monday update

SHORT TERM: higher open then pullback, DOW -7

Overnight the Asian markets gained 0.5%. Europe opened higher and gained 0.1%. US index futures were higher overnight, and the market opened at SPX 1746, one point above Friday’s close. Just past 10AM the SPX hit 1748 and then began to pullback. Also at 10AM Existing home sales were reported lower: 5.29mn v 5.48mn. The market pulled back to SPX 1742 by 11AM, then tried to rally. After a bounce to SPX 1745 by 1PM, the market pulled back to 1741 by 2:30. Then bounced again to close at SPX 1745

For the day the SPX/DOW were mixed, and the NDX/NAZ were +0.20%. Bonds lost 5 ticks, Crude dropped $1.45, Gold added $2, and the USD was higher. Medium term support remains at the 1699 and 1680 pivots, with resistance at the 1779 pivot. Tomorrow: the monthly Payrolls report at 8:30, then Construction spending at 10AM.

The market opened higher today, made a slightly higher bull market high, then started to pullback. Overall it was a fairly quiet day as the market traded within a seven point range. Today’s high was accompanied with a negative divergence on the hourly charts. So a pullback, of some degree, was quite normal. Since the SPX 1696 low last Tuesday, all pullbacks, surprisingly, have been quite small.

Short term support remains at SPX 1730 and the 1699 pivot, with resistance at the 1779 pivot. Short term momentum dipped to neutral after a negative divergence. The short term OEW charts remain positive with the reversal level SPX 1729. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: bull market


About tony caldaro

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176 Responses to monday update

  1. torehund says:

    ABC fulfilled on dax, it should decline soon, if not its a squeeze straight up to expect.

  2. 16golfer says:

    tommyboys….The money changers might just be thrown out before this over.

  3. micheletonon68 says:

    impressive indeed..

  4. joseph3000 says:

    Anybody? How do i buy USD 2x? Any ETFs? I think USD is bottoming.

  5. pio27 says:

    MR C
    I know you advocated this is a bull market. How can a count,, waves or trends work when there really has not been a real correction. I mean to throw a target to the upside is easy as we will most surely get there are at 1753 and at this rate be over 1800 in a week without stopping.

    • tony caldaro says:

      The DOW has a corrected a couple of times over the past few months.
      As for the other indices, it is beginning to feel like the greater fool theory is in play.

    • uncle10 says:

      Welcome back Pio! 😉
      Counts, waves, and trends still work. My suggestion is sit and watch the blog ( pay special attention to the people that are right a lot), wait until what you think matches up with what they think , then do a reasonable size trade/investment and have a place that is reasonable to get out in case you are wrong and take some profit when you have it. Do that for a year or two and I believe you do better than you think. gl

  6. eeid26 says:

    Since the correction from 1709 to 1626 (83 points)
    We went up to 1734 (about 1.272 of the drop)
    Then down to 1246 (.236)
    Up to 1.618 from the (1709 to 1626 drop) today

    Also the rise as of today (from 1646 is 1.272 from 1646)

  7. radrian6 says:

    Hello Tony and all,
    It looks like the RUT has entered a “topping” phase that has been repeated several times during this uptrend. These phases are triggered after RUT rallies up to or above the daily upper Bollinger Band then moves back inside the band. The RUT should be rangebound for a number of days and possibly a few weeks. In this case, the range could be 1087 to 1122 but the range boundaries have not been established. When the sideways grind is over, the RUT should correct to the daily lower Bollinger Band which is currently near 1044.

    The current rally from the 1037.86 low measures 8.1% which is very close to the previous rally of 7.8%, however, RUT has also generated rallies of 12.2% and 12.8% during this uptrend. Three of the last four corrections lasted over three weeks but the most recent lasted only five days. It’s hard to predict the nature of the next correction but all four of the previous corrections tested the daily lower Bollinger Band. The last four corrections have affected price as follows: -5.8%, -6.5%, -5.1%, and -4.6%.

    I can post a chart if there is any interest.

  8. torehund says:

    ok, roadmap…wait for UUP to get Close to all time low and then buy some DUST. Hope the dollar holds what it promises.

  9. JK1987 says:

    post #3

    Like to share Tony’s excellent advice for people to benefit.

    “Just do the right thing
    And don’t be trying to catch every turn … breathe”

  10. 777daimon says:

    I won’t touch short anymore.
    Buying dips it’s a much relaxing sport for a beginner.
    When this dips bottoms, I’ll buy.
    shorts are toxic in a bull market.

  11. jparkins10 says:

    Did we just see minor iv, now in minor v?
    13 point drop could qualify it as such

  12. JK1987 says:

    Tony Thanks
    DOW still 200 points away from the high. DOW never truncates.
    When DOW makes new high, should be SPX 1779 of oew P3 target.
    Is that a correct assumption?

  13. JK1987 says:

    Still no new high for DOW.
    DOW new high = SPX 1779

  14. berniebaruch says:

    Board Thoughts:

    Vix is moving up strongly from today’s low while SPX and other indices reach new highs?

  15. onthemoneyuk says:

    Hi folks – I last showed up here several weeks back pounding the table for a Wave 4 expanded flat. Seems that in the Dow at least Tony has now leant towards that view but for sure, the substantial correction most of us had anticipated has not materialized – yet.

    So it may be of interest that my latest study suggests a big pick up in volatility and an imminent sell-off. Thought I might post links here, but I see that nice man John Parkins has already done it for me. All charts & comments a few posts below.

    The most common pattern in this setup (pullback ~> rally to new highs ~> correction) dovetails with the SPX Ending Diagonal scenario. Best to your trading.

  16. JK1987 says:

    Tony Thanks
    Red line marks the negative divergence at 1754.69;

  17. "Old fogLEE" says:

    Hey Tony

    Cardinals in the World Series who would have thunk it.
    Should be an interesting day here and in the real world, catching up on the posts… just an observation but it seems emotions get high when day trade

    • "Old fogLEE" says:

      ……when day trades are posted ..JMO
      Trade well hombres

    • tony caldaro says:

      Birds against the bearded bloody Sox.
      We have the DH in four games, and they lose the DH in three, should help

      • lunker1 says:

        Disagree. The Red Sox would love to have both Ortiz and Napoli’s bats. Both had game-winning home runs in the ALCS.

      • "Old fogLEE" says:

        Speaking for all my family in S Illinois
        We’ll take all the help we can get !
        SPX 60 min chart with my bifocals on I see the RSI 5 – div TL got touched and thru by :just the tip ” ? Perhaps a small throw over here and back down..
        Thanks again Tony that’s post # 3 1/2…adios

      • kloutt says:

        classic teams in the World Series…. go red birds ! imagine what cardinals bats will do at Fenway ! ha

      • "Old fogLEE" says:

        Not really sure except that I just show up😉
        CL traded $98 finally !

  18. 777daimon says:

    guess Piker’s Big Down was negated above 1748 in cash.
    above 1756 and ANY bearish vision is instantly negated (multiple resistances negated and a special channel trespassed to the upside).

  19. manunidhi21 says:

    Namaste Tony !
    should we consider USD closer to bottom as euro hit 2011 high..

  20. scottycj1 says:

    Change in trend today

  21. $SPX $SPT $UVXY $AAPL $NUGT, market update for today’s trading:

  22. tony caldaro says:

    We have a really good group of professional traders here.
    In an attempt to keep this blog going in a positive fashion: helping others.
    All personal insults to anyone, or anyone’s approach to the markets, will not be tolerated.
    Those that choose to do this sort of thing will be marked as spam.
    If they continue, their IP address will then be blocked.

  23. Shhh, but if pre-market holds the ED will start turning into an uptrend channel… too early, but it is starting to open up.

  24. rc1269 says:

    QE to infinity

    i wonder how many years it will take the Fed to realize/admit that our unemployment problem has become structural and cannot be solved through monetary policy

    sadly, Yellen is of the exact opposite belief.

    • 16golfer says:

      RC….been hearing a lot of talk that Yellen might surprise us all and she won’t be as dovish as many predict, based her her prediction of the housing bubble.

    • budfox9450 says:


    • tommyboys says:

      Why would they want to spook the market? A problem postponed often is a problem solved. If panic is inevitable as many here fear then why not postpone it as long as possible – preferably forever if doable. Now or later which would you choose?

      • rc1269 says:

        >>Now or later which would you choose?
        with stocks at all time highs – yes, now. there’s never been a better time to be rational.

        the Fed helps cause bubbles. they have admitted as much, and their own research backs that up. we know that bigger bubbles do more damage when they pop. bubbles always pop. it’s a fairly simple and reliable chain of cause and effect.

        so, the logical extension points to precisely the opposite of what you say: stop now, before the next problem is worse than it has to be. rather than maintain the ‘a problem postponed will fix itself’ mentality that has failed us since the dawn of time, perhaps we should take the empirically-proven more successful and optimum model of prevention. that model works in all other facets of life and business , from operations management to health care delivery.

        if the market and economy are about animal spirits, confidence, etc… then that means that we should treat economics as a sociological exercise, not a science. indeed that is why Economics is generally housed within a university’s sociology department. since, then, utlimately we’re talking about influencing the human psyche on a mass scale, it may make more sense to utilize proven methods from medicine more than anything else.

        this is probably why the “fixing the patient” analogy to the economic recovery seems to always fit so well. the patient is the hearts and minds of all of us – consumers, builders, owners, investors. so sticking with the medical model of what works, since indeed we are talking about treating hearts and minds, the evidence clearly is against overuse of remedial treatments. the whole “QE as morphine” analogy also comes to mind. the initial stages of the shock are long past us. yet the Fed insist on keeping a recovering patient in the ICU with a morphine drip, when they should have instead been released to physical therapy years ago.

        a recovery in health takes hard work and weening off the crutches of medicinal assistance. would you expect somebody in a car accident to lie in bed sedated for 4 years and then suddenly jump out of bed, walk on their own and be otherwise normal without any hard work? that’s what we expect when we keep applying the QE at every hiccup. the problem hasn’t been not enough stimulus, it’s been too much. just as with keeping the morphine drip on too long, monetary policy can evolve from positive to negative effect; stimulus shifts to moral hazard. why buy a house today if rates are never going up? why invest in this project today if i can borrow lower next year? why invest in a factory or hire workers when i can make more money juicing my stock in this bull market? it’s moved beyond effective stimulus to now one of gaming the system.

        many rational investors have fled the market and left it to liquidity seeking algorithms. the daily % of trade volume done by algos has skyrocketed the last 5-10 years. that is not an increase in investor confidence – that’s the opposite. when a rational investor cannot make heads or tails of good or bad earnings or economic news, they will become discouraged and leave the game.

        the efficacy is over. anything more today merely adds to the fuel of the next blowup. nothing more. people need to get over the misguided notion that whetever feels good today is the right or best thing to do. as in most things in life, rarely is that the case. just ask your local heroin addict if a problem postponed is a problem solved.

      • tommyboys says:

        We had a taste of hangover in ’08-’09…no one wants that repeated if at all possible. They’ll keep the punchbowl as long as possible. Live now or die. They choose life for now postponing death for later. With time comes hope – without time it’s hopeless…

      • tommyboys says:

        I’d also add – fight it at your peril. I fought it from ’03-’07 complaining and stressing at how the impending hangover would be horrific – and it was. Missed out however on several years of great gains due to stubbornness. To everything there is a time…

      • "Old fogLEE" says:

        Hey R C
        That was solid !

        Going thru the posts I saw u requested my offer of a 5 paragraph description of the pit’s mood on Oct 19 th 1987 ..Can I send u what I wrote and u ghost write it for me ? Dude u got skillz

      • tommyboys says:

        Here are some sights you’ll enjoy. Been reading the “crack/heroin addiction” metaphor for 20 years. At these sights you’ll find it’s authors (Addison & Bonner). The one sight tracks programmed trading and has been referencing it as a “mania” for 15 years. Prechter of course has also preached this for two decades. These guys did save me in 2000 however. Enjoy….

      • uncle10 says:

        Awesome RC!! great stuff! Thanks.

      • rc1269 says:

        Thanks Tommy appreciate the links. To be clear, in no way should my disdain for continued Fed actions be construed as trading advice. My beliefs are one thing; but as you have illustrated, our investment accounts are ruled by the trends, of which we have no control.
        My point wasn’t so much that we should fight our equity holdings from going higher; my point is that just because you and I might benefit today does not necessarily make it good, right or even appropriate. I can think of plenty of ways I could make more money that wouldn’t be good for our society or economy.

        Lee- would love to but i’m certain everyone here prefers your wit and brevity over my verbosity. 😉

      • tommyboys says:

        I agree 1000% on the moral high road and ethics. I try to be the best Christian I can in everything I do – I fail all the time. If you’re looking for morals and ethics however in the markets then I’d have to say you’re in the wrong place. Stay as far as possible from these markets if looking for morality. I’m in the markets for one reason only – to make money. For this I’ve had to discard all ideological beliefs while here and analyze to the best of my ability trends and probabilities and that’s it. Strong ideology lost me lots early on. Markets and morals are at odds. Recognizing this changed things for me. I’ve had to basically fight innate instincts and do consistently the opposite of what I feel in order to profit. Its an emotional conundrum – and a life long challenge – I love it.

  25. pio27 says:

    Just as a sentiment gage again with POMO and FED all that matter anyway it seems everybody is bullish. Today no matter number the market will not go down. Good number they say it was a error bad number fed stays longer. Miss this blog a lot of the players on it are gone and either stopped following or stop posting. Hope it gets going

    • tony caldaro says:

      The effectiveness of QE has been waning.
      Never rely on just one market driver.

      • That’s a good point Tony. All other things being equal, I’ve often wondered at what SPX price the $85bn per month is fully priced in and ceases to be a reason for higher prices.

        • tony caldaro says:

          Our recent analysis shows QE 1 and 2 had a similar impact on the stock market.
          Even the first Operation Twist worked just as well.
          The second OP had a lesser impact, as QE started to lose it effectiveness.
          And now, the current QE 3 requires twice the amount of bond purchases to move the market as did QE 1 and 2.
          Should Jan/Feb bring large deficit reductions and/or tax increases.
          The FED’s recent talk of tapering will have backed it into a corner.
          They will not be able to taper, nor increase QE 3.
          Deflationary secular cycle then shifts from stagflation back to deflation.

      • va89blog says:

        Tony, this is what I think too. The Fed painted themselves into a corner and won’t be able to slow their QE purchases or reduce their balance sheet. What’s worrisome is what happens when the US has another inevitable recession while rates are at 0% and QE is clipping along at $85B/mo? Do they increase to $200B/mo and buy every bond available? Do they buy equities?

      • pio27 says:

        I know its not working MR C in the economy. But for the stock market its working. we dont go down.

      • purplember says:

        Bernanke is leaving at the right time. Yellen responsible now for unwinding it.

    • budfox9450 says:

      pio27 – Good to see you remain here….

    • tommyboys says:

      If everyone were bullish the markets would crash…ya know why? Because there would be no one left to buy.

      • tommyboys says:

        There is still billions sitting idle. My bet is they chase us WAY higher over the coming 6 months. Time will tell.

  26. eeid26 says:

    Hi Tony,

    Thank you for your work.

    I have a question about using the Elliott Wave principles or OEW over a long period (5-20+ years). Would the inflation effect the analysis. Most analysis happen using time and price in us dollars. I can see if the value of the dollar is constant then the price reaction would be a real reflection to human’s reaction (impulsive or corrective).
    Thank you

  27. If the jobs data continues to surprise to the upside, time for taper ? And spike down :))

    • Thomas Crown says:

      Evans repeated yesterday that the FED needs to see a few good employment reports before they can decide on tapering. He mentioned he would like to see something closer to 200k. It’s gone take a few high numbers IN A ROW to get the 6 month average anywhere close to 200k again. Forget tapering anytime soon, QE infinity is there to stay. That doesn’t mean markets can’t go down but it’s obviously a struggle for the bears.

  28. jparkins10 says:

    This is from James Goode’s twitter timeline (he posts in here occasionally)

    Prepare for an immediate pullback in stocks – then a powerful correction or a major rally. Here’s the setup:

    In 30 yrs, 19 precedents with equally low vol at new high.
    Charts – 1985: // 1988-90: //1991-94: // 1996-98: // 2003-05: // 2006-07: // 2010-12: /


    (A) All 19 precedents led to a pullback at least – and in all but 2 cases the selling began immediately
    (B) Most common pattern [9/19]: immed. 3-7% pullback ~> 6-10% rally to new highs ~> 6-9% correction ~> bull mkt resumes
    (C) Those which did not pull back but instead pushed directly higher, took large corrections soon after (eg. 1998, 2010

  29. torehund says:

    Bullish harami cross and short signal on UUP, thats pretty much F.I.R.E in one or the other direction pretty soon. In some time I expect a treasury hike and temporary crushing of commodites, thats when the etf DAG may be a Nice pickup. However With all Plays its all about timing.
    Well buying SDS timely and enjoying the dollar hike as a bonus sounds Nice, then convert to DAG. Patience is the key.

    • torehund says:

      I also expect some Pharmas to do poorly (they mostly do a 5-10 bagger, but from where??, thats the task).They all need to be shaken thorougly as the risk of losses are great at any given price Level until they are so devastated that no-one cares selling them. Some laggards have broken Down and may test or make a brand new 10 year bottom. But its also the totally broken Down small cap Pharmas that do the 5-10 bagger flight. And thats naturally where the greatest opportunities lies.

    • rc1269 says:

      what do mean by a ‘treasury hike’? if you mean the Fed raising the fed funds target rate, that’s going to be a long ways off in the future. 2015 at the earliest most likely. they haven’t even started reducing stimulus, much less discussed a timeline for tightening

      • torehund says:

        I believe that FED is not entirely in Control of the interest rate and the dollar is Close to testing the lows. It could og either way at this point, as the signs are very ambivalent techically for the USD and the T-bill. Thats why both beeing short and long the market now is more of a 50/50 exercise. Tony has the USD in a bullmarket and until this is proven wrong there is a substantial risk of dollar appreciation and rate hike. I am not saying i know which direction, just that I am waiting for the market to reveal its Secret. For gold and miners these considerations are Paramount and will cause enormous swings. Lets hope we can reap…some..

  30. JK1987 says:

    Tony Thanks
    Are you sure Pik and 16golfer is not the same poster? And possibly many other ID.
    Their “tie” are very close if enumerate many many of their posts in past in many ways.
    Are you sure Pik is not coming here to advertise his fee based Pity newsletter?

  31. gokalg says:

    Thanks for your posts.Always something to learn. Your thought of dropping big but first support around 1709 and then retrace to about 1760(.5×100) then a big drop to about 1560 area is my target (abut 10% drop).Appreciate

    your comment

  32. Hello all Elliott Wave traders out there,
    As I said in my earlier posts I am tired of waiting for shorting opportunities in broader markets. Also burned shorting the markets. So I started looking at individual stocks to find short term set ups, both upside and downside. I need your feedback on my analysis on APPL stock.
    Looking at a daily chart, after bullish move started on 04/19/2013 recently it looks more consolidation.

    From 08/19/2013 to 09/16/2013: I see ‘abc’ correction I am counting it as wave A.
    From 09/17/2013 to 09/23/2013: I see 5-3-5 up move counting it as small ‘a’ of B wave
    From 09/23/2013 to 10/08/2013: I see a triangle. I am counting as b-wave of B wave
    From 10/09/2013 to till today: It looks like 5 wave rally to complete c-wave of B wave

    Do you agree that we should see downward C wave to start this week that at least should be 50 points lower to match the Wave A?

    Appreciate your help.

    • BTW I am not bearish on APPL rather I am saying it should complete C wave down before it starts next leg of upside move. May be tomorrow’s product announcement will cause a small drop to complete C wave and next week’s earnings report will cause it go higher. just my 2 cents.

  33. alexh110 says:

    Tony, is today’s correction most likely micro 4 of minor 3?
    Or could it be the start of minor 4?

  34. Thanks, Tony! Good golly, Miss Molly, the Russell is jolly! This is a monthly chart … still room to move up to the dashed blue line. The party is not over yet, but getting close. Remember, this is a MONTHLY chart — can take awhile to change. However, it gives one a perspective to stand back and look at the big picture.$RUT&p=M&st=1973-01-01&en=(today)&id=p98570180905&a=319348397&listNum=7

  35. pas1968 says:

    Hi Tony,
    (I’ve been away and just reading a bit here today).
    So most probable count now is SPX targeting about 1779 to end P3 followed by a 10% or so P4 correction ?
    Should we exclude a possible/probable major [5]-P3 target of around 1900 where major [5]=[1] ?

  36. kloutt says:

    OCT 22 2013 is a date you will remember

  37. Was just gonna say that it will be od at 1779/82 ranges that Primary 3 is equal to 1… in fact, its really kind of disconcerting… would possibly be a big ABC then from 666 right? Have we ever had a Primary 1 equal to Primary 3 in history? Doubt it…

  38. might have a decent top signal… Ralphie the ‘Godfather of technical analysis’ saying bull market has 10 years left..

  39. Hi Tony,
    Thank you for all you do. I have been sick for the past few days and I am lost. Would you mind catching me up with levels and counts please? Again, thank you!!

  40. H D says:

    Thx Tony.

    Piker, Nice. @38 I’m a fan, you got your wedges dialed in! 1 bounce and stop right next to the hole. Now just sink the put.

    • JK1987 says:

      After 9:30, ES traded between 1736-1740, it’s 1738 +-2, an easy call.🙂

    • Today set up a Big Down!

      Now, without sneaking over to my twitter page, who can tell me the entry, stop, and target?

      • 5wavemodel says:

        You must be eating lobster morning noon and night by now. Nice job!


      • radrian6 says:

        Your stop should be above the recent high at 1747.79 … so make it 1748. The entry trigger you like is a move below the previous day’s low which was 1740.67 … so make it 1740. I don’t know how you determine targets so I’m not going to stab at that one.

      • Joker – I suggest you focus your social interactions with Tony. You have something worthwhile to share, share it. If not, then why bother? If you want a chance to learn how the market works without someone hitting you up for a newsletter fee, then watch and learn. If you’re good where you are, I’m happy for you. So how about you return the favor and leave me be?

      • I agree with Radian’s setup and will take a stab at your expected target. I’ll go with 38.2% retracement, which is also where previous strong support sits at 1709 area.

      • Jack, Be careful. IMHO it is too early to be heavily shorted. Why not wait for a trendline break/MACD roll-over/break of support. It seems like you are trying to pick the top … same difference as catching a falling knife. Good luck! I mean that sincerely.

      • JK1987 says:

        jedi Thanks.
        My stop is 7 points at 1754.
        I am a fan of your charts.🙂

      • radrian6 says:

        I think Piker is looking for a much lower target here — in an earlier post he mentioned that this correction would be deeper than the recent corrections we’ve seen.

      • radrian and Jedi got the ins and outs (entry and stop), though I usually would use a CLOSE above the stop to exit the whole position. But the target, jedi is BIGger! I agree that should this trigger, and should SPX decline, that 1709 should be an important level along the way – it could become a support level from which the Big Down is reversed, for example. If this triggers, the orthodox target must be at a level that would represent a greater than 100% retrace of the last bull swing (1646 – 1748). I usually will look for the closest support level that matches a 50% retrace of AN important swing, or a fib extension of the last bull swing.

      • uncle10 says:

        Hey Piker, you have any thoughts on GDX? Thanks again for sharing!

      • Uncle10, Watching GDX myself … lots of consolidation (accumuldation) in the 23-30 range. Worth starting a small position. Easy to know where to put the stop.

      • @uncle re: GDX – not at the moment, uncle.

      • uncle10 says:

        Hey Jedi, I am doing more than “looking” 🙂. With Japan’s QE forever, EU probably doing the same, GB, and US. Throw in the fact the Euro just does not seem to stand a chance in its current form , it is hard to understand why Gold will not still have some life yet??

      • uncle10 says:

        ok. If you get one I would love to hear it. Thanks.

      • Good luck, Uncle. Be careful, as there is a gap below on GDX that might get filled.

      • uncle10 says:

        Always careful. I have a decent entry and a close stop. gl

      • jparkins10 says:

        CN, what’s your twitter handle?

    • 16golfer says:

      Piker will sink that put, you can be sure of that! Thanks for showing us the ropes and being so generous with sharing your knowledge!

  41. bouraq says:

    Lack of action today: #SPX #FTSE (2 charts due to being away from home this week)

Comments are closed.