monday update

SHORT TERM: quiet day starts the week, DOW +15

Overnight the Asian markets gained 0.2%. Europe opened lower but gained 0.2% as well. US index futures were lower overnight, and the market opened two points below friday’s SPX 1418 close. After some hesitation in the opening minutes the market started to rally. At 11:00 the SPX hit a new rebound high at 1422. Then after a pullback to SPX 1417 by 2:30 the market bounced to close at 1419.

For the day the SPX/DOW were +0.05%, and the NDX/NAZ were +0.30%. Bonds gained 2 ticks, Crude slipped 25 cents, Gold rallied $6, and the USD was lower. Medium term support remains at the 1386 and 1372 pivots, with resistance at the 1440 and 1499 pivots. Tomorrow: the two day FOMC meeting begins. At 8:30 the Trade deficit will be reported, followed by Wholesale inventories at 10:00.

The market opened a bit lower today, then rallied to a new rebound high at SPX 1422.  After a small five point pullback, the market then bounced higher for the rest of the day. This market appears to have a slight upward bias as it awaits the tues/wed FOMC meeting. Weekend rumors suggest the FED will bump QE 3 to $80 bln/mth, with Operation Twist expiring. Whatever they do decide may be a risk on/risk off event, short/medium/long term.

Short term support remains at SPX 1413/16 and 1402/03, with resistance at 1422/27 and the 1440 point. Short term momentum hit quite overbought this morning then declined to neutral. The short term OEW charts remain positive with the swing level now around 1411. Best to your trading during this potentially pivotal week.

MEDIUM TERM: uptrend highly probable

LONG TERM: market nearing bull/bear inflection point


About tony caldaro

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111 Responses to monday update

  1. rc1269 says:

    meanwhile, futures continue drudging on to new rally highs… did ES need to ring the 1434 bell as well before we could shake things up?

  2. LX says:

    Well ES futures retraced 99% of the days range and then popped it to 75% from days low…
    Ho Ho Ho
    Nothing has changed except P/L’s

  3. LX says:

    IMO this is the most important period for the SPX since spring 2009

    • CB says:

      Lee, that sounds philosophical…tell us more 🙂

      • LX says:

        Capital preservation
        Do not risk what u can’t afford to absolutely lose and more (slippage)
        I hope I’m wrong and I probably am 🙂

      • LX says:

        Thanks Tony for putting it out there for us !

      • CB says:

        Thanks Lee. I so know ur right Lee 🙂 Being the under-earning spouse allowed me to mess with rules for some time and i am happy about having being able to learn and experiment for a while ,but rules are rules (and that’s why I just got stopped out a minute ago)..
        and I think it’s good to experience losses so that the fundamental wisdom that you bring up can really sink in…we only learn thru losses.

      • LX says:

        Hey C B
        Stops are the most frustrating and most valuable orders u can enter.
        A person can get away without using them if they plan on not making this their career.
        I use them to protect my flawed human tendencies of pride and ignorance 🙂

      • fibretrace1618 says:

        I say go big or go home!! I’m all in. No coincidence about the S&P high (1434.27) today matching the 11/02 high of same to the penny.

        On another note, I wanted to know what your take is on the SPY and it’s supposed exact tracking of the S&P. I Googled it and that is the consensus.

      • ronini3 says:

        fibretrace1618 is TheOne!

        Those good old days!

      • CB says:

        Thanks Lee. Well said!! I need to dp things more “your way.”
        you guys think 1427-1430 is still resistance now going into tomorrow?
        I am afraid I agree on the one diagnosis..geez that’s a tough one

      • CB says:

        so thanks for the warning i3.

      • LX says:

        Is Ben is saying ? …Go ahead tug on my’s real
        thanks !

      • ronini3 says:

        Oh CB, I would not know. I was just joking.

      • CB says:

        well, I don’t know either I3…but after reading a few lines I have to say: ‘very similar approach’…and that’s all I need to know (to stay… guys be careful w/all the “fun” cuz ur on your own this time -so make sure it doen’t get out of control..

  4. LX says:

    Ye ole Globex high @ 1424 ESZ

  5. ronini3 says:

    long ZC @ 727.5. 723.5 stop OCO 737 lmt.

    Please don’t voodoo doll my trades..TIA!

  6. budfox9450 says:

    Watching the OEW – DJI 60min – Negetive divergences have formed….
    The SP500 BoYu Buy signal from 12/6 remain in tack, as of last evening.
    As does the FAGIX fund Buy signal….

  7. LX says:

    Guys IMO To make $ at trading U have to trade to make $

  8. fibretrace1618 says:

    I’m starting with 10 SPX 1350 MAR 13 P. Kramer just told me that this market is, OUT OF CONTROL!!!!!!!!!!!!!!!!!!!!!

    • LX says:

      Hey Fib

      Kramer from Seinfeld ?
      I heard he’s getting a new sitcom 😉

      • fibretrace1618 says:

        Are you shitt^n me? I don’t think that dog is going to hunt. Honestly, I don’t want to see it happen. “Seinfeld” is the greatest comedy ever produced and that Kramer is hysterical. He comes out now doing a geriatric solo act, I think it could get ugly.

  9. fibretrace1618 says:

    T, LX, am I frickin tripping or what???????????????? Matt & George are getting angry!!!!!!!!!!

  10. fibretrace1618 says:

    I was under the impression that the SPY tracked the S&P. Apparently not too well, I’m seeing a 143.72 High on 11/02 and a 1434.27 for the S&P which coincidentally is today’s high. Am I missing something here?? The SPY takes the 11/02 high out decisively today at 144.07 yet the S&P matches the 11/02 high to the penny at 1434.27. WTF, talk to me T-Man.

  11. LX says:

    Bots – infinity
    Carbon Units-0.2360

    Inflection mania !

  12. tony caldaro says:

    The SPX has just entered the Twilight Zone

  13. gary61b says:

    LX you nailed the count on aapl, kudos ( maybe out of the driveway and around the block tonight?) lol.

  14. rc1269 says:

    AAPL putting in a pretty bullish mornging star setup. so far

  15. fibretrace1618 says:

    High on the SPY at 143.69, If I had to say I think Mr. Market just sucked in the last of the shorts in and is going south for the Winter.

  16. fibretrace1618 says:

    Anyway, if they hold short the shi$ out of this market, if not load up and get long.

  17. LX says:

    Im Dec till Thursday…old school
    ESH 10/18 high to 11/16 low 23.60 % = 1431.50

  18. fibretrace1618 says:

    Watch these points: SPY (143.72), IWM (83.45), SOX (391.92—–>394.93). See you T

  19. H D says:

    ESH 1423.50 came into the Nov sell area. See if any other sellers show up. GL

  20. LX says:

    “While most high-frequency trading operations rely on fiber optic networks, basic physics limits signal speeds in the cables to about 200,000 kilometers (124,000 miles) per second. Microwaves, traveling through air, can approach the speed of light 300,000 kilometers (186,000 miles) per second, IT World reports — hat tip Slashdot.”

    “The downside for microwave technology is that it requires line of sight connection between transmitters and the maximum distance before a signal has to be repeated is about 186 miles. Rain and fog can also interfere with signals.”

    “Still, the potential speed increases are driving demand for new rights of way, particularly in key corridors, such as New York and Chicago according to the report.”

    It just keeps getting easier and easier…yawn

  21. rc1269 says:

    Didn’t US stocks rally right up until the very last minute during the debt ceiling debate last year? Are we doing that again, in the face of a near-certain political debacle/roller-coaster? In all my years as a bond investor, i’ve come to realize – equity investors are gluttons for punishment!

    • tony caldaro says:

      RC … stocks do not have a par value … it’s all risk

      • rc1269 says:

        i agree. but somehow to me that only reinforces my point. equity is essentially a call option on the value of a firm. one should want to buy that option when it is cheapest, which will be when the underlying value of a firm is most uncertain. relative to economics, right now it seems to me that the maket assumes some sort of deal will be hashed out before year end. just as last year the market figured that a routine debt ceiling debate would be resolved in a timely fashion.
        if the base base is that things should be resolved before year end, then frankly there isn’t much to be concerned about right now. that means uncertainty really isn’t that high, which to me also means that the call option that is equity is priced relatively higher.
        in essence, to me the upside case is also pretty close to the consensus assumption. so what if we get a deal tomorrow? no big deal – we already thought they’d come to one in the next two weeks anyway. what if it’s 12/30 and they’re still far apart? risks seem skewed to the downside to me.
        just like last year, everybody was talking about the debt ceiling debate and the silly debt ceiling countdown clock on CNBC, but nobody really thought it would come to any type of real issue.
        I honestly do not believe that “the market is never wrong” addage is true anymore. sure you can say that the market is always right because it is what it is – if it goes up, you should have been long and if it goes down you should have been short. of course that’s all true. but i’m speaking more from an efficient market standpoint. i think we have way too many computers trading on technical signals to be an efficient market. i think these systems cause the market to develop momentum that is way too strong and too long, constantly overshooting where a truly efficient market should be. market moves would be much smoother if it were efficient and “always right” in my view.
        as the probabilities of certain positive and negative events evolve over time so should the market. if you’re standing on a train track and a train is barrelling down at you, each moment that passes and you don’t move, you will increase in your head the probability that you are hit. that change i probability should be fairly linear, such than when it’s 1″ away the chance is going to be 99.99999%. with the market, when reality is 1″ away, often times the market is still pricing it as a 10% event.
        i realize that’s a simplistic analogy, but i think a lot of behavorial finance phenomena come to play into it quite a bit, not the least of which is that investors on the average hold too long to a view supportive of their position (i am long, therefore i am optimistic; i am short, therefore i am pessimistic). and they will do that all the way until the point when they get run over. just my two cents. sorry for rambling!

      • tony caldaro says:

        The more participants the less outside forces, i.e. PPT, etc. can affect the markets.
        Certainly there are many trend following systems, EW analysis, technical indicators, etc.
        But in the end investors are looking for ROI.
        When Bonds, Bills, Notes are offering historically low rates, while ‘real’ inflation is running well above those rates, stocks offer a fair risk/reward opportunity.
        Nevertheless, eventually every Cycle runs its course over time. Sentiment changes.
        Currently, with the FED in a position to counter balance anything the government does so the risk is not all that great. But, eventually, even the FED has a tendency to overshoot its activities.
        Personally this looks like an important week as the market heads into the 1434-1462 range.

      • tommyboys says:

        My 2 cents…
        The economy is not the market – two separate entities… Valuations are fluid and change by the minute. Economy can go no where or even become in recesion and markets can still rally – and vice versa.

      • tommyboys says:

        Actually a big breakout underway here…Last couple weeks A/D line showing itself.

      • tony caldaro says:

        Historically the stock market has predicted 10 of the last 6 recesssions.

      • rc1269 says:

        i agree with most of your comments Tony. i’m still not entirely convinced that the low rates necessarily make equities attractive. i do agree that rates are unattractive. however, one thing i hear a lot of in the institutional money world is everybody seems to be a buyer on rate backups. “i’m not a buyer here, but 15bp cheaper.” i think there are a lot of equity holders who are rates buyers on backups. to me that signals not very bullish flows, and low rates for a while. i think it will take several quarters of robust economic growth to alter the generally capital-preservation + income generation mindsight.

        in response to TommyBoys – economies and markets are seperate, sure, but not unlinked and autonomous. to say that the market can rally in a recession is a little disengenous in my view. of course that can happen. and it can selloff in a growing economy. but that comment attempts to ignore the fact that the market likely already had a preceding selloff in tandem with the economic reality of the recession. we shouldn’t ignore that primary link just because markets don’t always move lockstep on a daily basis, in my opinion. i there’s a good reason why Tony tracks ECRI data, WLEI and a host of other economic indicators even though he’s an OEW trader.

      • tommyboys says:

        I’ve worried a lot over the past decade and a half. I’ve read ALL the books – ALL Prechter’s, Bonner’s, Dent’s, Soro’s, Strauss & Howe and on and on etc… I’ve learned not to worry so much – just assess where we may be in 3-6 months – and go wth it. Fear is likely the largest market in the world…use it.

      • rc1269 says:

        no Tony, i did mean bond selloffs, not rallies. by “rate backup” i meant when rates go up, folks come in to buy. all is right in the world of logic don’t worry. 😉

        Tommy – agree with you there 110%. cheers!

      • tony caldaro says:

        Fear sells products

      • tommyboys says:

        Correct…and always recognize that that is the main reason its all over the media. 90% of the time its benign information spun for fear production.

  22. rc1269 says:

    Dax within 25 pts of 4 year highs. what European crisis??

  23. theyenguy says:

    In the link provided, the ongoing Yahoo Finance chart of World Stocks, VT, and YAO, INDY, EWA, VGK, SPY, shows that China, YAO, India, INDY, Australia, EWA, … … are pulling World Stock up; while the Europe, VGK, and the S&P, SPY, are pulling World Stocks down. We are witnessing the inability of the world’s two major world banks to continue to stimulate global growth and corporate productivity.

    The chart of world stocks, VT, the chart of large cap stocks, SPY, communicates that Peak Stock Wealth has been obtained. One can no longer grow or preserve wealth by investing in the S&P.

  24. low risk folio of 40 some stocks today was +.96% vs. $IWM benchmark +.44%
    roadmap folio of ten stocks was +.4% vs. $SPY benchmark +0.04%.
    high risk B folio of ten stocks was +.7% vs. $IWM benchmark +.44% but still struggling due to $ZLC earnings

  25. torehund says:

    RSI declined much more than index on 60 min spx, thats bullish !

  26. increased longs to 100% – from 90% – this morning. purchased 37 stocks, including aci, anr, nihd, etc.
    i’ll post the spread sheet this coming weekend.
    this new folio of large and small cap stocks increased 1.035% today while the benchmark $MDY increased 0.62%.

    spx “pstt” indicator is now on buy signal.

  27. CB says:

    thinkingtrades saying this today: “McClellan Oscillator had very small changes in the past 4 days. Big move ahead. Either 1450 or 1390. $SPX” – 5th day today.”
    Anyone can explain why he is saying that, mentioning both directions based on that?.. thanks. Btw Mclellan has moved from 56.52 to 21.90 in the last few days and is now rising…??

  28. Hi Tony, for facebook, how high do you think Wave 3 could reach? thx and great site!!!

  29. conannca says:

    Dear Tony
    Love your site and all that you do for us out here. I have a question on APPLE. I have attached Avi Gilburt’s Elliott Wave count and he thinks we are at the bottom with at rest at $505 soon for a W bottom and then to new highs in the first quarter for wave 5. Could I trouble you for your count and outlook. We are getting killed out here and need some help.
    Thanks and I have supplied the Link to his projection and his chart for your viewing.
    P.S. Would love to learn more about your classes. I will be signing up once I get through this APPLE debacle.

    Avi Gilbert Apple projections

    • conannca says:

      Sorry typo, that should read RETEST at $505

      • tony caldaro says:

        Hi Conannca,
        Can’t count the recent $700 high as a B wave.
        AAPL rose nearly $200 in a B wave?
        Since late 2008 it has only had one wave larger than $200.
        Short term we have the same relative count with $518.63 being a key level.
        good luck!

      • Tony, if 518.63 is a key level then where is it headed if that level breaks? Does it has the potential to affect the overall bullish count for the market?

      • conannca says:

        Thanks, for your charts. So to clarify, on the daily we are working on C of 4 down and hopefully completes here with a W formation at between 518/505 range. And then on the Weekly with 4 complete we are to commence with wave 5 up to complete the long term uptrend? If not will you please clarify. As you know there is a HUGE H&S chart floating around with a neckline right here and measured move to $420 which is FRIGHTENING and I find hard to believe is accurate.
        Thanks again for your help, many of us got caught on the magnitude of this drop and need some guidance at this critical level.

      • tony caldaro says:

        The previous shoulder took months to develop, this one 2 weeks? Poor H&S formation.
        The daily chart displays a serious decline to $506, which is probably the low of Major 4.
        After the rally to $595 another drop to $519. If $519 does not hold a retest of $506, or lower, is likely next.
        Both counts suggests at least another attempt at a new high.
        good luck!

      • conannca says:

        Good Morning, and THANK YOU for your APPLE count. WE ALL greatly appreciate ALL that you do.

        Warm Regards,

  30. budfox9450 says:

    Often times, it is hard to be a Bull. My BoYu indicator,
    as applied to the SP500, and FAGIX fund, are on Buy
    signals. FAGIX fund since Nov 21st….Dec can be a very
    volatile month. Keep stops in place….

  31. M1 says:

    Thanks, Tony.

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