monday update

SHORT TERM: gap down then reversal, DOW +21

Overnight the Asian markets gained 0.1%. Europe opened lower but gained 0.1%. US index futures were lower overnight and the market gapped down to SPX 1873 at the open. The SPX had closed at 1878 on Friday. In the opening minutes the SPX dipped to 1872 and then began to rally. The rally continued throughout the day with only three to four point pullbacks along the way. Heading into the close the SPX hit 1886, then dipped to close at 1885.

For the day the SPX/DOW were +0.25%, and the NDX/NAZ were +0.80%. Bonds lostΒ 3 ticks, Crude gained 55 cents, Gold added $1, and the USD was lower. Medium term support remains at the 1869 and 1941 pivots, with resistance at the 1901 and 1929 pivots. Nothing on the economic agenda tomorrow.

The market gapped down at the open, then quickly reversed closing the gap before 10am. After that the market rallied to the infamous SPX 1884 area. An area which has been visited consistently since early March. Should the market continue to follow the fractal of the last uptrend, a retest of SPX 1860-ish is next. Should the market follow the count we have posted we should see new highs soon, as sentiment in the NDX/NAZ appears to be improving. Turnaround Tuesday is next.

Short term support is at the 1869 pivot and SPX 1860, with resistance at the 1901 and 1929 pivots. Short term momentum is displaying a very slight negative divergence. The short term OEW charts are still positive, with the reversal level now SPX 1880. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: bull market


About tony caldaro

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105 Responses to monday update

  1. There have some crazy $%&*^ happenings in the market today, it is big… whatever that is… to empty too fast

  2. as promised your VIX smash and es ramp on the way. alot of noise but new highs by friday on S&P coming its what the fed wants

    • read the book, seen the movie. This time it has a different ending. Usually the last 30 minutes the ramp up the close. They started to early, which means it will close at its lows in my opinion

    • tommyboys says:

      Don’t know what kind of people hope against hope for a market crash. Some many get hurt when these things happen. Something ain’t right with the people praying for a crash. Karma will get ya!

      • tony caldaro says:

        STS: the gain of one, outweighs the loss of many

      • If Karma exists the Fed has a lot of things coming to it. The economy sucks yet they put on this false sense of reality by goosing markets. Works both ways Tommyboy, Nobody is hoping people get hurt but people are hurting and The fed is telling you everything is ok because the S&P is at all times highs.

        • tony caldaro says:

          Information received since the Federal Open Market Committee met in March indicates that growth in economic activity has picked up recently, after having slowed sharply during the winter in part because of adverse weather conditions. Labor market indicators were mixed but on balance showed further improvement. The unemployment rate, however, remains elevated. Household spending appears to be rising more quickly. Business fixed investment edged down, while the recovery in the housing sector remained slow. Fiscal policy is restraining economic growth, although the extent of restraint is diminishing. Inflation has been running below the Committee’s longer-run objective, but longer-term inflation expectations have remained stable.

      • Also tommyboy by the way you talk I can all but guess your name goes on the back of the check but never on the front. If you name was on the front of the check you would see how real businesses are struggling.

      • rc1269 says:

        TB we might not agree on a lot, but i’m with you on this one. well said. thx

      • Economic growth has picked up? really where in housing or retail? weather? Canada has weather to. households are spending? yep showed up in todays retail numbers.

      • uncle10 says:

        TB, very few people actually want the market to crash. Traders trade and if you are short the market you want it to go down… the more the better if you are short….. I don’t feel karma is going to get me because I trade the market.

        Besides, your thinking that it is bad/many will get hurt if the market crashes may seem on the surface to be a true statement but may not be” true” in “reality”. ie- if the market/economy does really bad and it finally brings about necessary reforms/changes that are needed then what seemed bad is actually good.

  3. torehund says:

    indexes getting wedgy.

  4. Lee X says:

    Some good calls by the magic man and others
    If I don’t see ya’s again this week have a great holiday and be nice to each other.

  5. mjtplayer says:

    The DOW is hanging on for dear life, testing the 16,350 area and bottom of the ED. A break lower from here and it could be lights out

  6. uncle10 says:

    I don’t remember a time when everyone was so confident……
    We have always been a confident bunch, but wow….

  7. Lee X says:

    This 1869 pivot is starting to get scar tissue its been hit so many times this year…
    Cue RHCP video
    May the markets go to the pivot that make you the most $ and Go Black Hawks !

    H D
    Don’t let Capt Kangaroo keep you away too long. πŸ™‚

  8. sorry third post this week but the last for sure. Get ready the VIX futures smash and S&P ramp sponsored by your centrally planned bankers, Enjoy

  9. Today’s SPX drop, a potential marubozu doji, WILL engulf the previous two day rally similar to April 10th drop….and tomorrow will be another down day

  10. Ladies,gents, boys and girls; Just checking how many of you have sold and folded as per my posting.

    If not, please….

    There will be small bounce tomorrow, and that will be yet another lower top.

    I will be closing BULLS Cave as per recently floated “Cave theory”.


    • jeffbalin says:

      Can you reveal some of your secrets? Any particular indicators or combination of things?

      • I said, Buddy, I will let everyone know, what trend market is following (according to me), but first SPX has to touch 200 dma in next about 14 trading days. I said this before, I am wrong 60% of the time, if I get it right this time, will say what I was following.

        But, someone on this board, is already following that trend, dont remember his name, he comes rarely on this board and on all last three occasions, when I saw his comments, ONLY mention was those indicators and there was sentence like; “he is fearing…”.

        That guy is, I think, neutral position in the market and he is, I think level headed. Usually, if one is neutral, he does not put biased views.

        With due respect to Tony, Tony is long in this market. Please search for word “inspiration is directly proportional to perspiration..” and see what was happening to SPX on that day..

      • jeffbalin says:

        Thank you Shrihas

  11. gtoptions says:

    Thanks Tony
    Not to sound like a Bear, but the DJI ED lower triangle TL is being tested. FYI
    I’m sure you all see that. πŸ˜‰

  12. rc1269 says:

    last post for today is a friendly reminder to POMO watchers – the $ doesn’t always have to end up in stocks. see: UST.

  13. Market is hanging by a string people, be careful! Wave 3 down very possible.

  14. jeffbalin says:

    Expecting to drop to 1860 ish, nice positive divergence, and maybe a temporary end to the sideways action…. Ha Ha or is that a fantasy

  15. scottycj1 says:

    Starting to look like a key reversal day…………………..

  16. simpleiam says:

    Remembering that for something to reverse, it first needs to stop it’s motion in whatever direction it’s going at the present time. Perhaps this is the calm before the rally? GL All! Simplify!

  17. torehund says:

    Ukaine tumults combined With US drought Equals wheat shortage, Perfect storm for this commodit isy brewing. Go hoarding some, whilst shipping is still free……

  18. magicianme says:

    FWIW, and speaking as a day trader who doesn’t care whether the market goes up or down (except when I have a position open), I’m expecting a down day and am looking for a good opportunity to short.

    Reasoning: Yesterday was an up day on low volume – circa 800K contracts or about half what’s normal for a Monday. That’s usually an artificial ramp up to make for some profit taking. Secondly, everybody is expecting the market to go up as it’s a Tuesday. That’s a good reason for it to go down. There are other reasons such as very little POMO today etc. So far, and for many months, every time we made a swing low on the D1 chart we went back to test it. We have yet to test the swing low from last Thursday and today seems a good day for testing given there is no major economic news on the calendar.

    Looking at longer term charts & based on my volume analysis, the week before last was a “high churn” week …which usually precedes some correction. There wasn’t enough correction last week and I believe there’s some due.

    I’ve got to balance all of that with my momentum indicator which tracks number of contracts being exchanged at bid vs ask – it’s showing a +ve divergence on the daily (and a -ve divergence on the weekly). But, of course, divergences don’t turn price till price decides to turn.

    • magicianme says:

      On my multi-day TF chart (40,000 ticks) there is a right shoulder of a H&S forming, the left shoulder started on the 7th. You can’t see this on time charts.

      Following my last post I took a short at the 1885 level that proved to be strong resistance on the 2nd of May, 8th and again yesterday. It made for a low risk trade with a very close stop. I would suggest that if post-open the market rallies past this resistance it’s a fake move. Wait for some weakness or a -ve divergence in lower time frame charts to go short.

    • magicianme says:

      Just something I noticed which has probably already caught everyone’s attention. Today’s high was a 61.8% retracement of the 14-15th drop and today’s low (so far) is a 61.8% retracement of the 15th-20th rally. Good place to close shorts, IMO.

      Anyway, this is my last post for the day. Have a good one, folk.

    • magician…. thank you for contributing your insights… on….GL

  19. alexhartley1 says:

    1860 area still looks good to me for buying. I think we go back down to re-visit in the next few days. I am looking for a tradeable low around 22nd still. After having commented recently on the currencies I think maybe risk currencies may bounce a bit with the market as well so as of yet not sure if currencies like GBP and EUR have topped against the USD yet.

    • rc1269 says:

      conspiracy theory. pretty sure it’s a bias toward belgium-based custodians and the fact that Euroclear is HQ’d there

  20. Kevin M says:

    The overall market is looking more and more like it wants to go higher. However a test of the recent(April) lows for the NAZ by Mid-late June seems probable. Thereafter, a retest of highs or a slight overshoot should take place here by August(nasdaq here). The fall will produce W4 IMHO for all index’s. It does indeed look like we are going to go 1998 all over again. BTW I’m talking about the NAZ because IMHO it’s the leader in when,where and how this market decides what it does.

    Tony my hats off to you, you called it nicely here and stuck to your conviction. Bravo. I’m saying all of this because time is running out seasonally. Not enough days for the market to go down.

    The bears should have some glory into Mid june but thereafter hunting season begins again.

    Take care…

  21. simpleiam says:

    Thanks Tony. With all the bearish at present, we’ll either see it come to pass, or a run to the upside. Remembering what you said, the markets tend to go the direction in which most are positioned the wrong way. Should be interesting.

    • H D says:

      wow, could your nose get any higher. Are you inferring the group here is a fade? Need I remind you of your bearish sentiment at 1860, that you wanted 1840, and then at 1902 you wanted 1930. Don’t make me copy and paste, we have a guy here for that.
      C’mon dude, enough.

      Sorry folks, I am not finding it easy to fit in here recently. I’ll make that my quota for the week and check back in a couple days.

  22. theyenguy says:

    You certainly do have a bullish perspective!!!

    On Monday, May 19, 2014, Global Dividend Growth Excluding The US, DNL, a Large Cap Blend ETF, likely peaked out, as Industrial Growth Stocks, FXR, PSCI, RZG, SOXX, XTN, MHK, traded higher on the day, and as Emerging Market High Dividends, EMHD, and Emerging Market Financials, EMFN, traded to new rally highs, on higher Emerging Market Currencies, CEW.

    The seigniorage, that is the moneyness of the Banker Regime, started to give way today, as traders derisked from debt trades and delveraged out of currency carry trades in Australian Equity, AUSE, KROO, EWA, WBK, BHP, on the trade higher in the Yen, FXY, and a trade lower in the Australian Dollar, FXA. And likewise they took flight from the Middle East Equity, GULF, MES. All as Zero Hedge posts Conflict Between China And Vietnam Is Imminent – China Piles Troops, Tanks, Artillery And APCs Near Vietnam Border.

    German Small Caps, GERJ, traded lower as Deutsche Bank, DB, traded lower.

    Brazil, EWZ, EWZS, traded lower as Brazil Banks, BBD, BSBR, traded lower, as Spain’s Bank, SAN, traded lower.

    High Yield Interest Rate Hedge, HYHG, Brazil Electric Utilities, EBR, CPL, ELP, PAM, DEP, and US Electric Utilities, XLU, PUI, traded lower as the bond vigilantes called the Interest Rate on the US Ten Year Note, ^TNX, higher to 2.54%, and steepened the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, which is seen in the Steepner ETF, STPP, steepening.

    Junk Bonds, JNK, and Ultra Junk Bonds, UJB, traded to new all time highs, while Aggregate Credit AGG, traded lower, on lower 30 Year US Treasury Bonds, EDV, and lower US Treasury Notes, TLT.

    The bond vigilantes took control of the Benchmark Interest Rate, ^TNX, when it traded higher from 2.49%, on October 23, 3013. And today May 19, 2014, they reasserted their control over this Benchmark Interest Rate, by calling it higher yet to 2.54%, reflecting that the Rider on the White Horse, seen in Revelation 6:1-2, has the Bow of Economic Sovereignty, and is effecting economic coups throughout the world, as is seen in the political instability in SE Asia, and as is seen in the Ambrose Evans Pritchard report Putin To Give Ground In China To Seal Gas Deal. The long coveted prize would allow Russia to switch sales from Europe to the Far East and transform the Eurasian gas market. Higher interest rates globally mean economic destabilization and economic deflation, coming largely from investors derisking out of debt trades and deleveraging out of currency carry trades.

    Given this model, look for High Yielding Debt, JNK, LWC, EU, EMB, HYD, EMLC, EMCD, BABS, HYXU, PZA, to trade lower in value. And look for Market Leading Banks and Financial Institutions to begin to now rapidly fall lower in value; these include, BOFI, IBN, SAN, BSBR, ITUB, BAP, BCA, SHG, WBK, GGAL, BMA, IX, CIB, RY, BNS, PUK, GNW, TMK, BANF, CBIN, TFSL, SFNC, CNS, LM, BR, VOYA

  23. blackjak100 says:

    Is wave ii over just a pt short of the .618 retrace? c=1.618*a + 1pt in what looks like a zigzag higher. will we see a key reversal day tomorrow? Who knows, but I still see no reason to be long until 1902 is overtaken.

    • budfox9450 says:

      You maybe more correct, than you know.
      The Monthly BoYu has been moving sideways
      since 12/31…for now, my neutral position
      is best for me (SP500 that is)….

  24. sverker , this one is for you! A possible ascending triangle forming on the NDX as well. Breakout of this formation, if correct, targets low 3800s.

    Note that COMPQ’s recent lows have been contained by the long term trend line established since the Nov. ’12 low

    • Thanks Soul! Nice. It will be interesting to watch how volume behaves if the upper channel in the triangle breaks down. Market is Close to a decision Point. No doubt.
      All the best, Sverker

    • rc1269 says:

      given the successive higher highs in NDX that looks like it could just as easily be a rising wedge. imo

  25. gtoptions says:

    Thanks Tony
    I see that the DJT has led with HH’s again. Although I see -/Div RSI/5 on all but the Monthly chart. If it leads higher, then most likely it will fall before the DJI/SPX? Just an observation. Thoughts anyone?

  26. Lee X says:

    Thanks Tony
    Market gave anyone who wants to short their price today, it’s nice like that.
    All I know is a person could make millions a year trading futures on what some consider “slippage” here

  27. Thanks for the update Tony!

    Today the NDX and COMPQ (NAZ) gave an AI buy-signal. The SPX and DOW not yet, but getting close to it. BB-width on SPX now even lower than Friday’s reading, whereas the BBs on the NDX are expanding! Looking at the NDX/NAZ and the NDX in particular the current set-up is from a TI perspective (BBs, AI, MACD) very bullish, IMHO. It’s all explained here:

    (click on pic to enlarge)

    I’ll eat crow if tomorrow is a big red day, LOL! But, I heard it will be a big fat POMO day tomorrow so Yellen Inc. may be supportive of my POV.

  28. torehund says:

    Bulk update: We may have seen the bottom today. NEWL turned at the 2-5 million mcap Level after it has been using more than a decade to align itself ws peers like free shipping.
    Positives are starting to feed on itself, firstly China opening up to Foreign Finance, and then Putins sale of future nat gas to China. Much of Chinas recent infrastructure has been built during a downturn in both commodity price and a downfall in the value of the dollar. If the latter factors reverses itself then even the propery bubble in China will look less ugly. Lets see what the Shanghai maret does in the coming week.

  29. scottycj1 says:

    Tomorrow may be key reversal day …………….

  30. jparkins10 says:

    Turnaround Tuesday Tony, last 2 have been down significantly.

  31. bouraq says:

    Bear flags for now:

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