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. M1 says:

    Thanks Tony. Do you think the selloff is done for this week ? ..and yesterday lows should hold the sell pressure for the moment ?
    I see the NAZ has already retraced 38.2% of the 2016 – 2018 wave…and even the bots should “understand” this is an important support. 😊

    Like

  2. phil1247 says:

    BONDS / ZB

    bond gurus say 6% bond yields ?
    they are horribly wrong

    floyd .

    . blasting thru target all the way to -618 target
    and extension short busted

    ya gotta love it ….yes ?

    Like

  3. Good morning all. /ES printed a slightly lower low in the overnight session. Therefore, if we are witnessing a counter trend rally, the updated levels have been lowered to account for lower low print. Still expecting /ES to print a top around the gap, the pivot (2529.25) the 38% short (25520.48) or the 50% short (2534.14). If /ES trades above 2547.78 this analysis is invalidated at the counter trend rally will be a bit more powerful and test 2581.38. All targets are noted on the chart. DH chart.

    Bottom line…../ES 2547.78 bullish above and bearish below.

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    • phil1247 says:

      Hi asa

      i have a series down but look where the 38 special of the series is…..

      the same level as yours from the top …double special

      Like

      • phil1247 says:

        ps ….. nice boat dock asa
        i guess i went into the wrong business

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        • /VX is bullish, just broke out of a micro 61.8% Short…bearish for equities..We had the pullback off this will it continue?…watching /VX for clues. As I type this post, /ES is almost ready to break a 61.8% micro short at 2492.04 which will lead to a retest of the overnight low, , Tony’s pivot and then some.

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  4. fxaprendiz says:

    If I were a long term investor I would start buying below 2500 and just wait a couple years. Alas I’m only a trader and as such just watching price action since Monday.
    This corrective wave from 2942 is a wxy complex indeed, only that instead of starting with w as a flat it seems to be a double zigzag, with both zz about equal now, although I suspect there’s still a bit more downside for now.
    Not sure I want to enter a trade now, with the holidays and new year this close. Maybe if there’s a good setup, otherwise just sitting on my hands.

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  5. torehund says:

    Prechter is at it again, he has himself been in a bear-market prediction wise, and so have I (even though I have remained bullish for very long).

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  6. chrisk44342 says:

    boom. as noted earlier today https://invst.ly/9ko3q 2480

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  7. Dex T says:

    Bluehorseshow ,

    The market has had a “problem” ever since QE ended and the rate hikes began. It started with the “taper tantrums” and the bitching has never let up even as the bull market continues. Every Fed day increase all I read is that the market is “concerned” with Fed tightening.

    The REAL problem is wall streets deep insecurity because they want an easily manipulated puppet and not an objective Federal head.

    Powell is very new to the game but as long as he ignores the political sideshow and Wall Street whining they should do ok.

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    • fenster6 says:

      Agreed 100%

      the village idiot is more to blame, Pumping up an overheated economy with unnecessary tax cuts and then starting a trade war not just with china but with allies and friends and saying trade wars are fun.

      Like

      • Dex T says:

        While I have a mixed opinion on the tax cuts (mainly not favorable) I am in favor of the trade wars. However, Trump is a separate issue.

        The rate increases first began in December of 2015 and have since continued . The Fed has made their position fairly clear since then and stayed true to their course.

        Powell is simply continuing the path of his predecessors and made it clear he will not be influenced by daily fluctuations.

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      • We have been raked and ravaged by the Chinese and our trading partners for years. It was allowed and encouraged by our last four Presidents. Anyone who says that this shouldn’t come to a screeching halt immediately, needs to have their head examined. In case you haven’t noticed, the Chinese government is the embodiment of evil. BTW, we just came to agreement with Poland today on a 20 year deal to provide them with LNG

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        • The trade problem is legacy thinking from the Marshal Plan
          Henry Kissinger “the smartest man on the planet” masterminded the really bad problem with China.t’s been on autopilot since. Nobody wanted to try fixing it.
          Enter Donald Trump.

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          • Exactly Tom. It amazes me how the Trump haters think that somehow we can fix this through “normal negotiations” and promises made by the Chinese, as the last Presidents (especially the previous 4) have done

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      • purplember says:

        FED didn’t raise rates during obama when they were suppose to. Now they are. all politically motivated

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        • Dex T says:

          But they did. The first increase was in December 2015. The market reacted badly so they held off a while.

          But I agree. Rates should have been increased earlier and QE ended sooner.

          While there are people in the Federal Reserve politically motivated I doubt Powell is one of them. He just has the task of steering the ship at the tail end of a bull and trying to head the course that was plotted years earlier.

          Like

    • Officers of publicly traded companies have been making out like bandits.
      The FED brings rates way down, companies borrow are low rates (subsidized by CD savers) , buy back a shares, the stock price goes up. Company CEOs are geniuses. They get huge 144 stock awards, retire very wealthy.

      Does any of this help the economy? No.

      Like

      • nsteve24 says:

        Officers of publicly traded companies have been making out like bandits.
        Trump/GOP Tax cut (socialism for wealthy & corps), companies borrow with the tax cut savings (do not permanently raise worker wages), buy back a shares, the stock price goes up. Company CEOs are geniuses. They get huge 144 stock awards, retire very wealthy.

        Does any of this help the economy? No.

        Like

  8. Hello. Most of you already know me. Bud Fox, that said. My SP500 work today,
    has lead me to believe a Bear market, is just around the corner, and probably has already begun.
    12/19/2018….Bye

    Like

  9. lml25 says:

    A little advice I try to follow:When in a bear market,follow whoever is a bear.It’s their time to be right.Guys like Michael Wilson from Morgan,Acampura is another bear right now.In a bull,follow guys like Tom Lee.On this site,Aah is bearish and should be given extra creedence.Or go opposite Gartman–when all else fails lol.GL all.

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    • Hi…Yes, while I have not read the commentary, you have posted by others.
      My chart work suggest, a Bear market in here, as of 9/21. Yes, I am way late
      in the Bear call. No question. But, my rather new designing of the SP, for LT analysis
      is new. In spite of that late call. Where are the Bears? Oh, I think in a relatively few weeks
      the Bears will outnumber the Bulls today. Bud Fox

      Like

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