monday update

SHORT TERM: wild swings to start the week, DOW -41

Overnight the Asian markets lost 2.2%. Europe opened lower and lost 0.7%. US index futures were higher overnight and the market opened at SPX 1794. The SPX had closed at 1790 on Friday. In the opening minutes the SPX hit 1796 and began resumed its decline. At 10am New home sales were reported lower: 414k v 464k. Around 10:30 the SPX hit 1782, bounced to 1788 by 11am, then dropped to 1773 by 12:30. With a slight short term positive divergence the market started to rally. At 3pm the SPX hit 1794, then pulled back to end the day at 1782.

For the day the SPX/DOW were -0.40%, and the NDX/NAZ were -1.00%. Bonds lost 8 ticks, Crude slipped 80 cents, Gold dropped $13, and the USD was flat. Medium term support remains at the 1779 and 1699 pivots, with resistance at the 1828 and 1841 pivots. Tomorrow: the FOMC starts its meeting, Durable goods orders at 8:30, Case-Shiller at 9am, and Consumer confidence at 10am.

The market opened a bit higher today but could not generate any additional buying, then it headed to new lows for the decline. Without a noteable rally from SPX 1829 the market hit 1773 by 12:30. At that low a small positive divergence appeared, as the market found support in the lower end of the OEW 1779 pivot range. Just another two points lower and it would have broken through medium term support. And another four points below that, broken the uptrend as well. Nevertheless it has been quite a decline from SPX 1851 to 1773, and there is no clear sign that the selling is over.

Typically during a downtrend short term RSI can bounce to neutral before heading lower, with price, again. We hit neutral on today’s rally. Should it reach overbought it would improve the prospects that the low of this decline is in. Also, the short term MACD has reached oversold levels normally associated with ongoing/ending downtrends. Since a downtrend has yet to be confirmed this too can be considered a negative.

Short term support is at the 1779 pivot and SPX 1768, with resistance at SPX 1800 and SPX 1814. Short term momentum bounced to neutral after an extremely oversold slight positive divergence. The short term OEW charts remain negative with the reversal level now SPX 1812. Best to your trading the FOMC in this volatile market.

MEDIUM TERM: uptrend weakening

LONG TERM: bull market


About tony caldaro

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108 Responses to monday update

  1. blubrd67 says:

    Tony, does the fact we didn’t cross the midline on RSI today increase the likelihood of furhter selloff?

  2. blackjak100 says:

    Still looks like we need a 5th wave down towards sub 1770 before a multi day bounce takes place.

    • gary61b says:

      I like that BJ, we need to trap some bulls up here then drop it for that final leg down.

    • fractepper says:

      For almost sure, BJ. Tony’s 60min Dow RSI5 has risen into the 60’s and is very overbought relative to week of the 21st at Dow 16,500 levels.

    • JK1987 says:

      Still holding on your AAPL long?
      Or you are buying more like Icahn?
      Icahn’s $500 million new buy is not pumping up the price.
      I am long at 503 today.

  3. blubrd67 says:

    McMillan today:
    Volatility indexes VIX -6.89% XX:VXO -2.88% are quite interesting. VIX finally began to shoot upward — we call that “spiking.” VIX is officially in a spiking mode (a look at the chart confirms that). But a “spiking” mode is actually a precursor to a buy signal. When VIX reverses back down more than 3 points, that would complete a buy signal.

    The construct of the VIX futures took a “hit” during this recent bout of selling, but still retained much of its bullish nature. Nearly all of the futures settled at discounts to VIX on Friday. That’s something we haven’t seen for a long while, but that alone isn’t bearish. What would be bearish would be the term structure taking on a negative slope, and it hasn’t done that. In fact, the slope of the term structure is completely positive, with March trading higher than February, April higher than March, and so forth. Frankly, I find it a little surprising that Feb VIX futures are such “dogs” that they haven’t even been able to exceed the price of March futures. While I don’t have rigorous proof of this, it seems to me that in the past when the front-month VIX futures were at such deep discounts, that was a bearish thing for the market over the intermediate-term.

    One other point is worth noting here: The end of January is traditionally a very bullish period. Moreover, the first trading day of February is the most bullish of all the months. Hence, there is some strong short-term seasonality about to take place.
    In summary, these completed sell signals seem to augur an intermediate-term bearish move, but the bulls have other plans. If these buy signals (January seasonal, VIX spike peak, and modified Bollinger Band) are successful, the bearish threat will be over.

  4. tommyboys says:

    Tapering just may lead to lower rates as markets normalize and true deflationary forces reassert themselves. This deflationary cycle is likely with us through sometime in 2016…–not-higher-rates–dan-alpert-213546835.html

  5. Enjoy the triangle because when its done we going to 1760.

  6. rc1269 says:

    okay anybody here *not* looking for ~1812, aka the 50 MA, aka left shoulder, aka HWB..?

    free money what could possibly go wrong?

    • 16golfer says:

      RC…I would like to see 1828. Close that gap from Jan 23 and end month with a hanging man.

    • uncle10 says:

      Hey RC, I was on Monday when the vix was spiking. Now after two down days for our beloved vix and the market just hanging on…. Not so much any more. It would make for a much easier short though if it did get up there, which again prolly means it won’t??

    • ewtoriginal says:

      Well Permabulls like Lee Cooperman sees at least that level of 1812. After all, as he told CNBC today, you slap (love that phrase) a 16 multiple on the 2014 earnings figure of $117
      ( everyone was using 120 last week but,hey, who’s counting anyway?) and that gets you 1862. Of course last week GS (Lee’s old home) put out a piece about how forward p/es above 15 were rare except in maybe 2000 . And that last year, as of Q3 vs Q3 2012, full year earnings were just under $ 95 so again, who’s counting?
      Of course CNBC didnt ask where Lee got his bullcrap earnings figure and how eps was going to rise above 20% because that would cause a stir. Without POMO, it’s NOGO. Anyone who believes that it is anything else is gonna shocked if, and I will admit it is a big IF,they stop the print machine.Markets bottom and rally continuously from lows when sentiment is poor and economic news is bad. They rally as the news continues to be poor. They peak when the good news starts, but particularly when the news was a huge lie all along. So, are earning actually gonna be good? This guy says no, and I concur:

  7. Someone just told me, s&p is ready to make a slow grind up 20 handles…

  8. last post for today but this is what makes the market amusing. Terrible job number, average earnings , lousy durable good number and 3 % from all times highs.

    • Just say “repeat” or “the same comment” or “just saying”

      I for one, know what you mean. save yourself some time.

      Post #2

      You’re welcome.

    • tommyboys says:

      Really? You can’t take a single data point and extrapolate it to that specific day’s market activity. You need to look at monthly – or better quarterly – trends along with valuations, EPS & GDP growth/contraction, rates, cash etc, etc…. Any one off economic report is meaningless in a vacuum. Today’s durables I can almost guarantee was affected by weather. I know personally it has affected some purchases on my end – which will still be made – only a month or two down the road…you’re sure you’re not Pio?

      • Tommyboy no reason for name calling. you can one off all you want. the economy is not good. I do not know where your from but I can tell that on the northshore of Long Island even the affluent who are business owners or Medical professionals are not spending their money. Kids are moving back with their parents after college like mine has, I only lean bullish because the FED is totally in control. and I use 3 or 4 % pullbacks to add and buy. I think anybody who thinks we are going lower (P4) is way off track.

      • tommyboys says:


      • tommyboys says:

        If you believe its only the Fed floating the market than you best get out as they are backing off. You saw the reaction to the announcement last month right? Further I don’t want any whining – I’m from Detroit – we’re in bankruptcy – I’m not whining…

  9. Tony, re: previous conversation on AAPL. Looks like Icahn is already starting to eat the crow… he must be choking on the head by now 😉

    • tony caldaro says:

      he bought some more =)

      • uncle10 says:

        Reckon if he has a stop loss on those shares?? HAhahahaha. Great company. Seems undervalued?? Just the thing to get some cocky “pro” to go in too heavy and really take it on the chin .I don’t like to root against people but he makes it so easy to…..

      • Yeah, I just read it on the news, he tweeted about it? I wonder if he owns TWTR shares too then?!?! 😉

        Here’s my count, not favoring his buying…:

        All fib-extensions perfectly align with possible count shown: Major A up doing a text-book 61.8% retrace of Major A down. Minor b of intermediate c retracing between 50-61.8%, text-book. Minor c of intermediate c equals minor a of intermediate c, text-book. Minute v of Intermediate c hitting the 2.000x extension of minute i of c, textbook etc.

        Do you have Icahn’s email address? Maybe I can send him the link!?!? 😉

      • edit: “Major A up…”, should of course read “Major B up…”

      • Soul, looks good, but for AAPL? I dunno… seems too low.

        Anyway, I might get some put options around b of C, in a few months… I still find it hard to believe that AAPL will get that low…


      • gary61b says:

        I love it when guys like Carl gets into stock at a premium and takes it in the pocket book, This is the only way Carls know how to give back. And the reasoning he has proposed for his venture into aapl is appauling, so let chips fall where they may.

    • torehund says:

      Big mess-ups is a part of any great investors history, lol.

      • yup, nobody can win ’em all. I am sure he can adsorb the loss (e.g. he made a $B on NFLX last year alone by selling half of his total shares, 3M, on Nov 22nd, which he admittedly bought at the Primary IV bottom at ~$60/share. So there’s another $B+ waiting to be cashed in…)

    • ewmarkets says:

      Your big C down after hitting 575 looks too corrective to be a “C” wave that would match the A wave in magnitude.

  10. H D says:

    traingle B wave? 1803 still eyes on

  11. 777daimon says:

    Feeling a little lost here.
    In what sub-wave of this down movement from 1851 are we ?
    Still in 3, in 4, in 5?
    Thank you.

  12. mmmiiikkkeee says:

    Can anyone tell me the mathematical derivation of the .764 retracement level, please?

  13. robnaardin says:

    Revenge of the Bears!

    SPX has a probable LS, H and neckline in place, for a low volume RS rally.

    RS targets:
    1. LS 1813.55
    2. 50% retrace of the decline is 1811.86.

  14. Good morning Tony. I’m a longer term investor, not a day trader. But I’m curious about OEW. If minor 2 ended yesterday, and we now begin minor 3 of Int iii, are there any implications about the length of minor 3 or Int iii, given that minor 2 retraced almost the entire length of minor 1? In otherwords, should the subsequent waves be longer or shorter than a “normal” impulse wave?

    • torehund says:

      iI this was the first of the wave 3 of this five there are 4 more waves to go, and judging by the size of it the 3rd of 3rd will be pretty impressive.

    • if bears can push this market red today I will be impressed .

      • JK1987 says:

        Just trading, not bears.
        Tony is negative on his tone.
        daneric changed his 3 of 3 of 3 thrust up, and now is calling for flash crash.
        AAPL long here 503 has the least risk.

    • JK1987 says:

      APPL on fire sell at 503, long.

      • I dont know who daneric is but if he has a bearish view like most he will be wrong. Caldaro has done a fine job. But to honest I dont think a 3% sell off is a correction . so this is still a market that for the most part other than a bump or 2 does nothing but go straight up

    • joseph3000 says:

      JK – Please, try not to assume what you read is correct. Here is Daneric quotes from his site: “In my opinion, it would also be a technically “ripe” area for such a thing as an oversold “flash crash”. Not predicting that of course just saying it seems a good spot (technically speaking) if one were to happen. So keep a close eye on price action over the next few days.”

      You can confuse people. Daneric says he is not predicting a flash crash.

  15. torehund says:

    After 2 waves up and churning corrections there aren’t many loose hands hanging around anymore, so thats why the 3rd is brisk at least until the 2 previous tops have been conquered. Many of my small caps are in this pos, so if my count is justified recovery should be quick when and if it commences. The first 2 ups from a bottom is the shaker waves so that a sell free wave 3 can do its intended ascension.

  16. rc1269 says:

    mkt no lovey durable goods it would seem

  17. 777daimon says:

    target for “Turnin’ Tuesday” = 50 dailyMA = 1812.80 (guess that qualifies for Tony’s 1814 R)

  18. monday’s market wrap and search and destroy plan for tuesday:

    many shorts.

  19. Caldaro so we are clear are you saying if the market breaks 1767 you will confirm a p4 and label it a downtrend?

  20. M1 says:

    Thx, Tony
    IMO, The market did exactly was it was supposed to do today. And It looks like the first wave down is over.
    Now in correction mode ?
    wave a was 20 points. if wave c = wave a, then we should visit 1801 soon.
    Am I missing something ?

  21. rc1269 says:

    Hey Tony. All this excitement I just had to talk the day off and go skiing. 🙂

    I know I asked this a few weeks back but going to toss it up here again just for fun: what do you think are the chances that your original count from a year ago was actually right, and that PV just topped? (“in the winter ’13 / spring ’14”)

    who knows, maybe you’re even better than you thought… 😉

  22. Hi all, well people have finally noticed the Chinese money panic and the Latin American hyperinflation. Those stories are far from played out. My take at this time is the ostriches will stick their heads in the sand and buy the dip once more, but the exits will jam near 1850 and Primary IV will start on the retest of that area.. I see the indexes as as having finished a 9 wave up to complete Int v of Major 3, and this is major 4 of Primary III now. Close to the alternate count, but a little different. I’m expecting 1772.88 to be the bottom of Int a of Major 4, but if the markets go straight back to new highs from there then Major 4 will have ended and the next drop from 1850 will be Primary IV. Time to play defense not take risk.

    Best wishes to all!

  23. ewtoriginal says:

    Tony, many know that markets crash from oversold levels. This market is nowhere near a level that would suggest that could happen, but the weekly MACD was so high for so long and pointed near vertical recently. It could take quite a bit of price and time for that to come down to a more normal reading. As I mentioned earlier,it is worth looking at the trading and volatility in early year 2000.

  24. a random coincidence I’m sure. DOW Fibs

  25. gary61b says:

    aapl lovers It looks as though the aaple will fall close to the tree trunk, after hrs did some damage, till morning see if it holds.

  26. mjtplayer says:

    Hard to say if today’s intra-day bounce was minute iv or minor A. If 1,772 today completed int a down, then we’ve already seen minor A, in B now with C up to come. Otherwise, minute v of minor C down below 1,772 to complete int a down.

    Also, perigee blackmoon Thursday night still pulling us down – so we might not put in a low till sometime Thursday or Friday morning.

  27. Hi Tony

    1. Do you see any support for BDI index ? it keeps crashing down ?

    2. With the current movement it looks like primary wave 4 correction begun – what kind of “correction” are we looking for from highs ? 10% or more ?

    Thank you

    • mjtplayer says:

      Seems clear to me that support is 1,000 in teh BDI. A lot of prior action around that level, it’s the previous “wave 4 of 3” and it’s a very large “round number”.

    • tony caldaro says:

      Getting very close to eliminating my alternate count: iii
      The may be the A wave top after all.
      Either way, not the end of this bull market.

  28. kvilia says:

    Thank you, Tony, It is not a surprise to me as I posted many times – 5th waves are meant only to be day-traded, period.
    Now, if I can get an advice, please (I understand its way OT but perhaps correlation with OEW projection for interest rates will make it less obvious :), and I definitely appreciate all the opinions! I’m working on the move up to DC and looking for a rate to go with. With interest rates being historically low it appears wise to choose 30 years fixed, however looking at the payment table, 5/1 or 7/1 ARM will save quite a significant amount of money with the thought of being able to refinance in 5 or 7 years for let’s say 15 years fixed. I intend to live there for a long time, the question is only where can we project the interest rates to be in 5 to 7 years from now.
    Thank you.

  29. vorfahrt says:

    Tony: long time no hear. I was just thinking the NatGas X-wave seems to be at the end or at least close to. A new leg down for commodities is at hand IMO. Thanks, Joe

  30. bouraq says:

    Bears got a good hand:

  31. Tony, thanks for the update! What do you mean with “Since a downtrend has yet to be confirmed this too can be considered a negative.”? Do you mean this a negative for the current decline from 1851 or do you mean it’s a negative for the uptrend?


  32. JK1987 says:

    This monday update sounds negative without any word mentioning current oew wave counting.

    Your tone sounds negative:
    “tony caldaro says:
    January 27, 2014 at 11:15 am
    Where are all those guys who said the market can not go down on its own?

    tony caldaro says:
    January 27, 2014 at 12:15 pm
    biggest drop in over three months

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