monday update

SHORT TERM: drift higher continues, DOW -1

Overnight the Asian markets gained 0.7%. Europe opened higher but lost 0.2%. US index futures were higher, then lower, overnight. At 9:15 Industrial production was reported higher: +0.6% v +0.4%. The market opened one point below Friday’s SPX 1760 close, dipped to 1758, and then started to rally. At 10AM Pending home sales were reported lower: -5.6% v -1.4%. After 10AM the SPX hit 1763 and began to pullback. The pullback lasted until 11AM when the SPX hit 1758 again. Then the market rallied to 1765, a new high, by 3PM. After that the market pulled back to SPX 1759, and then closed at 1762.

For the day the SPX/DOW were mixed, and the NDX/NAZ were -0.05%. Bonds lost 3 ticks, Crude gained 75 cents, Gold added $1, and the USD was higher. Medium term support remains at the 1699 and 1680 pivots, with resistance at the 1779 pivot. Tomorrow: Retail sales and the PPI at 8:30, Case-Shiller at 9AM, Business inventories and Consumer confidence at 10AM, and the two day FOMC meeting begins.

The market opened FED week slightly lower, then worked its way up to a new all time high at SPX 1765. The current rally has now travelled 24 points without one meaningful pullback since the SPX 1741 low on Wednesday. Minor 3 travelled 63 points without a meaningful pullback, and Minor 1 travelled 66 points with two meaningful pullbacks. With Minor 5 making new highs today, a down turn can now occur at any time. However, we are expecting the DOW to make new highs before it does. The DOW is currently about 100 points from its Major 3 high at 15,658, and 150 points from its B wave high at 15,710.

Short term support remains at SPX 1759 and 1730, with resistance at the 1779 pivot and SPX 1804. Short term momentum ended the day just above neutral. The short term OEW charts remain positive with the reversal level now SPX 1753. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: bull market


About tony caldaro

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105 Responses to monday update

  1. 777daimon says:

    hope you like the joke 🙂
    a message for bears 😀

  2. mjtplayer says:

    Hey Tony,

    Things look pretty overbought and extended in the markets, complete 5 minor waves up to finish int 3/c and nearing the 1,779 pivot. Another Fed day top tomorrow?

  3. llerias7 says:

    I guess we just entered in the OEW 1779 Zone, so … “Yellow Alert”!

  4. lunker1 says:

    Hey Lee….catch ya on the flip side.

    Cledus Snow: Hey Bandit. Me an’ Fred’s got a question.
    Bandit: What you an’ Fred want?
    Cledus Snow: How come we doin’ this?
    Bandit: Well why not?
    Cledus Snow: Well they said it couldn’t be done.
    Bandit: Well thats the reason, son!
    Cledus Snow: [shrugs] That’s good with Fred. We’re clear.
    Bandit: [laughing] Ten-four

  5. pooch77 says:

    Small caps canary in the coal mine

  6. blackjak100 says:

    Am I seeing that correctly?…the -div on the daily being erased with this current rally?

    • tony caldaro says:

      Also of note, as we approach the FOMC meeting this week, there is a negative RSI divergence building on the daily chart. This could clear with another sharp rally like the first wave. But it is something to keep an eye on, as Int iii/c appears to be in its fifth wave.

  7. Slumpbuster warning, been a long time since we had any pivot action. close

  8. blackjak100 says:

    If the market were going to 2000+ With Fed as backstop, you would think the VIX would at least trade down to single digits like in 2006. We have not even seen 10. It just doesn’t add up.

  9. When the market eventually makes a significant correction, three fibs from three key lows come within a tight range of each other and are worth noting. These fibs all fall within 20 points of each other up to a high of around 1870.
    Example from SPX 1768:
    Low: Fib: SPX:
    666.79 23.6% 1508
    1074.77 38.2% 1503
    1266.74 59% 1517
    1510 from here is a decline of around 14.6%.

  10. jparkins10 says:

    DOW at 15661, Major 3 high now exceeded.
    Sure looks like RUT has started Int IV, three days in a row now with mostly downside action intraday

    • radrian6 says:

      Could be … RUT may have topped on the morning of Oct. 25. There is a series of small a-b-c patterns on my 15-min chart since the Oct. 25 peak. RUT now looks similar to the tops in March and in September. Keep an eye on support at 1105 — a break should trigger the more serious part of Int. iv.

      • jparkins10 says:

        Agree Radrian, IWM hasn’t gone anywhere in a week now, relative performance to SPY today is getting worse as the day goes on.
        I’m close to your numbers, 1099-1103 as key support.

      • jparkins10 says:

        Just realised that my target was Tf, not RUT, so we’re pretty much the same

      • radrian6 says:

        TF is fairly close to cash but is showing more volatility than is showing up in the cash market. I’ve been suspecting for some time that RUT would correct into November expiration the same way it did in April, June, and August. All RUT corrections this year at least tagged the daily lower Bollinger Band. If we get a repeat performance, it will be a great opportunity for a long position ahead of Int. v.

  11. pbnj123 says:

    Very similar action in VIX and NYMO to mid July through mid August (non confirming movements)
    Don’t know if it amounts to much but the two of them are not “agreeing” with current higher movements in the markets.

  12. sometimes when the fairways are tight you have to hit 7 iron off the tee. Let’s put a green HDivot 1764

  13. JK1987 says:

    Art Cashin: Talked about Fed’s taper policy and 1929 market crash.

  14. tommyboys says:

    Could the Nasdaq take out its all time highs yet THIS year…?

  15. kvilia says:

    Thank you for replying. I just wanted to add a few thoughts.
    tony caldaro says:
    October 28, 2013 at 9:51 pm “Spending cuts before the deflationary cycle ends will only make it worse. After 2016 government can balance all it wants.”
    You must be following OEW :), and the government does not. So they try to spend it out of crisis, and opposition tries to keep them under control. If they did not, we’d be buying milk for 10$ a gallon now with salaries remaining at 2007 level at best.
    tony caldaro says: “Oh, and I hope you are not referring to the current Republican politicians as conservatives. Conservatives would not shut down the government, and then threaten a debt default. That is pretty radical to me.” True, this is not the most thoughtful approach, and republican party today is not something I’d be proud of either. However you always need to look at the other end as well unless you are OK with nonsenses like Obamacare and the similar programs to be implemented if there was no resistance.
    I suppose many people would agree we’d be better off without many familiar faces on both ends and fresh air coming in. Where do we start, that’s the question.
    Thank you for all the work, Tony. I’m here every day, although silent mostly.

  16. mjtplayer says:

    Hey Tony,

    Everything still going as expected in the WS, sox won with Lester making it 3-2. Coming home for game 6, but facing Wacha. Sox have the momentum and coming home to the 10th man and the DH will be a big help, but still a good chance of seeing game 7.

    • tony caldaro says:

      Cards with back against the wall.
      Hard to win two without momentum in other guys ballpark.
      Big Papi batting over .700, rest of team under .200

      • mjtplayer says:

        Entire Cardinals entire team batting under .200? I’m sure St Louis fans are happy they’ve seen the last of Lester: 2-0, 15 1/3 innings, 9 hits, 15k, 1BB, 1 ER – incredible.

        In 3 career WS starts, Lester is 3-0 with a 0.43 ERA in 21 innings of work in the World Series.

        Papi is WS MVP, win or lose. He’s always stepped-up his game in the playoffs, especially in key situations (’04 ALCS, ’04 WS & ’07 playoff run). But, this playoff season & WS he’s been incredible.

  17. "Old fogLEE" says:


    Mowed the leaves and watched the game now it’s time to stay loose and get ready to react to the day’s action. BTW Boston winning 2/3 in St.Louis was quite impressive. Cheers

    • "Old fogLEE" says:

      When Pfizer is the top blue chip advancer u know this beast is getting tired

      • "Old fogLEE" says:

        I’ll be back but it’ll be a longer time away than those who’ve said they are done with OEW 😉 GL guys.. Piker give em the business

  18. Tony, Do you see even the $EEM (emerging markets) and $EWY (South Korea) are telling us that we are very close to correction. Appreciate your feedback.

  19. walkerjb says:

    To PIKER:


    ……I think it was a long step forward in my trading education
    when I realized at last that when old Mr. Partridge kept on
    telling the other customers, “Well, you know this is a bull
    market!” he really meant to tell them that the big money was not
    in the individual fluctuations but in the main movements that
    is, not in reading the tape but in sizing up the entire market
    and its trend.
    And right here let me say one thing: After spending many
    years in Wall Street and after making and losing millions of
    dollars I want to tell you this: It never was my thinking that
    made the big money for me. It always was my sitting. Got that?
    My sitting tight!

    Thank you for mentioning Mr. Livermore.

    • walkerjb says:

      A little more

      ………… I’ve known many men who were right
      at exactly the right time, and began buying or selling stocks
      when prices were at the very level, which should show the
      greatest profit. And their experience invariably matched mine —
      that is, they made no real money out of it. Men who can both be
      right and sit tight are uncommon. I found it one of the hardest
      things to learn………….

      • torehund says:

        Agree, finding a bottom or top and just sit out a pattern is honorable. Its a delight lasting a few weeks/months, and when one has done the first Perfect entrance and exit, popp a Cold beer, and tell Your self “well done” you have improved greatly, and by this accomplishment alone you can Call yourself Call yourself a stocktrader.
        The rest of in and outs haphazardly is mainly fluff…and doesnt pay off.

  20. M1 says:

    At this point what are you expecting for Primary wave iv ? % decline; zig zag or complex ?

  21. As $AAPL is not moving much after earnings, it looks like it is in 4th wave. As 2nd wave was a deep retrace this 4th wave should be side ways action. 5th wave Should target b/w 580 and 600 by year end.

  22. torehund says:

    If the economy tumbles at this stage the governments will get less Revenues, and the gap between debth increase and revenues will increase to such an extent that default talk will intensify and rates increase. this isnt the “good” rate increase thats based on a strong economy, its the exact opposite.
    Its like an airplane travelling at just 50 mph Maximum speed at the end of the runway, it will never take off. And all the fuel spent (qes) is totally worthless.
    Excuse me and my ingrained bearishness, but the Techs , EW and fundamentals are sort of coming together.

    • "Old fogLEE" says:

      Thanks torehund

    • kvilia says:

      Read the news – BofA and other lenders lay off a big chunk of their lending workforce. Add it to the equation that you nicely pictured. I just don’t get Tonys stance on govs spending and current economic course. Multiple times he mentioned if conservatives dont succeed in implementing spending cuts, markets will enter new multiyear bull cycle after coming breakdown. I’m sort of loosing this elusive path of optimism between next bear drop and following big bull cycle. Please correct me if I’m wrong but it seems Tony favors leveraging excessive debt to jump start world economy. Am I totally off? Guys? Tony?

      • tony caldaro says:

        You must be reading somebody else.
        Spending cuts before the deflationary cycle ends will only make it worse.
        After 2016 government can balance all it wants.

        • tony caldaro says:

          Oh, and I hope you are not referring to the current Republican politicians as conservatives.
          Conservatives would not shut down the government, and then threaten a debt default.
          That is pretty radical to me.

    • tg33316 says:

      Torehund..I like your analogy. The reason the plane is not lifting is that the engine is not making more rpm due to low oil pressure (JOBS which left for china). Add oil and a tune up and that plane will take flight at 45 mph….even if they have the longest runway in the world it’s not going to take flight with the same policies. It will just cause a bubble to burst when they run out of tarmac. .imo

    • mcmasoniam says:

      Wow torehund, you’ve really gone deflationary! Not the easy-going, care free attitude you usually display. As a Deflationist myself, I think Jobs, or lack thereof is the real troubled spot here in U.S.; along w/Obamacare. Europe not getting the attn. it deserves and Greek friends say they’re much worse off this year than last. As Tony said, Black Swan. Will probably get this all kicked off and roll downhill like a snowball.

      Other than that, was amazed at the guy riding 100 ft. wave. Some people do have a death wish for sure.

  23. “With Minor 5 making new highs today, a down turn can now occur at any time.” Tony, no idea why time and again you try to get ahead of the market and your own waves? It has rarely worked so far. If Dow has to make a new high and SPX is likely to tag 1789 at the very least, where is the hurry to declare the upcoming downtrend that may never materialize. Once 1789 clears then it’s the next pivot that needs to be watched. The last time when many were looking for a plunge, market roared back and rallied 115 points in 2 weeks.

    • tony caldaro says:

      nothing said about a downtrend, only a downturn

    • Thomas Crown says:

      Interesting comment regarding the merit of anticipating. Would have been enlightening to actually get a proper reply from TC.

    • bobhopium says:

      trade321…respect to Tony, but the point you make is not an unfair criticism.

    • Tony was not jumping that far ahead. He says only a downturn, not a downtrend. But I have to admit I wondered what he meant by a “downturn” before he clarified it in his reply to Tradesmart321.

    • With so many counts going on right now, I am sure this downturn will lead to a downtrend based on one of your counts. I don’t claim to understand your wave labelings. I only understand that trying to anticipate before market gives any clues is sure recipe to miss the ride at best and board the wrong ride at worst.

      • tony caldaro says:

        Uptrend/downtrends are significant waves.
        These are the important waves during bull/bear markets.
        A trend change in the DOW, for example, applies to all counts.

      • Thomas Crown says:

        This is a very good point regarding the merit of anticipation in forecasting.
        Then again, waiting for a 75 pts drop to finally confirm a downtrend just the day before it ends isn’t the best method either. But is there any middle ground between anticipation and confirmation that would yield better results ?

    • mcmasoniam says:

      With DJI catching up a bit and close to new all-time high, after that, could start to rollover at any time.

  24. bouraq says:

    Will this be a major reversal? #SPX #FTSE #AUDUSD #OIL #SUGAR

  25. Thanks Tony. I will be back with my AAPL chart update. (:-

  26. Tony

    Am I right understanding that this is soon end for Primary wave III and then Primary wave IV to begin next ?

  27. Jennifer says:

    Thanks Tony,

    U.S. stocks closed mixed and Apple boosted the S&P 500 index today:

  28. cwallace90 says:

    Hello All,

    On Friday, October 25, 2013 I conducted an Interview with Tim Wood and special guest Bill Still. Tim Wood is a market technician and Bill Still is a monetary reformer.


  29. scottycj1 says:

    Are you selling Gold here ?

  30. gtoptions says:

    Thanks Tony
    Excellent weekend update.
    Back to even, keep those Rookies on the bench! GL Cards 🙂

  31. radrian6 says:

    Hello Tony and all,
    For RUT, the boundaries remain the same — resistance at 1122 and support at 1105. Until support gives way, the bulls have the advantage. The SPX looks somewhat similar to August 2 so from that perspective, I agree with Tony that Int. iv could start at any time; however, it seems more likely that volatility won’t show up until the FOMC announcement.

    The setup for a pullback is pretty good with indicators looking toppy and some are displaying -div but I still don’t have any specific expectations for Int. iv. If the correction goes far enough, I will be watching the reaction at the top of Int. 1 — 1730 for SPX and 1087 for RUT.

  32. selhai says:

    Thank you, Tony. The corn grows faster in Decatur IL.


    Just finished dinner here – we’re now 4 hours ahead, until Sunday anyway – and read the denial to you timed at 1.52 pm. Oddly worded, don’t you think? and total BS, of course. Last week, same phrases, same individual words, same MO.

    Everyone knows the score and I don’t doubt that Tony will take whatever action he thinks appropriate should the 20 posts/day resume and all the (fantasy?) trades. Thank heavens Jack the Parrot was quiet today!

    • "Old fogLEE" says:

      Hey selhai,

      You had him sniffed out and gave me the heads up this am and I thank you for speaking up and saying so.
      I think he skipped odd and went straight to creepy 🙂 as I noticed he replied to one of his own posts this morning .
      I’ll just ignore him like I did before when he was JB as that just drives em crazy.

      Thanks again !

  33. tuamotu says:

    Thanks for your work Tony.

    It seems we had a Zweig Breadth Trust in October …
    What do you think about this and the scenario of a repeat of 1995 (with QE Eternity) ?

    • TUA; There was no zweig breadth thrust. It came close, but no thrust.

    • tony caldaro says:

      If this market shoots up into the stratosphere the FED has big big problems

    • 777daimon says:

      No bears left? :)?
      70-80% of the comments here are bearish projecting a downtrend soon and about 85-90 % of the bloggers on the internet are bearish (due to touch of multi-years resistance trend line from 2008-2009) and you’re saying that “no bears left” ? :)?
      The market will fall when everybody will be steel-sure that this market CAN’T fall and WON’T fall.
      I’m not seeing this now.
      “Au contraire” like a french guy would say 🙂

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