks will not Get bearish on the latter until they figure out they and their car is running on the same fuel🤔

  13. mcgcapital says:

    This is extremely tedious and for that reason I’m out. Will be plenty of set ups worth playing once this vol squeeze is done

  14. stan911 says:

    Anyone able to help me out with this question. If spx w3 has reached its target but Dow w3 hasn’t which has precedence? Spx or Dow e.g2553-2718= 165×1.618=267+2594=2861 and Dow 23342-24859=1517×1.618=2454+23528=25982

  15. Page says:

    Time to drop like a rock.

    • H D says:

      No way. Fully invested for the easy ride into 3000+. Diversified in defense stocks for Space Force™, Infrastructure companies for Infrastructure week™, and wall builders, Mexican companies though +little GVA and TTEK too. Bring on the growth!

  16. fionamargaret says:

    DWT…..short oil down to 60…..
    TVIX, VXX…long undulations….
    …and of course, long love…x

  17. At least football is back today, although preseason at least its football.

  18. SPX cup and handle idea

  19. rd3777 says:

    The NDX eeks out another EDT….this will end the 10 year Bull Market, look for a very sharp reversal soon…today

  20. Mary773 says:

    Nice pattern in RUT:

    • Mary773 says:

      When SPX takes out the January high, let’s see if we get a repetition of the 2015-2016 “run stop – pullback- new highs” sequence.

      Over the limit. Mea culpa. Good luck.

  21. emuntrader says:

    Thoughts
    Wave 1 larger than wave 3. Max Target = 2887.62. A close above this would suggest an EW extension that would carries too great heights.
    We are either putting in a ED for a DBL top or we continue higher. ED would than be LD of a 5 of 5 for preferred count.

    $VIX printed a TD 9-13 yesterday. (Daily)
    Indices are at a TD 9-11. (Daily)

    Hourly charts put in a TD 9-13 at yesterday’s high.

  22. fxaprendiz says:

    SPX: with the overnight session move down the current small Harmonic pattern forming in the 15min/1hr charts got wider so the previous target level for point D raises from 2866 to circa 2868 (2 or 3 points higher for the ES). Symmetry wise, the second wing of the pattern would equal the first one around 4 or 5 hours after today’s close, so I’m not sure SPX will finish the pattern before the closing bell.
    Have to go to the city today so I think this will be my only post for the US session. Trade safe guys.

  23. Would be surprised if we didn’t make new highs from here. Tomorrow is free money Friday. Still looking for 2887-2890 before pull back. Need 1 more climatic squeeze before the drop to 2800.
    My 2 cents, good luck all.

  24. phil1247 says:

    es
    bulls have the advantage now

    can they push the ball to the 68 yard line? (2868 es )
    or will they fumble and fall back behind the 52 yard line
    and break extension long support ?

    • phil1247 says:

      purely conjecture on my part
      but now that everyone and his dog believes we MUST pull back here ..

      it would be the perfect time to blow out the extension to the upside
      and create panic buying in 3 of 3 up

      lets see

    • Phil Did you make a slight change in the colors on your chart. I like it…a lot…. this is much easier for me to follow. Not second guessing your analysis because it is working for you but your extension long looks too small/aggressive. Do you trade these micro set ups and how often do you get stopped out or is your stop below the 61.8% of the larger 62.8% long?

      • phil1247 says:

        i have only longs from monday left
        i use these aggressive extensions to exit longs from lower levels

        so say i have 100% long monday and we hit target
        i take off 1/2 there but leave the rest if in extension long .. not traditional
        then if new extension take 1/2 off again so now i am at 25% long
        i may or may not be adding on the way up depending what i see
        yesterday i did nothing
        i am still 25% long from monday
        but could add more today if i like what i see
        its very fluid and could change in 15 minutes …..

  25. phil1247 says:

    Currently, /VX is trading at 12.60. The 61.8% SHORT is 12.78. There is “0” chance of any significant unless 12.78 is breached. I can’t make it any clear cut than this…..and I chose my words carefully.

    ASA

    you chose your words carefully ….but isnt there a word missing ?

    ” 0 chance of any significant……………….. unless 12.78 is breached ”

    significant what ?
    i know what you are saying but others may not 🙂

    • fionamargaret says:

      He was the son of missionaries in Africa, and became a Displaced Person after the war. He returned to Germany, learned a craft and later emigrated to Canada. I only met him once, but wrote to him on occasion and sent flowers when I felt he might like to know someone was thinking of him.
      He died recently, and his son, one of my “volunteers” came to me and pressed an envelope into my hand. “It is for you” he said.
      There was a note inside and some money.
      “I want you to buy another dog, just like the one you loved so much” the note read.

      Like I said, solvency is a strange thing….x

    • torehund says:

      If we regress sufficiently lawyers will enter a bear market🤗 According to Armstrong if or when we regress is postponed to post 2033, lots of good years left still.

  26. torehund says:

    Seems like cost push inflation is doing its thing with an amazing 4 percent growth. According to economist Paul C Roberts, Gov does downplay statistics on inflation to make growth look good in the Numbers. But According to him there is no wage pressure so that the population is getting porer and the companies richer. At a certain point one would expect inflation to cause wage growt or are the population just digging into sawings and maxing out the credit cards ? As the real economy might soon want to Get hold of a larger piece of the cake, some sectors will have to retrieve less, are Faangs the upcoming loosers, cracks starting with facebook and media heading to independent sites ? Dutchsinse the earthquake forecaster left you tube now, as he had been deemed too radical and found himself on a no no list together with Alex Jones. Are these media companies starting their bear phase all by their own awkward effort ?

  27. Tony, I appreciate your blog, it’s very helpful.
    I have a question. Could we still be in wave minor 2 from the June high as an expanded flat? Opening the possibility of revisiting the June low.
    Thank you.

    • tony caldaro says:

      Would have thought that was possible before this week.
      No longer think so

      • Thanks for your view.
        For what it’s worth, an observation for readers here. If one looks carefully, price behaviour from end of June low to now is mirroring the behaviour from the May low to June high. Today just gone is equivalent of being at 8 June. If pattern continues it implies high arrives next Mon/Tues.

  28. Last post tonight over my daily limit but it doesn’t s related to SPX trading and Tony’s analysis. Phil this chart is for you…it shows that the aggressive setups you like to trade is actually playing out. The small, aggressive long traded and defended (notice the green candle at the close) at the futures close this afternoon at 2854.38 (upper yellow line). IMHO, what has a higher probability of occurring, is /ES trading down to the next 50% LONG at /ES 2849.38 (lower yellow line).

    IMHO, /ES would have to break the 61.8% LONG at 2845.98 (lower red line) for any type of a significant pullback. Full disclosure DH chart, his/ my analysis.

  29. Hi Tony…glad to see you posting again…I trust\hope you are recovering uneventfully. One quick question and many others, may have the same question as well. My understanding of your OEW label is that SPX is trading in minor 3 of Intermediate wave 5.

    What I am not sure of and perhaps you are waiting to see how this plays out…if there is
    let’s say, a 80 point pullback and then a rally…would that be an indication the pullback was minute wave 1 of minor 3…minor wave 3 is subdividing. Further, if the pullback is limited to approx 40 – 50 points and then a rally, then that pullback could be a wave wave 4 of some degree of minor wave 3? I guess what I am asking is, do you expect the current wave 3 to subdivide?

    • tony caldaro says:

      If we got a decent pullback to 2790-2800, would think this rally was Minute i of Minor 3 and the pullback Minute ii.
      If the pullback is much smaller and the market keeps going higher, would think Minor 3 is underway but much further along than just Minute waves i and ii.

      • Ashley says:

        This goes with the chart I posted below, I think we see 61 then 51 probably tomorrow with the close near the low and then gap up and go to low 2900’s to start minute wave 3 of major 3… Then a small PB to 2890’s and back test the trend line then it’s gone =)

        • Ashley says:

          Sorry the first one is the same one I posted below this is the microchart I watched realtime and the B wave verdict comes from overlap on 1/4 and the magnitude of the decline..

      • floyd drummer says:

        thx tony!

  30. phil1247 says:

    ES
    in no mans land between the short and extension long support

    need to wait till one side wins

  31. Hi all

    I understand the internals of the volatility index that are mentioned below. I use the KISS analysis so forget about all these internals on the VIX…..although they may prove to be right. Bottom line….in order for /ES/SPX to decline to any significant degree, / VX has to break it’s 61.8% SHORT. Currently, /VX is trading at 12.60. The 61.8% SHORT is 12.78. There is “0” chance of any significant unless 12.78 is breached. I can’t make it any clear cut than this…..and I chose my words carefully. Full disclosure DH chart my analysis

    • phil1247 says:

      yes asa

      you chose your words carefully

      but you left one out after significant …..LOL

      • LOL….OK?….just want to drive home the point that using DH analysis, you can dramatically increase the probability of a free or a reduced risk trade. Do you think I made my point?…LOL

    • aahmichael says:

      It’s a chicken and egg argument, since they generally move in tandem. You could just as easily argue that the VIX can’t go up unless SPX goes down.

      • Anne Day says:

        There was even speculation that VIX was somewhat “cooked”.

      • mcgcapital says:

        Expect in January when they were both rising, and we know what happened next. Vix is just the implied volatility on options on SPX, so it’s a balancing item in the black-scholes formula. So basically, if traders have high demand for options which generally happens when they see a wide variety of outcomes, the price of them goes up and therefore the implied vol goes up all else being equal. So all a low vix means is that there’s not a wide variety of outcomes expected, and a high vix the opposite. We know those expectations can change quickly though. I can’t see how there’d be much use trying to use it as a forecasting tool as often vix can remain very low and stocks tick higher as there’s no uncertainty, and likewise it can stay elevated for a long time when the markets going down and that doesn’t mean you want to be long

        • Hi mcg..enjoy reading and respect your posts…thank you. I would not want to take a swing trade short /VX or SPX until /VX breakes it’s 61.8% SHORT. I refer you to my chart above. Now, there can be a divergence between the two, however, that divergence usually dorsn’t last for a longer period of time (hours).

          • Sorry, would not want to take a short on /ES or SPX….

          • mcgcapital says:

            Did you monitor this in January? Presumably you had vxx in longs and spx in longs at the same time? I know what you’re saying as usually range expansion = greater uncertainty = more demand for options = higher implied volatility = markets coming down as uncertainty is generally a bearish thing. But I’d have thought that price and options prices shift simultaneously.. so vxx might break the short as the SPX price range begins to expand, but before the bulk of the selling in stocks happens?

            • I think you caught the general essence of what I was trying to present to the group in the first part of your reply. All I am simply stating is that, in the recent past, /VX can often predict movements in /ES and SPX. Let’s see how this works out in tomorrow’s trading.

      • Hi aah..not really. /VX can stay just inside the BB for a period of time and fluctuate or even trend higher but perhaps stay in the lower half of the BB range but if /VX rallies from 12.60 to 12.78 that would be confirmation (to me) of additional /ES or SPX weakness directly ahead.

  32. Theodore Lerts says:

    Way too many folks identifying a “topping pattern.” One thing I’ve learned as a trader is that this is a tell-tale sign that “if it’s too good to be true, it ain’t.”

    Corrections come when very few expect it. Not when people are certain they see a top. I anticipate record highs in the near-term.

  33. 123 abc says:

    Excellent midweek update Tony, very appreciative of providing details of the wave pullback sizes.

    SPX

    BTC : https://redd.it/913xx6

  34. Mary773 says:

    Thank you for sharing your excellent analysis, Tony.

    SPX can certainly pull back at any time. Yet operating under the theory that the market exists to redistribute money from average investors to the malefactors of great wealth, it just seems so enticing for the bots to run what must be a ton of buy stops above 2872.87. It would be uncharacteristically considerate of the funds to let beleaguered shorts off the hook when SPX got within just 10 points of the high, but it wouldn’t be the first time.

    • mcgcapital says:

      Markets don’t exist to shaft people you know, or transfer wealth from one set of people to another. They’re based on supply and demand. The vast vast majority of capital invested in markets is institutional (banks, funds, pensions, endowments, insurance). None of these guys care whether it’s at new highs or above resistance or below support or whatever. They don’t even look at charts, they set a diversified investment strategy and they follow it, reviewing what’s going on once a quarter based on the end position typically. That’s why you get the month end window dressing effect.

      Active traders provide liquidity but we’re a relatively small percentage of volume. The reason some people don’t do well when actively trading is a lack of discipline, and in my experience that often comes from believing too much in their own analysis and not reacting to what happens. The market doesn’t have a fixed path.. if you think it’s pulling back from here there’s no way of knowing whether it’s going to stop at 2800, 2700, 2600, 2500… so all you can do is short now or cover longs until you get a signal that it’s going back up again then switch back the other way. Anything else like pinning a random number target up there and trying to hold through whatever happens until it gets there is gambling. It might work this time, but if it doesn’t it gets messy

      • Mary773 says:

        I believe there are some former floor traders on this blog. Do big traders gun for retail stops?

        • mcgcapital says:

          Maybe Lee, aah or some of the others can chip in if they’ve traded in that environment as my experience is all banking/asset management/research. But i’d say no on the basis that they’d be taking a risk by buying heavily if they think that price is only going above a certain level on the basis of stops of smaller traders being triggered. After all, if they did that, then yeah they might have paper profits but might struggle to liquidate in size beyond the stop level to crystallise the profits as what we’re basically saying is there’s no demand up there in this instance

        • Lee x says:

          They certainly did in our pit

          • mcgcapital says:

            Was that on SPX or other markets? Surely the bigger and more liquid something is the harder it would be to do it.

            Anyway, as a retail trader all we can do is be disciplined in response. So if it did run to a marginal new high, respect your stop loss as it’s unclear whether it’s a breakout that runs or one that fails. Then if it runs you can look to buy it, if it fails then can re-enter shorts if it flops back into the range with a stop above the new high

          • torehund says:

            The end of the road to misery in Softs if I understand your gravatars rightly😏

            • Lee x says:

              Tore

              Pic is Michigan super sweet corn
              50 cents an ear or $5 a dozen here in SW part of the state.

              $5 a bushel for the CBOT variety seems reasonable haha

        • aahmichael says:

          They used to do that, but that was before electronic trading came into play and ruined their ability to front run their friend’s orders and to gun for the stops that they saw in each others’ books. Those days are long gone, though.

          • Mary773 says:

            There is no need to see the books. I began day trading the Valueline when it became the first stock index futures contract in 1982, and it soon became apparent that retail stock traders put their stops in the same places that other amateur futures traders do: one tick above the high/one tick below the low of the time frame they are trading. Livermore wrote about it. I believe Gann did as well. Predictable stop placement is a signature characteristic of small traders.. I taught a futures trading course at UCLA, and the novice traders would invariably choose the same stop placement on the basis that a new high/new low meant they were wrong. This is human nature, and getting them to fade a run-stop would have required waterboarding. It was forever thus.

            • mcgcapital says:

              Don’t most amateurs end up not using stops at all as they feel like they continually get stopped out if they do? Which means they end up exposed. If you’re using one, you have to place it somewhere… what’s wrong with placing it in the obvious place above the high or below the low, then watching to see what happens. Either the high/low as the top/bottom of the move and the stop doesn’t get hit and you’re good, or it does get hit and then you assess whether it’s a fakeout or breakout, and if a fakeout can look to try and restablish the position with a new stop above the fakeout high. I’ve been through all of the options with this, and feel like that’s the most effective way of doing it because the other options are use no stop at all and leave the risk open ended (which is obviously a no go), or place your stop further beyond where you think the critical price level is which leaves more points at risk, and it’s also not always obvious what the critical price level is either. For me it’s all about having the flexibility to keep trying on entries until some stick, and you can do that when the % of capital risked is small

              • Mary773 says:

                “what’s wrong with placing it in the obvious place above the high or below the low, then watching to see what happens.”

                This is a recent example of what’s wrong:

              • mcgcapital says:

                Yeah.. so that’s where I’m saying if you thought that 2800 area was going to hold, you’d have used the 2798 as the low to trade against which obviously got stopped out. Your next step would be to assess, having been stopped out, whether it was a breakout under 2800 or a fakeout. Then go long again if a fakeout as was the case this time. If you read the posts, fxa traded that move in exactly that way. Got stopped and re-entered. It’s not an all or nothing approach. The futures low was actually 2790.. so if you’d have just tried to widen your stop loss below 2798 there’s a reasonable chance it would have got hit anyway unless it was much wider

            • VOUS AVEZ RAISON ! Mary your comment was so on point, I thought it warranted a French exclamation, thx.

            • floyd drummer says:

              mary,

              ” I taught a futures trading course at UCLA, and the novice traders would invariably choose the same stop placement on the basis that a new high/new low meant they were wrong. This is human nature, and getting them to fade a run-stop would have required waterboarding. It was forever thus.”

              ….brilliant ! …and tradeable…!

            • aahmichael says:

              Your premise is that the SPX is rigged and manipulated and its moves are designed simply to run the supposed stops that small time traders place. I believe that’s a flawed premise. In most cases, the only people who even use stops are traders, and amateur traders usually don’t use stops. Those that do are such a small number, relative to the size of the market, that it’s as if they don’t exist at all. Markets are always taking out previous highs or lows. Sometimes those moves are breakouts which begin new moves, and sometimes they’re capitulations that end moves. That’s just the nature of how markets function. It has nothing to do with running supposed stops. To say that a market will definitely take out a high or low, simply because it’s close, or simply because some person on an internet blog believes that the market is rigged is just another kooky conspiracy theory.

              On 2/9, the cash took out the previous day’s low, but the futures market didn’t. On 4/2, the DJI took out the 2/9 low, but the SPX didn’t. Several stock indexes indexes have made new ATHs on this recent rally, but SPX and DJI have not yet done that.

              • mcgcapital says:

                Some of the comments we get on here suggest that being stopped out is this terrible thing that should be avoided at all costs, and if it happens then that’s it then that trader is wrong and finished. The reality is, if you don’t use them properly you’ll come unstuck eventually. It takes a lot of practice and discipline to get that side of it right, and if you do, you can literally be getting stopped 9/10 and still be breaking even. You can’t tilt the odds in your favour without an effective stop loss strategy. Anybody who approaches the market with the view that they know in advance where it’s going is asking for trouble. She’s fixated on 3041 and doesn’t think there’s a need to protect on the downside as any retracement will ultimately be bought up towards that target. If you’ve sat through 4 big drawdowns already then the approach on the next one is going to be the same, and what if the next one doesn’t get bought. It may well get to 3000, who knows, but it’s not the point. It’s a very arrogant or naive way to trade. It’s what tends to happen with people after 14 up years in the last 15… they refuse to believe the trend might not always remain up

              • aahmichael says:

                Agreed. Trading without stops is playing Russian Roulette with a bullet in every chamber. Plus, lots of people use stops to ENTER a trade, and that’s a very smart trading strategy in many instances. The reason many traders don’t use stops is because they don’t want to take a loss. They don’t understand that taking losses is actually the most important aspect of a winning trading system.

              • Mary773 says:

                “Your premise is that the SPX is rigged…”

                My premise is that inexperienced traders put their stops in predictable places, a theory that former floor trader Lee has confirmed. I provided a visual example of a “wash and rinse”, where those stops were run on a downgap immediately followed by an upward acceleration. It does not always happen, but occurs sufficiently frequently at terminal points that understanding the pattern helps a trader recognize what is occurring and respond profitably. A further refinement popularized by Joe Di Napoli is that when a market gaps through stops and makes its high/low during the first five minutes of trading – and that high/low holds for half an hour – traders must be alert for a huge reversal because the Big Money has just appropriated positions from the small money and the market is about to accelerate in the opposite direction of the gap. This happened on 8/2, and a little research will reveal it was not an aberration. The cautionary note is to avoid placing stops where the public places them. None of there observations are “conspiratorial”. It is “human nature”, and if you do not believe that human nature is a predictably recurring phenomenon why are you on a technical analysis site?

              • Mary773 says:

                In conclusion, someone can make more money trading than doing virtually anything else IF they are really good at it. This fact attracts highly intelligent people to Wall Street. When you are trading ES, you are literally competing against the most brilliant people in the world. They are a) smarter than you; b) more experienced than you; c) better capitalized than you; and d) better equipped than you. Visualize playing chess against Bobby Fischer and he starts the game with an extra rook. If you are going to survive – and few do – you better choose your spots extremely carefully because your only advantage is that you do not have to move your pieces except when the odds are in your favor and you wish to do so.

              • aahmichael says:

                As mcg has repeated said, you are functioning on the premise that you know exactly what the market is going to do at all times, AND you know exactly where all traders have placed their orders. It’s like I’m conversing with the Amazing Kreskin. The fact of the matter is that no one ever knows where the market is going to go, and no one ever knows where every other trader has placed their orders. There are just as many times that the market breaks a previous high or low and never looks back as there are when it breaks a previous high or low and reverses. The #1 rule in trading is to ensure that you are in business tomorrow, and if it just so happens that your stop is hit and the market immediately reverses, then that stop was still placed in the perfect spot because it ensured that you are in business tomorrow.

                By the way, Lee didn’t say that people put stops in predictable places. He said that the floor traders had the ability to run stops. When markets went fully electronic, it killed the edge that floor traders had.

              • Mary773 says:

                Thank you for the endless stream of snide incoherent non sequiturs. God bless you.

  35. rd3777 says:

    Posted this last night and should accelerate down through the lower TL
    JPN225

  36. Ashley says:

    Hi Thanks Tony, “Also of note, during the entire SPX 2692 advance to 2863, the largest pullback has only been 7-points.”, Im sure you meant 2796 right??? Any thoughts on this being right???

  37. bouraq says:

    Chart of the day is $SILVER at http://www.tradingchannels.uk

  38. Lee x says:

    Thanks Tony

  39. phil1247 says:

    thanks Tony

    VIX sell signal today ( bearish for stocks )

    need higher VIX close tomorrow to confirm the signal

    • phil1247 says:

      For a VIX confirmed signal you need 3 events:

      A close outside of the 2.0 Bollinger Band (20-day SMA)
      A close back inside the 2.0 BB – this issues the signal
      A higher close (sell) or lower close (buy) than the close of the day back inside the 2.0 BB – this confirms the signal.
      Once you get those three events in succession a major reversal in equities (and the VIX of course) usually occurs within a week. Obviously the buy/sell directions are relative to equities, not the VIX, but of course implicitly a buy signal in equities is a short signal on the VIX side.

      from Evil Speculator

  40. jobjas says:

    expecting wave 3 to top at 2880 .squiggle count

  41. Page says:

    SPX will open gap down.

    Thanks Tony.

    • tommyboys says:

      Why do people waste time making predictions hour to hour? No one knows what the market will do hour to hour and 9 outta 10
      of your “next morning” calls are wrong so what’s the point?

  42. Skeetois M says:

    Thanks for the update, Tony. Hope all is improving for you. Am looking for the dip to confirm my numbers too.

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