monday update

SHORT TERM: gap up opening, DOW +73

Overnight the Asian markets opened gained 0.3%. Europe opened higher and gained 0.8%. US index futures were much higher overnight, and at 8:30 Personal income (+0.2% v -0.1%)/spending (+0.5% v +0.3%) and PCE prices (+0.1% v +0.1%) were all reported higher. The market gapped up at the open to SPX 1828, ticked up to 1829 in the opening minutes, then pulled back to 1825 by 10am. The SPX had closed at 1818 on Friday. At 10am Consumer sentiment was reported unchanged: 82.5 v 82.5. The market then rallied to SPX 1830 by 12:30 before pulling back at 1825 again by 2pm. Then after a small bounce to 1829 by 3:30 the market dipped to close right at the 1828 pivot.

For the day the SPX/DOW were +0.50%, and the NDX/NAZ were +1.10%. Bonds lost 10 ticks, Crude slid 50 cents, Gold slipped $3, and the USD was lower. Medium term support remains at the 1779 and 1699 pivots, with resistance at the 1828 and 1841 pivots. Tomorrow: Durable good orders at 8:30, FHFA home prices at 9am, New home sales at 10am, and the market closes at 1pm. Happy holidays!

The market gapped up at the open today, hit SPX 1830 a new high, then consolidated for the rest of the day. The rally from Wednesday’s SPX 1768 low still looks like three waves into new high territory SPX: 1811-1801-1830. Would expect this advance to unfold in five waves before any substantial pullback. At this point a pullback of 10 or so points can occur at any time.

Short term support is at SPX 1814 and the 1779 pivot, with resistance at the 1828 and 1841 pivots. Short term momentum is starting to form a negative divergence. The short term OEW charts remain positive with the reversal level now SPX 1811. Best to your holidays!

MEDIUM TERM: uptrend hits new high

LONG TERM: bull market


About tony caldaro

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73 Responses to monday update

  1. ggok1 says:

    Hi tony
    Thanks for your response and thoughts on the matter of US dollar.
    Have a lovely holiday.

  2. kloutt says:

    bulls need a rest …. found this chart somewhere on the web and it looks clever

  3. uncle10 says:

    My stuff tells me this is a good spot to short. Risk about 5 SPX points. Reward 15-20 Spx points.
    Thanks Tony and all.
    Happy Holidays everyone!

  4. Art Cashin all year said 10 year would be a trip wire. Man has he been wrong.

  5. Wishing everybody a happy holidays and a profitable new year. markets have buyers and sellers just not this year. only buyers.

  6. pooch77 says:

    Smallcaps looked stretched.2 hour looks like it could start topping today-Thur,daily has room to go but awful big run in 2 weeks

  7. blackjak100 says:

    Happy Holidays Tony and the OEW clan!

    Not much to add this AM other than Gold looks to be in a 4th wave triangle which should break downwards for a final fifth wave downwards towards $1160-$1175 range. I expect the break to happen by the end of Thursday and possibly end by the end of Friday’s session. Get ready to get long Gold shortly! Cheers!

  8. tuamotu says:

    Happy Holydays Tony and all contibutors on this blog !
    Is it possible we have a broadening top … ?

  9. thoth8 says:

    Hi Tony,
    Thanks many times for all your hard work! Wish you Happy +Jolly Holiday Season and prosperous 2014! Happy Holidays everyone : )

  10. 777daimon says:

    daily mid BB band needs a check-out in my very humble opinion (1798 and rising).
    Happy Christmas to all and Tony!

  11. scorp100 says:

    Namaste Tony. Happy Holidays!!
    Greece seems to be in downtrend. Any price target for GREK?

  12. Merry Christmas and best wishes for a prosperous New Year, Tony, and thanks for continuing to offer this blog and its great info.

    I have one question about last night’s update:

    “…with resistance at the 1828 and 1841 pivots”

    With a pivot range of +/- 7 points, am I correct that this translates to: “we’re subject to resistance all the way from 1821 to 1848”?

  13. pcskier says:

    Good call. $tnx should hit 3% any day now, the $vix is on support now and should bounce today. I got a sell signal last night on $spx and buy $vix. Higher interest rates won’t be good for housing or corporate balance sheets, future buy backs, emerging markets. What happen to to $rut yesterday I heard it jumped 7% at open and stayed their for a couple of minutes? Is that true?

  14. ggok1 says:

    Hi Tony
    I am one of those silent daily readers that occasionally pop up their heads! You do a smashing job on this blog and are part of my daily routine!

    I was wondering what your thoughts are on the US dollar. I thought that with the tapering announcement there would be dollar strength. However this doesn’t seem to have happened. On your weekly chart you have black a and b completed, so am I right in assuming you are expecting a black c down to finish green B? And downtrend in dollar will continue even as QE tapering starts? If so, what is your target for dollar B wave down please?

    Have a great Xmas and a peaceful new year.


    • tony caldaro says:

      HH G!
      Everyone was of the same opinion for the USD due to tapering.
      In the end they will probably be right after it makes a lower low early next year?
      Think 78+ DXY could do it.

  15. 1822-29 I gave out on Sept 12th for Major 3 projected highs and never waivered. Now we hit it, its santa claus rally as always… January should be interesting

  16. Thanks Tony. Seems like Shipping stocks DRYS (6% up) and EGLE (14% up) are cruising with rocket fuel today. No trade yet, might be closer to entering a trade this week in DRYS. But EGLE has to prove a lot before I trust this move. It is still under 30 week moving average, so no need to get excited about this stock yet. I would rather go with SEA. But shipping stocks behaving exactly as laid out by Tony’s update on BDI index. Regional banks (KRE) are also on a tear today. GL everyone.

  17. Tony,

    $SPX on the hourly, from the Nov 29 high of 1813 looks like an a-b-c down 1768 (unlike on the ES/), but then a single wave up to today’s high of 1829 (a 3 wave structure like you suggest).

    Can this wave since the FED announcement upwards be a B correction of a larger wave down?

  18. Hi all, if you have access to WSJ stories I urge you to read this article about the money crunch taking shape in China. Money panics can bring on crashes, as we all know, and they can be contagious. The next bear market will have it’s catalyst. This one has potential.

    Merry Christmas to everyone and a Happy New Year!

    • valunvstr says:

      And we care about China, why? China, along with the rest of the emerging markets, has been a mess for years. Yet, the US market makes new highs. Sounds like another bear looking for a reason for the world to come to an end. Please for the love of Pete, someone speak with some sanity. Alternate A of B of 3 of 5. No, it’s China. No, it’s PE’s. No, it’s profit margins. No, it SHILLER PE’s. Come on already. When does being wrong and not making money finally get old?

      • Good point valunvstr the US markets don’t care about anything. 10 year , taper, no problem

      • Speculating is talking about ideas, and keeping your eyes open for the important things coming over the horizon that people fixated in the moment are too blind to see. We should care about China because it’s the second largest economy in the world and is politically unstable. What do you think will happen to China if a money panic sweeps the country and the prosperity that is the source of communist party legitimacy comes to an end? What if they decide to start a war with one of their neighbors to turn things around? It’s been done before, many many times. What do you suppose the stock market will do then? Keep an eye on this or not as it suits you, but I know I will. It’s possibly the most important thing going on in the world right now and hardly anyone seems to be paying attention.

    • 16golfer says:

      I agree 2 side tape…As we saw in 2008….took 5 years to double in price. Given all back in 18 months.

    • Hello Twosided, This is exactly kind of wall of worry China (FXI) needs so that it can catch up with developed markets. US and Europe went through lot of worries in 2011 and 2012 and look at those markets now. There might be an initial sell of in China which may coincide with PRI-4 correction in US. But once it turns around we might get a great opportunity to go long.

      • Hi Peter George. I think if the Chinese market has a money panic it will make the Euro panic look very small. Think panic of 1907 maybe (or 1929, at least in China). I don’t see this as coming to a head just yet, but it seems almost inevitable sometime in the coming years. The political instability that comes from it is what we should be most worried about, far more than the money.

    • torehund says:

      Twosided, after a house has been burned down like China, fire isn’t what you should be too much concerned about, just a thought. Looking at the techs there are clear signs of a rally emerging, although I am a bit ambivalent whether or not the ultimate bottom has been reached. But it could be done and then China will tail follow the US and europe in some weak recovery.

      • Hey Tore, thanks for replying. I’m not so much worried about where Shanghai is going. I know it’s down 2/3rds from it’s high though I think it was a bubble high. What concerns me is the plight of the average person living in China. The communists can not afford any sort of unrest, and the source of their mandate to rule is the economic boom. The end of that boom would end their mandate. I suspect that is a big part of why we see so much saber rattling in China these days. “Wagging the dog”, if you like. I really believe the communists will find a pretext to start a war with one of their neighbors if it means the difference between retaining and losing power, and if that happens there will be a steep price to pay for everyone. If anything the stock market in Shanghai may be pricing this in the past year or two. Could go to 1000. Would not surprise me, but that’s not my biggest concern.

      • torehund says:

        Twosided what I am just trying to convey is that surely there could be downside in China still, but buying china here isn’t the rip off that it once was. However the sentiment is at the lows and then at some point a retrace is coming. Thats when you would want to hold it…

    • valunvstr says:

      What if? What if? What if? There is no investment process that works based on “what if’s”. So, I guess my answer is “I don’t care”. Maybe it will bring democracy and the world takes off because the second largest economy becomes a free market. What if that happens? Same answer…don’t know and don’t care because you can’t invest based on what if’s. Also, the smartest people with the correct conclusions about economics can be TOTALLY wrong about the investment conclusion. Another reason so few outperform the market over the long term. EG. “THE US IS GOING TO KEEP PRINTING AND DESTROY THE DOLLAR. THEREFORE BUY GOLD!” UH, THE US HAS BEEN PRINTING SINCE 2011, THE DOLLAR IS BASICALLY UNCHANGED AND GOLD HAS COLLAPSED.

      • valunvstr says:

        You can play the fools game and overthink and try to outsmart the market or you can choose one of three avenues to success.
        1) If the time frame is long enough, buy a broad market etf and get the best after tax returns possible
        2) broadly diversify a portfolio regardless of opinion of asset class and rebalance
        3) give a handful of managers the ability to manage your allocation and risk for you (eg oakbx, fpacx, etc.)

        Or, keep trying to be one step ahead of the market and instead be one step behind. Your choice.

      • I myself have stayed with my mutual funds not just because of market technicals, but because of low interest rates and the high present values of future earnings flows that low interest rates generate, not to mention QE 1-3.
        The larger issue that valunvstr is raising is whether we should pay attention to fundamentals at all. When we try to understand the economy and geopolitics, we are implicitly making a statement that we do not fully trust the judgment of the market as revealed by the price action. But technical patterns can start to change rather quickly, so if fundamental reasons why we hold our position has not changed, we can have the confidence to stay the course when the technicals start looking weaker. Creating weakening indicators and price non-confirmations is one important way that a bull market creates a wall of worry to keep the majority out of the market and shake out the weaker holders.
        At some point, it will be correct to take weakness in the graphs and charts at face value. If the underlying fundamental reasons for our asset positions start to change as well, we will give more credibility to the early signs of technical weakness and that will prompt us to change course in time to avoid a bear market.

      • Editing Correction: “so if fundamental reasons why we hold our position has not changed” should be:

        “so if the fundamental reasons why we hold our position have not changed”

      • buddyglove says:

        Valunvstr, Strong stuff, but I have to say I am in complete agreement.

      • Well I wish you well with that Valuinvestr, but if your plan is to buy and hold index funds why are you bothering with watching the market? Anyone can do that and not even pay attention. And yes, there are lots of ways to invest that work based on what if’s. Just about all of them actually – unless you buy and hold an index fund. I wish you well.

      • uncle10 says:

        Valunvstr, there are many ways to make money in the markets. You talk as if your three listed below are the only ways?? Did you read on the internet that those were the 3 avenues to success??

  19. elmer510 says:

    Thank you for the update, Tony!

    One question. You write:
    “The rally from Wednesday’s SPX 1768 low still looks like three waves into new high territory SPX: 1811-1801-1830. Would expect this advance to unfold in five waves before any substantial pullback. At this point a pullback of 10 or so points can occur at any time.”

    We can here see wave i is 43 points, wave ii 10 points and wave iii 29 points.
    If these are waves of the same category (minor), don’t you think wave iii should rise some more before a a small pull back of app. 10 points, at least to equal wave i of 43 points.
    Normally iii is the strongest, I learned that from you🙂

  20. bouraq says:

    Russell2k has to decide now

  21. kisshu2 says:

    HH and thanks Tony – does anyone have targets likely targets for spx minor wave 1?

  22. Tony, why dont you favor 1813 being end of wave 3? drop into a 4 to 1767 and now we are in a 5?Thanks.

  23. CB says:

    Thanks very much Tony. Excellent work and great calls over the years! Happy Holidays everyone!

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