monday update

SHORT TERM: gap down open – then a rally, DOW +18

Overnight the Asian markets lost 0.4%. Europe opened lower and lost 0.1%. US index futures were sharply lower overnight, and the market gapped down to SPX 1871 at the open. The market had closed at SPX 1881 on Friday. In the opening minutes the SPX dropped down to 1867, and then began to rally. At 10am ISM services was reported higher: 55.2 v 53.1. Just after 10:30 the SPX closed the opening gap, and then hit 1884 by 11:30. After a small pullback to SPX 1879 by 1:30 the market began to more higher. Just before 3pm the SPX hit 1886, then pulled back to close at 1885.

For the day the SPX/DOW were +0.15%, and the NDX/NAZ were +0.40%. Bonds lost 2 ticks, Crude slipped 40 cents, Gold rallied $12, and the USD was flat. Medium term support remains at the 1869 ad 1841 pivots, with resistance at the 1901 and 1929 pivots. Tomorrow: the Trade deficit at 8:30, and a speech from FED governor Stein at 7pm.

The market gapped down on the open today, immediately hit the OEW 1869 pivot range, and then rebounded for the rest of the day. The recent small five rally from SPX 1851 rose 40 points to 1891, and now has pulled back 24 points or 0.6%. This pullback fits quite well with what was expected. Should the wave pattern continue to unfold as expected, the market should now be in Minute iii of Minor 3. Once SPX 1891 is cleared we’ll post the Minute ii label at today’s low.

Short term support remains at the 1869 and 1841 pivots, with resistance at the 1901 and 1929 pivots. Short term momentum hit quite oversold today after Friday’s negative divergence. The short term OEW charts flipped from negative early, to positive with the reversal level now SPX 1880. Best to your trading!

MEDIUM TERM: uptrend probable

LONG TERM: bull market


About tony caldaro

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103 Responses to monday update

  1. Kevin M says:

    As my call yesterday, the overall equity markets are now entering a correction of size. However it should bottom out today or tomorrow short term and then have a rally that could get to all-time highs(very unlikely) by next Monday(time is an issue here). After that you are going to wish you’re short, in cash or in bonds. Again seasonals trump any waves here. Also remember Tony will change the waves mid-way here and he will look like a genius.

    Think and trade…Not trade then think

  2. RDC says:

    Tomorrow SPX will open with huge Gap-Up. Extremely oversold now.

  3. So all the bulls are gonna hold long overnight because they expect Janet’s comments to energize the market and push forward to 1900+, Market makers know this and I wouldn’t be surprised to see a gap down overnight, then once the gap down occurs- bulls will still hold because they think Janets comments are going to reverse the market, while they anxiously await for their savior to reverse markets (as the fed has almost every time) and bring them back profitable- it doesn’t happen and bulls keep waiting and waiting.. that’s how tops are made. good luck traders Bull or Bear.

    • JMHO, this is something else than Yellen, I think markets are worried about Russia and her friends. They’ve been getting louder, and talking smack.

  4. vix futures about to go red get ready for the fed to juice the market into the close

    • Truth, vix is extremely manipulated, if the powers to be know a market crash or big correction is coming they are not going to make it obvious ahead of time so everyone and their mother can buy vix. They would prefer ton have it go thru the roof with the least amount of people long and the most amount of people who are short vix. By the time vix explodes you will either be in it or you wont…..

      • JK1987 says:

        iman, you sounds reasonable, I am with you on vix.

      • I disagree with you on the vix. VIX is useless measure. VIX futures is my tell. nasdaq has gotten hit so has russell and momo stocks. But S&P is less 1% from its high. 2011 a lot of money was made on VIX futures hence a decent correction. VXX at all times lows show me no way S&P has sizeable correction or is it even a thought.

  5. rc1269 says:

    Aloha Tony et al

    Spending some off grid time this week and lovin it

    Prob won’t post much anymore this week but wanted to toss my hat in that the NDX upward move lately still looks b-wavey to me. That’s not OEW but SRCW- Subjective RC wave. 😉

  6. Cliff Uzan says:

    Hi Tony,
    Based on OEW, at this point SPX 1869 we are ripe for a nice rally to the upside over the next few days. However, its seems that would reward the bulls for a market that has been sideways the last several weeks and seems to sell off at critical junctures. On the other hand, whenever the bears feel that they are gaining the upper hand, they also get disappointed. Of course, the bears getting disappointed is nothing new during this bull market and it may be time that they get rewarded for their persistence. In which, we should sell the rally’s as was done today from yesterday. Just thinking out loud..

    • tony caldaro says:

      Hi Cliff,
      Since the market hit 1884 in early March every rally has been sold.
      But after two months we are less than 1% lower.
      Been a day traders market for the whole period.

  7. JK1987 says:

    Twitter plummets 14% as lock-up period expires.
    Yikes, insiders are selling at this price, they own the shares averaged at $2.21.

  8. 777daimon says:
    … smells like Lehman spirit … or Nirvana – Smells like teen spirit (revisited)

  9. Definitely looking like THIRD UP WAVE, Isn’t it?, Lolz

    As said yesterday, action at 50dma is EXTREMELY crucial..If SPX prints 1843, then be ready for SPX 1763.

  10. Lee X says:

    Nobody get’s slaughtered on the internet bull or bear but the 1869 pivot is back in play.
    Bull market in Vitamin D thats fo sho

  11. torehund says:

    bulk; WATCH OUT for gnkoq, spot oriented rises first. I have been troroughly skunked in this sector, but maybe this is IT….

    • Lee X says:

      Hey Tore
      I will use my 3 rd and probably final post of the week as my posting are in a 3 of P3 down 😉 to say Hello and hope ur having a great spring down there and for keeping it real posting the good the bad and the ugly in bulk. Gracias

      • torehund says:

        Thanks Lee and good spring to you !
        I had that scooter accident and when I couldnt surf I had to get out of South Mexico as rainy season approaches and it gets increasingly hot (cannot only walk on the beaches looking at the Peaches).
        GNKOQ could be working on wave 3 from mid March bottom. However not easy to say as the bottom churn often may look as constructive Waves but oftenmost is just choppy Garbage Waves…..But I lift the possibility of a long lasting motive up period, like Tony says nothing is 100 percent impossible.

    • torehund says:

      My lat post, added a good chunk of shares in Free shipping. Risky YES, but if it is it.. I dont want to regret later on not buying when I had the chance..

  12. llerias7 says:

    Who!…Houston, we are going down!

  13. in theory there is still room for micro, nano, and pico 1-2’s :mrgreen:
    or just look at 2014 and realize it’s a corrective choppy cluster of terminal overlapping waves.

    • Lee X says:

      Hey H D

      It’s all just a theory at the end of the day .
      Tuscon like weather here in the midwest, midweek.

  14. I know to many my vix indicator is uselss. But VXX being red is telling me the market is Going higher today easy

  15. tommyboys says:

    SP retesting the neckline on the IHS from early April this morning…

    • magicianme says:

      The “neckline” from the 9th April high would be circa 1900 today. If you’re looking at the 4th April high, that doesn’t count as a “neckline” but a channel line as the left shoulder didn’t touch the line.

      What I am seeing though is today’s price at the line joining the 15th April low and the 28th April low. Price keeps hitting that line and each time it bounces off the bounce is less convincing.

      • tommyboys says:

        Don’t know all I see is a downward sloping IHS beginning early April. We busted through the neck last week and are now retesting that neck. We’ve created yet another lesser degree IHS in the process…Way over again – out.

      • magicianme says:

        That looks like a channel line to me rather than a neckline. The pattern doesn’t meet any of the criteria for an IHS and even if it did the line doesn’t meet the criteria for a neckline.

        I would caution against seeing necklines where there aren’t any.

  16. 777daimon says:
    NATO could take further steps on Russia ???
    …hmmm, nevermind, it’s TURNING TUESDAY ! KEEP BUYING! Or not?

  17. blackjak100 says:

    Everyone seems worried, but we have clear lines in the sand. Trade below 1867 would be initial sign for bulls in trouble and trade below 1851 would be final confirmation bulls are in trouble.

  18. 777daimon says:

    … maybe “E” from the Tony’s DOW chart finished … 🙂 … and don’t take me with crappy arguments that DOW never truncates and stuff …. because as far as I saw the counts on SPX, DOW, NASDAQ and other can be changed (and the fact that they can be changed is not a problem with me!) so don’t count on that argument!

  19. jeffbalin says:

    Awwww, bummer, Looks like minute 2 not over, which means back to 1869, I think

    • blackjak100 says:

      Looks more like we completed a b wave triangle at 1876. This is not a third of a third. c=.618*a = 1919 for the ED scenario.

      • blackjak100 says:

        Or the triangle completes 1870-1875 in a few hrs as the e wave has to be 3 waves.

  20. When people start relying on an up market because its Tuesday or Because Janet is speaking that should be a warning sign.

  21. CygnetNoir says:

    I bought me 100 lottery tickets for the end of the week in the form of NFLX 300 puts – its back to its 200 day and the tape is running weak. It’ll be Lobster or canned tuna, one way or the other 🙂

    • 16golfer says:

      I’m right there with you CN! Playing any good golf lately?

      • CygnetNoir says:

        Not as much as I’d like, golfer – But I’ll be picking up the pace in a couple of weeks.

    • Wow, too much seafood, unhealthy anymore…

      BTW, seems like selling weekly puts at $300 is way smarter play than buying them?

      • CygnetNoir says:

        I call ’em like I eat ’em 🙂

      • CygnetNoir says:

        and I can’t get my head around how selling puts on a high PE, low float momo stock trading at resistance after a bounce during a correction could seem smarter than taking a defined risk short via long puts, but then again, I’m not too bright.

      • No question you are one of the brilliant traders around here, just wondering the extreme percentage-drop in such a short time, would’ve guessed a bounce and then down for the next leg, later on… Just wondering, like I always do. I am sure you have a better chance to be correct, than be wrong.

  22. magicianme says:

    Respect to the many on here who are holding out for a new high based solely on OEW count.

    I’m seeing some very scary signs that this new high can’t be taken for granted. In four days early last month the index dropped 80 odd points …it hasn’t been able to recover all that loss yet, even a month later.

    When the bears hit, they hit hard and the average drop on those four days was 30 points per day (with heavy volumes of selling). In contrast, the bulls have made zero progress over the last 10-11 trading days and we are today exactly where we were on the 22nd of April. In fact, we were at these levels on the 21st of March and everyday between the 5th and 11th of March, two months ago. That doesn’t look like a lot of progress for the bulls.

    Trends don’t change direction abruptly, they go through some choppy action at the tops and bottoms. The choppy action, if nothing else, suggests the trend could be over here. There could still be a blow-off top – the ED scenario – but my analyses suggest that doesn’t always happen (though it did happen for the UY’s long bull trend when UY broke out of the top-chop in late Nov ’13). DX is looking weak and the Yen is looking strong. Together they spell bad news for the UY which has closed under 102 time and time again and is severely testing support between 101 and 102. Though the correlation between UY and the S&P has broken a steep drop in UY is bad news for the S&P. It’s almost guaranteed to cause a correction in the index.

    A closer look at the last few days shows a bit of a struggle to go up. And when the S&P does rise it’s rising on low volumes, low momentum and low average trade size – evidence of lack of demand. And now I see cyclical resistance has formed on the daily.

    Then there are bonds going up + gold and commodities making a come-back. The risk-on, risk-off correlation has also broken down somewhat, but rises in risk off assets don’t make for good news for the S&P.

    It’s all looking like the perfect storm.

    To those of you holding on to longs …. good luck!
    (Disclaimer: I’m a scalper/ day trader, long or short makes no difference to me. I just want to see movement)

    • 16golfer says:

      Agree with all points magic. Ride the waves!

    • tommyboys says:

      I’m taking it all for granted

      • magicianme says:

        I hope it works out, tommyboys. I took my short for the day pre-open and now with the chop around 1873 I’ve taken my profit and staying flat unless I find another very good short entry. A divergence or other signal near today’s high would be good enough for me.

        If the index ends down on a Tuesday, that’s going to make big news!

      • tommyboys says:

        I add a bit each time there’s an opportunity. 2 years from now I’ll be even happier.

  23. pooch77 says:

    Looks to be another bi polar day for small caps

  24. 777daimon says:

    6 May 1947
    hour: 19:25

  25. torehund says:

    Some months ago I proclaimed the advent of the “angry bull” to be responsible for the commodity and shipping retracement of the horrific decline from 2007 and onwards. I hoped that a lesser conflict would drive it, but we know now that the Ucraine debacle isnt of the light variety…but to give a healthy retrace something Wild had to happen…so…
    In a situation of instability itis in every countrys interest to hoard as much as possible as no-one With any certainty knows when the conflict wil end and to what degree of severity it will attain during it course.
    I knew from the wave pattern that shipping would recover in a bear fast spike manner…however the smaller fractals just kept going and flatlining for ever and ever. But as we approach the bulls eye of the conflict something big is bound to happen so load Your guns.

  26. thanks Tony! Totally agree on the 1,2, i, ii count with new highs. I am still holding to my calls from earlier this year for a Primary III top in the 2050-2090 range. 1.382x extension of PI from PII is at 2046… With tech back on track I don’t see why not.

    using your count and text book extensions:

    intermediate v area: 1.764 to 2.000x (1883-1738) + 1814 = 2000 – 2104 (Primary III top), which is perfectly inline with the 1.382 extension and my old call.
    intermediate iii area: 1.382 to 1.618x (105) + 1814 = 1959 – 1984 (right around the 1969 pivot… 🙂 which should provide enough resistance for intermediate iv )



  27. Kevin M says:

    Close above 1890 and the correction is guaranteed folks.

    We just might need a all-time high to suck in the last remaining perma-bulls.

    Think then trade…….

    • tuamotu says:

      Bearish hidden divergence with SPX advance/decline line.
      This occurs when price makes a lower high (LH), but the oscillator is making a higher high (HH). By now you’ve probably guessed that this occurs in a downtrend. When you see hidden bearish divergence, chances are that the pair will continue to shoot lower and continue the downtrend.
      But what happen in an uptrend when we see it ?
      We’ve got a 250 pts drop in 2011 …

      • That looks the cumulative A-D line, not an oscillator. I think that divergence is more likely to be bullish.

      • tuamotu says:

        I agree. It is not an oscillator.
        The AD Line should confirm an advance or a decline with similar movements. Bullish or bearish divergences in the AD Line signal a change in participation that could foreshadow a reversal.

      • tommyboys says:

        Yep that’s a bullish divergence. Just a testament however that technical indications – especially divergences – don’t always work and serve only to confirm or deny underlying fundamentals. Economy strengthening today.

    • I will be out traveling today, so this will be my only post of the day. There are confluence of topping patterns developing at this top along with bulls failure to follow through bullishly on strong positive data the past few days. The bull is looking very exhausted and is ready to roll over as soon as today after Yellen speaks or as soon as DJI and DJT completes their ED and the SPX either completes an TED or ED. Also, based on Tom Demark’s recent DJI (intraday high 16661) and SPX (close above 1891) topping price predictions, seem to be in agreement with the DJI ED and SPX TED topping pattern. Whether your a follower of Tom Demark or not, it doesn’t matter, just pay attention to price targets and what Mr. M does during and after Yellen speaks today. ok, adios and gl all.

      Tom Demark Interview:

    • simpleiam says:

      Yes, by all means I hope traders go short and get SQUEEZED to friggin’ death!

      Are you going to continue to post this crap all day, every day on SOMEONE ELSE’S BLOG, BTW?! Please start your own blog. I have room to say this because when I first got here, I pretty much broke the blogging record.

      Please be constructive or find a Prechter blog somewhere.

  28. simpleiam says:

    Thanks Tony! Great Update! If futures hold overnight, looks like w3 could be taking hold; but as you’ve warned, futures at this time of day aren’t truly reliable. Still, I’m optimistic.

    For those of you who’ve classified this market action as a “Mania”, you might want to rethink that. I’ve NEVER seen a rush into bonds as we’ve had of late in a “Mania Market”.

    GL trading to All!

  29. ocaj2000 says:


  30. radrian6 says:

    Right now, RUT isn’t offering much to directional traders. The 200-day SMA held again — I count seven touches or near touches — and the daily Bollinger Band midline once again cut off the attempted rally. At today’s close, the BB midline is near 1132 and falling while the 200 MA is near 11114 and rising — these lines are converging on the RUT so it’s in a straightjacket as long as it respects both boundaries. There are also some weekly moving averages and Bollinger Band components that are adding to the squeeze.

    So which way is the RUT going to break? Tough to say but the direction of the break may not last because there are strong support and resistance components waiting for the RUT if it escapes the straightjacket. Bottom line … I’m not going to hold my breath waiting for the RUT to establish a trend. For the moment, the opinions are not strong enough to break the elaborate containment.

  31. opader says:

    Thx Tony for the update. I was looking at your monthly SPX chart this weekend. I was wondering why “Cycle” counts are not shown on the chart. Thanks.

    My 2cents: A close above 1887 would confirm a small and big Inv. H&S. Objectives for the small one is 1915 and the big one is 1950. We need a catalyst to get up to 1887 and I think Fed comments this week is going to be that catalyst or perhaps an agreement in Ukraine.

    • tony caldaro says:

      Monthly only goes back to 1980.

      • opader says:

        Thx for your reply Tony. Yes I do understand that Monthly you show goes to 1980. You show Super Cycle on that plot, but why not Cycle. Isn’t “Super Cycle” a longer wave than “Cycle”?

      • tony caldaro says:

        the SC lasted from 1932-2007.
        cycle waves were 1932-1937, 1937-1942, 1942-1973, 1973-1974, 1974-2007.
        the SC decline from 2007-2009 was comprised of three cycle waves
        Oct2007-Mar2008, May2008, May2008-Mar2009.
        cycle wave [1] of the SC has been underway since

  32. High odds set up on Nasdaq has unfolded, Today! Bullish potential into May 12 , 2014

    Went long today! Nasdaq play…


    • No denying that $SPX and $INDU daily candlesticks were very bullish — price pulled itself up, leaving long bottoming tails. $NDX, although closing green, came close, but did not produce a bullish engulfing candle that looked like might happen. Price never hit Friday’s high. Good luck, Amos — might be a short-term long trade here.

    • I’m 90% sure I’ll be buying SPY puts tomorrow. Pretty much locks in a one point trading range for the next two weeks, eh?

    • simpleiam says:

      Amos, I think you’re going to get a payday! I’m never too sure of Nasdaq, but think you might have it very soon. GL! Last post for today.


  33. CygnetNoir says:

    Thanks Tony.

  34. esvxm says:

    Thanks Tony for the analysis:

    Bonds 30 Year futures contract:

    Crude pulled back and still closed above the 78.6% Fib retracement:

  35. bouraq says:

    Bulls and bears still hanging in there:

    • blackjak100 says:

      Thanks bouraq! From an EW standpoint, I think gold is about to head towards $1200. Decline from $1391-$1277 looks impulsive and I would label it wave a. Month long sideways correction looks like a b wave. A=C from here is $1200ish.

      • bouraq says:

        BJ, 1200 may be in the picture and I have been leaning bearish for quite a while but I don’t see 1200 happening very soon from here. A rise to at least 1350 and then I will have a look into it again.

      • blackjak100 says:

        A rise above $1331 will negate my bearish scenario. I nibbled short today around $1310 and will add like I always do around $1320 if it gets there. I can count a clear five waves up from $1273 as if c of b completed today at $1316. We should know by tomorrow.

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