tuesday update

SHORT TERM: market pullback continues, DOW -89

Overnight the Asian markets gained 0.6%. Europe opened higher and gained 0.3%. US index futures were relatively flat overnight. At 8:30 Durable goods orders were reported flat: 0.0% vs +9.8%. Then at 9:00 Case-Shiller was reported higher for the sixth month in a row: +3.0% vs +2.0%. The market opened lower at SPX 1403, then rallied back to friday’s high at 1409. The SPX had closed at 1406 yesterday. At 10:00 Consumer confidence was reported higher: 73.7 vs 72.2, and FHFA housing prices were higher: +0.2% vs +0.7%. After hitting that early high the market then pulled back to SPX 1400 by 10:30. Another rally attempt followed, which also ended at SPX 1409 around noon. Then the market pulled back to SPX 1399 by 2:30, and bounced to 1404 by 3:00. In the final hour the SPX hit 1398 just before, just before a 1399 close.

For the day the SPX/DOW were -0.60%, and the NDX/NAZ were -0.35%. Bonds gained 6 ticks, Crude slipped 50 cents, Gold dropped $8, and the USD was higher. Medium term support remains at the 1386 and 1372 pivots, with resistance at the 1440 and 1499 pivots. Tomorrow: New home sales at 10:00, then the FED’s Beige book at 2:00. Also at 12:15 there is a speech from FED governor Tarullo.

The market opened lower today, rallied to SPX 1409, pulled back, then rallied to 1409 again before heading lower. At the same time this was occurring the DOW was making lower highs. This suggests the first rally, Minor wave 1, from SPX 1343 may have concluded today at SPX 1409. We posted a green tentative Minor 1 label on the SPX hourly chart. Should this be correct we should now expect a pullback to either the OEW 1386 pivot range, or the 1372 pivot range.

Short term support drops to SPX 1396/98 and the 1386 pivot, with resistance at SPX 1402/03 and 1413/16. Short term momentum displays a negative divergence at today’s highs, and ended the day nearly oversold. The short term OEW charts remain positive with the swing level now around SPX 1397. Best to your trading!

MEDIUM TERM: uptrend probably underway

LONG TERM: bull market

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

About tony caldaro

Investor
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105 Responses to tuesday update

  1. H D says:

    WOWZA! Got ur spike Homless. GL playing extremes/closes too. C ya’s in the AM

  2. Mladen Jelic says:

    exactly, support, sorry :)
    Could you change resistance and put support?

  3. blubrd67 says:

    Tony,
    I want to thank you for all your tremendous support and navigation of treacherous market waters with consistent wisdom . And also love, patience and acceptance. We can always have trusted Lee to take care of occasional pesky comments. :) But you are always there like a good father to gently lead but with a sure hand.

    I have made copious amounts of mistakes in the past, mostly by not listening to the “inner voice.” You have been one of the instrumental guides to help me recoup at least some of the losses. Igor with his comments has been tremendously useful more than a few times as well. I read once a statement that doctors are the worst investors (alternative medicine mostly here), and I’ve been terrible investor. It took me a while to deal with that simple fact. As Igor yesterday said: “The market is here not to make you money, it’s here to take your money.” Thanks Igor, very wise and quotable. :)

    But talking about “inner voice” which seems to be a taboo topic, as I have never heard it discussed in market circles, yet it’s interesting. I had very clear intuitive voice two days ago that market would be down on Tuesday and wanted to position myself accordingly. Then the news came that the Greek deal was reached, and I let my rational brain chatter negate that decision, My inner voice was obviously more correct than rational chatter. Last night again, in spite of any reason, as I reasoned it should continue dropping more, I felt market will end up positive today. That voice was less clear last night than two days ago, but was still there, and I was stunned when suddenly this morning things started turning green. Tomorrow I “hear” will be down again, but with yet less certainty.

    So this is the point and my question to you that follows: Sometimes I don’t have any intuition at all, it’s totally blank. Sometimes it’s very strong (those are the times when it’s virtually always 100% correct), and sometimes it’s weak. Sometimes it’s there and turns out to be wrong (usually happens when the “voice” is weak or I’m uncertain of it). I’m not trying to make any predictions, simply I “hear” or “feel” it, it’s just there. But the fact that it’s occasionally wrong is confusing me. So the question is: do you ever rely on your intuitive feelings to make a decision? Do you have any strong spiritual practice that help you in doing what you are doing. Or is it simply rational study of waves based on past performance?
    Thanks again for everything you do.

    • tony caldaro says:

      Blubrd,
      Simple question, complex answer.
      As a market technician my goal is to chart the market and apply OEW as it unfolds. But we are much more than just a two dimensional being of mind and body. We are three dimensional beings of mind, body and spirit. The mind being its most active in the conscious state, and the spirit being its most active in the unconscious state.
      The spirit, which has been called the inner voice, will communicate with the conscious mind if it is aware of its existence. Others, may call the spirit intuition, when it communicates with the bodily senses. The spirit, btw, also communicates in dreams. When the mind is silent, the spirit can be more effective.
      What you are possibly experiencing is lesser and greater intuitive feelings. I would speculate that the stronger feelings are both mind/body experiences, and the lesser just body.
      hope this helps

      • blubrd67 says:

        I agree, When the voice is stronger it’s usually when I’m calmer and more “connected.” And with the dreams, I posted here several months ago when the silver was languishing that it’s suddenly breaking out to a specific number, which it did not too long after that. Majority of my intuitive feelings are not about the market, but was just curious if you ever makes decisions based on that, as in the last few days it’s been so present and accurate. Now, I just to have to learn to trust it especially when it happens to be clear. :)

      • tony caldaro says:

        Do I make conscious decisions regarding the market on that alone> No.

  4. Mladen Jelic says:

    SPX 1400 is good support for now. I think that level could be support for next few months. That means SPX could go very HIGH.

    • tony caldaro says:

      Guess you meant support … thank you Mladen

    • torehund says:

      THe only real guarantee bottom in a stock has been reached is when you feel like, and eventually physically sell it. Then its bottom…
      Good strategy is the sell and buyback the next day.

      • torehund says:

        I have tried to sell imaginary shares, but that doesnt rise the shares, you have to physically sell them to make them rise. Its when all market participants are sure the shares wont rise they start to do the opposite.
        Elliot wave(in individual stocks) as it works on long time spans- you have to count right to the last minute wave. That isnt easy, for me it suffices to get the raw longer yearly picture right, buy and then its a longer wait but if you trust the more discernible bigger wave count, sweat it out.
        However painful it may be if you trust your longer judgement and the company does not go belly up, chances are descent it will turn when the small crappy corrections at the bottom have played themselves out. These small corrective waves can bee seen as the small choppy seas after a prolonged but ever diminishing storm, awaiting change in wind direction and a new storm, an upward driving one generated by wind coming from the opposite direction. As downward waves gets more and more counterbalanced by equal strength ABCs mixed with 5s we know the downforce is diminishing by the day.
        EW is waves also in length and force and quality that have to be appreciated intuitively when reading charts, and not by only “blindly” counting the waves.
        Thats another dimension to EW. And as surfing a wave being successful comprises many more parameters of understanding than simple math and schooling alone can provide. Thats why EW is so fascinating, and why there are so many levels of understanding among participants. One can only be humble and receptive in charting and when surfing the waves on the open ocean !

  5. pbnj123 says:

    Tony – if we exceed 1 before the close than this is possibly i of 3 and 2 completed today at 1386?

  6. budfox9450 says:

    Some this AM suggested that the Low, of the Lunar Eclipse was this morning.
    I am not sure about that – due to the Gann, and Cycle lows due Dec 2-4…
    However, a burst of SP strength, is what I am looking for thru Dec.
    And – below 1343 is bye bye…..

  7. blubrd67 says:

    Anyone who follows gold with opinion on this article? He feels gold might be entering longer term downtrend. Everyone is expecting inflation or hyper-inflation for 3 years now, but it’s not happening.
    http://www.minyanville.com/sectors/precious-metals/articles/inflation-qe-qe2-qe3-quantitative-easing/11/27/2012/id/46141
    Tony, you also expressed a few months ago that PM might be entering long term downtrend, but I guess you have revised it based on action since then. What’s your current take?
    It would be welcome if Patrick can provide his updates at least once a month.

  8. LX says:

    Ok guys going to feed some birds ..have a great day

  9. James Bond Skyfall / Shanghai Composite Freefall….S&P see smooth sailing till 1435…IHS formation in the works

  10. H D says:

    3 drives on ES @1404, lets test a theory, close above 1400 bearish, below 1400 bullish. GL

    • The Homeless Daytrader says:

      go on …

      • H D says:

        I am out. took 1402. I am actually seeing sharp 2 and flat 4th from the lows. Not a good pattern for a short at close IMO. The close theory is psych of 1400.

      • tony caldaro says:

        THD … nice call yesterday

      • The Homeless Daytrader says:

        Thanks HD. I do a lot of “in at the close and out at the open type trades.” What I mean by that is I take a position during the last hour and close it the nesxt day during the first hour – yesterday’s SPY short was a good example. I do not have the feel today that gives me a clear long or short. Looking at SPY, for example, the 50 day is just an itch and a scratch above at 142.50, and a nip and a tuck above Friday’s 141.40 high would be, to borrow a phrase from Lee, “a cheap short.” I don’t trade levels on their own, however. I like to see how the market trades once it reaches those levels. Right now, if SPY spikes into the close, then I’d be inclined to buy puts. However, I am also thinking we have a better than even shot of a gap up open tomorrow if we have a close on or near the high. With a gap up, there is no way to tell in advance (at least no way that I am able to come up with) to be able to determine ahead of time whether it will be a gap that gets sold or a gap go go go. I look for three drives and pushes myself, and I always like to hear how others are viewing it.

  11. LX says:

    Nice # HD cheap short as they say …
    Hey CB
    Thats the expiration but the silliness start 2 weeks prior

    • CB says:

      thanks Lee. And great trading advice as Igor pointed out. I like rules -I just have issues with internalizing them.. ;)

  12. H D says:

    5 day rally, 3 day low ? – Ya I know I’m noisy.

  13. LX says:

    The great news is rollover starts soon ! SPZ /SPH

  14. H D says:

    The people I know that use astrology tell me their accounts are in retrograde

  15. H D says:

    Just needed a reminder of our “Wall of Worry” See the gov’t is good at some things :lol:

    • LX says:

      I hate losing money more than I like making money.
      It was my motivation to study and know where I’m wrong before I even enter an order. Unless u guys use an auto trade program
      I’D just pick spots and let em come to you. Yes u miss some trades ……some good and some really awful .

    • CB says:

      Igor, U bring up an import. issue – entrepreneurs thrive on taking risks & breaking rules while good traders minimize risks. In trading being paranoid pays. Think about Richard Branson, for instance – he’s always totally ignored risks & have done what others told him he couldn’t do. So personality is a big deal in finding a good prof. match. Obviously, the world needs both kinds…it’s just important to recognize who we are & who we are not…and frankly I am troubled by my risk blindness and looking at the big picture sometimes … in Lee’s world, I have no longevity.. :grin:

      • CB says:

        “paranoid” is too harsh, isn’t it? “prepared” is really the word- basically always thinking about the worst possible outcome..and whoever has that attitude wins big in trading…so to all of you who have it -congrats you guys!

      • Igor says:

        Hey CB,
        knowing an obstacle that prevents you to move further is already solving a half of problem. When I recognized to myself that my major losses occurred due to lack of discipline (and not because that Tony is manipulating with waves as I would want to believe :-)) I started to work on my trading discipline. Writing a blog is one of steps on my way to be a disciplined trader btw.

      • CB says:

        good points, Igor & such a good idea w/ur blog. It’s all a matter of life experience. It just so happened that in my life I took some major risks which worked out well for me, so I am OK with taking risks & sometimes I’ll take more risk than I should. And a few times I had to take big losses (which were first small losses), so I don’t want to repeat that pattern. But I’ll prbly only change my approach entirely when I am 100% responsible financially for myself , so I know that “100% disciplined trading” is coming to me at some point – I know what to, I just don’t care enough sometimes, I guess. Maybe cus I got into trading for the wrong reason – as a way of getting out of other business stuff that I was not interested in. So lots of seemingly unrelated things go into this, but yes, eventually we have to do what needs to be done.
        A note to Blubrd – U may be interested in checking out D. Schull’s work on neuroscience, trading , intuition etc – the basic approach as I understand it, is that intuition is just all our life experince so far stored in our psyche &ready to assist us in making fast (and accurate) decisions. So in trading, that would be like having looked at 60 min chart thousands of times & seeing the same pattern over and over again, which tells us that a reversal is imminent. On the other hand, trying to figure out what the Greeks might do overnight, would not meet the criteria -it would simply be gambling. Tony, thanks also for ur very insightful comments on intuition/spirit. Interesting stuff. Blubrd, I don’t think Lee’s comments are pesky -Lee has a nice way of conveying the tough trading reality in a very funny, intelligent & somewhat cryptic way. And it’s really fun to try to figure out what Lee really is saying lots of times. And Lee, stop feeding those birds, and start teaching them “how to fish” just like you do with us, here! Thanks guys. Great calls!

  16. alexh110 says:

    Lots of technical damage on Gold today. I don’t really see any bullish count left now: looks like Int ii is extending.
    Very frustrating as I’d built up a really nice long position; but now it’s stopped out for minimal profit.

    What are your thoughts Patrick?

    • deltastrikejj says:

      completely disagree, gold has been respecting its 50% fibs on the way since late summer. today it so far held support at 1713 which is the 50% fib retrace of Nov rally up. as long as 1672 low holds there is no technical damage imo. gold is not too be chased but scooped up on spike downs.

      • alexh110 says:

        The November rally looks like a classic a-b-c to me; can’t see how you can interpret it as 5 waves?

      • deltastrikejj says:

        well i can see it more of it being 1 big wave up all of Nov and this week is just wave 2 correction. the volume profile and fibs mean way more to than the waves. the VP shows a market that was merely too long short term and had to liquidate a bit here. as long as it holds 1704 its constructive

      • alexh110 says:

        One thing’s for sure: Patrick’s count needs amending.
        Also the inverse H&S that was forming around the 1672 low is now violated, which is a shame as it had perfectly symmetrical shoulders on the time-axis.

        Plus this chart is now starting to look suspiciously like the zigzag Int ii correction of 2009, whose a-wave bounced off EMA34, before the c-wave retested and breached slightly below that moving average.
        In fact the whole formation from the 2011 high looks quite similar to 2008-9.

      • deltastrikejj says:

        eh the key thing you said was ‘perfect inverted H&S’ lol there is no such thing. everyone saw that and bought the breakout during holiday week. I think gold is just marking time before the larger inverted H&S around 1800 breaks out. if we break 1672 then yea Im wrong :/

      • alexh110 says:

        I’m definitely leaning towards a 2 month duration for Int ii, to form mirror-symmetry with the Jan/Feb rally. Think the 1672 low may be the left shoulder of an inverse H&S.
        Anyway we’ll find out soon enough!

  17. mickeeg says:

    that was a fast a & b corrective wave? wave C on the way?

  18. LX says:

    looking for us to stall @ 1401.42 SPX
    I’m also looking for BigFoot so whatever its worth

  19. H D says:

    00011101010011SH*T0101010BUYMORE0001111010101USA0111000111 RT@mrtopstep

  20. pbnj123 says:

    Tony – too quick to call that a 2?

  21. rc1269 says:

    Lee, i’m waiting for one more leg down, maybe to the 1376 / 50% retrace, then prob another move up to the 1420-1429 gap down region from 11/7 to complete an A-B-C counter trend rally. then drift lower into year end. that’s my game plan at least

  22. LX says:

    1386 pivot hit
    What ya think Tony ? thx

  23. H D says:

    1391 trades! unfortunately for me when it takes 3 days my brain starts thinking and execution fails.

    Nice call Lee

  24. LX says:

    ES 1388.50 * Gap and Sept blast off
    Is this action in CL seasonal or something else ? Europe in the dumps sure but…

  25. LX says:

    Im surely no GC bug but it looks overlappy ? And dont call me Surely

  26. blubrd67 says:

    Tony, didn’t you say that you expected another low before serious rebound in Shanghai at one of the earliest posts?

    “Yet again, the Shanghai Composite Index CN:000001 -1.07% headed to fresh multiyear lows Wednesday, trading 0.8% lower in the early afternoon after ending the morning at its lowest intraday level since January 2009. “

  27. low risk folio today was up 0.64% while benchmark $iwm was down 0.12%.
    maintaining 90% long exposure, 70% in 5 multi-stock folios and 20% long in triple leveraged tna.
    longs were increased from 50% to 90% on friday, 11-16. short term down draft is expected for next day or two.

  28. M1 says:

    Tony,
    If we had five waves up from 1343, this rally can not be a corrective wave, right ?
    What if we go below 1343 ? how would be the count ?

  29. herringjd1 says:

    Hold out for a bonus breakfast sandwich.

  30. LX says:

    Thanks Tony
    So my Friday call of 5 waves up being completed in SPX could be correct !
    That call and a coyote will get u a cup of free coffee in Chicago.

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