monday update

SHORT TERM: gap up opening sold, DOW -45

Overnight the Asian markets lost 1.1%. Europe opened lower and lost 0.2%. US index futures were higher overnight, and the market gapped up to SPX 1837 at the open. The SPX had closed at 1831 on Friday. Right after the open, however, the market started to pullback. Around 10am the SPX hit 1831, then tried to rebound. Also at 10am, Factory orders were reported higher: +1.8% v -0.9%, and ISM services were reported lower: 53.0 v 53.9. By 10:30 the SPX had only hit 1834 and started to decline again. At 11:30 the SPX made a new low for the decline at SPX 1824, bounced, then retested 1824 again at 12:30. With a short term positive divergence in place the market started to rally. Around 2:30 the SPX hit 1832, then pulled back to close at 1827.

For the day the SPX/DOW were -0.25%, and the NDX/NAZ -0.40%. Bonds gained 10 ticks, Crude slipped 25 cents, Gold added $1, and the USD was lower. Medium term support drops to the 1779 and 1699 pivots, with resistance at the 1828 and 1841 pivots. Over the weekend long term Investor sentiment hit its highest level since 2007: 58.3% v 54.2%. Tomorrow: the Trade deficit at 8:30.

The market gapped up at the open to start the first full week of the year. But again it found sellers awaiting, and the market made a lower low for this pullback at SPX 1824. Thus far, from the SPX 1849 it looks like we have an abc down to today’s low: 1828-1838-1824. The positive hourly divergence suggests Minute a of Minor 2 may have just ended. We posted a green ‘a’ awaiting further market activity. Until the market hits SPX 1833, or higher, we will leave it as a tentative green label.

Short term support remains at the SPX 1814 and SPX 1800, with resistance at the 1828 and 1841 pivots. Short term momentum displays a positive divergence. The short term OEW charts remain negative with the reversal level now SPX 1833. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: bull market


About tony caldaro

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88 Responses to monday update

  1. Caldaro a question for you. A market with no Volatilty and just for the most part all one way, More prudent to focus on stocks and not indices? what the point of watching the counts on indices since the pull backs are a day or two at most and we head to new highs almost immediatley…

    • tony caldaro says:

      We talk about the SPX in the updates, but track lots of stocks, commodities, bonds and even the currencies.
      There are always opportunities somewhere.

  2. H D says:

    Same ole,,, todays move from 1841 Pivot went HWB and found buyers. So far, same program different year.
    If last year taught me anything it was thinking any rally after 3 waves back was a B wave is wrong 90% of the time. GL

  3. Last post, and sorry for going over the limit.

    What are the odds that the scenario becomes…. are we in extended INT i, or INT iii as already started?

  4. 16golfer says:

    JPM…money launderer for Madoff. lol. Haven’t seen anyone going to jail yet, though.

  5. gtoptions says:

    Thanks Tony
    Kudos to all the contributors here, Nice Gap call RDC.
    SPY ~ Testing WPP @ 183.35
    Looking for further weakness and support at the Weekly S1/S2 181.98/181.14

    I see that Blackjak went long AAPL, I wish you luck. I’m on the opposite side with a short (i.e.. puts). Thought I would post a visualization of the break of the rising wedge. I went short on the break of the red trend line last week. AAPL is now re-testing the break of the silver trend line. I’ll cover my short if AAPL breaks back above the silver line with much force. Looking for support at the 500 level. Difficult to short the AAPL Beast running up into earnings. But I saw the weakness and took a shot.

    • blackjak100 says:

      Good luck to you as well! I said there was a 90% chance it bottomed yesterday. The 10% chance we didn’t leaves the door open that yesterday completed 4 of C and we are now in 5 of C with target of $530-$535. This should be hit by tomorrow. I’m going to actually add to my long position if we get there

  6. RDC great call yesterday on the VIX. best trade on wall st is to short the VIX. and go long stocks.

  7. If there is a turn down, now is the time, last wall… MHO

    • 16golfer says:

      Agree surfingwavers. Hitting head on 50 dma on 60 minute chart.

      • Hi Golfer, it’s funny, this new algo that I am looking at, and still testing, is looking at things very differently, but it is funny that matched the 50 dma… is a mathematical universe, God knew how to design it.

    • alexhartley1 says:

      I think we’re higher into the close but maybe it has an intra-day correction then re-attempt. We’ll know soon!

      • alexhartley1 says:

        If we make a lower high going into the midday high compared to the morning we’re likely to make a lower high on the close tonight which would be bearish tomorrow into the 9th.

        That’s all today from me. Cheers

      • blackjak100 says:

        Agree with all your analysis. Think tiny third wave completed at 1840.10. Would like to see an attempt at 1841ish later this AM or early PM to complete this tiny C wave up before heading lower tomorrow.

  8. alexhartley1 says:

    I think we’re higher into close but tomorrow we go back to finish a C wave into 9th around 1815 – 1817 (admittedly closing above 1839 probably kills this idea dead though) before moving to attack recent highs in a bigger B into the end of expiry 15 – 16th and then a final move down to around the already proposed 1817 area (maybe low 1800s (1809 or 1811-13) into the 24th for the final C.

    Tony mentioned that the correction be choppy and it currently is!

    Then we have Int. 3, 4 and 5 of Major III into late March where I see the top of Primary III.

    Then P IV before P V into Jul – Sep time (preferred time July) before a serious correction C 2 down into November. Then it’s off to the races again. 2015 will be very bullish.


    • Alex, I’ve been thinking about the relationship between “sell in may” and Major 4 or P IV.. it did not fit in any of them. I see you are ignoring it as well. I was trying to fit the Major 4 in May… I know we did not have the sell-in-may, last year…. but it would be nice to find it somewhere on the charts.


      • alexhartley1 says:

        Cheers Surfing. My roadmap could soon be dead on arrival. Above 1842 forget it I think. pos. divs do seem to work unfortunately more than neg. divs!

      • Thanks Tony, for hitting that + div on the nose.

      • ukmark62 says:

        Hi Tony,

        Quite a few pundits are saying that we are now in a secular bull market for stocks. That would mean the secular bear lasted only 9 years (2000-2009). Do you subscribe to the view that we are now in a secular bull, or do you think the secular bear is still in play??


        • tony caldaro says:

          HNY Mark,
          Guess a few pundits are looking for excuses for this bull market.
          Secular deflationary forces will come into play again before the cycle bottoms.

    • 16golfer says:

      Time for a fat finger “flash crash” on the $SPX tomorrow…taking out weak hand bull stops?

  9. $VRS $SPY $UVXY $NUGT $TSLA $FB $TNA, market update and plan for tuesday (within remark’s sect.):

  10. bobhopium says:

    Hi all. For those interested I Still have a small short on, but it’s more of a hedge than positional, as I am up to my Butt in Global Equity, The structure suggests to me it wants to Flush hard before moving higher, but in this sideways Chop it’s a tough call….Aimho.
    GL to us all.

  11. 16golfer says:

    One can sure tell Byron Wein is a Democrat. Good that Kernen, a Republican, balances out the conversation.

  12. maubos says:

    Hi Tony,what about eurusd for this year,according with your outlook for sp500 at 1970 in third or fourth quarter?
    Thanks,It’s always a pleasure reading your analysis

  13. Futures green, let’s see if cash follows through!?!? either for minute b or start of minor 3!? On the road rest of the week to “balmy” FL panhandle, where it is now a balmy 19F… So you won’t hear much from me except my chattering teeth 😉

  14. sweinv says:

    Godmorning Tony,

    What do you think about this wave count? If you compare to minor 1/intermediate 1/major 5 it still can be minor 1/intermediate 3 underway. 1811-1801-1849-1824- . This week we can have the last push up (minute 5) like 35-40 points before minor 1 finish and minor 2 starts next week.


  15. mcmasoniam says:

    Tboys, & other Bulls, sounds like Byron W agrees with you (this AM’s Squawk Box). Too bad they put a yutz like Kernan on to interview him. Guess he has to be bullish, whether he is or not, given his business. What’s he going to say, No? And a strong USD too! Yeow! GL to All today. Bye.

  16. $SPX $SPY $UVXY $NUGT $TSLA $FB $TNA, market update and plan for tuesday (within remark’s sect.)

  17. perversionofthemean says:

    Appears that RUT has worked off half of its momentum since it peaked Christmas Eve. Still could make a full reset to channel support. Remains under the influence of a downward parabola, having tested it this morning at the open, but half way back seems like OK support, especially since RUT is testing the 11/29 peak from above. Bad stuff usually happens on the right side of a parabola down, however.

    NDX recycled its momentum further down than RUT, and actually hit a measured-move target at the low today, before emerging from its parabolic down.

    SPX doesn’t yet agree with these two, appearing to have elected a measured-move target down with the break just this morning. It looks suspiciously like 9/25 again. It’s controlling parabola is farther away, but it would seem that any rally here would be just 2-3 hours in duration, or the neckline would give way.

    This is not EW, so believe Mr. T over me; I’m just saying what I’m seeing, still seeking to merge my insights with EW to clarify my position.

    Btw: I’m concerned with sentiment, but not so much with margin debt levels. With the market at record levels, margin debt *should* be too. It’s a coincidental indicator, not a leading one, in my opinion. Current levels aren’t disproportionate, whereas 2000’s were. If your take is different, I’m all ears (eyes).

  18. The impending monetary panic in China continues to develop. Reminds me more and more of the playout of The Panic of 1907 in the U.S.A.

    The scary thing is not so much the possibility of the Panic itself but the possible Chinese reactions to it, such as starting conflict with it’s neighbors to bolster the public’s support of the Communist party, or bloody crackdowns on unrest. Stay tuned, this has a long way to go before it reaches endgame. If the Chinese handle this right it could lead to prosperity later, but I am skeptical they will handle it right.

  19. torehund says:

    I just picked up some junior miner (the good old trusted one that served me well earlier), and will add some if it gives me a second chance, sometimes its fruitful to bet a little against oneself..especially when the decline has been prolonged an torturous before one buys in.

  20. blackjak100 says:

    Thanks tony!

    Who mentioned we would see a nice gap up tomorrow because of the vix action today? I agree as I think we print 1840 tomorrow as a little wave 3 takes off.

  21. mcmasoniam says:

    Hey BJ. WTI might be getting close, at least, entering the range… TTYL.

    • blackjak100 says:

      I know, but it has not moved down in 3 waves and did not get a bounce today. I’m on the sidelines with it since it’s unclear to me.

      Gold and Apple were really clear to me so I entered those trades and so far so good! I’m 90% sure AAPL bottomed today but still need confirmation.

  22. rc1269 says:

    thanks Tony! bullishness is bullish.
    until it ain’t
    i’m outta posts have a good one!

  23. Jennifer says:

    Thanks Tony!

    Wall Street drops on soft service-sector data:

  24. Tony: What is the source of the long term sentiment reading of 58.3%? The Sentiment Trader has reported readings of 70 for the last 2 weeks. What do you think of the prognosticative power of the sentiment readings being reported by some services lately in terms of telling us how close to a top we are?

    • tony caldaro says:

      We keep track of portfolio asset allocations.
      The public is now the most invested in stocks since 2007.
      But in itself it does not mean anything.
      Since they were more invested in 2006 than 2007, and even more so invested 1999.
      Point is they are quite bullish.

      • The market can be driven up by public buying for quite a while, but if there is not an underpinning of professional and “informed buying”, that period will be shorter. Thanks for all your hard work and generosity in providing this site for us.

  25. bouraq says:

    Fat fingered gold bear:

  26. ewtoriginal says:

    Thank You Tony. From where I sit, I find talk that the majority are/were not bullish, and remain overwhelming so, a ridiculous postulate. You only get the most bullish sentiment readings from having only a large majority of bulls and a tiny minority of bears. Fund flows in equities and ETFs have been enormous and margin debt is at a record. Now, lets discuss 2007. It started the year at 1410 and traded up to 1560 or so with a double top in the middle. By mid December, the SP500 was trading 1484 and the following remarks were made by the forever bullish- at- any -price- level strategists( the most “bearish” only expected the close on Dec 2008 to be around 1520 while the rest expected around 1625 to1700):
    Of note, the last two weeks ended with a smashing sell off and an SPX of 1412, up 3 huge points on the year plus divs.
    I would be surprised if this market rose 15% this year when all is said and done, although a rise at some point above 1875 is possible. However, I would be much more surprised if the SPX didnt trade 1730 at least once.

  27. mcmasoniam says:

    Thanks Tony.

    BTW, Cashin is calling your ‘trifurcation’ a divergence. He starts by saying, “So far this year…” What? 2 or 3 days? Good Grief Charlie Brown! But at least Cashin is seeing DJI gaining. It be stylin’, little by little.

  28. M1 says:

    Nothing to be worried about…yet
    As I mentioned on friday, I feel NDX cycle wave 4 could be already unfolding.
    However, a lot more selling will be needed to confirm this is correct.
    Very short term support at 3450-3500.

  29. gtoptions says:

    Thanks Tony
    Have a great week everyone. 😉

    • mcmasoniam says:

      Thanks gto. Hope you’re doing well. Always good to see your blog at EOB. If I fail to see it for a while, I go looking for ya.

      • gtoptions says:

        Doing quite well, thanks. The Fib Fans remain effective. Hope you’re living the dream. I agree with your mantra,Simplify!
        GL in 2014.

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