monday update

SHORT TERM: first sizeable pullback since SPX 1398, DOW -51

Overnight the Asian markets lost 0.4%. European markets opened lower and lost 0.6%. US index futures were lower overnight, and the market opened lower at SPX 1462. The SPX had closed at 1466 on friday. By 10:00 the SPX had pulled back to 1458, then bounced to 1462 by 10:30, before heading lower again. At 11:00 the FED released the following: At 1:30 the SPX hit 1457, then rallied to 1463 by 3:30, before closing at 1462 for the day.

For the day the SPX/DOW were -0.35%, and the NDX/NAZ were -0.05%. Bonds gained 3 ticks, Crude added 10 cents, Gold dropped $10, and the USD was lower. Medium term support remains at the 1440 and 1486 pivots, with resistance at the 1499 and 1523 pivots. Tomorrow: Consumer credit at 3:00.

The market opened lower today, delivered its first 10 point pullback since SPX 1398, then hit 1457 before rallying. Since this is the largest pullback of the rally, which began last monday, we tentatively labeled friday’s SPX 1468 high as Minute wave i of Minor wave 3. This pullback should be Minute wave ii. After reviewing the short term activity from SPX 1398 to 1468, we noticed three areas of potential support. First SPX 1456/58, second SPX 1449, and third the OEW 1440 pivot range. Whichever level holds should lead to a Minute wave iii rally.

Short term support is at SPX the 1440 pivot and SPX 1422/27, with resistance at SPX 1462/64 and 1471/75. Short term momentum barely touched oversold today before rising past neutral. The short term OEW charts remain positive with the swing level now SPX 1445. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: bull market


About tony caldaro

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87 Responses to monday update

  1. mokiepon says:

    Looking forward to Tony’s Update, as I’ve been at doctor’s and labs all day. I can say without reservation that vampires do exist and they wear scrubs.


    • torehund says:

      Melinda: Doctors have to absorb lots of negative sentiment, anxiety, fear, desparation. But so do traders when stocks go down.. Surgical operational assistents are the real Vompires, lol.

      • mokiepon says:

        torehund, oh definitely, medical personnel deal with lots of downer people. I’m generally not like that until they drain me of half (feels like) my bodily fluids.

        Oh great, Harry Dent on TV, calling for a crash in Q3 of this year… They just broke into his interview for a special announcement… Too funny. Great timing! LOL!


    • mokiepon says:

      Market seemed to do the same thing yesterday as today. Down pretty hard, then cut downside in half. Still closing down though. Hope this doesn’t persist for long, else we could be down quite a bit before we know it. Could just be timing; waves working out during open market instead of emini’s/after-hours & overnight.


      • tommyboys says:

        Love it when they parade the Dent’s and Prechter’s around…feel better about going long!

  2. H D says:

    Hard to see a 5 IMO so that is only Wa, b up,before our c down in Wii 3-3-5
    The DOW? doing it’s own thing….

  3. torehund says:

    looks like a finished ABC on sp 500.

  4. LX says:

    I see the DJIA low today is at the bottom inflection range… Does that range matter anymore ? And a close below it mix things up ? THX

  5. LX says:

    PP 1455.75 R1 1460.75
    S1 1450.75 R2 1465.75
    S2 1445.75 R3 1475.75
    S3 1435.75

  6. H D says:

    My virtual book was trying to scream at 61, 55’s traded, 49’s on deck? #previouos4ths

  7. LX says:

    Everybody talkin their virtual book

  8. rc1269 says:

    anybody waiting for the 10pt bots at 1452.80…?

  9. LX says:

    Happy B Day Elvis !!! TCB baby

  10. Tom Green says:

    In mid February, 2013, Asteroid 2012 DA14 will pass within 21,000 miles of earth.

    The moon is 240,000 miles away and several GPS satellites orbit at 26,000 miles. No need to worry though, NASA assures us that their calculations show that it will not stike earth.

    We’re from the government and we’re here to help you.


  11. mokiepon says:

    Anyone have a sense of AA earnings to be reported today? I’ll be away most of day until last hour (maybe), but will be able to monitor site from time to time. Although AA isn’t the end all of earnings season, the first is the first. Just wondering. Have a great day.


    • rc1269 says:

      mean estimate according to bloomberg is 0.06 for the quarter. expectations seem pretty low, as this number has come down substantially over the year. entering 2012, the estimate for this quarter was 0.30/share.
      but naturally, in our liquidity-injected market, an 80% downward revision in earnings expectations over the course of the year resulted in the stock being… unchanged. but i digress…
      with so much business spending delay from the “fiscal cliff” fears during the quarter, on the whole earnings will likely miss this quarter. but that doesn’t necessarily mean stocks will go downof course

  12. M1 says:

    Thanks, Tony.

  13. theyenguy says:

    Today, Monday, January 7, 2013 … in the long term view, a market top has been attained … in the medium term view, the market is a pivot point to turn lower …and in the short term view, the market declined.

    Reuters reports Wall Street edges off five-year high, awaits earnings. Stocks lost ground as investors drew back from recent gains that lifted the S&P 500, SPY, to a five-year high, in anticipation of sluggish growth in corporate profits.

    Zero Hedge reports Speculators rush into risk by most since 2007. And Zero Hedge also reports More central bank gimmicks exposed as European collateral shortage deteriorates.

    Gold Mining Stocks traded lower today, January 7, 2013, making for a buying opportunity. In a bull market one buys into dips, and in a bear market one sells into rallies. The chart of Gold Mining Stocks, GDX, shows that they broke out December 20, 2012, and traded 1.8% lower today on a 0.6% trade lower in Gold, GLD. Ten Mid Cap Gold Mining Stocks, seen in this Finviz Screener … … having strong growth potential include AEM, EGO, GOLD, ANV, RGLD, FNV, AUO, NGD, AUY, KGC; as a group these traded 1.6% lower today.

    • cogito, ergo sum says:

      Wait … you mean zero hedge has turned bearish? When did that happen?

    • torehund says:

      Growth has been sluggish, but risks are way lower as the fiscal cliff debate pointed out that there is a way to deal with deficits, and by the same time goose growth.
      Yenguy, economy is a big ship that takes time to turn. And FED isnt going to attempt squeezing that citrus until there is sufficient juice to obtain.
      The short impulse capital infusion in this Q stimuli will make a slack and steady wave 3, perfect for holding high beta small caps.

      • torehund says:

        Or lets call the corrective nonsense wave one and be correct.

      • torehund says:

        Speaking of Free Shipping (FREE), the run seems to be motivated, I count 2 full 5 wave structures completed.

      • mokiepon says:

        Hope you’re right about those small caps. Besides a couple of stocks, I’m holding tna for a trade. Gotta go. Kids to et settled.


      • torehund says:

        Melinda, I try my best in the high beta world, lol. Just needs to buy some FRO to complete. Funny how easy waves are to enterpret now that they are motivated, dont have to turn graphes upside down anymore.
        Idea is small cap seismic ships, I had one today that was trade halted on Oslo Stock exchange..They may run wild, mine the RXT (Reservoir exploration technology) had a mcap of just 5 million, little like my Free Shipping play. When contracts starts to run in big numbers thats a giveaway..

      • rc1269 says:

        “the fiscal cliff debate pointed out that there is a way to deal with deficits, and by the same time goose growth.”

        eh? how’s that? we must have been watching completely different fiscal cliff “debates” unfold. i didn’t see anything that resembled headway in dealing with the deficit, nor increase growth, for that matter

    • torehund says:

      The yenguy, I am looking at NUGT to maybe pick up but it must hold 8,11 usd to keep the divergence, or it will start to look ugly. Then it has 2 divergences. Could be a last washout in Gold ofit will turn really ugly. Do anyone know how gold traditionally fared during a major 3 rd ?

      • torehund says:

        but maybe pick up some FRO, could start wave 3 at any time now from recent bottom, and a biggie..Looking long term there is a beautiful divergence all back to 1998 or so when it traded half of today…….counting once more it looks like FreeSeas has done 3 waves since the ascent started (and that wave 3 was huge), possibly a good one from Fro too the following days.

    • mokiepon says:

      Samuel, thank you for posting this! I’ve been concerned about the VIX collapse also and have never seen it fall to this extent in such a short amount of time. Watching key levels to discern what might be coming next. Thanks again!


      • cogito, ergo sum says:

        VIX data is available for a long way back, and there are plenty of 20-30%+ moves up and down in a few days or a weeks time. It usually means that the VIX was elevated a few standard devistions too high because there was some bad stuff coming – sometimes real, sometimes imagined – and that the bad stuff has gone away, been delayed, or is not coming at all. I’ve been primarily an options guy from jump street (I actually started trading options about a year before 21 Jump Street first aired on Fox) and all a low VIX means to me as that typically mispriced options are even more badly mispriced. Buy delta, and even moreso, get long gamma, and it is onward and upward!

        – cogito, ergo sum, aka the homeless daytrader, aka optiontimer, aka A Big Fan of Tony’s blog and the good folks who are drawn to his good work!

        Hey, HD – USA!

      • Ryan Parker says:

        I believe I heard it mentioned on CNBC yesterday at some point that last week’s 39% plunge in the VIX was the biggest weekly loss in 26 years. That would mean late-1986/early 1987. Market had a big run after that…of course until about August or so then we all know what happened. In the very short term (days) this drop in the VIX may be bearish but I interpret the breadth thrust from last Monday and Wednesday combined with the huge plunge in the VIX as extremely bullish. Note that the VIX got down to less than 10 prior to the end of the last bull market in 2007.

      • mokiepon says:

        I realize this isn’t technical, perhaps it’s more Fundamental, but did it ever occur to anyone that the big run-up stocks had was due to end of quarter, end of month, end of year and beginning of new year? New money being put to work?

        Regarding how low the Vix was before 2008, etc.; this isn’t way back when, okay? The Vix collapses since the crash in 2008 have turned out to be warnings of negative market behavior to come. If you’re not concerned, that’s fine, however, I AM CONCERNED and will continue to watch this like a hawk. I am not attempting to fill this blog with Zero-Hedging, Harry Dent, Prechterizing, although I read all that too; I READ EVERYTHING, whether I agree with it or not.

        Good luck to you in your trading,

      • Ryan Parker says:

        I do have to say that I hate when big rallies come at the end or beginning of a quarter or year but I just can’t ignore the back to back breadth thrusts. Fundamentally it makes no sense to me but my count is looking very similar to Tony’s bullish count. I had previously been in the camp of an ending diagonal 5th triangle but price action and breadth don’t act like this near market peaks. Just my opinion. Best to you as well!

      • 7dayyss says:

        Not meant to be critical, but I would be Selective in what I read. Bad track records, always telling one side, don’t bother, etc. Stick with the Caldero’s and blogs with Sharp people to counter-balance. The rest is noise and just leads to the proverbial “analysis paralysis.”

      • mokiepon says:

        ryan, I hear ya.
        7day, guess selectivity isn’t in my dna. I will still read everything I can get my hands on.. I’m not so weak-minded that certain pundits would be an all encompasing influence on my.

        That said: I’m still concerned about the VIX!


  14. torehund says:

    There is a pretty pushy correction going on in the Dry-bulk sector. Risk is even starting to wane in the most minuscule of highly leveraged spot oriented shippers like FreeSeas which I just recently bought for my Kamikaze portfolio. This is pretty much signaling that we are entering a risk off market…

    • torehund says:

      I ment we are leaving a risk off market and entering a risk ON market, lol.

    • tommyboys says:

      I don’t believe the BDI carries the same meaning it did several years ago. If anything it almost seems like a 3rd world indicator. With more and more production headed back to the US we may continue to see fewer cargo ships loaded and enroute…just a thought. This could be a net positive for the US as we save on energy costs and employ more follks domestically.

      • torehund says:

        I think the BDI reflects the real economy (not Apple-onomics, lol), construction on a world wide scale. Point is many countries have benefited greatly on low transportation costs, foremost China that have been able to “on the cheap” build infrastructure making the country much more productive and efficient in the years to come. My concern has always been Japan, that due to its size (economically speaking) is needed to fuel a full on bull market. They have been correcting for decades and having bottomed out last year we now have all ingredients to start the real bull market, leaving the period between 2009 and 2012 looking like corrective nonsense.

      • mokiepon says:

        tommyboys, I agree. Lots of smaller ships cannibalized and now using much larger ships. BDI will have to be adjusted for this, but don’t think it’s been done yet.


  15. mokiepon says:

    Thanks Tony. Great Update as usual.


  16. radrian6 says:

    I included a link to a 60-minute SPX chart. Given the well-established channel line and the weak MACD, it doesn’t seem like there is room for a minute iii right now.

    • tony caldaro says:

      Guess we need to break out of that channel

      • radrian6 says:

        Assuming minute iii is on the way then SPX will definitely need to break the channel. The current technical conditions are not what I would expect ahead of a wave 3 but it would seem more likely after further correction.

      • cogito, ergo sum says:

        Breaking out of channels … That’s what third waves do, isn’t it?

    • tommyboys says:

      MACD is coming off a low while the RSI is below the 50 line leaving lots of room for upside. Actually looks pretty constructive to me FWIW…

      • radrian6 says:

        Hello tommyboys,
        My point here was that the SPX is churning near the top of a channel where it has been rejected six times; also, the SPX daily 14-period Stochastic is over 93 and the VIX is below 14. I’ve seen better buying opportunities in my trading career but if this one strikes your fancy, you should jump in.

      • tommyboys says:

        Likely just an orderly pullback here prior to finally smashing through that topsline sometime late this week or early next. 7th time the charm ?

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