Wednesday update

SHORT TERM: lower open, DOW -89

So far this week Asian markets have gained 1.3%, and European markets have gained 1.0%. The SPX started the week at 2850, rallied to match its all-time high at 2873 on Tuesday, then pulled back on Wednesday. At that high we could count five waves up from SPX 2802: 2819-2806-2850-2834-2873. The largest pullbacks during the rally were 13 and 16 points. Early Wednesday morning the SPX had pulled back 17 points in the cash market (2856), and a lot more (28 point equivalent) overnight in the futures market. Just noting the futures action even though we do not consider it in our analysis.

If this rally did conclude at SPX 2873, then a 40+ point pullback could follow. This would suggest a decline to the OEW 2835 pivot range is underway. After the pullback new all-time highs are next. The DOW still has to rally about 3% to reach its all-time high at 26,617. Short term support is at the 2858 and 2835 pivots, with resistance at the 2884 pivot. Short term momentum ended the day just below neutral. 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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217 Responses to Wednesday update

  1. vivelaamo says:

    It’s always a topping process 😉

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    • fotis2 says:

      Yip especially after Trump was elected every 20 points up the Top is in and every 5 down ”We are in the early stages of a Bear Market”Groundhog Day 3years and counting

      Liked by 1 person

    • fxaprendiz says:

      vive and fotis, by topping process I was referring only to the price action since January 29, 2018 and more specifically since July 25. I wasn’t even here before 2018.
      And I have been calling for only a 14-15% correction not even a bear market let alone a crash. So please don’t lump me in with the perma-bears. We can call ups and downs without belonging to a particular camp.

      Liked by 1 person

  2. Bud Fox says:

    Here is my links to that SP500 historical chart. No one asked for it, but, I thought otheres might want to see it, for themselves…. here is is below…

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  3. mcgcapital says:

    Ditched my SPX shorts today for a modest loss, just can’t hold against the trend without a set up. Usually if it’s going down you can short agains the prior high after some sort of pullback. The making of higher highs vs earlier in the week invalidates the immediate sell set up for me. It could easily weaken directly on Monday here, but it could also run further and wasn’t prepared to let it run away from me. All of the things I’ve mentioned recently re divergences still stand despite new high prints.. but I want to see FTSE and Dax holding this week’s high and going lower next week. If not and they break up, we’re not out of the woods yet but looks like the downside would be less immediate. Quite a lot of work to do on those indices for them to turn bullish.. 7800 and 12800 would probably do it but we’re miles off. US markets are persistently strong, absolutely hate holding positions when the vix is less than 12 as we just don’t move enough. We’ve been blessed with good conditions all of this year so hopefully this is just a temporary lull

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    • fxaprendiz says:

      Hang in there my friend, we are almost done with the upside in SPX. It’s just a very lengthy topping process, but the more time goes on and i see no truly lasting up moves the more convinced I am the end is very near. Check out my last 2 charts in my replies with my current EW count. There’s also a couple Harmonic patterns in the making as we go up that should mark both time and price for the reversal. I haven’t published those yet though, don’t want to jinx them 😉 But definitely we are in a topping process, as I mentioned before, those patterns show up mostly in topping/bottoming processes and consolidations so I don’t buy the 3 of 3 counts.
      Anyway, I’m actually long now, went long again at 2860, but with the finger on the trigger to reverse around 2888-90. I don’t like to trade for a measly 30 points gain, but right now it’s what the market offers, and I’ll use those points to reverse down in a safe way as hedge, anyway.

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      • mcgcapital says:

        I’m in quite big on FTSE so didn’t want to hold a loser over the weekend when I’ve got 3 winners to hold. And I’d also say on SPX, with the exception of January, when you do get an impulsive turn, it tends to bounce and fall short, and that’s where I want to sell as it goes positive very quickly. I sold the other day because we’d failed at 2873, but that’s no longer valid short term. Hate sitting in something where I’m marginally down which doesn’t move lol.. it drains emotional capital.

        In terms of the count, I’m really not sure.. I can see you’ve got it going to 2890ish.. that would be a bit too high for my liking vs the January one where we actually have futures resistance at 2878 cash. Bottom line is, it needs to break 2800 to validate a more bearish move. Even if we sell off from here, we’re now 3% above there and buyers will probably come in first attempt anyway. And we need a catalyst… there’s politics, trade and liquidity as the only things I can see on the horizon that could cause a multi hundred point drop. Politics probably isn’t going to do it unless some more stuff comes out which isn’t out there already, and trade will drag on a while probably.

        Liquidity is the interesting one as I think that’s been driving things all year. I’m looking for the recoupling between the US and elsewhere as being the big theme to watch, whether that’s upwards or downwards. What we’re seeing at the moment is liquidity draining into the US. Eventually all indices will move in the same direction together for a sustained period. If we don’t have enough liquidity, that won’t happen on the upside. I’ve been not seen a single period all year where everything has rallied together. Despite today’s US rally, Europe hasn’t followed at all. So I feel confident in the analysis but it really needs price to confirm for it to be tradable.. if SPX carries on moving to 3000 in this choppy fashion I’d be amazed but would also be very wrong even if it did then subsequently tank

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        • mcgcapital says:

          And meant to say it’s important in this game to admit when you’re wrong otherwise you can end up with big losses.. at the moment I’m happy to carry on the cat and mouse game on SPX of looking for short entries which can get out for small losses on if they don’t play out. But we’ve already gone further than I thought in the last few weeks, and there’s always a possibility I’m wrong. I’d say above 2900 and we’re sufficiently above prior highs to stop trying to sell resistance/failed breakouts etc. But everything does kind of point to a decent drop coming to me

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        • fxaprendiz says:

          It’s an area defined by several Fibonacci lines, not all shown in the chart, it’s more like 2888-2893.
          Now that the January ATH has been taken out, the bearish counts remaining both imply an expanded flat, and in such cases, the first target for wave b/x is 5% of wave a/w above it, and that gives us the low 2890s as well.
          Now the bulls are encouraged but what they fail to see is that an expanded flat is the second most common corrective pattern, after zigzags, so a reversal after piercing an ATH is very common, and the way we have approached the ATH has not been decisive at all.
          Regarding the catalyst for the reversal, I’ll let the pundits to find a reason after the fact. Sentiment can and does change very easily and often without a visible reason, only later it’s rationalized. It may be liquidity problems as you have mentioned.
          Have a good night and weekend and I’ll see you next week.

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  4. scottycj1 says:

    Looks like Mr Murrays calculator needs re-calibration

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