Weekend update

REVIEW

The week started at SPX 2767. After a lower open on Monday and a trade down to SPX 2749. The market gapped up on Tuesday, and then hit SPX 2817 midday Wednesday. A gap down opening on Thursday took the SPX down to 2755, where it was trading on Monday. Then a gap up opening on Friday rallied the SPX to 2798 early morning, which was sold off for the rest of the day. For the week the SPX/DOW gained 0.20%, and the NDX/NAZ lost 0.65%. Economic reports for the week were mostly positive. On the downtick: housing starts, building permits, existing home sales, and the Philly FED. On the uptick: leading indicators, the NAHB, industrial production, retail sales, the NY FED, business inventories, plus jobless claims and the federal budget improved. Next week’s reports will be highlighted by the beige book and Q3 GDP. Best to your week!

LONG TERM: downtrend probably underway

Despite a volatile week not much has changed from last weekend’s report. The market traded above last week’s SPX 2711 low, and well below the SPX 2941 all-time high. The range for the week was SPX: 2749-2817. And the SPX gained 1 point for the week.

The SPX weekly chart displays the Major wave 1 bull market count from February 2016 to October 2018. Notice the five wave rise from the Primary II bear market low at SPX 1810, to the Major wave 1 high at SPX 2941. Five Intermediate waves, with five Minor waves creating a subdividing Intermediate wave iii. Intermediate ii was an irregular zigzag, and Intermediate iv was a flat. Minor 2 was complex and Minor 4 was simple. Alternation on every level. Same can be said for the DOW, NDX and NAZ chart patterns. They all mimicked each other, while at times not completely in sync.

MEDIUM TERM: downtrend

While the last uptrend left a lot to be desired as for impulsivity. It was still tracked as Intermediate wave v, and expected to be the last uptrend of the bull market. We had noted months ago. If the uptrend surged it could pass SPX 3000 easily. If the uptrend struggled and took lots of time it would probably make only marginal new highs. The uptrend took six months, and exceeded the previous all-time high by only 2.4%. The DOW only exceeded its high by 1.2%.

Thus far the market has dropped from SPX 2941 to SPX 2711. We had thought that could be an important low, and so far it is holding as such. We labeled that low Minute wave A in dark green on the charts. The rally that followed has thus far risen to SPX 2817 for nearly a 50% retracement. We have labeled that with a tentative light green Minute B. So far the decline is moving along generally as expected.

SHORT TERM

With Minute A SPX 2941-2711 (230 points), and Minute B reaching SPX 2817 (106 points), we would now expect Minute C to decline either 0.618 Minute A (2675), or 1.0 Minute A (2587). There are pivots at 2656, 2632 and 2594. Once the market does hit one of those lows it should end this Minor wave A downtrend. Then we would expect a Minor B uptrend retracing 50% to 61.8% of the entire decline. After that we probably won’t be seeing those levels again for some time as the bear market begins to make itself more widely known. If things really get carried away. Which is possible considering the multiples. The FED will be forced to intervene: MM4ME.

Short term support is at the 2731 and 2656 pivots, with resistance at the 2780 and 2798 pivots. Short term momentum ended the week just above oversold. Best to your trading! It’s a day traders market.

FOREIGN MARKETS

Asian markets were mostly lower for the week for a net loss of 0.7%.

European markets were mixed and gained 0.3%.

The DJ World index lost 0.1%, and the NYSE gained 0.1%.

COMMODITIES

Bonds continue to downtrend and lost 0.2% on the week.

Crude appears to be in a downtrend and lost 3.7% on the week.

Gold remains in an uptrend and gained 0.6%.

The USD is also in an uptrend and gained 0.8%.

NEXT WEEK

Wednesday: new homes sales and the Beige book. Thursday: weekly jobless claims, durable goods, and pending home sales. Friday: Q3 GDP and consumer sentiment.

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

 

About tony caldaro

Investor
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625 Responses to Weekend update

  1. llerias7 says:

    Positive divergences seen in 5 min chart:…https://snag.gy/IrMx4N.jpg

  2. Page says:

    This is the capitulation.

  3. I sold all my Puts. Made another 50K. That’s 100K in two days. I am NOT confident that we continue the slide tomorrow. I also didn’t see any panic just a continuous slide.

    I am still expecting a nice 3 to 5 day rally but not sure if it starts tomorrow. I will be inclined to buy CALLS if the market seems to agree with me.

    • Mike Corrada says:

      Excellent trades and patience Gary

      • I sold too early. Didn’t see the last 20 minutes as capitulation mode. It was and I think we found the bottom. I’ll take the gains. I think regardless of how the market opens tomorrow by the end if that day it will be in positive territory. I am also guessing that 2780 is the next target to reach for. If we see no relief from downside pressure tomorrow I throw away my assumptions.

        • fionamargaret says:

          If you notice my posting below, numbers are pre-emptive (before a situation)….check the timing of my posting below, and what happened after…..

  4. Lee x says:

    Hey it hit a pivot

  5. Peter Sliney says:

    I’m pretty sure Mark Cuban will be blaming the speed traders for this.

  6. Tony C. If you see this post before you write your Wednesday update, I wonder if you would comment on the possibility that your green minute labels being 1 degree larger. Where you have minute wave “a’ could that be minor wave “a”. Green minute wave “b” actually minor wave “b”.
    My rational for asking this question is:

    1. the initial leg down is pretty significant.
    2. If you are looking at 2500 or so for the print low…the SPX is more half way there are we still have minor, and intermediate degree corrective waves o complete.
    3. Finally I think it was lunker1 that posted your 2011 daily chart of SPX…minor 1 declining into minor wave 2. That correction was about 95 points, 7% and took about 1 month to complete.

    I know historically wave 2 usually corrects 50% – 61.8% of wave 1 but 2011, was much less significant. Could it have been a huge bear market from 2007-2007 that distorted the charts?…or Bernache’s QE programs? If I understand you correctly you are expecting a <50% correction for minor wave 2.

    Not trying to pin you down, just trying to understand your rational for your call. I want to scale back into this market at some time in the future for a long term trade. Been waiting for this time, for a long time.
    Would appreciate any additional color to your analysis (excuse the pun on words)…thank you.

    • tony caldaro says:

      Have been considering that possibility too.
      My initial thought is that this bear would take about 6 months to unfold in a double three pattern. It may not have to take that look and it may be a much simpler pattern.
      There appears to be many heading for the exits in the last two days.
      Something to keep in mind, and will mention it this weekend.

  7. stan911 says:

    My sequence 2670-2755-2619(07)-2814-2505 to 2484

  8. kvilia says:

    Tony’s pivot 2675 is in play (+- 7 points). Let’s see.

  9. kvilia says:

    Phil, CL tanked again.

  10. Page says:

    Tomorrow morning will be the capitulation time then afternoon will be the start of a long lasting explosive rally. Get ready. 😀

  11. stan911 says:

    Gap at 2754 maybe tomorrow we hit

  12. A few years ago, StockCharts added a new tool to their annotate workbench.
    The “parabolic” tool.
    Seems most chart users prefer the “log” scale (versus the arithmetic scale), so, the parabola tool doesn’t provide a lot of new data, Except the parabola tool on arithmetic scale presents ii in a more dramatic fashion. As in “Holy Jeez, how did we get up here?

    For example, we all know that the three main rallies in the SPX of the past 35 years were big, but did they look this big?

    Or, or current nearly 10 year-old rally, do you think about the “nose-bleed” acceleration very often?

    Just wonderin…

    GLTA

    • tommyboys says:

      Yes that “parabolic” tool distorts for effect. Makes those charts look extra scary.

    • Mark Smith says:

      On an arithmetic scale chart, the higher waves go, the more they will dwarf prior ones in terms of chart-paper. And yet, they could even be much smaller in percentage terms. Ex: $1 to $3 is a triple, but $1000 to $2000 is only a double… It’s folly to use arithmetic scaling, unless the looking at the short-term. Weird, however, is the occasional long-term chart that adheres to EW size suggestions like A=C. I have seen it…

  13. phil1247 says:

    last one

    if es is going down it has no business being above 15 any more

    good luck and see ya tomorrow !

    thanks Tony!

  14. stan911 says:

    Spx gap at 2670

  15. stcoleridge says:

    Lower lows today in the COMP, RUT, SOX and DJT.

  16. Jack kendo says:

    SPX 2691.91 10/24 lod, vs 2691.43 10/23
    5th wave truncated, opposite to the top of 2940 vs 2941 truncation.
    meaning SPX bottomed. good buy here.

    cheers!

  17. This market isn’t looking for a bottom.
    It’s just looking for places to let people out.

    • aahmichael says:

      If the market takes out yesterday’s low today, then it will be the first time in 9 years that a reversal like what occurred yesterday was erased the next day. Action like this only occurs in bear markets.

      • Jack kendo says:

        unless SPX down another 2%+ from here.
        The fact is, 8.6% for the initial decline is not enough for the start of a bear market, Only a mild correction. it’s the smallest correction in 9 years.

        it’s even smaller than the so called Int iv 11.8% initial decline.
        No matter you are calling it P5 topped , or Major 2 correction, certainly not the size of decline you are looking for.
        I see either P5 or Major 1 topped are not proper degree.

        cheers!

        • aahmichael says:

          Every 10% decline starts out as a 5% decline
          Every 20% decline starts out as a 10% decline
          Every 35% decline starts out as a 20% decline
          Every 50% decline starts out as a 35% decline

          • Jack kendo says:

            that’s a wishful thinking, only in theory.
            fact is not like that, none of any 10%+ corrections in last 9 years, and not even during 2007 or 2000 top. the initial size of declines are much larger than this mild 8.6%.

            cheers!

            • aahmichael says:

              You’re assuming that the initial leg down is done. Of course, you’ve been assuming that it was done at much higher levels (and smaller percentage declines) as well.

              • Jack kendo says:

                I profit from the largest fastest decline into 2710 (when I called 3 of 3 plunge) while you were nowhere.
                I was 1% earlier calling the bottom, not a big deal, a matter of size of one day move.

                So many time, when you start to become active on the blog, market close to bottom, this Feb was an example. It works every time.

                cheers!

      • stcoleridge says:

        Agree with that statement and a bear market is exactly what OEW has us in already. Heard a lot of comparisons lately to Oct 2014 with its monstrous mid month reversal. That narrative took a bit of a hit today to say the least. Also some might remember that the B wave that wasn’t back then caused the most tantrumesque behavior this blog has seen, which is saying something.

      • floyd drummer says:

        aahm,

        interesting comment, ….haven’t traded a bear market. …any relevant comments/observations in trading bear markets (…with elliott wave in mind)?

  18. Page says:

    Tony’s pivots at 2656, 2632 and 2594, pick one, it is coming, most probably tomorrow then go long from there. 😀

  19. travis01 says:

    The lotto ticket was sold in my town… not mine so back to work😉

  20. fotis2 says:

    Ricin to Trump the Pentagon, pipe bombs to Clinton ,CNN,Obama Soros? Whats up guys someone stirring the Sh…t pot again?

    • lml25 says:

      Media will infer its Republican sending them…could just as easily be a Democrat wackjob.Entertaining day in stocks,PPT working hard.Later all.

      • Page says:

        somebody is afraid Dems. will take over Congress/Senate so guess who? ha ha ha …
        OK Malania is speaking right now so let’s listen to her then Trump will bash Dems. after that. 😀 😀 😀

  21. fxaprendiz says:

    Computer working now, sort of…
    There you go Floyd

    It almost seems like mission impossible now to launch a counter-trend rally after all these brutal down days, but if SPX is going to do it, now it would be a key moment.
    I would open a long at these levels if I wasn’t already positioned at 2727 after the touch of the B point of the Gartley in the pre-market hours.

    • Anne Day says:

      I agree. It seems impossible but it is totally possible. I would like the market to stay at this level or lower for a few more days, resulting in an even bigger surprise.

  22. phil1247 says:

    ES
    if 2701 gives way .. look for 2661

  23. fxaprendiz says:

    There’s what I like to call a “little helper” in the SPX 1hr charts. When a harmonic pattern appears, sometimes a smaller pattern forms right after the big one, to sort of helping it with the heavy lifting of reversing a strong trend of start a counter-trend move which is the case today.
    I’m having problems with my computer (posting this from my phone) so I can’t draw the pattern properly to post it, but it’s a small bullish Gartley, that is helping the big Bat completed yesterday.

  24. mcgcapital says:

    Looks like today is a higher low.. month end window dressing is imminent, and looking at the monthly chart it seems quite standard that we close half way up the red bars on big down months. Thinking 2780-2800 by next week. Usually when it happens there’s more weakness coming in future months, but the risk reward is to the upside here I think. All subject to the lows holding of course, could be Armageddon below there.

    • stcoleridge says:

      Markets dumped on the European close then rallied sharply soon after. Seen that movie before. Agree with your thoughts MCG, even think the DAX maybe be worth a look from a long perspective.

      • stcoleridge says:

        Looks like a lower low is coming, this is one knifey market.

        • mcgcapital says:

          Feel like most of the indicators I watch are washed out so a reversal should come, but it hasn’t. I’m not sure what that means, maybe it means we just break lower directly. But it’s tricky as you can’t short here when an aggressive counter rally is likely

  25. kvilia says:

    Phil.
    Itching to get CL. What are you doing?

  26. Been over an hour and while the move is decidedly down the acceleration of move has not happened yet. I do not see a slow drawdown over next few days. I think the market either capitulates today or it reverses.

    • chadthundercockthethird says:

      Agreed, I opened some shorts and rode them down this morning to close at spy 271.90. I hope I don’t miss the swoosh since I can’t open anymore till tomorrow. Might be calls by then.

    • chadthundercockthethird says:

      My thoughts are we have no capitulative volume on the 4 hr or daily compared to other corrections. We need a volume spike and I think that gets us down near 2600 at least. This could happen this week or next, or not till Nov 9th as you’ve suggested.

      • So far you seem right on volume. 2728 – 2720 is being defended. if it can break below I think there is a chance for a fast drop. Still holding my 265 Puts for Friday. I push the gamble further with only recent winnings. Had I been losing money I probably wouldn’t be taking such a risk.

        • chadthundercockthethird says:

          I won big on this whole correction, well big to me is 15k lol I’m only 36, but dammit I should still be holding my puts from this morning. Oh well better to scalp when you aren’t sure of the move in your gut.

          • It took me longer to finally start making money. I take chances with money I can afford to lose. AT my 30 plus year job I would listen to the markets in the background while doing work, programmer. At times it gave me a sense of the “mood” of the market and I almost always have a radar for the possible cascading events. Born on Oct. 29th. Perhaps that has something to do with it (lol).

            Now that we broke below 2720 at 11 AM I will hold on till I see a definite reversal or allow this to breakdown thru the day.

  27. Theodore Lerts says:

    I’ve been saying this for a couple months and I still stand by it. My target for USD$ is 109+

  28. lunker1 says:

    I like 2691 for the bottom of Minor A.

    Tony’s charts
    Weekly RSI oversold 20 level is similar to several prior corrections
    Daily RSI is oversold and +D similar to April
    60 min RSI is oversold similar level to April and again no +D
    During the downtrend price met resistance at the Daily 13EMA

    Only curveball I could see is a lower low to 2674 area to set up +D on the 60 minute RSI

  29. kvilia says:

    Phil, CL is trading extension short 67.15. I am on sidelines until it breaks 67.48 and makes a pullback. Will go long after that.

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