monday update

SHORT TERM: pullback continues, DOW -78

Overnight the Asian markets gained 0.4%. Europe opened lower and lost 0.3%. US index futures were higher overnight, and the market opened two points above Friday’s SPX 1806 close. The market then pulled back to SPX 1803 by 10am. At 10am ISM manufacturing was reported higher: 57.3 v 56.4, but Construction spending was lower: -0.3% v +0.6%. The market then began to rally, and by 1pm it hit SPX 1810. Then the market pulled back again. Heading into the close the SPX hit 1799 then bounced to close at 1801.

For the day the SPX/DOW were -0.40%, and the NDX/NAZ were -0.30%. Bonds lost 16 ticks, Crude gained $1.15, Gold dropped $31, and the USD was higher. Medium term support remains at the 1779 and 1699 pivots, with resistance at the 1828 and 1841 pivots. Tomorrow: Auto sales.

The market opened higher today, pulled back, made a higher high, then pulled back even more. Today’s high came within four SPX points of the all time high. But today’s low was lower than all of last week. i.e. SPX 1799 v 1801. This would suggest the short term trend is still lower. The parameters mentioned over the weekend remain.

Short term support is at the 1779 pivot and SPX 1746, with resistance at SPX 1810, SPX 1818 and the 1828 pivot. Short term momentum continues to decline from Friday’s negative divergence. The short term OEW charts turned negative today with the reversal level now SPX 1805. Best to your trading and holiday season!

MEDIUM TERM: uptrend

LONG TERM: bull market


About tony caldaro

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103 Responses to monday update

  1. H D says:

    where r the bulls? SPX -34 @1779, previous 4th and C=A close too. TYBJ

    • H D says:

      Tony, Thx for the prefect set up, you noted in the update, last weeks lows and 1779.
      Muchas Gracias!
      I think some of the guys w “decades of experience” and “EW doesn’t work”, the FED, POMO, yada yada got some explaining to do….. :mrgreen:

  2. Caldaro is a bright man. I am sure he knows people here follow him and will not encourage anybody to bet against the market. He knows the FED is driving

  3. hucky2 says:

    With the approx. 5 billion in Outright Treasury Coupon Purchases today, I expected the market to be back near the high by now. No point flogging a dead horse though.

  4. looks like that was the sell off. 20 S&P points after a 500 point move this year

  5. looks like 5 waves down off the 1813.55 high IMHO!? or!?

    wave 1 down to 1802.76, which is 10.79
    wave 2 up to 1810.02, which is 67% retrace
    wave 3 theoretically down to 1792.74 (1810.02 – (1.618x 10.79 )). I think off it may have gone to 1790.75.
    wave 4 up to 1794.26
    wave 5 should target theoretically 1788.44 (1810.02 – (2.000x 10.79)). I think 1787.85 maybe it? Just my 2c. Closed my SDS’ (I’ve learned to be not greedy when shorting a bull… 😉 ) Meager 60c gain/share. But still better than a 60c loss 😉

    Btw, TSLA supposedly rallying on good news… Hmmmmm… really?!?!?! Or was this already in the cards? I already identified a bullish breakout past weekend -see my previous link in today’s thread- and suggested this breakout even the weekend before that…
    News is noise… really

    • jparkins10 says:

      Soul, just a of A maybe?
      Starting b now?

      • jparkins10 says:

        or iv of a of A?
        Up to 1795-8 then down to 1778-82 in v of a of A?

      • likely yes, but remember that no real key levels have been invalidated yet. The SPX bounced of secondary support at 1787 so far. However, the DOW looks in worse shape with trade below 15865.37 today. but assuming a typical 50-62% retrace for wave b then we’re looking at 1800-1805 for the SPX IMHO. Let’s see what happens there.

      • in the iv of a of A case, iii would be 2.00x i, which would be an odd extension IMHO. Possible of course but kinda unheard off for a 3rd wave IMHO

      • jparkins10 says:

        agree, I’ve got around 1800 for b of A and 1740-50 to complete A.

  6. kloutt says:

    sweet chartwork via maxcherry

  7. radrian6 says:

    Hello all,
    With the downside of the last two days, RUT has broken the cyclical trading pattern that has been in place since July — therefore, predicting an outcome is speculative. I can see that support at 1123-20 is important on the daily and on the intraday charts and may produce a bounce. If the RUT bounces, the Fibonacci retracement levels become significant. It would also be significant if RUT breaks below1123-20 without any retracement — that break should lead to a test of rising wedge support near 1110-15.

    • radrian6 says:

      Also note that RVX (RUT volatility index) has broken above its daily upper Bollinger Band which typically reverses the RVX. The Bollinger Bands are currently very tight so RVX can’t move too far in either direction without breaking through a band.

  8. H D says:

    What’s POMO? DOW shaking hands w previous 4th. I’m overposted and don’t want to overtrade it.

  9. kloutt says:

    Black Swan Alert…..JPMorgan Chase & Co., Royal Bank of Canada, Bank of America and several hedge funds are the creditors for the now legally bankrupt Detroit. U.S. Bankruptcy Judge Steven Rhodes ruled Tuesday the Detroit is eligible under Chapter 9 of U.S. bankruptcy code

    ok so if these mega banks had insurance on their exposure to Detroit then who owns those CDO’s ????

    We r going to find out soon as the bagholders go POP !

    mega margin call

  10. purplember says:

    is market top close? 2 charts on right show when market value is above GDP, it usually spells trouble such as 2000 and 2007.

  11. torehund says:

    Amazon to use drones, and market is controlled by the boots ! Welcome to the future of doing nutting….

  12. mjtplayer says:

    Could primary 3 really be over? Could we actually sell-off into primary 4?

    Once the Detroit bankruptcy ruling came accross the tape, the market began to accelerate lower. Strange however that muni’s are holding-up.

  13. I’ve noticed that I’ve been flooded recently by notifications from Fidelity of upcoming IPOs and secondaries — seven in the past two days.

    My initial reaction is that this is very bullish, but is this a leading or a trailing indicator? Do IPOs tend to peak at the top of the market? Is there any end-of-year factor at play here?

    Thanks to Tony and the talented regulars here for sharing their knowledge and experience.

      • Thanks for the responses. From casual observance in the past, it appeared to me that GS and JPM are loathe to move forward with these things if the outlook is negative. If they’re confident, I guess I should be confident. I’ve been mostly in cash since about SP 1700, and my few conservative forays into SPXU, UPRO, and a handful of specs have generally been “learning experiences”. Thinking of trying a couple of these IPOs while waiting for P IV, though Fidelity typically only throws crumbs to the little retail customers and reserves the more profitable issues for the big guys.

    • 16golfer says:

      Speaking of recent IPO’s. OMED up 86% from yesterday.

    • torehund says:

      Many stocks have to make a wave 2 from their possible recent bottom, if its a bit concerted the index declines. Think the shipping stocks at least will retest, but not sure.

    • purplember says:

      are we close to top? historically when stock market cap gets to 110 to 130% of GDP, it usually spells trouble ahead. historical ave is 55% of GDP; today is 113%. market can continue to rise but generally speaking stock market can’t be larger than general economy. Chart below.

  14. Caldaro according to OEW what would confirm pri iv?

  15. H D says:

    GM all, ES trading HWB w break in 2-4 TL,

  16. Remember most important Double POMO from 33 liberty today all but guarantees market up and vix down. Normally narrow range light volume trading and small distance between opening and closing levels the last several days would usually indicate uncertainty and complacency. But read the first line and it’s takes the uncertainty out of it.

  17. mcmasoniam says:

    Tony, much thanks for holding the boat steady here. Now TBD is which downturn this is: P4 (your preferred), or minor 2/Int 5, M5, P3. Esp. watching 1775ish, then, 1730. Either one will make money. Thanks again! M

  18. 777daimon says:

    Accumulation area on ES – futures SPX 500:
    acc1 – 1798
    acc2 – 1792
    acc3 -1787
    stop – 1786/1785
    target 1- 1826
    target 2 – 1862/1868
    target 3 – 1927/1932

    p.s. Don’t fall in love with the downside! Santa’s gonna kick you a** cause you don’t respect the spirit of Christmas!

  19. $SPX TNA $UVXY $AAPL $NUGT $SPXL $FAS, roadmap for tuesday:

  20. thanks for the update tony! been surfing some real waves today instead of elliot waves. learning to read the liquid waves is even harder than the money waves! 😉 anyway, here’s another warning shot across the bow for the perma-bulls:

    trade to 1814 could still have been a b-wave of minute iv of minor 5, and now in minute c as it looks rather similar to intermediate iv (fractal forming?). Trade below 1777.23 will confirm 1814 was it for PIII. Trade above 1814 suggest 1820s are on tap. Not much wiggle room…

  21. I want to apologize in advance because I am going to tell it like it is and I know somebody maybe even Caldaro may get offended. I have been around a long time since my days at Donaldson Lufkin. I fell in love with elliot be many moons ago as I felt it gave me an edge. When T &A was considered voodoo I was learning and using my Old friend Dick Arms indicators and really felt there was something to it. I laugh at the Abbie Cohens, the Ralph Accampora who show up in the bullish case now trying to justify this bull run. I have never seem a market as manipulated by the boys at 33 liberty as I have seen now. They know what they are doing every step of the way. You are not getting a 2008 pullback. Caldaro made a point to show me the corrections when tapering was going to end and pullbacks. It’s never going to end. I have spoken to several Elliot people who have been around a long time because with Elliot your never wrong you just keep adjusting broken patterns to make the fit. I am sure Caldaro must shake his head at times. In liars poker a dear friend who use to play said those who know don’t tell and those who tell don’t know. This market is on a mission don’t be fooled into counts and waves, it’s a new game not the one of the past. I made the mistake of fighting the fed because my count kept saying 10% to 15 % pullback.

    • chrisk44342 says:

      Never is a long time. A swan, pig or some other animal will come along and make the bull market forever crowd look like fools. This is how it always happens. It just may be another 400 points from now (:

    • perversionofthemean says:

      It’s like the post I last left about how new traders are convinced they’ve got the edge, and only when they humble themselves can they start making money…

      I’m still licking my wounds for hanging on for the 10% correction, which I characterize as my own arrogance. I’ve been a committed investor for 20 years, and have analyzed/scrutinized the Dow back to 1901 numerous times. I’m very happy with my method of buying breakouts of price and/or momentum and waiting for measured moves to complete (humbly not expecting to call every twist). Ironically, EW does the same thing, but flexibility is required (just like with my methodology). For example: An EW trader may have to buy what is thought to be a B wave up of a double zig-zag —- just because it may turn out to be a monster wave 1. Lots of other indicators can play into this, but a line in the sand can get you *in* and past your (my?) arrogance.

      I am still adding the EW pieces I’ve learned this year to my toolset, but after my bonehead adoption thinking that -10% was in the cards earlier this year based on EW, I’m overall sticking with my basic tenets. My NDX work was wildly bullish this summer, yet I sold my NQ and QQQ’s. Dumb!

      FWIW: my work counts waves NOT on price, but on an indicator, and as long as I can count 5 waves, I don’t have to adhere to rigid rules like “wave 3 can’t be the shortest”, etc. And I won’t share my secret sauces, because they’re all I have.

      Here’s another reading piece for new and seasoned:

    • buddyglove says:

      Some good honest commentary above, thanks.

    • 16golfer says:

      What a great piece truthtrader! Your statement about those telling or not telling hits the nail right on the head. Many on this board have come and gone who feel the need to impress us with their knowledge and seem to have a need to comment on everything. In my world, we call people like that “know it alls”…lol

    • mcmasoniam says:

      GL TTrader. It’s all a learning curve. No system is absolutely perfect. M

    • 16golfer says:

      I know several others who will race you to the “green banana” pile, Truthtrader! Thanks for sharing your knowledge & wisdom of the market with us. No learning curve for you…lol

  22. Hi all, I’m eyeing a spot to cover on TSLA. Been a great downtrend but looks to me like it’s reached the end of b of C and is going to have a washout in the next couple of weeks. I’m looking for 105 or so, then a big B wave higher that retraces 50% or more of the decline (150 or so?) before the final collapse to 40 down the line. This will take a long time to play out, so I see 105ish as enough for this downtrend for now. Might be worth a long side trade but the mojo isn’t going to be what it used to be. Anyone else trading it?

  23. Still in major 3 of primary 3…. 1829 remains a great top, may take all month to get there, then a January major 4 begins. no change in plans… projections.

    Until January, its zzzzzzz time….. slow and choppy with a slight upside bias.

  24. RDC says:

    Thanks Tony as always.

  25. This market appears to be getting very tired. 1) almost five days in a row, we have had late day sell-offs. 2) Futures , brought us up here for years day after day with 5, 10, 20+ pt gap ups on spx it seemed like everyday we went straight up, for the last couple weeks futures spx strength has been getting weaker and weaker.

    • torehund says:

      Looks very tired, but I don’t think it is. No really easy money in it yet. It has been a knuckle fight since summer, and thats why it grinds higher.

  26. fishonhook says:

    The Fed didn’t do it’s POMO today due to a glitch, so tomorrow’s may be twice as big. Lets see if that makes a difference.

  27. Thanks Tony.
    If we are going to have extended 5th wave then next pull back is going to be a good buying opportunity. Waiting for lot of regional banks to break upside. If financials and gold charts are telling any story then we have to assume that Friday’s jobs report is going to lift financials much higher and bring down gold further down. My 2 cents.

    • torehund says:

      PG: Agree on gold going down from here, in the middle of January or so there may be a good buying opportunity in gold. If the debt ceiling stuff is allowed to rest in peace for now, economy expands (uninterrupted by massive rate hikes), equities may perform well. Box ships looks tempting, as do shippers in general, however China looks a bit unfinished in its downturn(my greatest concern), but that might be wrong. Especially DRYS looks reluctant to retest the 50 mad, so a rally from here may soon make it a 6 uds stock. I will wait for a confirmation before deciding.

      • Torehund, You just read my mind on DRYS. I reviewed this chart this week end. Huge base starting from February with nice reverse H&S. When it takes out $4 then your target of $6 perfectly aligns with measured move. Like you I am also waiting for confirmation before entering the trade, Good luck to both of us on DRYS. Also look at regional banks FMER, STI, TCB, UVSP, WAFD. All of them with nice bases and forming handles with nice consolidation characteristics. On break out I am ready to pull the trigger. In fact regional bank index KRE already broke out. Looks like fund managers are betting on US recovery. Time will tell us whether they are right or wrong.

  28. Tony

    When will you stick a label on Primary III at 1814 ?

    When we break what levels ?

  29. Jennifer says:

    Thanks Tony!
    Wall Street low on holiday sales and as mining companies drop:

  30. radrian6 says:

    Hello all,
    SPX broke below 1802 support and has printed an awkward-looking H&S top with a downside target near 1792 — if it gets there, the reaction should be watched closely. RUT is much more linear — a clear short-term top at 1147 and a possible impulse lower. The key support level to watch is 1123-1120 — if that area breaks decisively, it opens the door to more selling and a test of rising wedge support.

    • mcmasoniam says:

      Thanks ra6. I love TF and closed out what I had yesterday, darn it! But hey, anytime one has even a small profit, I say TAKE IT! Will see if I can do something with it again today once I get home. Thanks again! M

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