monday update

SHORT TERM: gap up opening then pullback, DOW -60

Overnight the Asian markets lost 0.4%. European markets opened higher and gained 0.3%. US index futures were higher overnight, and the market gapped up at the open to SPX 1422. The market had closed at SPX 1416 on friday. In the first few minutes the SPX hit its high for the day at 1424, set up a negative short term divergence, and then began to pullback. At 10:00 ISM manufacturing was reported lower: 49.5 vs 51.7, but Construction spending was reported higher: +1.4% vs +0.6%. The market continued to pullback until 11:30 when the SPX hit 1414. Then after a bounce to SPX 1418 by noon the market started to pullback again. Around noon the FED released this: Just past 3:00 the SPX hit 1408. Then the market bounced to SPX 1413 by about 3:30, before closing at 1409.

For the day the SPX/DOW were -0.45%, and the NDX/NAZ were -0.25%. Bonds lost 5 ticks, Crude added 20 cents, Gold gained $1, and the USD was lower. Medium term support remains at the 1386 and 1372 pivots, with resistance at the 1440 and 1499 pivots. Tomorrow: a speech from FED governor Tarullo at 10:45.

Today the market gapped up to SPX 1422, hit a new rally high at 1424, then pulled back for the rest of the day. When considering the SPX had just done three waves up from 1385 this was not a good sign short term. When the market pulled back to 1414 we updated the hourly charts to display a potential five waves up from SPX 1343: 1409-1385-1420-1409-1424. We mentioned this possibility in the weekend update. But we thought the fourth wave, (1420-1409), could take a bit more time to unfold. Nevertheless, with today’s low at SPX 1408, we have a complete retracement of the recent SPX 1409-1424 rally. This suggests the market did complete the five waves up to complete Minor wave 1, and a possible pullback to the OEW 1386 pivot range is next. All labels remain tentative green.

Short term support drops to SPX 1402/03 and 1396/98, with resistance at SPX 1413/16 and 1422/27. Short term momentum displayed a negative divergence at today’s high, and ended the day slightly oversold. The short term OEW charts remain positive with the swing point now at SPX 1405. Best to your trading!

MEDIUM TERM: uptrend probably underway

LONG TERM: bull market nearing inflection point


About tony caldaro

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53 Responses to monday update

  1. fionamargaret says:

    seeing we are following 1967 (more or less), here is THE FUTURE……….

    Thanks Tony.
    Bought PCLN – needs to be beamed up!

  2. ronini3 says:

    Took a week off and I am back..
    Short MRK @ 44.5. 45.5 stop OCO 42.5 limit.

  3. fionamargaret says:

    Dear President Obama,
    You wanted us to believe in you and vote for you – we did.
    Now we request you put the country first and come to some agreement with the Democrats and Republicans now, before the country is irrevocably damaged.

    Many thanks.

    Thanks Tony.

  4. For one whole year the DJ Transports have gone nowhere…2013 may be the year of the transports

  5. Unless SPX closes above 1424 today odds of a year end decline increase significantly…fingers crossed…

  6. Igor says:

  7. choppy action in crude threatening to negate the long view…not just yet though… Both crude and spx wil have nail biting finishes tonight…

  8. StemSki says:

    Hi Tony,
    1377 is your line in the sand to change the count to a more bearish stance?
    I always feel conflicted at these inflection points. Decline from 1475 looks corrective (as you have noted). Combine this with the MACD positive divergence on the 60 min chart and the 5-wave impulse from 1343 and we have a buy signal (Your WROC buy).

    The only possible bear scenario I see is if there was a failed 5th wave at 1470. I can then see 5 waves down and a 61.8% retracement so far with a C-wave yet to complete.

    I know you have addressed this scenario. Can it be eliminated?

  9. While horrrible price action yesterday has done some serious technical damage short term but all is not lost…As long as price is above 200 dma stay long..use 200 dma as the stop loss

    • CB says:

      maybe I am missing something…seems to me we should be tickled that we’ve had an impulse move…normally followed by another impulse….

      • CB says:

        Thanks Tony. I like your objectivity amid all the widespread gloom&doom in the news rooms :thumbsup: …Yeah, can we see those SPX1500 hats (and beards) again pls. :))

      • tony caldaro says:

        My review of the Fiscal Cliff looks more like the bear slope of hope.
        Besides the rhetoric, it does not look that bad fiscally.

      • tommyboys says:

        Agree…this whole fiscal cliff is another Y2K… bunch of political posturing nonsense. Got a great email yesteday supposedly started by Buffett suggesting we all start demanding congressional cuts putting them on the same healthcare the citizens are and limiting terms and cutting to token or eliminating salaries, no tenure or pensions, participation in Social Security like everyone else, ending voting themselves pay raises, voiding ALL contracts with past/present Congressmen/women effective 12/1/12 and on and on… These positions were intended for SERVING others – NOT making careers from while bleeding coffers dry. Lets get back to our Founding Fathers’ original intent.

      • CB says:

        ‘cuts putting them on the same healthcare the citizens’ -oh that one will get their attention for sure 🙂
        Tony, I hear you – Fisc. Cliff – a manufactured crisis…their ‘solution’ will be great, though 😀

  10. pas1968 says:

    DeMark Sees 48% China Index Rally as Bears Exhausted Below 1,960

    The Shanghai Composite Index (SHCOMP) will rally 48 percent within nine months after its decline below 1,960 signaled selling has climaxed, according to Tom DeMark, the creator of indicators to show turning points in securities.

    The benchmark index for Chinese equities will advance to 2,900 after its decline produced a buy signal on the Sequential and Combo charts, designed to identify market tops and bottoms, said DeMark, who has spent more than 40 years developing market- timing indicators.

    Both DeMark’s Sequential and Combo indicators completed “13 countdown” on a daily basis for the Shanghai index last month. In general, DeMark’s “countdown” study involves comparing a security’s closing price to its highest or lowest levels two periods earlier, with cycles of “exhaustion” forming when a pattern continues 13 times.

    On the weekly basis, the Combo indicator finished “13 countdown” in September while the Sequential chart formed a “12 countdown” last week.

    “I believe SHCOMP index made a low and should have a very strong rally for a number of months,” DeMark wrote.

  11. robslob64 says:

    It seems the only thing that would catch everyone by surprise is a bear market?

    All the politicians are comfortably re-elected, reported inflation is mute and all the extra from Ben & Co. will be front run and cashed in.

    I like Kyle Bass’s pro-play for Democrats…let everything expire, watch panic and then deliver another Grand Compromise…win win for everyone!

    Tony you should be given the “Medal of Honor for Investors”…always calm, cool and analytical.

    Thank You!

  12. M1 says:

    Here we go again, Tony.
    I went 150% short at the close.
    What is your worse scenario this time ?

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