tuesday update

SHORT TERM: gap down opening, DOW -32

Overnight the Asian markets gained 0.2%. Europe opened lower and lost 0.3%. US index futures were lower overnight and the market gapped down at the open to SPX 1766. The SPX had closed at 1772 yesterday. After the opening the market rallied back to yesterday’s close, and then the pullback resumed. At 1:30 the SPX hit 1762, was quite oversold, and began to rally. The rally pushed the SPX to 1769, then a dip into the close ended the day at 1768.

For the day the SPX/DOW were -0.20%, and the NDX/NAZ were +0.05%. Bonds lost 6 ticks, Crude dropped $2.00, Gold slid $14 and the USD was higher. Medium term support remains at the 1699 and 1680 pivots, with resistance at the 1779 and 1828 pivots. Tomorrow: Export/Import prices at 8:30, then the Budget deficit at 2:00.

The market gapped down at the open (to let everyone know the banks were open), then bounced back to close the gap before heading lower again. In the afternoon the SPX hit its low for the day at 1762, then recovered heading into the close. Two weeks ago today the market hit SPX 1775 at the open. Since then the market has failed on three attempts to break through that level, and the OEW 1779 pivot range. Consolidation, or forming a top? Since June the SPX has risen from 1560 to 1775 with nothing more than a 4.9% correction during that period.

Short term support remains at SPX 1746 and SPX 1730, with resistance at the 1779 pivot and SPX 1810. Short term momentum dropped from quite overbought to quite oversold, then ended the day around neutral. The short term OEW charts are flip-flopping again, ending the day positive with the reversal at SPX 1766. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: bull market

CHARTS: http://stockcharts.com/public/1269446/tenpp

About tony caldaro

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129 Responses to tuesday update

  1. 1822 makes wave 3 higher than 1 if so…. 748 vs 704. Also, 555 points from 1267, the first rally was 555 points from 666 to 1221

    Lots lining up

  2. llerias7 says:

    Market only peak around next FOMC meeting on Dec 18th…then will stop probably near 1850´s!

  3. JK1987 says:

    minor 3 new high with negative divergence.

    minor 1 of int. med. v: 1775.22
    minor 2 of int. med. v: 1760.64 with positive divergence.
    minor 3 of int. med. v: 1777.27
    minor 4 of int. med. v: underway with overlapping diagonal.
    minor 5 of int. med. v of Primary 3 target: 1826-1828.
    bullish inverted head and shoulders target 1828.

  4. blackjak100 says:

    Very impressive breakout to new all time high on the S&P! No indicators telling me to buy here. Remain cautious! Apple peaked on the day the iPhone 5 was launched. Will the market peak on the day of Yellen confirmation?

  5. My last post til the next update here. Thanks for the reply Truth. I agree its in the charts. Heck if you’ve been doing this for 30 years its probably working. Two observations I will make. One is that the market ran the all time high stops today and it wasn’t much of a run. No more shorts left to cover? Also the Bollinger bands are getting really tight and today is not moving them. To me this implies a false breakout is probable. My view is in a few days we’ll be referring to this as the Yellen top but time will tell. Best wishes to you. I am usually wrong make the big gains when I’m not.

  6. lower BB on SPX at 1736 upper at 1781 and VIX lower BB at 12.50 both BB are very tight …Thoughts??

    • gtoptions says:

      I posted both those charts yesterday. They indicate that Volatility is going to pick up and a STRONG break one way or the other. Everyone way too bullish. IMO
      I’m on the cautious side. GL

  7. jparkins10 says:

    McClellan is still negative, this is going to be a major divergence when this wave tops (soon)

  8. tuamotu says:

    Do we have an ascending triangle or an ending diagonal on the DOW ?

  9. JK1987 says:

    minor 1 of int. med. v: 1775.22
    minor 2 of int. med. v: 1760.64 with positive divergence.
    minor 3 of int. med. v: 1776.35
    minor 4 of int. med. v: underway
    minor 5 of int. med. v of Primary 3 target: 1826-1828.
    bullish inverted head and shoulders target 1828.

    the bears are wearing white.

  10. Top callers still wrong. 1822 on table next once 1778 taken out, if it is taken out… key resistance. Still in Major 3 of Primary 3 folks, ultimately we see 2200 in this market

    • oneandonlyuniverse says:

      1822 sounds a bit risky, I am thinking 1822.4077
      This has been this guy’s call since 11/5/10

  11. wowza! itza 1 spicy meatball. 1776 fibtastic, .618 of the 27 point rip. Less coiled than earlier:mrgreen:

  12. bobhopium says:

    Hey all, Interesting and exciting juncture here that has this board a little emotional and divided.
    Fwiw..A cursory glance thru my charts on any timeframe from 5min to weekly just screams bullish.
    Am I the patsy at the poker game? or is it the bears?…we will just have to wait and see.

    • jmoptions says:

      I dont know, but I am really getting tired of yours and truthtrader cheerleading and constant posting. onthis board.

      • Jmoptions I am truly sorry for these many post and respect Caldaro 3 post rule. I will answer twosideded question and it will be my last post. Twosided a 300 point day does nothing. I change when the charts change. I have traded other markets as they have clearer picture where as the US markets. The trend in stock is intact for the bulls, currency wars can boost this market. I have been around a long time in 1983 the % of bears was the same. IF you look at chart you will see where we went. I will change when the charts change. You are not getting a 15 % correction its not going to happen the fed is committed to keeping foot on the gas. Good luck traders. Remember the market does not have to go down because of any count or any news.

    • tony caldaro says:

      three posts a day please

    • Yep, too much bob, keep it down.

  13. This is all going to end very badly… and I have a feeling many are going to be blindsided by a huge down move. I wish you all luck but many are just becoming way to greedy here.

    • huge down move? like what 20 handles on S&P for a day before going back to new highs? nobody is buying protection, nobody has any fear, I think that poster who wrote no sellin with yellen is most likely right. People are complacent for a reason. there is nothing that can rattle this market. My Elliot count has been wrong but above 1775 will lead to bullish explosion.

      • radrian6 says:

        Interesting comments TTT1. I worked in Silicon Valley for 23 years — your comments sound a lot like those of my coworkers in the Autumn of 1999. They truly believed the upside would never end. Some of them were so financially devastated by the bear market and recession that they were forced to move in to their parents homes.

        Cycles in the stock market are just as certain as cycles in the economy — this bull market will end and the outcome will be painful for many.

      • Thetruth do you hear yourself, holy cow… Nobody buying protection opens the door for a catastrophe to screw the majority. Complacent traders are bait for big fish. You say that nothing can rattle this market, Im sure that was said before every major market drop.

      • Truthtrader, honest question here. What would you have to see happen to change your view? For example what if the market goes down 300 points tomorrow. No change?

    • Huge down move? We had one… it ended at 666 after a 9 year correction ABC style. That was a 61% retrace of the 74 lows to 2000 highs. Figure we are only up 14% or so from the 2000 highs 13 years later, this is hardly overbought… everything is relative. Money continues to flow out of bonds, out of gold, and into assets that can grow. Of course we will have a major wave 4 sometime soon, but we are not even done with Primary 3 yet….

  14. mjtplayer says:

    Volume today is crazy light, everone waiting for Yellen testimony tomorrow?

  15. StemSki- no prob. last Th was clearly a WTF wave. It’s not every day u see a key reversal, reverse the next day. There’s enough energy, coil, to produce some more 25 point swings too! GL

  16. RDC or Caldaro I looked at VIX chart and VIX futures.. Why not just short VIX since it never moves higher. Looks like ETN’s do nothing but go down. I mean the chances of the VIX spiking seem to be very low.

    • You can short but its hard to get shares to short. Puts are very expensive and not worth it usually. I used to trade VXX actively but it was frankly too frustrating. If you short definitely check the relationship of the front months of VIX futures first.

    • RDC says:

      This is not the time to short VIX products. It is very close for spike, may happen tomorrow.

  17. Caldaro I think there is no reason for anybody to short or sell in front of Yellen thursday.

  18. I think people are expecting a correction and deep inside know they will not get one. I can say most bears I speak to are all but deflated. they can blame the machines and they can blame Bernanke but truth is in the price of the market. I hear complacent talks but there is a reason to be complacent in this market it usually resolves to the upside. Today another nail in bear coffin

  19. gtoptions says:

    Thanks Tony
    An Epic Bull/Bear battle is playing out at all time highs. It’s best to be cautious than over confident.
    As the contraction continues in the SPX, the DJI seems to be in wave D of an ED on the 60 minute chart. Trade Safe

  20. bobhopium says:

    Thanks Tony and greetings to all.
    For my own trading purposes, here are my thoughts… maybe of use to others.
    Target to cover my Short acquired this morning on SP fut @1757 and I am now looking for long setup. I continue to lean bullish until the market proves otherwise, as I believe the exuberance is not irrational enough yet. GL to us all.
    DOW hourly continuous…rejection of lower prices @15625\35 (arrows) would get me long as would a clean break of the green.

  21. mjtplayer says:

    With options expiration Friday, it would be helpful to review where the open interest lies in the SPY contracts.

    Largest open interest is at the SPY 175 puts. There’s also large open interest in the 180 calls and the 176 puts. At-the-money 175/176 contracts are where the action is, but puts out-number calls by 50%. So, with heavy open-int right here at the money and slighly higher volume at the 175 area than the 180 area, I would expect the market to stay right where it is the 175 – 176 area through Friday’s expiration.

    If there is a move outside of the open-int, it would favor down with large open-int showing at the 174 and the 170 strikes 50%+ vs. the 178 and 180 strikes.

  22. SPX and DOW showing + div on hourly RSI(5) !? Seeing many of the tickers I follow making bullish intra-day reversals (the before 10am BTD folks out in force today!?)

    Not that I post much intra-day, but will be on the road again for the nxt 3days, so will mostly track market’s progress sporadically from my phone…

  23. rc1269 says:

    gap down being bought. surprising

    • tony caldaro says:

      before 10AM as has been the case

    • Young Tom says:

      RC, hope your well.
      What’s your take that the majority of fixed income managers have a short duration vs their index? can they all be right?

      • rc1269 says:

        my take is that, a) they’re all scared to death of rising rates, and b) with the 10yr at 2.73% risk is highly asymmetrically skewed to the downside for them. right now everyone is willing to give up that extra carry to avoid the dv-01 (dollar value of a basis point). everyone has nightmares of 1994 all over again. if we get a repeat, then we’re only halfway done with our rate spike.

        regarding everyone being right… haha well, you certainly don’t need me to tell you how that typically plays out. the only caveat i might add to it though, is that if ‘everyone’ is on the opposite side of the single largest fixed income player (the Fed) then maybe for once there is indeed a chance to be right. it’s not a normal market, so maybe the normal rules don’t always apply

  24. StemSki says:

    Here is a more technical view of the current market. It is an inverse head & shoulders pattern on SPX. The 61.8% retrace of the current move (1746 to 1773) is 1756 area which would be a perfect area for a right shoulder. On a break above 1773-74, the target is 1801.


    • H D says:

      hmm, a bottom pattern at all time highs? I guess nothing should surprise us.

      • rc1269 says:

        the market is oversold. by the dip. even if the dip is only 10 points, still buy it. cash on the sidelines. wall of worry. underinsvested in equities. Bernanke put. blah blah…

        … zzzzzzz

      • StemSki says:

        Thanks HD

        A very very good technical analyst pointed out to me that:

        Any H&S is a reversal pattern by definition and there is no preceding decline here for this IHS to reverse, so it is not valid.

        I apologize for presenting this option before confirming.

      • bobhopium says:

        An ATH is only an ATH…… until the next ATH.

      • tommyboys says:

        Love all the sarcasm and reasoning why the market is manipulated and “should” be dropping and at much lower levels. Once all this Bernanke mocking and sarcasm ends we’ll be near a top. No where near it today.

      • rc1269 says:

        not true Tommy – i will continue to mock Bernanke well after the top and likely through the next two bear and bulls mkts🙂

    • bobhopium says:


  25. 777daimon says:

    my last post here today is a question to all here and to host:
    what would be the expected Primary 4 targets on spx 500?
    thank you.

    • 777daimon,i’m only look at the dow and was expecting a strongest 3 able to touch the top of the channel or even slightly overtake it,so if a 4 take place now,it will appear that the wave is bending in the channel

  26. 777daimon says:

    1756-1752 area backtested from above as I stated here during the last comments.
    let’s see what happens here.
    if it springs to the upside and gets over 1805 we are in deep and new unchartered territory, like Bouraq said.
    But Tony can help us with his Fibo projections and ratios :)… but the territory is still new and unchartered🙂 .

    • tony caldaro says:

      Normally we would expect this fifth wave to have some Fibonacci relationship to either waves 1, 3 or both. However, the SPX has had a few fifth waves failures over the past year or so. So Friday’s close at SPX 1771 could have been it. If it isn’t, and the SPX clears the OEW 1779 pivot range, then the next resistance would be at SPX 1810 and SPX 1826-1828. The first two numbers are 0.618 relationships to Intermediate waves i and iii, with the last number a Fibonacci relationship for Major waves of the entire Primary III. Medium term support is at the 1699 and 1680 pivots, with resistance at the 1779 and 1828 pivots.

  27. Ok so by time does the market turn green? 10am?

  28. torehund says:

    If one has the assumption that Japan isnt out of their deflationary mess and the long trendline isnt violated, a long yen exposure could be the right Choice.

  29. Mr. CL- EE says:

    Morn Tony

    Are the ponds freezing down by u yet ?
    Have a gooden !

  30. eeid26 says:

    The bears are represented by nemo in the matrix

    They started to believe…

  31. $SPX $IWM $AAPL $NUGT $UVXY, mkt. update for tues and trading for wed. (within blog’s remarks section: http://standardpoor.wordpress.com

  32. mike7x says:

    The bull/bear spread is now probably over 40% and at levels where historically there has been a significant correction. Can the Fed, their allies on Wall Street (including the banks) prevent history from repeating itself? From Jack Steiman yesterday:
    “We have two historical readings of the bull-bear spread being over 40%. In April of 2011, we had a reading of 41.6%, before the market crashed out to the tune of nearly 23%. In October of 2007, we had a spread of 42.6%, which took the market down to the tune of over 50%. Yes, that’s OVER 50%. We are very close to either of those two numbers, but we have Fed protection, so how much we ultimately fall and when it begins is unclear.”

    • pooch77 says:

      Mike when you were bullish you hit,now your tilting bearish…could be the bulls are in denial of a correction we will see

    • torehund says:

      Yes Mike, same readings as when comparing previous waterfall declines during this bull, however at this time market is aging and I doubt the rebounds will be bought with vigor.
      I decided to establish short etf positions and then add as the decline matures. Patience and stamina to ride it thoroughly is more difficult than finding a top. Easy to mess it up taking profits in the bear phase, then loose it. Lets prepare our mindset.

    • perversionofthemean says:

      I think there’s a big difference in sentiment readings during a P3 vs. what I believe was a C beginning at the top in ’07. This is why I posited a question yesterday about what sentiment is typically ending a P3 and ending a P4. My experience with limited I.I. sentiment data (since ’08) is that sentiment readings seem fairly coincidental, with advisors lagging the spx slightly. Noteworthy was how if readings perked up too quickly at a new or retested low, then another wave down would unfold. When a rally was slowly endorsed, the bottom was more enduring. Any other observations out there? What about in the context of early impulses vs. later ones?

      • torehund says:

        Just read the sentiment out of the techs, EW and fundamentals (fex fluffiness concerning these social media companies). All these polls is just one piece of the puzzle but can’t be judged alone. After a healthy decline there could be sentiment rebound fever, but as long as there aren’t any buyers sentiment alone doesn’t help. Folks are bullish all the way to the bottom just look at gold, where there will always be stubborn bulls all the way to the bitter end. If folks are uberbullish despite declines, thats uberbearish as the shares don’t get oversold enough to create a healthy bounce. Thats the case with gold and I don’t think I will ever position myself long until its thoroughly despised and scraping 800 or so.

    • Mike do you shift bearsih now or do you think we are just rocketed right back to new highs?

      • mike7x says:

        I think the market is over due for a correction of at least 7-10+% and could begin at any time. IMO it would be very healthy for maintaining this bull market. Having said that, we could still see (marginal?) new highs first.

  33. Possible E.W. “Triple Three” in the SPX, with Wave z in progress…..( “Elliott Wave Principle”, by Frost, 2005 ed, page 53, Fig. 1-46.).


    Thanks, Mr. Caldaro…

  34. torehund says:


    gold worst case before a sustainable popp. Debth ceiling in 2012 maybe.

    • torehund says:

      bugs are a stubborn breed, so always lots of sellers🙂

      • torehund says:

        One option is to have lots and lots of patience and wait for the Extremes to manifest and then take a much larger position either way. In Intermediate patterns its so easy to get chopped if one do countertrend; and if one just have to enter, then enter the trend..

    • chrisk44342 says:

      So you’re plotting an impulse to 800ish which causes me to guess at your long term count as you didn’t label the prior wave up. If this is an impulse down as you say, then it is either a 1 or an A. I’d say it has to be an A because gold is not going to zero, unless Prechter is in charge. So let’s call it an A. Your longer term count has gold going to 800, 50% back to 1520 mendoza line, then a real waterfall back to 200-300? Just wondering.

  35. RDC says:

    Thanks, Tony!

  36. blubrd67 says:

    I understand the expectation of the potential Intermediate v failure. But why not give equal chance that it won’t fail, and that we are just in minor 2 of Intermediate v?

    • Dear bilubrd67, Do you want to trade 50 points upside or more than 100 points to downside on $SPX. I would go with latter from risk reward point of view. More over there are all signs of market tiredness. Of course I will wait for the reversal before going short. If we see a good follow through day tomorrow that would be a great setup to go short. my 2 cents.

    • tony caldaro says:

      uptrend still has a chance to go higher

      • Understood Tony. That is why I am not short yet on $SPX. Just selectively shorting weaker stocks.

      • In fact looking at $FB, $LNKD they are ready to move higher as they seems like completing ABC correction provided my EW analysis is correct. Also they are ready to touch weekly and daily support lines. Looking at $EBAY and $GOOG also looks bullish as they have completed nice consolidations. Again my 2 cents.
        Final word of the night: $85 billions per month has to go some where.

  37. bouraq says:

    Is topping a process?
    #SPX #DJIA #GOLD #OIL #EURUSD http://www.tradingchannels.co.uk/2013/11/is-topping-process.html

    • torehund says:

      I exited my DUST exposure yesterday as I thought the gold may rebound soon.
      However its always risky to time a countertrend move. Then its sometimes better to wait a while and then follow the trend Down. Dollar seems strong and is still at bottom of range. If gold gets nasty it may even do a straight (more or less so) decline to 780, or 1000 is another target. Well to Catch a countertrend that may be nonexistent or very weak is difficult even though miners are Down 80 percent from the top. its more probable they will decline 90 percent than elevate themself to minus 70 percent. Thanks for Nice Charts.

    • bobhopium says:

      boraq…crystal clear …Thnx.

    • 7dayyss says:

      Thanks attitude and Tony.

      “As always, be prepared for a “popped stops/short-squeeze” upside breakout should price defy these factors.” Seems like this has been ongoing for the last couple of months. Just when we think it’s time for a fall, whamo!

  38. Are Bears extinct? It seems not one to be found? Many bears at 1650 now none at 1770. This is interesting.

  39. thanks tony, possible minor 1 and 2 of int. med. v in place? retrace to 1762 looks abc-y IMHO. IF so then minor 5 would carry to 1812ish, right around the 1805-1825 zone.

    • JK1987 says:

      Tony Thanks.
      Yes, possible minor 1 and 2 of int. med. v in place.
      1762 is the low of the bullish inverted head and shoulders with oversold RSI.
      SPX 1826-1828 is “Fibonacci relationship for Major waves of the entire Primary III”, could be a good target for int. med. v of P3.
      I think these are Tony’s upside target as he listed the numbers during the weekend update.

  40. Thanks Tony. Good day for me as $SLV shorts worked out great. Tired of shorting $SPX. Just trying to short the weaker ones like $EEM, $EPI.

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