monday update

SHORT TERM: another gap down opening, DOW -129

Overnight the Asian markets lost 1.8%. European markets opened lower and lost 0.9%. US index futures were lower overnight as well, and the market gapped down to SPX 1676 at the open. The SPX had closed at 1692 on Friday. In the first few minutes the SPX hit 1675 then started to rebound. At 9:45 the Chicago PMI was reported higher: 55.7 v 53.0. The rebound continued into the afternoon as the SPX hit 1687 by 1:30. Then after a pullback to SPX 1678 by 3:30 the market bounced into a 1682 close.

For the day the SPX/DOW were -0.70%, and the NDX/NAZ were -0.30%. Bonds gained 3 ticks, Crude slid 55 cents, Gold dropped $8, and the USD was lower. Medium term support remains at the 1680 and 1628 pivots, with resistance at the 1699 and 1779 pivots. Tomorrow: ISM manufacturing and Construction spending at 10:00, along with monthly Auto sales during the day.

The market gapped down for the second day in a row. Today’s gap opening jumped over the 1680 pivot, but found support near the lower end and ran into resistance at the upper end of the range: 1673-1687. The decline from the recent SPX 1730 high has now reached 55 points. The largest pullback during the entire Nov12-May13 uptrend was 61 points. Recent market activity is certainly looking like a new downtrend. We labeled a tentative green ‘a’ and ‘b’ at the recent SPX 1692 and 1704 levels. The degree of waves is yet to be determined.

Short term support is at the 1680 pivot and SPX 1654-1665, with resistance at the 1699 pivot and SPX 1730. Short term momentum was quite oversold at today’s lows then bounced. The short term OEW charts remain negative with the reversal level now SPX 1692. Best to your ‘likely’ government shut down trading tomorrow.

MEDIUM TERM: uptrend continues to weaken

LONG TERM: bull market


About tony caldaro

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140 Responses to monday update

  1. 16golfer says:

    Piker…great record there! Sounds like you’ve got your trading style “grooved”. Now when are you going to write that book?

  2. I have no idea what that spike was all about, but i shorted it good and proper @1698

  3. pio27 says:

    Mr C
    You have to admit one thing this market is amazing. everything including a goverment shut down and Nasaday and Rut break highs and rest at striking distance. Even if we go over the debt ceiling the market will still go higher.

  4. jobjas says:

    Wave b of intermed A likely to top @ 1690

  5. mjtplayer says:

    Liking your minute a-b into minor A count Tony. Also looks like minute a-b into minor B at today’s high of 1,696. Thus far, from 1,730 down to 1,675 = 55pts for minor A. The rally into today’s high at 1,696 for minor B = 21pts; a perfect .382 retracement.

  6. blackjak100 says:

    After looking at it closer, 4th wave of ED needs a low in the 1663-1667 range to have the ‘right look’. It still may come, but this rally needs to be corrective.

  7. Tony….
    Thanks for marking min-a on chart…do you have a target zone for min-b ?

  8. I seems to me that NDX needs one more push to complete a 5 of some degree. Having in mind all the divergences (momentum and breadth), maybe, just maybe one should be ready to pull the trigger on the short side.

    I like to follow something called the “Beta Chase Index” on (tracking inflows in high beta against low beta funds at Rydex). It is going through the roof, printed extreme reading TWICE this month, which is unusual.

  9. oneandonlyuniverse says:

    Covered all GDX and GLD shorts. Now getting long both

    • Thanks oneand…I am still short gold but will have another look.

      • oneandonlyuniverse says:

        Bad equity tape, political probs , seasonality oct to year end, most hated group. I was going go wait til mid oct but a few things changed. same as aapl weekly chrt 6/24….also not great for equities…gl

  10. pooch77 says:

    Tony getting emails on posts but do not have box checked for email comments?

  11. lunker1 says:

    Tony marked 1675 Int A

  12. Hi Tony, The qqq, mid caps and small caps are all making new highs todays, and may make new highs tomorrow. However, When you look at a weekly chart of the DOW 30 on a “weekly closing level” it made a head and shoulder top just like 2011 and the index is currently lower than the 20 Weekly average, bearish. But what is really bearish is the 20 weekly average is rolling over or heading down. That is big time bearish!! What level does the Dow 30 have to get to before you think it is all over from an Elliot wave count. Thanks

  13. pooch77 says:

    Can someone explain why oil is tanking so bad in this ralley,just short covering here?

  14. Intraday SPX looks a little toppy at 1696.55. Nothing would surprise me at this point, not even a selloff all the way to red or another 1% up after a fast pullback.

  15. lunker1 says:

    You mentioned that no one would believe where you bought yesterday so did you front run the big up on a hunch and why?

  16. lunker1 says:

    I like this count now
    A 1697
    B 1707 expanded flat
    C=A was 1675
    perhaps the ABC completed to form Intermediate A of Major A and now in Int B, however SPX is now at 62% retrace of C and at top of expanding triangle from B and the Daily RSI5 is back at 50, a common reversal area, so if price reverses here perhaps this move up was only b of C with c of C ahead. but if price continues to move up in Int B the 50% of the entire ABC is at 1702 and the 62% is at 1709 which again is the 114.6% of 1576->667.

  17. pbnj123 says:

    Good morning Tony
    So are you 50/50 on Primary vs. Alternate?
    Would love to know what you are thinking as today has many guessing (except for piker 🙂 – well done piker)

  18. torehund says:

    They couldnt shut Down the Bots..last man standing

  19. Lee says:

    Who needs cable when we have such brilliant political minds here.(sarcasim with a pinch of good humor)
    Hey Tony
    Thanks amigo

    • H D says:

      funniest tweet I saw, Did the death panels get shut down today too? Where is Sarah Palin to cram that down our throat. 🙂 All in good humor and sarcasm people. I am not too serious.

  20. pio27 says:

    one part of the GOV that not shut down is the printing press.

  21. 777daimon says:

    If you see on ES more than 1688.05 I’d say to all bears to take their money NOW ! and run to the hills. It’s on ef the early signs that the trend is UP again!
    This Piker guy might be right!

  22. Greetings all.
    Watching to see if this rally/breakout is real or fake and looking to re-short…GL to all.
    S&P hourly fut :-

  23. jackkendo1987 says:

    RUT new record high, NDX near the top.
    SPX still in Primary 4?
    Or should change to DOW bullish alternate of major i, ii with ii at SPX 1675?

  24. blackjak100 says:

    NAZ another 13 year high – should be biggest clue we are still in Major 3.

  25. blackjak100 says:

    C=.768 * A = 1675. It was a min target for ED. It didn’t quite get to trend line, but still in play.

  26. jobjas says:

    Wave a Of A of Major 4 completed

  27. jackkendo1987 says:

    SPX up 17 from 1675.
    A label of c at 1675?
    Question is degree of Major or Intermediate or Minor of Primary 4?

  28. Nice update and keep looking for further updates as well and thanks for sharing such valuable updates with us.

  29. Tony, c of SPX completed at 1674.99?

  30. elmer510 says:

    Futures are volatile but points towards a positive gap up so far.

    I think the debt ceiling can cause more turbulence than the recent budget fight. We remember in 2011 the debt ceiling debate caused much trouble in the financial markets. Only two weeks to go before US reaches this ceiling and an over all agreement is needed to continue federal activities.

    There’s a lot of well suggested wave counts at this forum. One can get lost of less. But so far I prefer Tony’s version cause he has a tremendous track record, while I don’t know much about the other contributors’ hits and failures.
    But of course, very interesting to read posts from fionamargaret, lunker1 and all the others.

    • mcmasoniam says:

      elmer, for the record, I don’t think anyone is in competition with Tony, which I know is not what you meant. I’m trying to figure out exactly what I’m looking at, just like others. I trust Tony’s count too, but I also see a wedge, so I have 2-3 possible scenarios on the board.

  31. Tony

    When you write a,b does it then mean a c down coming ? Or I dont really understand how these waves are counted. Is it wave a,b,c of what ?

  32. I found this paragraph in the 9/19/13 edition of “The Street” and am pasting it here and commenting upon it:

    “Algorithmic and program trading takes up so much space in the futures markets that tools that used to work don’t anymore. The program writers have figured out every tool we use, even the plus or minus 1000 -1300 ticks and the new indicators (if they work) don’t last very long. If it’s not tied to an algorithm you can forget it .That means that traders need to constantly be looking for a new edge. Whether its learning “pivots and vol windows” or learning how to read the program levels in the S&P.”

    This is not a new phenomenon that has only arrived with the advent of program and algorithmic trading. In some form or other it has been going on since public markets were created in the Middle Ages, the traders and market-makers of that age probably using an abacus to crunch the numbers. In the 1950’s and 1960’s people trained in math, science, engineering, and quantitative business analysis began designing indicators to better map the relative position of whatever market trend was occurring to some objective scale of measurement other than the item’s raw price itself and to identify buying and selling points. Many of you may be familiar with Odd-Lot Sales ratio, On-Balance Volume, Lowery’s Buying vs. Selling Power, Rydex % of Cash + short Sales/Total Volume, the Arms Index and on into the hundreds. Many of them worked very well for a while and then became discounted by the market makers and large scale traders armed with powerful computers.
    It is not just a matter of “bots” monitoring sites like OEW but of mathematicians, physicists and computer scientists working for big money Wall Street institutions “forensically” ferreting out the trading methods being used that the people using them sometimes don’t even publicly reveal by analyzing the patterns they create. Some indicators and methods of “reading” the market have retained their usefulness because the people who utilize them have become more sophisticated in applying them, in the process adding value to the original tool but perhaps also requiring more subjective skill in it’s successful application. I believe Tony Caldero’s amplification of R.N. Elliott’s work is such an example.
    The idea of some pattern being so organic and inherent in the price movements of the market that nothing can counteract is a tantalizing speculation. I think R.N. Elliott believed had had discovered it in the Wave Theory. Maybe he did, but those who employ it must acquire a great deal of subjective understanding or add some powerful objective tools to find it, or both.

    • tony caldaro says:

      Seriously doubt we have even made a blip on the quant screen.
      But you never know for sure

      • The influence of Elliott Wave in general, widely used as it is, must surely have been noticed by the market-makers, the informed money, and large-scale trading houses. I am proposing the idea that your subjective skill in interpreting EW and the objective techniques you have developed for OEW in particular have foiled Wall Street’s countermeasures.

  33. So, Senate rejects again, and we are headed towards a shutdown, and futures are skyrocketing.

  34. lunker1 says:

    expanding on Tony’s ab count. for clarity I’ll use caps ABC.

    A = 38

    also if 1675 is a of C = 29
    and if b of C retraces 50% to 1689**
    then if c of C = a of C = 1660
    or if c of C = 1.62 a of C = 1642*

    *so I’ve got 2 hits at 1642 for a target for C

    also if 1675 is a of C, and…
    1687 is a of b of C (12)
    1678 is b of b of C
    c of C = a of C target is 1690**

    ** and I’ve got two hits at 1689/90 for a b of C target.

    so looking for a move to 1689/90 and then 1642. 62% b of C is 1693. the 1699 pivot starts at 1692. anything above there puts this count in the shaky zone.

  35. Tony, thanks for your update and guiding us through the market’s last and ever increasing treacherous moves.

    As mentioned earlier today; current price action gave a sell-signal on the SSTO’s indicator:

    The daily-AI is still in sell mode, and no signs yet of some sorts of bottom (buy-signal) on that time frame.

    The fact that the weekly-AI turned to sell is in line with either a primary III top or of a ii of Major 5 decline: see the ii of Major 3 sell-signal Dec. ’12 for analogy. Time will tell.

    ps: of course the week has just started, so the weekly has to trade above 1703 to negate the sell signal.

    GL y’all!!!

  36. I have a buy stop on the ESZ at 1681.25. True trigger would be a cash trade at 1688 or higher, stop loss would be a cash close, or anticipated close below 1674.99, and the profit target is cash trading at or near 1744.95 by October options expiration. An aggressive trader will allow an overnight buy stop-limit on the ESZ, a conservative trader would wait for the cash market to open and trade above today’s high before taking a position. This is a Big Up!

    • lunker1 says:

      Dude!!!! C’mon give us some reasons. Make your case. You kinda sketched out on the Big Down. I though BIG was 100+ pts??? Sell me on what ur talkin bout Willis. 😉

      • mcmasoniam says:

        That’s it! lmao, lunker. By jove, you’ve got it…”Piker Willis”! Perfect!

      • mcmasoniam says:

        Or, what about “Pike Dude Willis”?

        Okay, it’s late and not funny. It’s been a Monday, just trying to ease up here. Bye!

      • mcmasoniam says:

        Forgot that ‘r’ in PikeR.

      • I can’t be the only one who noticed that buyers gobbled up beau coup stocks at yesterday’s open and that price never looked back. In the parlance of the trade, we call that a “V-bottom reversal,” and while there is no such thing as a sure thing, you got to take them all if you are going to take any of them, otherwise you do not get the benefit of the long term expectation of the behavior. Had I managed the Big Down trade properly, I would have stopped the short and reversed to long today at 1681.25. I let the strength in the NDX and RUT shake me loose from it early – it happens. So I made 30 points instead of 40 points. It happens. And who knows, this Big Up may not make it to target, and it might even cost me 15-20 points depending upon how I have to manage the stop through the next few hours/days. It happens. All that matters to me is at the end of the year I manage to end up about +500 points/contract traded or better. That happens too 🙂

    • infinitedips says:

      So the aggressive trader is long already for the Big Up as a result of futures trading through.

    • infinitedips says:

      So you are in either way, aggressive trader or conservative trader.

    • infinitedips says:

      Even the lowly Dow has taken out yesterday’s high. Big Up here we go.

    • 16golfer says:

      Piker, I was comparing the volume yesterday to the volume on the June 24 V bottom. This move may be faking out those who are expecting the ED and will be turning down again soon. Yesterday’s buying may have been the money managers putting new money to work at beginning of month/quarter.

    • 16golfer says:

      Piker….I went long at the open Monday, but sold the position quickly when I had the gain I was expecting. Switched back to the short position near yesterday’s high. Just feel like there is more downside to come with the silliness going on in DC. My thought is Obama wants the market to tank to force the Republican’s hand and this could get real ugly real fast . Good luck to you in whatever position you settle on. I know that you will manage it well and can “get out of the woods or the hazard” and post a good score.

      • My ES Big Up/Big Down “scores” for the last 11 months: + 73, +104, +85, +64, -24, +118, -19, +70, +107, +30 = +608, all rounded down to the nearest whole tick. Nearly every one of these was announced right here at Tony’s OEW lounge, and nearly every single one of them was laughed at and ridiculed when announced. The worst thing that can happen with this particular trade is that I lose 15 to 25 points of the 608 points the market has yielded (which would mean that even with a loss, my ES trades over the past 30 days would be net positive). If you do the numbers, there have been 10 BU/BD’s this year, and merely by taking each and everyone of them, I average +60 ES points, or $3K/contract. I do not pick and choose which to take, and with all due respect, I do not try to psychoanalyze the President or discern the motives for and implications of a Goldman Sachs upgrade or wonder what Boehner’s shade of tanning spray might mean for the debt ceiling or whatever. I take each trade, every time, and let the chips fall. If this one fails, the next one is probably just a few days or weeks away, and odds are that one will not fail. Over the last 10 years, I can only remember three occasions where BU/BD had 3 consecutive losses in a row, and with an average profit of +60 points, and an average loss of -20 points, that has been a completely acceptable win rate for me.

  37. H D says:

    Just my $0.02, Typical wave doesn’t end here in channel, gap has R, C=A though

    • You are right, HD. While the SPX did what it could do to give a Big Up look today, the Dow did not, and both would look much better if the decline continued down another 1.5-2%. But the NDX and RUT are looking like each is ready to try higher rather than lower, and that might be enough to prop up their big brothers a bit longer, if not drag them to slightly higher highs. Like sea turtles, not all Big Ups survive to maturity. I lost the Big Up of 6/6, for example, as well as the one of 8/22. The 8/22 looked underdeveloped to begin with, so I did not bother with it at all and chose to stay short until a healthier version came along on 8/28.

      • 16golfer says:

        Not a lot of volume yesterday though.

      • I find that volume is best judged on a relative basis – what was it compared to the average and to the day before, and who won the day. I give yesterday to the buyers.

      • H D says:

        Nice job pikr, u know we have the 1692 but some good news despite the GOP’rs desire to destroy the Country- U.S. manufacturing expands at fastest pace since April 2011, on stronger production, hiring, AMZN hiring 70,000 Americans, Healthcare for all today! After 8 down days I don’t mind a rally at all. USA!

  38. The SPU’s gapped down 16 handles on the open, tested the overnight lows, rallied 11 handles to fill the gap, then faded before the quarterly rebalance process. Hedgers took profits early, then rolled into longer duration protection in the afternoon. Safe Haven UST10’s sold off until the re-balance and gold never caught a bid. The Q’s and RUT had a first-touch bounce off the FOMC gap fill, while DOW continues to look for a bottom. For the fourth straight day, sell-side MOC imbalances got matched by bargain hunters, and turned positive into the close: today’s went from 80% sell-side $800 mil at 15h to $100 mil to buy at the close.

    The last two initial declines from the May 22nd SPX 1688 and Aug 09 SPX 1709 tops ran 1687-1622 and 1709-1683 for 65 and 26 handles at 10 and 7 days. Today, Tony marked a and b onto the current decline. While EW classes corrective declines as ABC, I would suggest that the last two large declines appear as five wave declines if we acknowledge that waves incorporate both time and price.

    My view of the recent decline is:
    open-peak-close-open to close delta-time
    1. SPX 1729-1729-1697=22, 2 days
    2. SPX 1698-1709-1693=05, 4 days
    3. SPX 1696-1696-1675=21, 2 days (ongoing)

    If this is correct, and a flat second wave will mean an opposite fourth wave, we’ll see a short-lived pop that clears today’s HOD and doesn’t violate the bottom of ‘1’. If not, we continue the stair-step decline that has us down seven of the last eight days. With politicians putting out fire with gasoline, more downside certainly has momentum.

    • RacingSquirrel: Thank you for your very courteous and thorough response to my comment on your weekend “table post”. I studied it carefully and think i understand most of what you intended to convey. On the subject of the 20MMA, I arrived at my conversion into a “no. of days” MA by multiplying 21 trading days per month times 20 months and arriving at a 420 day MA. Now that I think again about it 20 trading days per month may be a more accurate average. Thus 20 days times 20 months would yield a 400 day MA. However, you seemed to be implying that this type of conversion does not create a real equivalency of meaning. That is highly plausible.
      The links you provided were excellent, and I bookmarked the first one as a reference in my “Stocks Research” folder. There was a paragraph in the first article that I am going to post and pontificate about in a separate post (on today’s blog). May I be so presumptuous as to suggest you reward yourself for sharing your excellent research with us by upgrading your username to the more dignified “Racing Thoroughbred”.

  39. student8888 says:

    piker, did you buy today’s dip or went short? would love to hear your thoughts on today’s price action. thanks for sharing your knowledge and wisdom. i have much to learn from all the experts on this blog. great group. thanks for enlightening a clueless student as myself.

  40. Looks like a consolidation amidst a massive bull market with alot more upside to come

    6 years ago almost Dow peaked at 14198. We are 15,100… or about 7% gain in 6 years.

    I’d say there is more upside to come

    thats just me

  41. CB says:

    thanks Tony.
    ..and inquiring minds are asking: so they’re going to shutting down the NSA also? ; )

  42. torehund says:

    ..give me some bouraq, until the big squeeze comes gonna be a Cold Winter I like coal too…

    • torehund says:

      ..and dont forget some Medical Device makers, goood if the republicans get it their way.

      • gary61b says:

        Would u be referring to the 10% of earnings they have to pay in because of the Obama health care plan?

      • torehund says:

        Obamacare (socialized medicine) supresses priced on delivered Products, eg 10 ladas is better than 1 Ferrari. Som of the generic cheap Companies will do well in Obamacare. Space age cutting through Technology will die out as the effort (costs) doesnt justify what you will be able to sell these Products for. And the advance in medicine will reverse globally. 100 000 of jobs in the Pharma industy will dissapear. So Obamacare has large implications.

      • H D says:

        I disagree, companies like SNY don’t really rely solely on USA? There are other markets for pharmaceuticals. IDK but if I knew 30M new customers were coming I’d be hiring.

      • torehund says:

        HD I am more thinking of start up Pharmas that needs an expected 100 000 usd per patient (cancer) to attract investors. And as we know that just a miniscule amount of drugs finally passes the FDA then not very many investors would be attracted to invest in a Company that would only get 10 000 usd per patient. Good thing is that patents do expire and the drug can then be sold for a fraction of the original Costs.

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