monday update

SHORT TERM: gap up and go kind of day, DOW +129

Stock index futures took a sharp drop overnight but then gradually recovered. Asian markets lost 0.8%. European markets opened lower, but reversed and gained 1.4%. At 8:30 the NY FED was reported higher: +1.0% v -2.2%. At 9:15 Industrial production was reported higher: +1.1% v -0.1%. The market gapped up at the open to SPX 1783 and continued to rally. The SPX had closed at 1775 on Friday. By 10am the SPX had hit 1792 and began to pullback. At 1:30 the SPX had pulled back to 1784, and then tried to rally. At 2:15 FED chairman Bernanke’s opening and closing remarks were published:, and At 2pm the SPX hit 1790 then pulled back into a 1787 close.

For the day the SPX/DOW were +0.75% and the NDX/NAZ were +0.65%. Bonds lost 1 tick, Crude gained 65 cents, Gold added $3, and the USD was lower. Medium term support jumps back up to the 1779 and 1699 pivots, with resistance at the 1828 and 1841 pivots. Tomorrow: the FED starts its two day FOMC meeting. Also the CPI and Current account deficit will be reported at 8:30, then the NAHB at 10am.

The market gapped up at the open today after last week’s first significant weekly decline in months. With the SPX rallying past 1783 in the opening minutes it appears Intermediate wave a ended early Friday at SPX 1772. The current advance should be Int. wave b. Today’s initial surge carried the SPX to 1792, then it pulled back to 1784. These two movements could have been Minor waves a and b, with Minor c underway now. We noted in the weekend update a potential rally could unfold into the mid-1790’s for Int. b. As long as the market remains below SPX 1800 this appears to be the ongoing count.

Short term support moves up to the 1779 pivot and SPX 1746, with resistance at SPX 1814 and the 1828 pivot. Short term momentum hit quite overbought today, after Friday’s positive divergence. The short term OEW charts turned positive shortly after the open with the reversal level now SPX 1786. Best to your trading!

MEDIUM TERM: uptrend trying to re-establish

LONG TERM: bull market


About tony caldaro

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86 Responses to monday update

  1. kloutt says:

    look at the POMO schedule for Thur and Fri

    dec 19 $4.75 – $5.75 billion
    dec 20 $2.75 – $3.50 billion

    those r big pomo numbers even for bernanke

    The odds of the Fed reducing its $85 billion of monthly government-bond purchases rise “tremendously” by January, and by March “it’s almost a done deal,” El-Erian said. “I’m still surprised they didn’t taper in September,” El-Erian said.

    fed will taper tomorrow but will throw the market some other form of stimulus from its toolbox of printed majic

  2. gary61b says:

    This is my target area for major A if we r in Primary 4, will need to break thru to trend levels of support.. Bulls no need to look. 🙂

  3. radrian6 says:

    Hello all,
    On an extended intraday run, RUT has broken out of its downward channel but, at the same time, has run into 1120 resistance once again. If sellers react as they did yesterday, RUT should be rejected and forced back into the channel. If RUT moves below 1112.61, it will confirm a lower high and continue the downtrend. If buyers persist, RUT should hold and eventually rise up to at least retest the 1147 high. There is no treasury operation scheduled for tomorrow so there may be some volatility.

    • pooch77 says:

      R6,need rut to break 1120 and breakout of downward channel,so far brick wall,maybe tomorrow

      • radrian6 says:

        Pooch, this has to be some of the most tedious price action I have ever seen. Buyers are playing the penny game and sellers are patiently lurking in the background waiting for their targets to be hit and then dumping. You’re right about 1120 — there are a lot of sellers in that area. No Fed cash injection tomorrow so the upside may be halted until Thursday or maybe until after expiration.

      • jparkins10 says:

        Breaks above 1120 then it runs into the bottom t/l of the prior up channel, around 1729-30

      • jparkins10 says:

        EDIT: 1129-30

  4. torehund says:

    Looks like Drys is working on a huge bear flag that could take it to the lower 2s. Genko is already working on its downside and a retest of the lows seems inevitable. However miserable, there may appear a good buying opportunity later which could coincide with a bottom on the Shanghai..

  5. ewtoriginal says:

    The wink and the nod have been given to Sen Bacchus’ him, his broker, the brokers pals etc.No taper.No statements regarding any near term reductions.And that concludes Bernankes legacy.

  6. anybody here expecting a sell off tom?

  7. Tony, question. Sunday evening ES dipped to 1754 and recovered. Is that something you consider in your count, or do you keep ES and CASH entirely separated?

    So far, 3 up from 1772 low, and 3 down from the 1792 high; are we seeing a 3-3-5 develop? (abc up) for int. med. b? Or is it a bunch of 1,2s setting up???

  8. gary61b says:

    ZB could be in a triangle 2 on 60 min, looks to be showing interest, pun not intended.

  9. pbnj123 says:

    Marty is a pretty smart guy – but no Tony 😉
    Tony I am interested in your thoughts on his work from today.
    Are rising rates really “that” bad for housing?
    Thank you

    • tony caldaro says:

      Generally yes, as affordability declines.
      But rates are so low, recently 1960’s levels, and consumer debt/disposal income is at 30 year lows.
      So it would seem, after the mass exit in 2008/09, consumers still have lots of purchasing power.
      In addition, our housing leading indicators show no signs of any potential significant home price contractions in the near future.

  10. Ryan Parker says:

    I highly recommend reading John Mauldin’s “Thoughts from the Frontline” this week. He thinks the next crisis actually begins in the German Banks. His guess (and anyone can guess but we never know exactly) is that this begins to hit in the latter part of 2014 or 2015. Assuming that the market begins to sniff it out a bit ahead of time the equity market should peak sometime in the first half of next year. As Tony and several of us suggested over the weekend this fits with a lot of our work.

  11. A fast drop here, might set up the + dive. for tomorrow?

    • bobhopium says:

      Agree, but I don’t wanna see less than ES 1773 GL.

      • gary61b says:

        Below 1770 and I am expecting will have some getty up lower.

      • ewtoriginal says:

        Does anyone recommend I sell IWM or SPY naked puts expiring tomorrow about 2% out of the money? Can anything bad happen?

      • hucky2 says:

        Personally I only sell naked puts where the probability of expiring in the money is at or below 5% (delta 5 is close enough if your broker doesn’t list probability) & 10% for calls

      • pcskier says:

        EWT love the sarcasm, first take I thought you were serious. $indu is hanging by a thread, if it breaks down as I expect looking for 14740ish really quick, before year end. Ho ho ho

  12. blackjak100 says:

    I have gold in a 3 of 5 wave which targets sub $1200. Final confirmation below $1220. This would be final flush before a multi month rebound towards $1400.

    I think there is a great risk/reward opportunity to get long gold below $1200 in the next 3-5 days. I will be closing my short and getting long just above $1200.

  13. 777daimon says:

    just my 2 UScents uncanny stupid opinion:
    watch what you’re doing with your money!
    under no circumstances, Bernanke and the FEDs won’t cut QE now in December = it would be contradictory behaviour as per what they have done until now!
    and one more thing:
    this thing is almost over and a deal will be done.

    A very crazy rally might appear in a few days out of the blue and no TA or EW thing will explain it (except after it has produced)!

    You have been alerted! Don’t you even dare to cry and yell after the fact was produced!

    • blackjak100 says:

      Just like it was a sure thing they would taper in sept.

    • mcmasoniam says:

      777, I understand you haven’t been around here very long, therefore, I don’t think anyone is insulted by your attempt to steal “the uncanny stupid opinion” award. LOL! GL!

    • bobhopium says:

      Nothing Crazy and out of the blue about a large rally imo, and my own T.A. is explaining it and expecting it. Measured move target @1848

    • Lee says:

      Thanks 777 D
      Spoken like a true short ..U are short correct ?

      hey it’s pivot time….again

      • ewtoriginal says:

        Amazing what getting short can do to your sensibilities after a big jump then a small selloff and another “expected” big jump. Thank god I stopped following my own path, abandoned Tony and this blog’s rational thought and embraced that. I’ve been killing it since.

  14. pcskier says:

    $spx wants to roll over, but $indu is fighting like a bone fish to not roll over this am, however bone fish eventually get tired and gives in to the direction of strength. $vix hit resistance at 16.49 maybe $vix will bring a pole vault back next time.

  15. Lee says:

    It’s like there’s a pivot down here or something.
    Thanks for updated counts Tony on the 60 min

  16. manunidhi21 says:

    Namaste Tony !

    below 1775 it will be sure that we made 1812 as P3 or still any Cavet for 1746 ?

    • bobhopium says:

      Nothing Outrageous there imo, in fact it all sounds quite probable, Janet Yellen would not have got the Job unless she had her helicopter pilots licence. Taper talk nonsense is all about bubble management.

      • mcmasoniam says:

        bob, you are correct, Sir! JY, being the co-creator of QE that she is, most certainly has a license to bubble. Furthermore, Ben, having grown up in So. Carolina, where manners are important, else, one gets a bullet (oh wait, that’s Texas) would not announce any change to policy, as it could be considered rude. Such announcement might present the appearance of a lack of confidence in the decision-making of the FedHead who follows him. Just my uncanny stupid opinion for today. GL! M

        Limit reached. Happy money-making to All!

  17. rc1269 says:

    when was the last time an IHS on ES failed to provide more gains, intraday? i don’t remember it’s been so long.

  18. thanks for the update Tony! So far there’s only been a 3 wave decline and nothing that would suggest yet the trend is down. The DOW found support last week at the critical 15,700 level and bounced off it (hard) today.

    After a very busy family activity filled weekend, I’ve had finally time to sit and play with the charts to night. My count for the SPX can be found here:

    Note that the daily SSTOs indicator is about to give a buy-signal -DOW shown- if tomorrow will be green. This time it will be a signal from OS conditions, which is often a strong(er) reversal signal than the buy signal that was generated for the previous b-wave which was from neutral levels. Chart can be found here:

  19. Thanks Tony. Again Regional banks outperformed Big financials. Not sure what to infer from that move. But TLT coil building is getting real intensive. It is for sure going to explode this week after FED minutes. From the charts I am interpreting to downside (taper data will be announced). But few traders hinted me that by looking at COT data 30-year bonds looks real bullish (no taper or may be very little taper). Going to be a fun week.

  20. lunker1 says:

    Hey y’all….the blog is getting really chatty again. So much to scan thru to try to read. Reminder it’s a blog not a chat board. One of youze was almost 1000% of the 3 post friendly quota. Every comment doesn’t need a thanks or reply. Gather up those thoughts a make a post to the blog. Maybe one at night, one mid AM and one mid PM. TYVM & HH!

    • torehund says:

      ….mostly I agree Lunker, but stock trading isn’t just lines all over the place, its also how fellow investor feels about their positions(out, in neutral), trading is more reading BETWEEN the lines, and getting that emotional edge that tells you which way its most probably heading at important crossroads.
      Sentiment in here is often most palpable and contrarian bets are often-most fruitful endeavors. Another issue is when major chart damage has been done, but that hasn’t happened yet.

    • mcmasoniam says:

      lunker, I disagree that comments don’t require ‘thanks’. In fact, Thanksgiving, is one of the more important of all posts.

      By the way, where are your forking charts lately? I like them and would enjoy viewing one. And I will thank you for posting it. M

  21. bouraq says:

    Bulls are back:

  22. Rancho says:

    Thanks Tony !

  23. pcskier says:

    The 20 monthly average of the $ vix is flattening, it’s been stiff resistance for the $vix for many months. However, in the past is was pointing down now it is horizontal. That is why I am bearish like big correction. Expect a sharp move in equites up or down tomorrow. I am position for the latter, if the move is up my bearish brain will tell me me it’s a fake out. I expected today’s move on thurs last week, tag 1787 than roll over, it was delayed. Selling into the close is always bearish sign too.

  24. torehund says:

    Listened to the Demark video, I think he is right eventually, but skewed in time. He is bullish on gold (I think) a bit(2-3 years) too early, and bearish on stocks too soon. These contrary assets still have to diverge to make it extreme, it isn’t there yet. For gold the miners just recently started the path of downscaling, that period in the mining industry will have to be prolonged before any meaningful rally may resume. Just look at other commodity producers, they have been scaling down for years, still no effect. All tis is if gold is in a bear and thats where I think it is; last year I went to a party in the peruvian mountains, well gold miners are an inherently bullish herd; but I think there was exuberance also on top of that !
    I like the 1929 analogy but we aren’t there yet.

    • torehund says:

      and governments will repair until the repair is giving them the mother of all whips, and as above we aren’t there yet. I can tell you that holding on to something up here is painful, yes it can get worse. But Obama isn’t the man of the century yet, and thats why we sleep at night.

      • torehund says:

        Interesting with all these countries softening up on keeping their bureaucracies fed, harvestin the resources of the people. They just can’t downscale themselves before its too late, so when they lack money there is no tomorrow on exploitation of hidden resources, look to Norway and now Mexico, joining the Brazilian gravy train. And US too with the shale boom, however, this is all ultimately deflationary as all these countries (with the big bear Russia too on top) are fighting for the same dollars. In the end there will be a consumer collapse.
        Folks at power have no belly that says; stop eating, and like the troll from the Norwegian folk tales if thrusts a knife to its belly when its full; just to consume even more porridge.
        Thats bureaucracy in a nutshell, it doesn’t die until it dies on its own weight or sewers the abdominal aorta with a knife…

      • Wow Torehund, the world you live in, every man for himself, and screw the idiot who wasn’t “smart enough” to make a living, there is no room for compassion. Compassion is what that makes us human.

      • mcmasoniam says:

        “…In the end there will be a consumer collapse.”

        That’s it in a nutshell, my Viking Poet Surfer Friend. The Consumer, us “little people” will be drained by deflation.

        Your knowledge re: deflationary economies seems to be growing quite a bit. Takes more than study. I’ve always thought you were very intuitive; that seems to be showing itself more and more.

        How are the waves? Where (approx.) in Mexico are you right now? M

      • torehund says:

        Surfingwavers, it the bureaucrats that consumes the little man, and its always the little man that upholds the bureaucrats, until the little man chokes. Through the ages its always the powers, be that communists or capitalists that through living on the little mans efforts grows bigger and bigger. In the end there is no little man left, and then the power succumbs to its own weight.
        M- I am in Huatulco pretty close to Barra, honing my portfolio, should I stay or should I go….

      • mcmasoniam says:

        “…M- I am in Huatulco pretty close to Barra, honing my portfolio, should I stay or should I go….”

        I know that’s right! Lou always posed the ultimate question. You’re not in the water at all? Hmm, if not, perhaps, the Senoritas keep you otherwise occupied… Or not. M

      • torehund says:

        M- going in the water without internet access, and some small caps dogs still breathing the polluted air isn’t comfy. ..and addressing the señorita question, well that infringes with the intent of the blog..stocks and thats my only love for the moment.

      • mcmasoniam says:

        tore, yo comprendo. Must go, as lunker is keeping us on track. Manana, perhaps. M

  25. radrian6 says:

    Hello all,
    RUT is still in its downward channel and is consolidating sideways underneath resistance at 1120. Another surge higher will break the channel and likely confirm the end of the correction. As I noted earlier, the combined Treasury Operation for the next two days is light so the indexes may retrace a bit of today’s rally while the Fed moves into their meeting. My intraday charts are positive but the longer-term charts still tell me that RUT’s potential upside is limited until it corrects.

    • CB says:

      Thanks for the info. , radrian!
      Thanks Tony!

    • gokalg says:


      Thanks for your post. U had mentioned that unless 1129 is taken out which is about 78%
      retracement we may still be in correction mode.

      • radrian6 says:

        Yes, as long as RUT stays below 1129 it could still be in a correction but if RUT breaks above the downward channel, I think it will continue higher to at least retest 1147.

        From the September low of 1009, RUT has clearly made five waves up to 1147. The a-b-c correction down to 1100 was very close to a 38% retracement of the five-wave pattern. I therefore think it is a realistic probability that the uptrend will continue despite the exhaustion displayed on the monthly chart.

        On the other hand, it is unrealistic to think that the funds, banks, and brokers will simply leave their huge unbooked profit in the market — they need cash to operate their businesses so they must eventually take some of their chips off the table. The market shows evidence of rotation so small profits have been taken here and there. However, RUT has gone up nearly 400 points since last November without a correction and that represents a lot of long-term profit and a lot of invested capital.

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