monday update

SHORT TERM: market gaps down in pullback, DOW -275

Overnight the Asian markets were all lower. Europe opened lower and closed -3.0%. US index futures were lower overnight as well. At the open the market gapped down to SPX 1276 and continued lower. The SPX had closed at 1285 on friday. At 9:45 the Chicago PMI was reported lower: 58.4 vs 60.4. Around 10:00 the SPX hit 1266, was slightly oversold, and tried to rally. At 10:30 the SPX hit 1271, in a choppy advance, and then headed lower again. Around 12:30 the SPX hit a lower low at 1263 and then began to rally. This one carried back to SPX 1271, and then the market headed lower again. Heading into the close the SPX hit 1253 and closed there.

For the day the SPX/DOW were -2.35%, and the NDX/NAZ were -1.85%. Bonds rallied 41 ticks, Crude slipped 65 cents, Gold dropped $25.00, and the USD was sharply higher after the BOJ Yen intervention. Support for the SPX drops to 1240 and then 1222, with resistance now at 1261 and then 1291. Short term momentum was quite oversold at the close. Tomorrow, the FED starts its 2 day FOMC meeting. At 10:00 ISM manufacturing and Construction spending will be released, then Auto sales in the afternoon.

The market gapped down at the open in response to an overbought technical condition and the BOJ Yen intervention. The pullback took the SPX down to 1253 breaking below the OEW 1261 support pivot. This represents a 40 point pullback from the recent 1293 high, and exceeds the 21-36 point pullback range of this entire uptrend.

The next thing we would expect, when this pullback concludes, is another rally. This would either complete the complex zigzag pattern on the SPX charts, extend Intermediate wave iii on the DOW charts, or end the Intermediate wave iv count before heading higher. Since FED/Bernanke statements have all been associated with lows for the past several months the market could be a bit choppy into wednesday. Best to your trading!

MEDIUM TERM: uptrend high SPX 1293

LONG TERM: neutral


About tony caldaro

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173 Responses to monday update

  1. I smell an E wave up, the D wave dropped to 1209 on SP 500 futures, a 38% fib. Fun market though… best of luck to all!


  2. Dr. CLee says:

    sorry about the play by play on a whacked out trade
    super fast…u kids must be getting some $ 🙂


    • wldcttr says:

      spy up $1 from close…interesting.


    • H D says:

      If u can make sense of any of it fill us in! up or down from here? :mrgreen:


      • Dr. CLee says:

        H D
        So far I think its …Put ur sells where ur buy stops would be
        Dude unless u get in really really good it can just turn to crap so fast scalping.
        Its a 100% chance if I trade ESZ long enough I’ll get manhandled by it .
        It has big thumbs also.
        Guys I talk a big game but I can’t trade the ES for nothing overall anymore.


      • Dr. CLee says:

        .382 back wasn’t hit on this pullback from 1289.25 – 1068.50 ESZ today
        .382 = 1204.50


  3. Thx CB.. All the risk assets have failed miserably at their long term averages led first by the euro..Japan has pumped 100 bio usd into usd.. In the past such action was supportive of asian equities…the seeds of failure in the merkozy plan were sown when they required the banks to recapitalise via private markets… The right thing to do wud have been to declare that the govts wud recap their banks and make them whole for the greek haircut… It wud mean socializing losses again but i do not see any other way out… Draghi’s next move will be to cut rates…short euro seems to be the likely profitable trade especially to hedge longs…unless something completely drastic happens in next 24 hrs i will cut my india longs tomorrow and go short at close… Will short Aud as well 7 pm tokyo time tomorrow…the juciest short may again be hong kong but will wait to put that on…


    • CB says:

      Hey there Ananado …thanks for all the interesting Asia/Europe stuff….”merkozy” haha..that’s a good one!
      Also, wanted to say thanks to Pooch, ggok and Dallas Dave cuz I missed your names last night (shame on me)..
      Thanks Loonie, ur too kind.
      Ok, so if Lee is still buying us all Netflix for Christmas, “the list” is now being prepared 😉


  4. Dr. CLee says:

    How about that CL ? Corrective up from days low?
    ESZ back testing its .50% pit at 1219.50 now


  5. ggok1 says:

    Hi catch
    Just wondering. If you had these lower closes, wouldn’t it generate 3 black candle sticks which is a usually a trend change to the downside and if 11600 goes then we have wave overlaps, so would that negate any mega upside.

    Have you got a chart or something which shows your signal and how it has worked in the past. I am intrigued as to how these lower low rallies, which most prob will also lead to bearish macd crosses on daily can lead to a mega rally.

    Thanks, I hope you don’t mind me asking. I am a novice.



    • Dr. CLee says:

      6E spike


    • No sir, I don’t mind at all.

      I have developed a proprietary method for predicting imminent market moves. All of my work is based on the Dow, but the S&P trades almost in lockstep. I do not even consider the common technical analysis, several of which you mentioned, nor do I use Elliott Waves, as the track record of my method has proven to be phenomenal. About the only time I lose is when I try to front-run it. Not 100%, but close.

      The major buy signal which is setting up for tomorrow entails several days worth of action/data. Only two pieces to the puzzle remain unmet: a lower close in the Dow today, and then another lower close tomorrow (Wed.). Will keep you posted. I post most comments here as well, but my own blog is at

      As an example of technical analysis having some value, you might notice that the S&P 500 just made a (nominal) new low, while the Dow did not. Positive divergence. A nice 100+ point pop immediately ensued in the Dow, 12 points for the S&P. What amazes me is how often various methods work together. Let’s see how everything plays out. I am strongly hoping for lower close tomorrow, too.

      Thanks again to Tony for creating such a great forum, and for all of the posters. We gonna crush the market.


    • Hi Ggok,

      Nice bounce indeed. The impending Buy signal is strongest when the low is put in the day before the signal — in this case, today. My strong hunch is that the market will indeed close lower tomorrow (thus producing the Buy signal) but without breaching today’s low of 11,634.23. Market would then rocket higher. Let’s watch and see how it all plays out. Note: A higher close tomorrow (Wed.) would negate the Buy signal and I would close the bullish position I initiated this morning at 10:00 a.m. ET (post is time-stamped 9:00 a.m. as this blog uses Central Time Zone).


      • ggok1 says:

        Hi catch
        If we close below 11600. Then how will that stand with you and your signal or below 1190 on the SandP 500?
        Does it get negated if we get past a certain low or does it get stronger the lower it goes?



      • No, nothing can negate the signal so long as the Dow closes lower both today and tomorrow.

        Past signals have been stronger when the low was put in the day before the actual signal (i.e., today), but even without that we should get a nice pop.

        My method entails hundreds of metrices. One metric can generate a Buy signal one day (and the Dow almost always rallies immediately), then another metric can generate a Sell signal the next day. However, they all seem to “work together”, as though by design, and have never contradicted each other. Would rather let you see this play out with your own eyes than just hearing me talk about it – if we get that lower close tomorrow, you’ll see what I mean.


  6. vishal409 says:

    One thing is very crystal clear that Gold is over and done with , it again fails to rise in this round of European panic, it will break support and create a new low


  7. vishal409 says:

    One thing is very crystal clear that Gold is over and done with , it again fails to rise in this round of European panic, it will break support and create a new


    • Vishal,
      Not to use you as an example but I have heard a lot of that lately. True, gold is performing as a risk asset right now and on a relative basis it isn’t doing well. However, it is my opinion that it is in a base building process. Just 5 weeks ago everyone was gaga for gold. Now, nobody except gold bugs own it. Sentiment is terrible and that is when you get bottoms. The charts look fine but I think you are going to see some slow and steady action for a while. I don’t expect it to go crazy near term unless Bernanke hits the QE button tomorrow (which is possible).


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