Wednesday update

SHORT TERM: flat open then typical FOMC selloff, DOW -352

The first three days of the week had Asian markets -0.4%, and European markets -1.3%. US markets gapped down on Monday, and made a new downtrend low at SPX 2531. Gapped up on Tuesday, but still made a new downtrend low at SPX 2529. Opened flat on Wednesday, rallied into the 25 bps rate increase at 2pm, then made another new downtrend low at SPX 2489. Guess the market didn’t hear what it wanted to hear during the press conference. The FED did lower the number of rate increases for 2019 from 3 to 2. But did not mention anything about reducing the Quantitative Tightening, which has been draining liquidity at a rate of $50B per month. Since the next likely rate increase is not until June or even September, then it must be all about liquidity and QT now.

We can still be certain, at this juncture, the stock market is still in its first downtrend of this bear market. The OEW 2525 pivot, which was only added last week, was tested two times this week then broke today. The next OEW pivot is at 2479. Around that level Minor C equals Minor A. Strong support? Positive divergences continue to appear on the hourly and weekly charts, with oversold daily and monthly RSIs. With options expiration up next, the volatility is certainly to continue. Still a day traders markets!

MEDIUM TERM: downtrend

LONG TERM: downtrend most probable

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

About tony caldaro

Investor
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682 Responses to Wednesday update

  1. arlingtonhts says:

    Thank you, Tony! Thank you all! A great site for me to learn.
    Happy Holidays & Happy New Year!

  2. mike7x says:

    FWIW:

  3. Jack kendo says:

    record fear level.
    Looking for 1 on the coming Black Monday December 24, 2018.

    Keep this guidance handy.
    https://www.cmegroup.com/trading/equity-index/price-limit-guide.html

    cheers!

  4. phil1247 says:

    merry christmas Tony
    health and happiness to you and your family

  5. New STATS needed….forget about down or up 2%, we now need to go to 3% and 4% up or down…after many years these new STATS are blowing my mind….all of them!

  6. phil1247 says:

    2408 es target hit

    exit shorts now

    see ya !!!!!!!!!!!!!!!!

  7. stockop says:

    stockop fade in effect. crashometer got to epic levels and almost went short (after some nasty long losses today). long 241 spy thru weekend unless we puke into close.

  8. This whole downtrend since Oct is loaded with pennants.
    Looks like this one will be a snap back for the bulls Monday.
    Market needs to reset.

  9. mcgcapital says:

    I’m a bear and even I’m bored of this now.. longs are suicide, shorts feel so uncomfortable given we’ve fallen so far already and how far it can retrace whilst still in the short term downtrend. Ideally there’d be a proper bounce to sell into but everyone is thinking that.. so probably just keeps heading lower

    • Jimbo says:

      Bearishness at extremes but i’m not sure that many are short

    • aahmichael says:

      This morning’s rally completed a 63 point retracement. That wasn’t proper enough?

      • mcgcapital says:

        I sold it.. it’s just the speed it’s moving at it’s hard to have a break without missing out. The rallies literally last 5 mins. Would prefer a more stable retrace to load up on rather than feeling rushed into positions

        All that said, would take this over last years horrendous volatility any day

        • aahmichael says:

          The market has declined 81 points since this morning’s high, and you’re complaining that it’s moving too slow? haha

          • I’ve noticed that there are some people here that dont seem to be considering what (isnt going on) in Congress and what looms come Monday and an abbreviated session…. hence the continued non-stop selling today.

            Sometimes, you have to step away from trying to count all of the “squiggles” and waves and stop looking at the bark of the Tree…. and look at the Forest.

            There’s a forest fire of UNCERTAINTY and total lack of leadership.

            • Lee x says:

              When the bell rings we’ll all have plenty of time to ponder it if we choose.
              Call me a squiggler 😉

            • I don’t think what Congress is doing (or not doing) means anything.

              Why don’t you ask people here about the two Chinese nationals who have been indicted for espionage? Who cares about soybean exports. If the Chinese government is getting massive data dumps containing classified into on everybody in the U.S. Navy, that’s a little more significant than a couple of freighters of beans.

              The market is dropping like a rock, and it’s not because of anything Chuck Schumer may or may not do.
              Historically speaking (and I am not saying this will happen), military wars have started over much less than this news.

          • mcgcapital says:

            Lol the opposite… would like few hours off without risking missing out on a 2% drop. Tiring week

            • aahmichael says:

              You daytraders work way too hard. This has been the best month of my career, and I’ve only made one trade, and it’s still open. Loaded the short boat to the max on the Sunday night/Monday morning death march of the lemmings after the G20 meeting, and have done nothing since. When the market is in an impulse wave, the thing to do is get in and then do nothing. Same thing happened in October. Held that short for 19 days. This one is now 14 days.

              • Michael, not to be critical or diminish your recent sucess, but I believe you are primarily a short seller. Nothing wrong with that. But people reading your post might jump to the conclusion that you had huge gains on the way up, same now on the way down. Maybe that isn’t the case.

                As we enter the heart of the Holiday season, we want all of our friends on the Tony Caldero blog to embrace the gift of family and friends, but also, the gift of the financial markets, whether they have done that long or short, or both. We all congratulate everyone for what they have accomplished.

                All the best of the Holiday Season. !!

              • mcgcapital says:

                I can imagine this is perfect for you, no need to even cover. I’ve got confidence this goes to 1800 or lower but never confident on what route it takes. I’ve been day trading both sides of FTSE all year despite the wider trend being mostly down.. so have a preference for markets to trade both ways even in the context of a wider trend.. doesn’t suit me when it straight lines either way as I regularly cash profits.. it’s suboptimal when it’s like this but would prefer to do it this way than hold on to long on the 95% of the time the market moves both ways

              • fionamargaret says:

                …numbers suggest down to 1917 now….perhaps a little bounce to give longs hope, but ….

    • Valerie wapiti says:

      Ahh yes. Another 700 pt swing day. Like anyone really cares if the IRS doors are locked over Christmas. Still 45 mins to go. Maybe we’ll see the fabled fear sell EOD.

    • Lee x says:

      You guys are bored ???
      Darned millennials haha ;);)

      • Valerie wapiti says:

        Aapl hit the $150 level the analysts have been jawing is a buy level. end of day on a quad opex…nxt week a holiday…all the political crap going on…hmmmm…..

    • courtesyoftc says:

      just to day up to now
      NYSE Comp. New highs 3
      New Lows 1018

      S&P 500 : New Highs 0
      New Lows 167

      Russell 2000: New Highs 3
      New Lows 473

  10. wildmarkets says:

    This is why QE was amazing. At least market rallied after such a sell-off 🙂

  11. Jack kendo says:

    Choose your count – bullish or bearish.
    Bullish count:
    Major 2 ending, and coming would be Major 3, the strongest and longest up leg of oew P III.
    Major 1: 1810 ~ 2941.

    Bearish count:


    The Great Debt Deflation 2019 ~ …
    Market down 80% ~ 90%.
    cheers!

  12. kvilia says:

    wow, what what a reaction off of ES 2458. Sell orders were in order, no pun intended.

  13. tommyboys says:

    Some worthless trivia for another grinder. S&P first trade date was March 4, 1957. Today, December 21st, 2018, it is a fib 61.80 years of age 🙂

  14. fxaprendiz says:

    I have a SPX long order at 2420 since yesterday. Not expecting it to trigger until next week but with this volatile market I’d rather be prepared.
    I might be left hanging though as my overall area of interest is 2437-2397 and SPX already pierced its upper limit.
    Not sure whether to post charts or not to explain my reasoning behind this position. This market has gotten into the habit of busting everyone’s counts/views as soon as they’re posted since 2942. Maybe I’ll do some after the fact posting to appear smart 😛

  15. lunker1 says:

    using Tony’s count
    Minor A 336
    C=A 2479
    C=1.236A 2400

    Minute A of Minor C 184
    C=2.236A 2388

    Pivots 2385 and 2411

  16. kvilia says:

    Phil I have a CL answer for you. Do not expect $20 down, looks like CL will fly once markets reverse. Tick by tick with ES, literally.

  17. Mark Smith says:

    My ROC work shows that we’ve hit the downside target on the DAILY and WEEKLY charts that I’ve mentioned. It holds here, or we elect new downside targets, significantly larger, similar to what happened in Sep ’00. This, coincidentally, is effectively where A=C for this type of indicator. Quite bullish now!

    • Mark Smith says:

      Not buying until the tick charts paint something more bullish. I have a single stock “with a higher basis”, and licking my wounds.

  18. stockop says:

    makings of a signature PPT stick save right at 12:30. not liking price action at all. if we do rally i may play it as C of a flat… long way to go as charts look horrible. i think the bad news is done for the day? indicators that usually work are not. no idea how many professionals would be caught on the wrong side if we did what 2016 could have done. the lack of rally at this point is very bad. maybe the indicators are too widely used and need to stop working for a while… put call ratio is a big one for me. what if levels are elevated because of put sellers and not buyers?

    • stockop says:

      to further expound on the put/call and why i think this may be the case if theres anyone with more information. last thursday the AAII sentiment released crazy high bear numbers. That same day the P/C opened at 1.6 and went as high as 2.0. the survey is done on tuesdays and released thursday am. if the investors polled were already bearish why would they be buying puts on that day? to my eyes it looked like people saw the numbers and decided to fade them (by selling puts which is so clearly the more professional thing to do than buy calls)…anecdotal but i’ve read comments recently on the web of people selling puts at what they think is the bottom for the high IV. just my 2 cents. the rally in january defied the P/C to the upside and it may just do it on the downside, too. i think the ppt has forsaken us.

    • PPT ?

      Theyve been totally absent during this entire sell-off.
      Fools gold. 🙂

    • PS. I think that you will find that the sentiment surveys (such as the AAII and Investor’s Intelligence) are interesting to track…. but they have demonstrated very little “timing” ability.

      • stockop says:

        I don’t know how I missed this reply, but what do you mean little timing ability? Just that they can be incredibly wrong at times? AAII is pretty crap imo, but Investor’s Intelligence seems to have a pretty darn good track record

  19. tommyboys says:

    Some worthless trivia for another grinder. S&P first trade date was March 4, 1957. Today, December 21st, 2018, it is a fib 61.80 years of age 🙂

  20. wildmarkets says:

    Bears are out looking for a bounce. Bulls are hoping for a bounce and the action is ugly and is keeping up with it with extreme readings.

  21. kvilia says:

    Camp. double bottom now? Let’s see.

  22. gary61b says:

    SPX 60 is making room for another drop and still maintain a +D and other charts are status Quo…..ES (2430 and 2406 I have some support) I’ll keep checking back. https://gyazo.com/a4bd18185bb9e7c368823f1aeb63c2a7

  23. mcgcapital says:

    Closing auction bullish reversal on FTSE, first one in a while and similar to end of October. Could mean a counter rally coming next few trading days

  24. Surprisingly big volume occurring today in many of the stocks that I trade, before the Holiday.
    AMD joins the Nasdaq 100 today.

  25. kvilia says:

    DH is saying support at 1475, will be lucky to defend it. I am starting my afternoon drinking now.

  26. phil1247 says:

    last one

    2482 is a key level
    series up fails below there
    then only the 2467 long from lows stands in the way of 2408 target

  27. lml25 says:

    Correlations–TLT to SPX.Not sure where the level of TLT has to go to break its bullish stochastic (guess 120 to 120.25?),but that would indicate Jamie Dimon is switching from bonds to stocks imho.IWM has a bearish stochastic of single numbers,so just wait and see what Dimon does–along with the rest of PPT.GL all.

  28. NEWBIE says:

    Anybody trading AMD? Any thoughts on direction from here?

    • stockop says:

      imo i would avoid semis like the plague. AMD just broke down from a bear flag. could just be wave b of an ABC wave 2, but the entire sector has seriously broken down and i think 2019 is the year most fundamentalist have pegged for the cyclical slowdown. wait until the current price action is reflected in earnings. the cycles in semis usually last longer than a few months. I wouldnt be the most enthusiastic about trying to catch a stock down almost 50% from highs in 3 months. its never worked for me in the past.

    • dad1 says:

      Keep in mind that AMD and Nvidia are tied in with BitCoin – especially Nvidia, but all semis

  29. phil1247 says:

    CL

    kvilia
    dumped remaining lotto tix SCO on gap up open
    no more crude trading for me till i see what shakes out here
    wave 4 triangle and post triangle thrust done ?
    or b wave triangle and 20 dollars down coming?

  30. Dex T says:

    Sorry to see General Mattis depart. He was the best choice for Defense secretary. Highly intelligent, dedicated, a proven soldier and always with the nation’s best interest’s at heart.

    However, I agree with Trump’s decision to withdraw troops from Syria. Time for the country to work on their own problems.

    • Problem with the U.S Military is that the status quo goes back decades (e,g, NATO).
      Guys like Mattis have a lot of close friends, that can’t be close friends going forward, based on Trump’s vision for new 21st century U.S. paradigm.
      The guy did the right thing by resigning.
      He sure wouldn’t want to get fired by Trump.

      • Dex T says:

        I agree. The U.S. military has a complicated network of alliances throughout the globe. It’s not an easy disentanglement but we cannot be the global policeman and rush in every time something goes wrong.

        ISIS has been beaten down and it’s time to move on and let the Syrians figure their fate.

        Mattis is the consummate professional but he needs to be able to let go.

  31. lunker1 says:

    Hi Tony, TGIF. What wave form should we expect for Minor A of Int B? I see 2 or 3 impulsive waves up from 2441. Thx

  32. travis01 says:

    VIX isn’t playing well with the recent market moves in either direction, but is considerably more tagged to the bear side. Tougher to figure out than usual, and I love to trade the vix. Still playing a short on the vix for an expected move through holidays.

    • stockop says:

      agreed as a fellow vix aficionado myself. one of my first big winners was on vxx back in the day. only good move i made in august of 2015…

      what i’m noticing myself is that the moves seem much more muted than in the past relative to the upside of volatility and downside market price action. long vix is one of the most crowded trades in the markets right now. i think its severely messing with the price action and is part of my rally thesis. parabolic market move with the same for the vix. depending on the reaction to that i think it would be a good tell of bear/bull market. don’t see how we crash when everyone and their mom is long vix either for crash or market protection. the herd can be right every now and then…

      • travis01 says:

        Glad ur a vix guy too…we can chat on it. Ive traded vix products a ton over recent years with short time money (never retirement type $). It’s a love / hate relationship for sure. Can’t really get ahold of these recent moves though. I usually trade it down via TVIX or UVXY. Made a good bit back with XIV before it crashed. Bought around $5 when it hit a low.

        • stockop says:

          UVXY is my go to vehicle. these recent moves have been abnormal for the past two months. market goes down and these damn things somedays join them. 3% down moves and they barely budge. I seriously think the amount of people in the trade is severely throwing it off. it no longer seems to lead, but more coincide with the market. all of the emotion seems to have given it a plausible Elliott wave count…

          Im counting some kind of contracting diagonal off the december 3rd lows. leading or ending it doesnt really matter it seems to fit all of the specifications. alternative is a ridiculously subdivided wave C or wave 3 that whenever I attempt to do is wrong so much more often than it is right i don’t do it anymore. KISS. market currently doing its best to kill my count.

          • travis01 says:

            Been in uvxy almost exclusively but lately tvix outperforms it. Plus was difficult to find shares to short uvxy for up moves and not so for tvix. XIV is gone so I use short on tvix instead. Luckily i was out of XIV when the crap hit the fan. GL and let’s get this train back on the track. I love to trade the vix though it causes a slight addiction at times 🙂

  33. I just love normal price discovery /sarcasm/. They large traders PPT (?) take the index down hard just before the open. Bears smelling blood jump in, with eyes on filling the gap. Meanwhile traders like me, sit on my hands waiting for the gap to fill and if it’s on a low tick, I was ready to take the long…so longs were waiting. What happens?…/ES trades a few ticks before the gap, never filled and then they hammer /VX and equities rally straight up no pullbacks , no technical entries into the long.
    Bears got their head handed to them and some bulls waiting to get in…. both are “trapped”. So, I continue to watch my computer screen for another entry and my wife is telling me to shut off the damn computer and take her Christmas shopping…for her!!!!! That’s what happens when you are married for 34 wonderful years…..she just knows what to say at the right time…LOL

    Good luck to all and Merry Christmas Tony and to all that apply and a Happy, Healthy and Prosperous New Year to all.

    • aahmichael says:

      The daily R1 pivot today was/is 2504.31. (HOD was 2504.41.)

      • Thanks…aah for that data point…that nontechnical rally (IMHO) out of nowhere just broke it’s 61.8% long. It’s all games. Fed president John Williams gave a speech today that basically said 1 and done…no rate hikes in 2019. That was the cause of the ramp which BTW, did not complete at any Fibonacci level or technical level. I don’t use R1 so I was unaware of that technical tool at 2504.31, so once again thank you.

        • aahmichael says:

          The “floor pivots” are invaluable. It wasn’t a fluke that the market reversed exactly at that number. Even though I haven’t daytraded in more than 15 years, I still calculate the pivots at the close everyday, so that I know where they are for the next day. (Old habits are hard to break) I have used the same spreadsheet for those calculations for the last 35 years. I do it for daily, weekly, monthly, and yearly.

      • travis01 says:

        Where did R1 come from? Not familiar. Damn you nailed that one! Nice

    • quickrick38 says:

      asa, been their many times 🙂

  34. stockop says:

    so i talked with a friend who is very knowledgable about the daily ongoings of politics. said he puts the odds of spending bill being passed at zero. apparently some senators went home for the holiday’s on wednesday when the spending bill was all but a done deal until Trump sided with the hard liners for the wall at the last second. the question now becomes, is it priced in already? sell the rumor buy the news? or is it a great short opportunity?

  35. Dex T says:

    Now that a relief rally occurred hopefully Wall street will stop complaining about the interest rate increases.

  36. fionamargaret says:

    $WTIC (OIL) down to 34
    DWT (short oil) up to 26.5
    $SPX down to 2050
    VXX TVIX……short the indices

    • gary61b says:

      Fiona, your numbers keep changing on the spx. not to be negative… just humorous, but it reminds me of a dog chasing its tail, the tail as the target keeps moving when the body keeps trying to obtain the target. The UPRO # you had was 33 so far 32.5 was the low as of yesterday. I have not worked my UPRO chart for a 2050 low. 🙂

      • fionamargaret says:

        Yes Gary there must be momentum changing the permutation….it usually is much more stable…regression is 2050 as of now….
        if there is something you would like me to look at I am happy to do so…..

      • fionamargaret says:

        Gary, as of the close today the $SPX is now suggesting 1971….Page will get her 666 yet…
        UPRO still is at 33 (I would find solace (if that is what you are seeking) in its not budging.)..

    • fionamargaret says:

      If we get oil (DWT) through 44….clear sailing down to 34…..and then do you think we DB with the low of yore…..

  37. Leon Cooperman (ex Goldman guy), kind of surprised that he called out the SEC, but agree that ALGOS and uptick rule would quiet things down. How about all of these “quad event expirations” with indexes influencing many stocks in general…3x weighted stuff seems like gambling to me, not leverage….they snowball all holdings on liquidations and re allocations….best to watch, but we a stretched to such an extreme that I might come back in for a big bounce.

    • I could solve this problem in 1 page of legislation.

      1. For all commercial/financial institutions, if you place an limit order it is a live order for 1 full second before it can be cancelled.
      2. For all commercial/financial institutions, if you place a market order there shall be a 1 second delay in execution.
      3. No third party electronic device shall be placed in between a traders computer and the exchange.
      4. No one receives any Gov communication (i.e. FOMC statements, Fed presidents and chairmen’s speeches in advance, etc.) in advance. All communication shall be posted on the internet in real time.

      Problem solved!

  38. stockop says:

    gigantic volume in the FANG names first 5 mins. someone is backing up the truck. the big question is who is right the buyer of the seller?

  39. For the sheer breadth of performers, 2018 is shaping up to be one of the worst year for investors across all asset classes. Out of 8 major asset classes, only two are on track to deliver positive total returns…. T-Bills and Treasuries.

    Emerging Markets and Commodities have been the worst, followed by DM stocks and US stocks.

  40. Good morning all. /ES broke the 61.8% short several times in the overnight session. Which increases the probability that /ES will rally to 2516..traders may trade to fill the gap first before they take equities higher. If this was “sloppy trading”, / ES would have to decline through the gap like a hot knife through butter.

  41. Menachem M. Uzan says:

    I am very scared of this market. But IMVHO, so far, its fair to say that this decline in the market is very consistent with what a Major 2 in a Primary 3 should look and feel like. This decline has accomplished its mission, everyone is a bear. If it is Major 2, then it will be over soon based on the extreme oversold readings. which nevertheless still allows for some further decline.
    Remember, you must go down in order to go up, that’s life. What will be the catalyst? G-d knows. It could be any number of things. If this market decline does nothing more than make you appreciate what you all have and help others who have less than you so be it, it was worth it. In the meantime while we are down here, plant seeds of goodness and kindness, so when we do share those times of success we can all share together in a kinder and more gentler world.

  42. I’m looking for another red day on big volume. A lot of people expecting a big rally. Want to see this sold off at the open down to 2400 level today. Will see

  43. jobjas says:

    CL may be bottoming soon

  44. phil1247 says:

    will another es selloff begin from 38 special 2495
    and send us down to 2408 target ?

  45. unclegrandpaw says:

    I have 3 Qs available for 5 more hours if anyone wants them. Happy holidays!

    Initiative Q is an attempt by ex-PayPal guys to create a new payment system instead of payment cards that were designed in the 1950s. The system uses its own currency, the Q, and to get people to start using the system once it’s ready they are allocating Qs for free to people that sign up now (the amount drops as more people join – so better to join early). Signing up is free and they only ask for your name and an email address. There’s nothing to lose but if this payment system becomes a world leading payment method your Qs can be worth a lot. If you missed getting bitcoin seven years ago, you wouldn’t want to miss this.

    Here is my invite link: https://initiativeq.com/invite/BgLiTmdyV

    This link will stop working once I’m out of invites. Let me know after you registered, because I need to verify you on my end.

  46. A lot to think about: highest recorded put/call ratio (bullish short term), $TRIN (extreme at lows), $TICK(high minus), quad expiration influence..scalar vs vector (Elon Musk quote)….I’ve learned to wait until the dust settles….good luck, but I would think a BIG RALLY (short term only)

    • tommyboys says:

      Yep. Dunno why even financial news talking big fear and selling this morning. SP futs fair value up
      10 right now. With 1.8+ P/C, greed at 5 and other sentiment extremely bearish I’d guess a face ripper on tap.

  47. mcgcapital says:

    Paranoid bull is definitely worth a follow, he explains what’s going on here pretty well:

    https://mobile.twitter.com/paranoidbull

    I’m sure some of his stuff will be popping up on Coolbiz soon once it gains some popularity lol

    • mcgcapital says:

      “The problem that comes from engaging in high-risk behavior for which the consequences are absent, even if only temporarily, is that such high-risk behavior begins to appear normal and the entire scale of risk gets adjusted and pushed out.”

    • mcgcapital says:

      “What this looks like is simple:

      When Risk is mispriced, losses must be suffered.

      When Risk is mispriced for a Decade throughout the System, the Losses must be extreme.

      When Systemic Risk is mispriced for a Decade, Losses must be catastrophic to the System itself.”

    • During the wild gyrations of Jan-Feb 2018 crash, Carl Icahn was interviewed.
      Nevermind of the most dangerous practices going on were the massive stock buybacks.
      1) Most of those companies took on debt to do tbat.
      2) Most or call of that stock is now at a loss.
      3) Losses likely to get larger.

      The FED just concluded a 10 year program to fix banks.
      Are we ready to start another round of bailouts again?

  48. torehund says:

    Crazy struggle ongoing; Fuel costs aggravating conditions in consumer countries and producers cant balance their budgets at current oil price. A trade war emerging where only the winner can successfully manage to keep their respective Govs running without risk of loosing control. 2 opposing forces enduring ongoing stagflation.

  49. lunker1 says:

    Dec ES 2814 to 2583 the -.618 extension is 2440
    today’s low 2441

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