Wednesday update

SHORT TERM: rally continues, DOW +92

For the first three days of the week the Asian markets have gained 2.9%, and the European markets have gained 1.2%. The SPX started the week at 2532 and hit 2595 today for a 2.5% gain so far this week. When reviewing the charts of the SPX, DOW, NAZ and NDX we do not see them as choppy as we would have expected for a B wave rally. The SPX, DOW, and NDX look like three waves up, and the NAZ is one wave up thus far. Could be corrective, could be impulsive, too early to tell. With that in mind we did a bit of research.

Whenever the Presidents Working Group (PWG) gets involved in the markets through their Primary Dealers. The market generally rallies 10% to 13% before turning over and heading back down again. One time, 1990, it never did fully return to the recent lows. Was that the outlier? Or is that a possibility this time around too? The three levels to watch going forward actually fit with three OEW pivots. These are highlighted in green on the daily chart. SPX 2575, 2632 and 2656. The first is a 10% rally, which has already been achieved. The second a 12% rally, and the third a 13% rally. We would not expect a PWG B wave to exceed that third level. We are also watching market breadth, and have some parameters there too. Interesting juncture.

Short term support is at the 2575 and 2525 pivots, with resistance at the 2594 and 2632 pivots. Short term momentum displays a negative divergence at today’s high. Best to your trading!

After observing TESLA  for a few years we have determined it trades more like a commodity stock (abc’s) than a growth stock, and have dropped it from our charts. In its place we have added a few things. Fed-Ex (pg. 13), Intelsat (pg. 14), and GBTC (pg. 13) the pink sheet Bitcoin ETF. Under commodities on page 8 we have added to Gold and Crude, the CME Bitcoin index and Soybeans. Biotech remains on that page. The Housing index has been moved to page 15 with the housing stats. New Year improvement? Possible.

MEDIUM TERM: downtrend

LONG TERM: downtrend probable

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

About tony caldaro

Investor
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551 Responses to Wednesday update

  1. 123 abc says:

    Thank you Tony for the excellent midweek analysis, superbly detailed techicals and research.

    Interesting new chart additions, also noticed that you’re starting to use the Fibonacci retracement tool. Palladium appears to be unusual, the only precious metal in a mania bull market. May be worth looking at Microsoft since its now within the top 5 holding of all major index tracking funds. Bitcoin needs to stay above the 06-JAN low otherwise the bear market likely resumes. Quite possible the S&P500 is impulsive from the Christmas Eve low, looks like Santa did show up…

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  2. Trader Sal says:

    ES came upto 2597 without any significant pullback from 2438.5. I was expecting a 3 waver like the (a) and (b) before in this chart below:

    Now I am not sure if there will be dip so close to the target ES2612 and start b of (c). Either way I think the bull bear line is at ES2612. If it tags it and turns around, that would mark the end of uptrend from 2317 on ES.

    Playing sub waves has been more difficult than trying to predict overall direction. I was harping about 2318 since nov first week when it was at 2800+ but by the time it got there I was in and out couple times and it wasnt well timed.

    Same thing on its way up.. made some good and some bad moves trying to time the waves to 2612. Case in point was the upturn at 2464 didnt materialize. Instead it went to 2438.5 before turning up..

    I think it makes sense to just sit out the smaller waves and give more time. One of these days I will get it right.

    But for now, all roads leading to ES2612.

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    • forget about ppl saying it’s an ABC, recount the waves on hourly and you will see that’s wave 4 up (leg A up so far of a potential ABC) and it should be lower than wave 1 which had a low of 2603. so probably we put the top in today.

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    • You had the call.

      This ran a 85 % correlation with my work

      How could you not be killing it ???

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      • Trader Sal says:

        Yeah one of these days. (:o) futs are dangerous btw. Opts are more relaxing but option sellers wisened up after initial october debacle.

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        • The call is still there..IT’s still money —> be more patient .YOu have good work – cut out the piker baby waves and play large , larger waves.

          the call is still there…9 yr uptrend ( we cut thru —> now overhead ) 2yr MA stuck

          https://www.tradingview.com/x/CyRqpU3E/

          https://www.tradingview.com/chart/YYGrtNqH/#

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        • aahmichael says:

          Why do you say that futures are more dangerous than options? IMO, it’s the exact opposite. Options are way more dangerous than futures, and the odds of winning with options are exponentially smaller than trading futures.

          Like

          • courtesyoftc says:

            Financial Press:
            U.S. Senate Finance Committee Chairman Charles Grassley said on Wednesday that Congress will not grant any expansion of President Donald Trump’s executive authority over tariff and other trade remedies

            Investors demanded cash back from U.S.-based funds for a 13th straight week, showing increased concern over economic growth as stock and bond returns disappointed, Investment Company Institute (ICI) data showed on Wednesday.

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          • courtesyoftc, if POTUS declares emergency, Congress has no say in the matter, whether the wall, or trade. It bothers me to have so much power in one place, as I do NOT trust any politician, ever….

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          • Trader Sal says:

            With futs u need more precision. Otherwise wider stop loss can get hit and still go your way. Playing opts is like playing etfs. More wiggle room. Can withstand gyrations if overall direction works. But you are right both have their pros and cons.

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          • aahmichael says:

            Here’s why I disagree. With options, you have to be right on both price AND time. WIth futures, time is not a factor at all. Of course, many people will say that futures are more risky because you can lose more than 100% of your investment, however, that risk can easily be negated by using less leverage, or no leverage at all.

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          • Agreed Michael. As long as a trader has a large-enough account size to take safe risk% of capital per trade, futures are the simplest, most versatile, and safest vehicle.

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  3. lml25 says:

    Agree,not much more to go.I’ve seen those stats as well–11-18% rallies in bear markets.Usually 13% on average.When it turns,SPX will lose 50,after being up 10-20.Key reversal and all that.Katie Stockton says 2640 is the huge resistance–and she says,”still a bear market.Sell rallies.”
    Later all.

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  4. jobjas says:

    ES projection

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    • Now that looks like my assumptions. Did you read my mind? Maybe being around EW for so long my subconscious picked up the radical radio waves the aliens put out. Maybe EW is an alien projection? I placed a big bet at close today thinking simply we need a decent retrace before pushing to the 2700 area. I also note that my 6 to 7 months bear low will be violated if we were to shoot up this quickly. Tomorrow opens the door for a better look at the coming pattern.

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  5. Page says:

    Thanks Tony.

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  6. Hi Tony

    Perhaps I don’t say it enough…I appreciate the time and effort you put into this updates. I like your analysis with the levels to watch for a possible larger pullback. Quick question, with a negative divergence on your 60 minute SPX chart, if there is a pullback in SPX 2525 (approx. 50% retrace from the January 3 low at 2443 to today’s high and one of your pivots) and SPX rallies off that low, would that increase the probability of a wave 1,2,i,ii from the 2350 low?

    Your thoughts?

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  7. Derek P. CT says:

    Thanks Tony. Very interesting here indeed. Popcorn ready.

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  8. The wild card is a gap up in the morning over the resistance pivot. GL All!

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  9. Greg Polites says:

    Hi Tony; The Zweig thrust indicator generated a fifth signal yesterday since the 2009 low. Following these four previous signals there has been a retest of previous low and only once (2015) was there a lower low put in before a major bull trend. Yesterday’s Zweig signal aligns with our current set of indicators that call for a retest pending of the December low. How do you view the Zweig indicator? Details and charts at https://hgpolites3.wordpress.com.
    Cheers, Greg

    Like

  10. kvilia says:

    Thanks, Tony. Crude is also at important juncture testing extension short resistance. For a longer term traders its just better to wait for direction.

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