Tony Caldaro's Wednesday markets update

Tony Caldaro's Objective Elliott Wave update this afternoon shows that he's considering a potential alternative for the completion of the bear rally. As I understand it, the possible alternative would have the rally complete sooner, and at a lower level (perhaps SPX 1001). It's important to know. We can expect him to continue commenting on it in his daily after-hours updates (at his site, and via RSS feed).

Remember, in Tony's method, the bear market rally is considered a primary B wave, composed of major waves A (up), B (down), and C (up). So after major waves A and B are done, Tony looks for completion of primary wave B (which implicitly means major wave C that will spell the completion of major B).

Personally I keep seeing the number about 960 SPX popping up in my measurements, but of course I defer to Tony for his analysis. Besides, there's a big difference between the market doing a pullback down now with a second rally leg up later, versus going up now to finish the rally and then roll over much lower. So if you're tracking Tony's levels and counts, you'll want to keep up with this:

From: tony's space

Sent: Wednesday, May 13, 2009 4:12 PM

Subject: wednesday update

SHORT TERM: pullback continues on weak retail sales, DOW -184

Overnight the Asian markets were mixed. Europe opened higher but closed -2.4%. Overnight the US index futures were higher but moved lower with European trading. At 8:30 Retail sales were reported lower -0.4% v -1.3%, and Import prices rose +1.6% v +0.2%. The market gapped down at the open to SPX 900 and continued lower in the opening minutes to 889. As the market started to rebound at 10:00 Inventories were reported -1.0% v -1.3%. By 10:30 the SPX hit 897 and then started to drift lower. Around 1:30 the SPX hit its low for the day at 883. After that the market traded in a narrow 6 point range into the close. For the day the SPX/DOW were -2.45%, and the NDX/NAZ were -2.90%. Bonds were about 12 ticks higher, Crude dropped 90 cents, Gold added $2.00, and the Euro was lower. Support for the SPX remains at 848 and then 789, with resistance at 912 and then 935. Short term momentum was oversold earlier in the day and ended with a positive divergence at the close. Tomorrow, the Bilderberg meeting begins in Greece, then weekly Jobless claims and the PPI will be released at 8:30.

Today's decline pushed this pullback to 47 points (SPX 930-883). The previous two largest pullbacks, for this uptrend, were 53 points in late March and 49 points in mid-April. Clearly an important pullback is underway. The count we have been tracking is a topping of Major wave A at SPX 930, then a Major wave B pullback underway, to be followed to our Primary wave B target between SPX 1001 (50% rally) and 1122 (50% retracement). Now it appears this market is displaying two potential counts. The one described above for the higher SPX 1122 target or the OEW 1107 pivot, and one for the lower target. We posted this afternoon a count on the DOW hourly and daily chart. This suggests that Major waves A and B have already completed, and a five wave Major wave C pattern has been underway. This count would generally require that wave 1 is not overlapped by the current wave 4, which should bottom above DOW 8191 (SPX 876). With the market getting close to these levels today and short term positive divergences in place, this count will get tested tomorrow. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: bear market

CHARTS:http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1606987