monday update

SHORT TERM: new highs then pullback, DOW +19

Overnight the Asian markets gained 0.6%. Europe opened higher and gained 0.2%. US index futures were lower overnight, and the market opened one point below Friday’s SPX 1949 close. Right after the open, however, the market moved higher. Around noon the SPX hit the 1956 pivot, then started to pullback. At 12:45 FED governor Tarullo’s speech: The pullback continued until 2:30 when the SPX hit 1947. Then a bounce to SPX 1952 by 3:30, before a dip to 1951 to end the day.

For the day the SPX/DOW were +0.10%, and the NDX/NAZ were +0.20%. Bonds lost 6 ticks, Crude rallied $1.70, Gold was flat, and the USD was higher. Medium term support remains at the 1929 and 1901 pivots, with resistance at the 1956 and 1973 pivots. Tomorrow: Wholesale inventories at 10am.

A quiet open for a Monday morning, and the market marched right up to the OEW 1956 pivot then pulled back. This is the first notable pullback since SPX 1916, and the third since 1862. Usually the pullback after a five wave sequence, (1886-1868-1825-1916-1956), completes that pattern. Then the market generally makes a larger pullback, i.e. 15 to 25 points, before the uptrend resumes. Nine points so far. We posted a tentative green Minute iii label at SPX 1956 around noon, and are expecting this pullback to be Minute wave iv. Support for Minute iv should be in the OEW 1929 pivot range. This is barring an extension of Minute iii into a nine wave sequence.

Short term support is at the 1929 and 1901 pivots, with resistance at the 1956 and 1973 pivots. Short term momentum displayed a negative divergence at the high then declined to neutral. The short term OEW charts flip-flopped today with the reversal level now SPX 1948. Best to your Tuesday trading!

MEDIUM TERM: uptrend

LONG TERM: bull market


About tony caldaro

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60 Responses to monday update

  1. Bank of America will close the gap at 15.93 reaching the goal, carrying a lot of attention to get sold if not break 15.93 15.41 stop aiming for 16.00

    Analysis on the link below

  2. green close. shocking

  3. jeffbalin says:

    I still say we hit new highs one more time, after this nano 4 completes, nano 5 of micro 5 to end minute 3. However I’m exiting longs anyway.

  4. lunker1 says:

    Tony on your SPX Daily chart the 1956 pivot flew the coop 😉

  5. lunker1 says:

    TLT broke down below the 111.30 support and looking for a channel bounce at 110.30 (rising), but the 2014 rally (or a correction in a downtrend) in TLT could be over for a while because it reversed right at the .447 from ATH to the Dec low. Trader “Slater” has studied that ABC’s that reverse in the .382/.447 box tend to be correctional instead of a W1, 2, 3 of a new impulsive move so will watch for TLT to break down W4 < W1 = 109.34. Perhaps this fuels Pri III?

    • ariez5 says:

      Lunker, Agree that bonds are on shaky ground here. Given the dividend paid on TLT, wouldn’t it be better to analyze the $TNX or $TYX chart? Also, “fuels Primary III”? Do you mean Primary IV?

  6. Sold IWM. Gut feeling. Small profit. Posting only because there was discussion regarding Russell … and H&S pattern shared yesterday.

    • lunker1 says:

      bullish on IWM as long as 115.11 gap low holds. draw a TL for the 2013/14 highs and paste to the Feb low. that TL was backtested today with a double ZZ down to complete wave A (also see prior S/R at 116). now copy same TL to May 12 and June 5 highs. that TL might get backtested next with wave C (after a B) and would want to see it hold otherwise larger correction. or maybe today’s low of 115.96 was it and more up ahead.

  7. jparkins10 says:

    Interesting….Tony’s 3 months?

    Kora Reddy ‏@paststat 37m

    it takes an average of 100 cal days ( median of 101 cal days) to get the first 10% correction from the ATH peak , #toplessmarkets

  8. rc1269 says:

    Anybody check out that CNN fear/greed indicator lately? It’s perty

    Hey Tony. Swinging a little southern country gentile in-law vacay this week so mostly off grid. Looks like another snoozer in the works anyway.

    Wake me up when ‘people’ start buying stocks again- then we can really rally! None of this chump 30%+ per year stuff

  9. torehund says:

    concerning gold, ambivalent ending of wave a determines the length of wave c. Best case gold is turning.

  10. timing101 says:

    Tony, with Stockcharts down today, just curious what platform are you using? Will Stockcharts be able to get data for today, to keep their (your) charts up to date? Thanks!

  11. fionamargaret says:

  12. Kisshu2 says:

    Tony, is the possibility of 9 wave extension still in play?

  13. Why is it so hard to understand the rest of the world wants to get rid of the dollar? Can you blame them? The Feds relentless printing of fiat money backed by nothing is a final desperation move, its really simple to understand what comes next—– war or major devaluation of dollar. How can this country be so prosperous with so many sucking off the government nipple? We don’t manufacture much of anything, we ship our jobs overseas, 50 million people reliant on food stamps. I understand the market is not the economy but people please open your eyes.

    • H D says:

      Open your eyes! We manufacture freedom. USA

    • tony caldaro says:

      It does not matter what they want.
      The world has prospered under a USD reserve currency since WW II.
      The US creates technology, the rest of the world just copies it.
      Until that changes, the US military will determine the reserve currency, not some rhetoric.
      Despite all this country’s faults, the world is a better place.

      • Tony, Unfortunately its more than rhetoric. Changes are being made daily throughout the world by many countries to leave the Petro Dollar. I don’t want it this way but I would be very naive to not recognize what I’m seeing happen in front of me.

        Food for thought, I am in no way trying to argue or cause chaos on your blog but for the sake of conversation, lets discuss Americas military might, industrial producution and potential enemies and alliances. As for US Military, you say the USA military will determine the reserve currency. How strong is the US Military, are they overstretched? How productive were the last few wars? If we went to war, where would we produce all the things needed to fight a war?Most of the factories are gone. Would we buy it from China? What if the war is against China? How about China and their military, they would have no problem producing anything since they produce almost everything all ready. Do you know USA imports most of its steel, we don’t have many factories left. What if China & Russia were allies?

        • tony caldaro says:

          This is a financial blog, not a political blog.
          Countries have been bartering forever, nothing new.
          The next potential war is not until the 2030’s.
          By then the size of ones military will not matter.
          Only the capability of ones war machines.
          Keep in mind, not all the US technology is made public.
          The government, had and used, the internet for three decades before releasing it.

      • tommyboys says:

        I sold steel for 23 years – we only buy offshore when it’s cost effective – can you say “exchange rate”? Most mills have consolidated in this country and most of the integrateds are losing to the minis’ but we’ve added in this arena. We have lots of capacity however to produce when competitive. The larger issue is that our economy is becoming more service oriented and less manufacturing. As a global economy the grunt labor will go the most cost effective route – simple physics. AAPL is the perfect example. They are an American company providing the ingenuity and creative mindset with all manufacturing basically in Asia. This is the way you progress. Some manufacturing is returning to the US as energy for transport has gotten too pricey but this again is all based on the exchange rate and the path of least resistance. The world will continue to innovate and progress and the US will continue to lead for the long term from here.

  14. torehund says:

    The global rise in Nationalism is good for…

    1) Russia

    2) The US

    3) European countries

    ….and is bad for The European union, plus whatever person, or larger Groups within a society that all of a sudden is thought of as not belonging. In prosperous times of plenty we embrace whats Foreign, in strenious times we (in an oppposite way) shrink Our expansive involvement with others.
    This seems to be an emerging global trend.

    • torehund says:

      Lets get the pension funds onboard, recently heard that Japanese pension funds were to invest 600 billion Fiats in the global stockmarkets.

  15. tommyboys says:

    Insiders have been strong buyers through this whole consolidation over the past few months – and have gotten stronger most recently…

  16. I read something very funny but not sure where. It said what do you get when you buy 4 trillion in Us government bonds and mortgage backed securities?
    the answer -1% GDP with stocks up 18% year over year

  17. Here is a link to the chart of $RUT:$SPX. It has broken above it’s downtrend line and might come down to back test it on any correction. I am thinking the RS ratio would have to move higher before it did fall back to the downtrend line, however. I am not a paying member of Stockcharts so I cannot draw in a trendline. You’ll have to use a soft straight edge on your monitor screen.. That means the $RUT price would be about .5950 to .5930 x whatever the $SPX is at the time it touched it’s downtrend line from above.

    • I should modify this sentence: “That means the $RUT price would be about .5950 to .5930 x whatever the $SPX is at the time it touched it’s downtrend line from above.”
      To have forecasting value, you would have to estimate what the $SPX might be when the RS ratio hit the .5950 – .5930 range (I am talking about a short-term correction here). But that would be an easier task than estimating the more volatile $RUT price. The $SPX closed at 1928 on the day it broke above the down trend line. By watching the $SPX as the RS retraces to the downtrendline (say at .5940), we might estimate to within a couple of points where the $SPX would touch it, and using the RS ratio value, calculate where that would be for the $RUT.

      • Using the above method and guessing that the $SPX would be around 1924 when the RS approached it’s previous down trend line from above, the $RUT value would be about .5940 * 1924 = 1142.86. This would be in line with Radrian’s worst case projection of 1138-1144. The idea that the RS line might back test it’s previous downtrend line is kind of a worst case scenario in my mind as well. I optimistically believe that the R2K will hold at the 1154-1160 support area.

  18. I stated last week that climbing the upper BB on the weekly doesnt happen often what I was gett ing at was punches through the BB bands are rare without pullbacks…most of the time significant pullbacks….so I believe we are close to that wave iv pullback many have been looking for… Springheel Jack states it quite well in this blog…….good luck all

  19. ocaj2000 says:


  20. Russell right at resistance — with a H&S pattern. Now, we know how H&S patterns have played out in this bull market. They have failed. Is this time different? Who knows. I still own IWM (for a short-term play).$RUT&p=D&yr=0&mn=11&dy=0&id=p28826230532&a=353435598&listNum=7

    • radrian6 says:

      Not entirely true, Jedi … the H&S patterns in spring/summer 2011 and in spring 2012 played out. I don’t think the current pattern will play out but if it does, it will be obvious before the end of the month — the downward phase of the right shoulder will be brutal and it won’t stop when it gets to the 1082 neckline.

      The bullish potential of the RUT may be greater than that of the other indexes simply because it was battered while SPX was grinding sideways and there may be some rotation into the growth indexes to support the uptrend.

      I would still be cautious about being long in RUT-based products — RUT is up nearly 100 points in three weeks and has closed above its daily upper Bollinger Band for two consecutive days. RUT has outrun its support and is likely to revert toward the mean.

      There are a couple of support areas to watch if the RUT starts retracing. The first is 1160 to 1154 — there is natural support near 1160 and an open gap at 1154. The previous gap in this uptrend filled after four days of grinding lower so it may take some time. The next support area is 1144-38 — there’s plenty of natural chart support in this area. The amount of retracement at this point depends on whether RUT retraces just the recent leg from 1119 or if it retraces the entire structure from 1082. There have been two corrections during this rally, each was about 25 points. If RUT topped today, a 25-point correction would nearly fill the gap at 1154.

      • Agreed with you, Rad. My remark about the H&S in this bull market was a flippant comment. I truly do pay attention to my charts and their patterns. In fact, the “fall” of the Russell in 2011 garnered major gains for me playing TZA. I often post that this 3XETF is not to be played until the 50 crosses the 200ma (death cross), however. Could not believe the gains in ’11 — crazy awesome. You don’t forget those wins My long in IWM (no 2XETF or 3XETF for this trade), has a very tight stop. I consider it a very short-term trade (mentioned this in another post). Thanks for the commentary — especially for those who might have thought I was disregarding the pattern.

      • pooch77 says:

        Rad i going to throw this at you.A pullback into fomc next week,than new high july 16 bradley turndate? Weekly chart looks to have at 6 weeks to go to top out.

      • radrian6 says:

        Hello Jedi … you are an astute observer of the market and I’m sure most contributors who have been here awhile know that. Keep impressing us.

        Hello Pooch … given the overbaked conditions, you may be right about a correction into next week. We may see more of a time-based consolidation (sideways) rather than a typical a-b-c retracement. I also agree that there is a higher high to be made on this uptrend but I can’t guess where it will go. The next resistance is at 1194 and the historic high is above that at 1213.

      • Right back at ya, Radian6. Thanks!

      • pooch77 says:

        Thanks Rad.,with market so overbought trying to figure out rut weekly.I believe in last ten years only once in 2009 has weekly turned back down (slow stoch)once it surpassed 40.So a nice slow grind down on 2 hour and daily and then hopefully new highs in mid July and weekly should top

    • valunvstr says:

      There are only TWO reasons to think a correction is coming sooner rather than later. And I personally don’t believe so because the strength is just relentless. The final 3 minutes of the trading day, the market ramps up. Why? Uh, maybe all the mutual fund retail money that the PM’s have to put to work from all their orders during the day. The S&P 500 divergence is too long in time to mean anything anymore. RUT doesn’t have a divergence nor is overbought so hard to make a call on that market. The QQQ however

      It has made new highs and KST, TRIX, ULT, RSI and MFI on the weekly charts are all massively broken down. Usually the high beta leads and I wonder if this breakdown is a sign that beta is about to roll over again as a prelude to a summer correction. Weekly divergences are only valid when the top to top is 3 months in duration. The prior top on NDX was exactly 3 months ago. The divergences have gone on for too long on S&P 500 to be meaningful. NDX is the only chart that can be read at this point. It is shouting Breakdown is coming but divergences have meant nothing since 2011. The only otehr reason to be cautious is because there isn’t a technician left that is bearish. The only ones left are the Shiller PE and Profit Margin crowd but Hussman and friends have been wrong for 5 years. See chart below.

      Here’s the chart…

  21. Kudos to Tony. Some of you might remember that LONG ago, Tony said that price on SPX would get to the top of this trendline again … it’s getting there (below). GREAT call, Tony!!$SPX&p=W&st=2002-07-01&en=(today)&id=p18792207318&a=311646723&listNum=7

  22. 16golfer says:

    Thanks Tony. It looks like ii lasted about 2 weeks in May. Will iv last about that long also or will it depend solely on where price hits?

  23. bouraq says:

    Another major resistance hit

  24. RDC says:

    Thanks Tony.

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