monday update

SHORT TERM: oversold market rally, DOW +100

Overnight the Asian markets ended mixed. Europe opened lower and lost 0.1%. US index futures were higher overnight, and at 8:30 the NY FED was reported still in contraction mode: -8.1 vs -5.2. The market opened higher at SPX 1418 and continued to rally. The SPX had closed at 1414 on friday. The rally continued until just past 10:00, when the SPX hit 1424. Then after a small pullback to SPX 1420 by 10:30 the rally resumed. At 11:00 FED governor Stein’s speech was released: Around 12:30 the SPX hit 1428, then started to pullback again. At 2:30 the FED released this: Around that time the pullback hit SPX 1422, and the rally resumed. Heading into the close the SPX hit 1431, then ended the day at 1430.

For the day the SPX/DOW were +1.00%, and the NDX/NAZ were +1.35%. Bonds lost 16 ticks, Crude rallied 70 cents, Gold added $3, and the USD was flat. Medium term support remains at the OEW 1386 and 1372 pivots, with resistance at the 1440 and 1499 pivots. Tomorrow: the Current account balance at 8:30, then the NAHB housing index at 10:00.

The market opened higher today, off the slight positive divergence setup on friday, and worked its way higher throughout the day. This morning, after the SPX had reached 1422 we placed a tentative green Minute wave ii label at friday’s SPX 1412 low. The market looks like it is now in: Minute wave iii of Minor 3. Or, from the alternate bearish perspective: Minor 3 of Intermediate wave C. In either case, the market should re-enter the inflection range (SPX 1434-1462) shortly. Then, eventually, make its final inflection point decision: bull or bear into 2013. Nothing like market drama as we approach the year end holidays, and of course, the 2012 Winter Solstice.

Short term support jumps to SPX 1422/27 and 1413/16, with resistance at the 1440 pivot and SPX 1463/64. Short term momentum is currently overbought. The short term OEW charts turned positive this morning once the SPX passed 1420 the current swing level. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: bull/bear inflection range


About tony caldaro

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101 Responses to monday update

  1. LX says:

    Hey Patrick
    It has come to pass in Gold.
    Thanks for ur reply and #’s

    • redadair says:

      Just bought a little after the 12:30 CT pit close 🙂 Not much though. Easy does it in the beginning.

      Plan the trade and trade the plan. That’s all one can do !!

      • tony caldaro says:

        Gold hit that $1667 target

      • CB says:

        thanks guys -great calls! Thanks Tony and everyone in your group – Patrick, Piazzi and all the other fOEW friends working tirelessly behind the scenes and sharing your work with us. Thanks for all the great trading calls Lee – ur like light years ahead of us, so what else can we say, Lee- he shoots, he scores -big thanks for sharing your talent and sense of humor with us, Lee! Thanks so much Tony for all the wonderful work and generosity!! You guys have a wonderful holiday season!
        2 $$ question: is gold @ around 1690 shortable again??
        Lee, is oil EVER going to go above $90?

      • CB says:

        thanks Tony! I am taking TC to a couple of doctor’s appointments in the next couple of days, so I’d like to wish everyone Merry Christmas in case I get stuck in traffic for too long 🙂

  2. CB says:

    The Fed’s 99 yrs-lease is up, on dec 23rd …so the solution to all our problems could be near…assuming we can we do the right thing…and not extend the lease…whoever the landlord is…

    • tony caldaro says:

      Think it’s Uncle Sam

    • LX says:

      Interest rates are going up now so obviously they saved the world in 2009 so I say just shut em down.

      • CB says:

        yeah, throw the bums out…
        Uncle Sam owns the building, huh? well, then he’s up to his eyeballs in debt and The Fed probly has that specific mortgage on its balance it’s back to Thomas Jefferson and his prediction…they simply owe us (or US)

      • CB says:

        sorry, meant: they own us…
        LOL…a good one, Tony.. love those debates over there..
        double-standard in effect, btw. :banks ‘have’ to be saved when they make mistakes, while most other businesses just go out of business when they make mistakes..

      • CB says:

        good point – the problem is that when a certain behavior gets rewarded it tends to repeat itself so the 2008-2009 experience is telling su something about our future..that “spacial status” for banks is fundamentally unfair to all the working and tax-paying people

      • CB says:

        special status…

      • CB says:

        all joking aside, I think that what Lee said about the Fed’s “saving the world” is really a brilliant point because it gets at the heart of the matter – interest rates are so very crucial in bankers’ fight against the Fed is definitely in danger of rendering themselves useless if they succeed in their mission to restore normal interest rates, and as you said Lee there are indcations of some normalization now.. So spot on, Lee..that was a great observation and I have to say that I really didn’t pause long enough earlier today to fully absorb your perspective. And I get it better late than never : )

  3. midcap folio of 37 stocks started 12/09/12 is now +7.06% vs. its $mdy benchmark +1.84%. best performer is $quad, +29%. currently only 2 losers in folio.

  4. roadmap folio of 10 large cap stocks started 11/19/12 is currently +11.3% vs. spy benchmark of + 5.4%.

  5. LX says:

    Hey AAPL filled the gap…never a doubt ;P

  6. rc1269 says:

    everybody seems to be diving head first into the ‘breakout’ trade now.
    santa clause is in full effect!

    • CB says:

      well, whats ‘everyon’e to do after the henchmen stopped everyone out recently..stand outside looking in, or , as you say, ‘dive head first? ‘…SOS….same ole ……
      the main thing is: everyone seems to be enjoying the ambiance ..

  7. CB says:

    Hey guys,
    one super-bullish count has us going to 1450-60ish in wave 3, then a small retr., and then 1470-1480 – and a new high this Friday would significantly improve evrryone’s mood, so why not do it : )
    Btw, If Obama leaves for HI Thursday night, then it looks like he’s gonna be flying around the time of the alignment – so the must be expecting all their flight instruments to work just fine then 🙂

  8. LX says:

    Is GC @ a OEW Pivot today ? Thanks

  9. pbnj123 says:

    Tony – noticing a -div on the daily RSI(5) WRT SPX at today’s highs?

  10. fibretrace1618 says:

    They broke through long time support Aqua, don’t see any other fibs or gap supports that can stop there free fall.

  11. fibretrace1618 says:

    The last bit of weak resistance on the way to 1464-1475 is the 76.4% (1443.56) of the 9/14/2012 H & the 11/16/2012 L. IMHO

  12. ronini3 says:

    have a great rest of the year. hope we survive 12/21/12! see you next year!

  13. LX says:

    You should trade weather futures if you don’t already. Your call for LESS Tornadic activity after the March 2012 outbreak this year was outstanding!

  14. LX says:

    Got to have a plan B

    • rc1269 says:

      like Boehner? is plan B we skyrocket to the moon, or that this is the last short getting vacuumed up with the retail pile in? hard to tell. but with gold down, copper down and credit wider today it’s certainly feeling a little weird

  15. piazzi says:

    This intermediate cycle low that we expected back in Oct-Nov has already been nicely profitable

    cycles are simple — simple enough that even I can understand and use them

    there is only a one requirement for a potential cycle low for a long player — that the low must not fail — isn’t that simple?

    Next intermediate cycle low is, as per my calculation, due in April-May time frame

    If all goes well, we must at least have a test of previous high

    if not, well, there is always some money management bit to stop and book

  16. rc1269 says:

    looking very stretched here. a great place to buy some cheap protection methinks. in case the 1440 retest fails

  17. fibretrace1618 says:

    I’m thinking if the 12/12 1438.59 goes, it’s onward and upward to the last resistance area @1464-1475.

  18. pbnj123 says:

    Okay – I missed AAPL by .70 on my call last Friday as my bottom for my 4 at 501.79 🙂
    I picked it up and hope to run for a long while now.

  19. fibretrace1618 says:

    As far as your Giants go T, my rankings were purely based on stats, but the bookmakers aren’t giving them much of a shot either at #9 and +1650. I had no choice but to make the call and take the Texans @+1350. As my Father used to say, it’s a lock, of course it never is. I think they have a legitimate shot though, excellent risk reward so what the hay.

    1) Green Bay Packers:+600
    2) New England Patriots:+635
    3) San Francisco 49ers:+1100
    4) Philadelphia Eagles:+1150
    5) Denver Broncos:+1200
    6) New Orleans Saints:+1200
    7) Houston Texans:+1350
    8) Baltimore Ravens:+1600
    9) New York Giants:+1650
    10) Pittsburgh Steelers:+2000
    11) Detroit Lions:+2250
    12) Dallas Cowboys:+2500
    13) Atlanta Falcons:+2600
    14) San Diego Chargers:+2600
    15) New York Jets:+3000
    16) Chicago Bears:+3500
    17) Cincinnati Bengals:+4000
    18) Miami Dolphins:+4000
    19) Seattle Seahawks:+4800
    20) Kansas City Chiefs:+5000
    21) Carolina Panthers:+5100
    22) Arizona Cardinals: +5500
    23) Buffalo Bills: +5800
    24) Tennessee Titans:+6000
    25)Washington Redskins:+6000
    26) Oakland Raiders:+7250
    27) St. Louis Rams:+8500
    28) Tampa Bay Buccaneers:+12000
    29) Minnesota Vikings:+12500
    30) Cleveland Browns:+15000
    31) Indianapolis Colts:+15000
    32) Jacksonville Jaguars:+16500

  20. Anonymous says:

    Check out the IPM turn Model to go along with EW analysis

  21. fionamargaret says:

    …..if you are hearing sleigh-bells, maybe it is time to consider IYT, and with a nod to the elves XLI. KRE probably is a good place for Santa to stash his cash……..and before you know it we are well on our way to a really nice upturn. (I need to do well!)

    Thanks Tony.

  22. CB says:

    one interesting thing about this month, besides, the Galactic alignment, which could influnce the market is a formation called a Yod (between Saturn, Pluto and Jupiter). The last time Pluto and Saturn were involved in something like that was in May of ‘ 89 -and it suggests some sort of de-constructing of power structures…fall of a dictato, possibly…so the Syrian situation could be resolved pretty soon….leading, possibly, to an OBL-type high…just a thought that’s been tossed around..

    • CB says:

      not saying that the galactic alignment could influence the market, btw ; ) ……just saying that while it’s the most hyped event this year, and while it’s rare & interesting as a phenomenon, there are other things, like the Yod, that can affect the markets significantly..

  23. torehund says:

    Its pretty strange, many of my picks have concluded a half year or more ABC down, whilst the market has done an ABCDE reversed UP ! Geometry in action, complex too thats for sure ! is it GOD or is it the BOOTS ?

    • torehund says:

      Noticed the spot price oriented Genco shipping ran well today, spot oriented rally on Japaese rally, correlation at work. Snapping up some lagging shippers could be a good trade, spot comps always run first !

  24. CB says:

    Tony, thanks!. What sort of calculation do you use to arrive at SPX 1462?

    • tony caldaro says:

      As we have noted over the past several weeks. The initial downtrend during the past five bear markets, (going back to 1981), produced a market loss between 6.9% and 13.8%. After the decline, the counter-trend uptrend that followed retraced between 69% and 90% of the previous decline. At the recent downtrend low the SPX lost 8.9%, and the DOW lost 8.7%, of its value. This suggested, even in a bear market counter-trend rally, the SPX should reach between 1434 and 1462, (DOW 13,293 and 13,543), before resuming the bear market.

      • CB says:

        thanks Tony. Seems like I need to hit the reset button – I kinda missed exactly when you started to consider this lon rally a possible bear market. Thanks for explaining this again. Appreciate it. I have ST’ tunnel vision,’ it seems : )

      • CB says:

        typo: to consider this long rally..sorry

  25. budfox9450 says:

    CAF – nice rally – Bearish RSI5 divergence, not looking healthy.
    I own it – waiting to add more, at 20-21 range…..

  26. torehund says:

    Just another crazy small cap idea. Rosetta genomics (ROSG) went straight up in ABC from 2 to 20 USD, and has retraced in what looks like a reversed ABCDE, with A and C of symmetric length. If this is end of correction there are heaps of upside, and their diagnostic cancer kit could sell well. Also a takeover target. RSI on 20 so things may happen quickly.

  27. fibretrace1618 says:

    Super Bowl odds using the odds makers & Fibre’s quantitative analysis.


    5:40p 8101 New England Patriots +350

    5:40p 8102 Denver Broncos +450

    5:40p 8103 Houston Texans +475

    5:40p 8104 San Francisco 49ers +325

    5:40p 8105 Green Bay Packers +650

    5:40p 8106 Atlanta Falcons +600


    Rank Team Passing Rushing Defense Total

    # 1 Houston 12 5 7 24

    # 2 Denver 6 18 4 28

    # 3 San Francisco 25 2 2 29

    # 4 Seattle 30 3 3 36

    # 5 New England 4 8 26 38

    # 6 Green Bay 10 19 15 44

    # 7 Washington 19 1 29 49

    # 8 Atlanta 5 29 19 53

    • torehund says:

      M1: Thats exactly what I am thinking of too, market wanted but didnt have strength in breath to break out before now when Japan finally uses one year of pos divergences to push upwards and rest of Asia follows. Then a lot of downbeaten sectors like Shipping, metal plays and Solar gets a lift not to mention energy in general which always accompanies a world wide recovery. Well Europe is a laggard, but will be dragged along if US/japan and emerging markets can continue this positive trend. Whats fantastic is the effect these contries will have on the small cap, they need all cylindes fireing to go big, and thats just what I think will happen.
      Urre the micro cap Uranium play responded today up 22 percent.

    • rc1269 says:

      M1 – regarding your “does it look like we’re in a recession” post – that data is stale I’m afraid. just look at Spain, for instance. it shows +0.7%. that’s from 2011. Spanish 3Q GDP was -0.3%. i don’t think you should be basing any analysis on that data is all.

      • torehund says:

        Answer: Global expansion or global GDP growth demands energy to produce more goods, and that energy better be cheap to obtain a descent competitiveness and descent yield. Japan has lots of manufacturing that demands inexpensive energy, so a ramp up is not feasible without reigniting the Nuclear reactors. Otherwise many companies will flew Japan and move to places where electricity is cheap and abundant. The consevatives wants to give the industry and consumers a source of inexpensive energy, and starting up 48 reactors takes a lot of uranium away from market. India is also exepriencing “growth pain” due to lack of available electricity, then the environmental friendly nuclear energy is prefered over even more coal burning.

      • tommyboys says:

        Uranium is the cheapest/cleanest alternative option next to NG and it is growing globally contrary to what the media woul have you believe.

        RC – I agree with Tony’s bullish premise -the one where he allows for SP 1700-1800+. I happen to think we’ll get far above those levels however by sometime in 2015…give or take. Time will tell…

  28. M1 says:

    Thanks, Tony.
    Here is the alt count I’ve been working the past weeks.
    It looks like we have a long way to go.
    I wonder is this count is acceptable for OEW ?

    • tony caldaro says:

      M1 … looks kind of forced

      • torehund says:

        M1:I like to look at waves sometimes upside down, (Wave two most often doesnt retrace that much), and when I do so the wave 1 looks like a wave five and wave 2 looks like the end of wave 3. In that context the two symmetric ABCs that you denote wave 3 and the symmetric in length end to it shoild be the steep part of my 3rd wave. in my model we should now see the slowly sloping part of the 3rd wave until later it will accelerate in wave 2 and apex at wave one. Then I see a full wave major 3 fulfilled.
        IF bluechips remais subdued and you get a shift towards beaten down sectors, small cap may go huge in a rally without making a big general index rally. Such a rotation could be in the works as money could run from Apple into some beaten down smaller plays. If all stocks retraces up quickly the flatter part of wave 3 could bend upwards in a straight up fashion and wave 1 and two make an ABC topping in the end. I am open to this scenario, if cliff disappears, and mayans calender is just old accounting !!! Just a thought.

      • M1 says:

        It is just an alt count. I can not be bearish long term until you do, Tony.

      • M1 says:

        Tore, it looks like it will be confusing until this week is over and the mayan calendar is behind.
        The Fed will take care abt the fiscal cliff.

      • torehund says:

        Tony like you say, inflection point, either utter devastated economic and social conditions, or a forcefull revitalized bull market, all shares align day by day now, could be heaven or the opposite. I think the cliff debate and that old calendar makes for good odds it will go well.

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