monday update

SHORT TERM: quiet open precedes big decline, DOW -326

Overnight the Asian markets lost 1.3%. Europe opened higher but lost 1.3% too. US index futures were higher overnight, and the market opened one point below Friday’s SPX 1783 close. Within the first few minutes the SPX hit 1785 and then began to pullback. At 10am ISM manufacturing was reported lower but still positive: 51.3 v 57.0, and Construction spending was reports slightly higher: +0.1% v +1.0%. Auto sales, however, were lower for the month of January. Just past 10am the SPX dropped below last week’s 1770 low and declined to 1763 by 10:30. After a bounce back to SPX 1770 just before 11am, the market dropped to 1751 by 12:30. Another rally attempt failed as the market hit SPX 1757 by 1pm, then it dropped to 1744 by 1:30. As the market tried to rally again the FED released:, and this article hit the OEW camp: After another rally attempt failed at SPX 1750 by 2:30, the market hit 1741 by 3pm, 1746 by 3:30, then 1740 just before a 1742 close.

For the day the SPX/DOW were -2.15%, and the NDX/NAZ were -2.45%. Bonds gained 22 ticks, Crude slid 80 cents, Gold rallied $12, and the USD was lower. Medium term support drops to the 1699 and 1680 pivots, with resistance back at the 1779 and 1828 pivots. Tomorrow: Factory orders at 10am.

The market opened quietly this morning, but the sellers took over in short order. Just after 10am the SPX dropped below last week’s 1770 low and the 1768 support level. After that there was a steady decline, with a few 5 to 7 point bounces, down to SPX 1740. Clearly wave 3 of this C wave has been underway since SPX 1794. Thus far we can count three waves down from the B wave high at SPX 1799: 1772-1794-1740 so far. On Jan 24th the SPX dropped 39 points in one day, (1829-1790), during the third wave down of A. The market made a lower low the next day, and then got quite choppy for a few days.

Short term support is now at the 1699 and 1680 pivots, with resistance at SPX 1746 and 1768. Short term momentum hit extremely oversold and is due for a bounce. The short term OEW charts remain negative with the reversal now at SPX 1779. Best to your trading!

MEDIUM TERM: downtrend

LONG TERM: bull market


About tony caldaro

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113 Responses to monday update

  1. blackjak100 says:

    Gold looks ready to break out of its triangle as early as tomorrow with a target of $1300-$1340 in the next few weeks. Will narrow target as we get closer. I’m long as of today.

  2. kvilia says:

    2 points:
    1) Direxion or even Google search does not have a reverse health care mutual funds for me😦
    2) “The Congressional Budget Office on Tuesday said that the Affordable Care Act will contribute to the equivalent of 2 million workers out of the labor market by 2017, as employees work fewer hours or decide to drop out of the labor force entirely.” I have no comments on that. (Well, I do but the majority here would not like them😉 )

  3. Unfortunately, I failed to fathom impact of yesterday’s huge sell and SPX touched 1840s. Here is now revised outlook;
    today close at @1748,
    tomorrow close at 1767ish
    —-and thats where down-leg starts and takes it 1558 ish (thats 200 point fall in two months). Friday close should be 1748 again..

  4. tony caldaro says:

    You posted 4 comments that could have been stated in one.
    thank you

  5. mjtplayer says:

    Tony, are you counting this as minute wave iv of minor A or minor wave 4 of int c?

  6. JK1987 says:

    oew agressively labels RUT Primary C Top.;
    Compared to 2007, maybe yesterday’s low was brown a, brown b underway.

  7. gauravsuri17 says:

    Tony sir where do you expect w4 to end for A

  8. The 1.382x extension of major 1 @ SPX 1741, measured from major 2, held as support (as mentioned yesterday), which is also where the 2.000x extension of 1 of c down (1798.77 to 1772.26), measured from 2 of c (1793.88) is (as mentioned sunday). I added more longs at the close yesterday. Not trading advice. We may be in 4 of c now, or c has finished. Bears should keep an eye on the + div that is developing on the daily RSI(5) between yesterday’s low and the Jan 29 low (labeled as green wave a on Tony’s hourly chart). Just my 2c.

  9. llerias7 says:

    Tony, today is a w4 of A down or is already a first leg up of B retrace?

  10. mjtplayer says:

    Nice oversold bounce today, SPY on pace for 140m shares trading; but that’s 40% lighter than yesterdays’s 255m shares. Just a bounce, sell/short at S&P 1,770

    • tommyboys says:

      Selling volume has dwarfed rally volume religiously for years. All I can attribute it to is fear being a greater motivator than greed. Market is up more than 100% over this period. I’ve been putting less importance on volume past couple years until someone can make sense of it for me – FWIW.

  11. RDC says:

    SPX will continue to move towards 1770 then reversal down to 1725-1730.

  12. blackjak100 says:

    Looks like a 4 of 5 correction. Would not be surprised to see 1755-1760 before end of day before 5 of 5 wave to 1725-1735. Everyone calling for 200 Dma but I think we come up short on this leg.

  13. 777daimon says:

    market – spx 500 – nosed up a little bit which makes my long usd/jpy already feel better, although being underwater.

  14. chrisk44342 says:

    Hi Tony,

    Thanks as usual for the great charts and insights. My personal view is that P3 is the count. I don’t feel that intermediate 1 (dow count) would have ended in the failure.

  15. lunker1 says:

    Here’s a bullish Dow count I just threw together which shows P3 still unraveling and now in Int 2 of Major 5.

  16. Cliff Uzan says:

    Hi Tony,
    We’re getting there, but we still have more to go on the down side. If I had to guess I would say we go down first make a new low then rally maybe 150-200 dow points then head back down to test the 1700-1720 area. JMO.


  17. michael sim says:

    Laid out 3 possible scenarios brewing for SPX.

    SCENARIO #1 (20%) – Bullish scenario, what we had was just correction

    SCENARIO #2 (40% chance) – slightly bearish correction, and we are just in the Major Wave 4 before a 5 new high.

    SCENARIO #3 (40%) – Bearish scenario, Primary Wave III in, and Primary Wave IV is in place


  18. rc1269 says:

    i’m amazed that so many people are amazed

    • Lee says:

      I’m outraged at the amazement R C , outraged I tell you. I might even start using the cap lock .
      Congrats on your SB win. Da Hawks

    • 16golfer says:

      Isn’t that what Mr. Market’s job is? Confuse & confound the masses?

  19. rc1269 says:

    i guess the market didn’t want my seahawks to win. 😦
    i’ll try not to take it personally

  20. M1 says:

    Tony, where should we expect the rebound now ? at 1727 ?

    • blackjak100 says:

      My $ is right around there now. This was clearly another wave 3, but this time 3 of 5. Wave 2 multi week rebound right around the corner. I would not be surprised to print 1800+ Before falling through 200 Dma.

  21. waddaguess says:

    I wouldn’t be surprised if the market put in a low today or does in next 2 days and then goes to new highs. Any takers?

  22. M1 says:

    One word: Very dissapointing.
    This is the first of the month. It is supposed to be bullish. So it was friday, the last day of the month.
    The “strong” NAZ couldn’t even reach the 50% Fib 4145 before this sharp selloff.
    How one could short the market this way ?

  23. Jennifer says:

    Thx Tony,

    It really looks like the market is adjusting for now..

    U.S. stocks dropped on a poor factory sector report

  24. lunker1 says:

    still no 4 into 1 if you think 1729.86 was a 1

  25. Hey gang

    Watch the 34 week MA line, which we will likely dip below. This being Major 4 of Primary 3, a very oversold condition will show up at 1713, which is the 23.6% fib of 1267-1850 (major 2 low to Major 3 high). We could see a big reversal initially there, then asssess whether we go to 31% or 38% for Major 4 after that rally

    • robnaardin says:

      The problem with that, is the support trend line for PII 1267 is the nov 1343 and june 1560 low. Now busted.. Therefore most likely PIII = 1850

      • Major 2 was 1267, major 1850 double top… major 4 1713 minimal retracement level, if not lower…. could be one ugly May-August this summer for Primary 4 once this 4 and 5 of 3 finish

      • fbender7 says:

        If wave c = a of this downtrend, then c = 1718, which is close to the 61.8% retracement of Major 5 at 1712, which is close to the daily 200 SMA (today at 1707, but rising). A nice cluster.

        We could bounce off the 200 SMA. That’s what I’m looking for.

    • buddyglove says:

      3xetf, Thnx for posting here. I am currently considering your subs service.

  26. mjtplayer says:

    Anyone follow or done work on George Lindsey’s “3 peaks and a domed house”?

    We possibly put in points 24 & 25 during the int a & int b, currently working on point 26 which should bottom (major a?) at the lows of the prior large consolidation (DOW 14,550 – 14,750 area). We get a large bounce in point 27 (major b?) back to the top of the highs of that range (DOW 15,550 – 15,700) then the point 28 plunge to test the Oct/Nov 2012 lows (DOW 12,000 – 12,500) – perhaps major c to complete primary IV? Problem is, that would overlap primary I. Hmmm….


    3P&DH model:

    FYI: DOW 12,000 – 12,500 would take back all QE3 gains.

  27. mharrison60 says:

    Hi Tony,
    as you know I am watching FTSE closely count of int V of major C and would really appreciate your thoughts on the following…
    1. The chart count details upto micro ii of minute 3 but I wonder if actually micro I and ii were minutes 3 and 4, and indeed we have also completed minute 5 as we seem to be going below the 6422 level shown for micro ii.
    2. Also I am trying to make sense of FTSE selling off less than S&P, CAC and Dax in recent days. Of course this could just be how the index is made up and formulated but I wonder of this is last gasp of bulls preventing a significant sell off that would confirm FTSE has topped.

    May just be hopeful thinking on my part🙂

  28. RDC says:

    Bears should not get too comfortable. It is always shorts squeeze which takes markets to new higher level🙂 (shhhh… No Yellen’g)

  29. buddyglove says:

    If anyone puts any faith in the “January Barometer”, today is just a little taste of whats to come.

  30. torehund says:

    its good to get this low in the beginning of feb, then we can enjoy spring when it arrives.

  31. lunker1 says:

    A = 81pts
    B = 1799
    1791 = 1.236 ext 1576->667 (resistance)
    1749 = C=.62A
    1737 = P3 14.6% retrace (support for A of C?)
    1734 = Weekly 34EMA (support for A of C?)
    1718 = C=A
    1709 = 1.146 ext 1576->667 (should get tested)
    1692-1706 Pivot
    1691 = H&S Target
    1687 = C=1.38A
    1687 = Weekly BB
    1673-1687 Pivot
    1668 = C=1.62A
    1667 = P3 23.6 retrace
    1658 = 1.09 ext 1576->667

  32. bouraq says:

    When oversold becomes meaningless:

  33. CB says:

    Thanks Tony. Has anyone seen Janet’s briefcase today .. or whatever it is that she carries around a big stick prbly.. ; )

    • tony caldaro says:

      Markets did not greet her kindly
      When Ben took over, at least the markets went up his first day, and then dropped.

      • CB says:

        wow, you have such a good memoryTony! OK, so smooth sailing is next🙂 and then what Lunker is predicting ..
        it wasn’t Yellen…it was the Broncos…😉

      • makiori says:

        then perhaps we get the opposite: a good drop followed by much calmer days…..or maybe not🙂

      • CB says:

        haha..I love all the “maybe”s – hey I know you, Makiori🙂 …good to hear from you!

  34. Pingback: monday update | Traders Flash

  35. mike7x says:

    Thanks Tony! Is the market yellen at Janet to un-taper?

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