monday update

SHORT TERM: pullback/rebound Monday, DOW +26

Overnight the Asian markets gained 1.4%. Europe opened higher but gained only 0.1%. US index futures were higher overnight. The market opened one point above Friday’s SPX 1924 close, and then began to pullback. At 10am ISM manufacturing was reported at three different figures, the last 55.4% v 54.9%, plus Construction spending was reported higher: +0.2% v +0.2%. Right after 10am the SPX hit 1916, for the first notable pullback in over a week, then began to rally. Heading into the close he SPX hit 1926 then dipped to close at 1925.

For the day the SPX/DOW were +0.10%, and the NDX/NAZ were -0.10%. Bonds lost 20 ticks, Crude slipped 25 cents, Gold dropped $7, and the USD was higher. Medium term support remains at the 1901 and 1869 pivots, with resistance at the 1929 and 1956 pivots. Tomorrow: Factory orders and Auto sales at 10am.

The market opened at a marginal ATH to morning then immediately pulled back to SPX 1916. This pullback clears out some of the negative divergences of last week. But it also displays resistance at another short term trend line, and the OEW 1929 pivot. The most obvious count, barring an extension, would suggest this uptrend is now nearing the completion of Minute iii of Minor wave 3. Another 9+ point pullback would likely confirm this count.


Short term support is at the 1901 pivot and SPX 1891, with resistance at the 1929 and 1956 pivots. Short term momentum hit neutral this am and then rebounded. The short term OEW charts turned negative at SPX 1918, then positive again shortly thereafter, with the reversal level now 1922. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: bull market


About tony caldaro

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91 Responses to monday update

  1. mjtplayer says:

    Copper holding $3.09 for dear life, a drop from here and the uptrend and bounce from March is over.

    Stay short copper…

  2. winslow80 says:

    SPX 1923.44 is the 1.382 extension of the 2009 low at 666.79 and the 2007 high at 1576.09. In combination with the NDX double top, this helps to account for the stagnation of the last few trading days.

    • JK1987 says:

      same source:
      Stocks have outperformed bonds by 1.42 percentage points during the last 20 trading days. This is close to the strongest performance for stocks relative to bonds in the past two years and indicates investors are rotating into stocks from the relative safety of bonds.

    • did you measure the 1,382x extension of primary I from the primary II low? Namely, on the INDU price is butting against the 1.000x extension of P-I (6,470 to 12,806), measured from P-II (10,404): 16,740, (P-III equals P-I so far), which also is around the 1.618x extension of the move from the PII low to the first 2012 high (13,339), measured from the 2012 low (12,035): 12,035 + 1.618x (13,339-10,404) = 16,783.

  3. torehund says:

    May 29, at 11:34 until now is an abc Down on the rotting IWM, lets hope this is it,and we rise from now.

    • torehund says:

      ..what do the RUT experts on Board have to say, is it a sufficient decline to claim wave 2 Down of the first wave (measured from correction bottom) to be finished ?

      • tommyboys says:

        Tore, give me the high and low points you are using…

      • tommyboys says:

        From the 1082.53 low to the 1144.11 high – IF this is your 1st wave…we now have a 41.30% correction of that run at today’s 1118.66 low. This is greater than the 38.6% I would expect so the answer is yes – we have plenty for a wave 2 to be “in”…

  4. lunker1 says:

    RC and Tony, how does that bond environment/count effect equities? or maybe the question is how has that Similar environment effected equities in the past? Thx

    • rc1269 says:

      if it pans out, early indicator for end of cycle would be my opinion. but this could drag on for 6-9-12 months before we see the follow-on in equities.
      i’m at my quota for the day so will drop back under my troll bridge. best. -rc

    • lunker1 says:

      Perhaps the bid spread chasers have moved into treasuries? Looking at the daily chart you can definitely see the buy the dippers have stepped in several times.

    • tony caldaro says:

      Agree, we are probably only in the early stages of spreads widening.

  5. gtoptions says:

    Thanks Tony
    SPY ~ Weekly ‘Draghi’ Pivot @ 192.14 ~ WR1 @ 193.29
    2nd morning bounce off the daily S1. Time to rock or drop.😉

  6. elmer510 says:

    SPX will soon start minor 4 of intermediate 3 of major V.
    According to my experience a minor 4 at these levels could mean a pull back between 30 and 35 points.
    But first minor 3 must finish. From Tony’s analyze, SPX is soon to complete minute 4 of minor 3, and it’s up to minute 5 to make a new high from which minor 4 can produce a pull back for some days or more.
    Minute 5 should at least send SPX above 1929 points?

    • tony caldaro says:

      Minute v to hit the 1929 pivot? possibly

    • elmer – I wrote a detailed “fib-overview of the market” y’day, which is inline with your thoughts:

      “micro 1 from 1862 to 1886 (24 points)
      micro 2 down to 1868
      now in micro 3, which is already 2.33x 1. May therefore seek the 2.618x extension (1931ish). Assume micro 4=2, then micro 4 should get SPX back down to upper range of 1901 pivot (1910ish).
      Assume micro 5=1, then micro 5 should get SPX back up to the upper range of the 1929 pivot (1934ish).
      That will then end minute iii. In that case, iii will be ~2.38x minute i (1850-1891). Nice fib relation. This will then also in line with “The OEW 1929 pivot should offer some serious resistance for much of next [this] week”

      Will have to await minute iv before minute v (minor 3) can be predicted.”

  7. winslow80 says:

    ISEE All Indices & ETF Only
    9:50 ~ Calls 2,434 Puts 61,986
    Most extreme reading on record
    CNN Greed/Fear Index 44 (Fear)
    They are shorting the double top on NDX.
    We’ll see how it works out for them, and for how long.

    • JK1987 says:

      During the last five trading days, volume in put options has lagged volume in call options by 42.85% as investors make bullish bets in their portfolios.

      • winslow80 says:

        That result is inconsistent with the numbers reflected in ISEE, and also with the CBOE-generated CPC, CPCE, and CPCI. What is the source of your volume statistics? By the way, Archivist, if/when GDX hits 21.92 that’s a .58 loss for me. Book it, Dano.

      • winslow80 says:

        “During the last five trading days, volume in put options has lagged volume in call options by 41.48% as investors make bullish bets in their portfolios. However, this is still among the highest levels of put buying seen during the last two years, indicating fear on the part of investors.”

        Thank you. Reviewing the raw data, it becomes apparent that the term “lagging” refers to comparing recent five day increments. The payoff line is their last one.

    • On the S&P side, I saw a bit of dust pick up for an hour, but it seems to be very calm now. will be watching it…

  8. Nky says:

    Hi Tony or any EWers: assuming minute iv pullback will be- if not already- underway, in theory, at which point the current count will be invalidated?
    A: 1891
    B: 1902
    Thanks in advance.

  9. gary61b says:

    Does anyone have a count on the Rut, in lower degree then public charts.

  10. rc1269 says:

    good morning Tony

    you may recall that i had mentioned perhaps a week ago that the tone in the corp bond primary market felt like it had shifted a little. specifically, basically every deal that has come for months has traded tighter in initial trading after issuance (in the “grey mkt”, as it were). then that sort of stopped.
    well, yesterday it got even weaker. there were a couple new issues that otherwise would have been prime candidates for good performance on the break, and both languished. rather than dealers and real money accounts scooping up more bonds at tighter levels, everybody seemed to be plastering the bid.
    i think a good corrolary is intraday dip buying for equity guys. for a long time that same trade can work: get a 10pt drop intraday, buy it, and you’ve got a 85%+ success rate. it has been the same thing for buying new issues. get in the deal, it prices at X spread, then you can sell it a couple hours later at X-1 or X-2 bps. this is not working anymore.
    the point is that we see this pattern when bullish risk appetite is getting satiated at certan price levels. like equities at their highs, credit spreads are at post-crisis lows. the spread differential between tiers of different credit risk have also compressed to near record lows. ie, the spread gained by dropping down to a BBB-rated credit from an A-rate, or moving from BBB into HY.
    corporate sector leverage has already moved back above the pre-crisis highs and it definitely feels like most of the other big accounts i talk to (myself included) are completely apathetic to take on incremental risk to garner more return. the risk/return function has shifted past neutral into unfavorable, in my opinion.
    what this means to me is that we need one of two thigns to happen in credit to move things forward. a) a meaningful selloff that provides prices at a more compelling level, or b) a strong positive catalyst that re-prices the ‘risk’ component in the market. because right now trading volume has nearly ground to a halt as fewer and fewer buyer and sellers feel compelled to meet at these prices. guys would rather sit on what they own than incur the bid/ask to move into something equally unattractive.

    • tony caldaro says:

      morning RC
      1. do you think this is beginning of summer trading?
      2. with the FED winding down QE 3 I would think bond traders would be bidding that market, are they on hold pending the ECB meeting?

      • rc1269 says:

        this feels a little more secular to me rather than just seasonal or around any particular event. when i’m chatting with guys about trades (or lack of) not once has anybody mentioned any of those factors as the rationale. it’s always the same: there is no value left.
        the mentality has definitely shifted. in my opinion, at some point last year we departed from actually seeing risk/reward value in spread product and moved into a greater fool game. (spread product = fixed income product that is *not* a treasury; stuff with credit risk).
        i say that because i haven’t talked to anybody in a long time who truly sees value in current spread compensation, but rather just owns it because they feel they “need to to outperform” or “it’s still better than nothing.” this, of course, happens when the same trade works for so many people for such a long time
        that kind of attitude is dangerous, in my opinion, because it doesn’t take much to convince a weak holder that they were owning something they shouldn’t.

      • rc1269 says:

        re that count: wouldn’t surprise me. cheers

    • hrmny358 says:


      • ariez5 says:

        Great conversation. But Tony, I am confused by your question. I am pretty sure you have repeatedly and brilliantly predicted that the end of QE3 would cause treasuries to be bid again. When treasuries are being bid strongly, it usually means that credit spreads are widening, no? Admittedly, that has not yet been the case in 2014, but it has otherwise been the case for the last 5 years, I believe.

        • tony caldaro says:

          Ever since tapering was announced all debt has been bid.
          The gov’t/corp. spreads suggest that has hit its limit.
          Possibly, a gradual rollover out of corp. into govt is next.

  11. Investor psychology, as measured by the number of bear SPX CFD contracts at IgMarkets, stands now at 88% bear. That is quite bullish!

  12. torehund says:

    Looking at MACD on weekly SPX: A top spotted on early June 2013, and from there until just a bit ago I see a declining ABC that is finished. Comparing on the price chart I see an ascending ABC in the same time frame, also this seems to be finished. For the most part in this time span there has been no Growth and thats amazing strength (and as Tony said there is no contraction emerging from several manufacturing data Points). Even if it gets dismal later one would at least expect that this macd ABC Down makes it to an ABCDE, where we are currently working on the D. Does this make sense or am I alone on this one too🙂

    • Makes perfect sense! Tonys current analysis is spot on in my opinion. Breath ratios have been negative recently, I went short whirlpool shares today, closed the position for small profitable day trade. Most likely, will try shorting Whirlpool on Tuesday.

      Old Chinese joke: Why is psychoanalysis a lot quicker for men than for women? When it’s time to go back to his childhood- he’s already there.”

  13. JK1987 says:

    Tony Thanks
    Noticed SPX 60m short term chart brought to the front end of today’s update, first time ever.
    The bright short term TL jumps into my sight.
    Sounds like emphasizing the resistance, a subtle notion of signaling the top?
    Minute iii and Minute iv completed with 9+ point pullback from 1925.09 to 1915.98?
    And then Minute v completed at 1925.88?
    Another 9+ point pullback to confirm Minor wave 3 or even Primary III?
    But nq still 2.7% short of making new recovery high, and started to heading south.

    Noticed a smart resident took 20% profits on TQQQ an UPRO, and saying cheap short.🙂

    • lunker1 says:

      Rushing the count JK.
      Take each wave as unfolds.

    • lunker1 says:

      if Tony thought Minute iii, or iv, or v ended today he would have put one or all in green, but not even minute iii is in green which would mean he still thinks its unfolding. possibly today was micro 4 and now in micro 5 to then complete minute iii but as Tony says the pullbacks determine where we are in the count. no pullback, then minute iii will extend.

  14. Would like to make a comment about JCP. I agree with Tony’s chart on page 18. I see a major reversal unfolding that is currently in Int ii of Major 3 of Primary I. The key resistance area of this move is the 50 week EMA. It has been resistance for two years and will be tested again soon, perhaps within a week or two after the current minor c of int ii completes.These are the early innings of a long game of turnaround and there is money to be made there. I’ve been observing significantly increased traffic in the local JCPenney stores in my area since they dismantled most of the previous changes of the prior management team. The turnaround looks real.

    Anyhow, fundamentals and technicals both look like a turnaround story from where I’m looking, so will be riding it long for some time over here. Breaking and holding the 50 week EMA will signal a lot of big traders it’s safe to get back in, which would coincide well with the 3rd waves coming in the near future. If major 3 equals major 1 then the target is 11.42, and that’s a pretty conservative target.

    Anyone have some thoughts on this?

  15. CygnetNoir says:

    “But, all of you are not getting my point. My success rate is 40%. I have already gone wrong three times in a row. That means, I am going to be right two times in a row.” Not for nothin’, but methinks it doesn’t work that way, though the fact that this fallacy has a well-known, widely recognized name indicates the ever-lasting appeal this notion has to the mere mortal minds with which we human critters are burdened🙂 That being said, a pullback to 1902 – 1897 or so would be quite welcome, from a bullish perspective. But in this market, once rallies begin, the pullback has become so rare as to be nearly a lost art form. Or an endangered species. Thanks Tony!

    • CygnetNoir says:

      This was meant as a complement, perhaps even a compliment, to the @shrihas string below. No harm nor insult nor implication intended🙂

      • I am intelligent enough to understand tone/read minds (based on what is written..), So there was no need to write, “No harm or insult…..”

        That is Sell And Fold Rev1 right here..SPX at 1823.8

  16. Hi,Tony, Dow nearly met wave1 equal wave3 ,but,can we assume an already busted ascending triangle on it?thanks

  17. oneandonlyuniverse says:

    Gold and $spx have swapped peak and low prices from 2011almost to the $$GOLD&p=D&yr=3&mn=0&dy=0&id=p91745099258

    • winslow80 says:

      Gold is higher since last December. So is SPX. Since 2011, there has often been an inverse relationship between the two markets, but it has not been continuous. For example, during 2011 the major SPX low occurred on 10/4, after which stocks and gold each rallied into November. In 2012, gold bottomed on 5/16 and SPX made a low on 6/4, then they both rallied into the Fall. During 2013 gold and SPX fell together from late May to late June; subsequently they each rallied into 7/24 before diverging.

      Due to variations of periodicity and amplitude, there are few dependable intermarket correlations, the most obvious being interest rates/bonds.

  18. ocaj2000 says:


    • tommyboys says:


    • winslow80 says:


      Congratulations for having the courage to say what needs to be said. Your eloquence has now moved tommyboys to spread the word. Thanks to your visionary leadership, the movement is growing exponentially. Onward and upward.

  19. lunker1 says:

    The afternoon action seems to show that the 1923 long-term fib extension wants to be support. 1922 is the low-end of Tony’s pivot. Watching to see if this area can hold and launch another impulse.

    • chrisk44342 says:

      Wouldn’t it be wise to see if we actually move above it by more than 2 points and then retest it?

      • lunker1 says:

        If the SPX is going to hop from this pivot up to the 1956 pivot the only retest would possibly only be of the high-end of the 1929 pivot at about 1935. Watching to see if 1922 holds tomorrow

  20. torehund says:

    Thaks Tony.
    If I can choose between getting more humble or being humiliated I prefer the former….no personal Growth without loads of adversity.
    Wonder what the ice age will do to us, maybe we will all meet as farm-workers in Sahara🙂
    Good evening to all on Board.

      • torehund says:

        ..maybe not that bad but reduced solar Activity for 100 years. Repeat of maunder minimum like it was from 1640 to about 1750. Interestingly Stradivari the famous violin maker was born just a few years before maunder minimum, trees grew so slowly that the Wood sounded much better. If tscientists With these unloved theories are wrong..I am fine With that too🙂

  21. It is time for world to panic. The reason is “I have gone wrong three times in a row”.

    JPM/GS guysngals will say “That is daily phenomenon…..”

    But, all of you are not getting my point. My success rate is 40%. I have already gone wrong three times in a row. That means, I am going to be right two times in a row.

    An hour before, I realised where I was wrong. I am not throwing darts or something..

    But, rest of the week, SPX will be down. SPX will touch 1875 (from where is started)in about 6 trading days.

    Once again, if proven right, will explain ref to Tech charts only.

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