monday update

SHORT TERM: lower open then rally, DOW +22

Overnight the Asian markets gained 0.3%. European markets opened higher, but lost 0.1%. US index futures were lower overnight, and the market opened one point below Friday’s SPX 1978 close. In the opening minutes the SPX hit 1979 then began to pullback. At 10am Pending home sales were reported lower: -1.1% v +6.1%. Around 10:30 the SPX hit 1967, was extremely oversold, and began to rally. At 1:30 the SPX had rallied to 1982, then pulled back to close at 1979.

For the day the SPX/DOW were +0.10%, and the NDX/NAZ were mixed. Bonds lost 4 ticks, Crude slipped 50 cents, Gold dipped $2, and the USD was flat. Medium term support remains at the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots. Tomorrow: Case-Shiller at 9am, then Consumer confidence at 10am.

The market opened slightly lower today, bounced, and then headed below Friday’s lows to SPX 1967. Then after getting extremely oversold, and barely holding the Minor wave 5 rising wedge scenario, the market started to rally. After the SPX hit 1976 we updated the SPX hourly chart with a Minute wave d at 1967. Under this diagonal triangle Minor 5 scenario the market should now hold that SPX 1967 low and rally to complete Minute wave e of the diagonal. The count posted on the SPX daily chart suggests a rally underway as well.

Short term support remains at the 1973 and 1956 pivots, with resistance at SPX 1991 and SPX 2000. Short term momentum hit extremely oversold early then rose to over neutral. The OEW short term charts turned positive, with the reversal level now SPX 1977. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: bull market


About tony caldaro

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64 Responses to monday update

  1. a = c at 1970 spx….. going long here one more time tight stop

  2. magicianme says:

    I know most of you don’t use tick charts, but if you fire up a tick chart for the ES – say a 10,000 tick – you should see the second shoulder of a H&S forming with the first shoulder mid-day yesterday and the head being today’s high. The pattern is not so clear on the H1.

    • magicianme says:

      I hope at least one of you got short at the top of this right shoulder. I’ve set my stop to B/E and am holding out for the target of 1956 in the ES 09/14 … but that may not happen till the after hours market.

      • cmucha68 says:

        If there is a surprise geopolitically yes perhaps. Otherwise I guess whipsaw in today’s range.

      • magicianme says:

        Hmm, the agent for the move down to my target could be the European indices being weak when EU opens tomorrow. But we may not even need to wait that long.

        I made six points earlier in the day and would have normally retired but this short was too good an opportunity. My reasoning which I didn’t have time to post earlier: Apart from the H&S, the price had stalled in its upwards move and immediately above the stall was an area of congestion (1975.25 – 1976.25) that formed when price was on its way down – the congestion itself is clearly visible only on tick charts. That made for a conveniently close stop. To add to that there was a -ve MACD divergence on my higher frame tick chart and to crown it all the last up bar in that head was formed on very low volume buying. All made for the perfect storm.

        Highly likely we’ll take out today’s low before EoD and that itself might be enough momentum for a post-close drop to the target and we may not need the EU indices to play ball.

        (Sorry if I sound like I’m selling tick charts. I’m not, but I have to mention them because otherwise my reasoning won’t make sense)

      • Magicianme, great call there….I think there are many on here that use tick charts, incl myself, and greatly appreciate your tick chart views…..luckily for me I was stop out of my long ES with a tiny gain.

      • drwarmington says:

        EL MATADOR …. How do you get stopped out of a position with a gain??? Please tell us and we will always make $$$$

      • drwarmington – One way to get stop out is to place a trailing stop order. as in my case, I went long ES at 1968.5 with a 6-pt trailing stop ordering at around 10:40 am. ES rallied to 1975.25 by 12:25pm before reversing to downtrend. since I had a 6-pt trailing stop order I was stopped out at 1969.25

  3. I’m currently long gold but i’m up against the wall trying to figure out where gold is head from here. Would greatly appreciate it if anyone on the board here could kindly share their thoughts on where they think gold his head from here….thx

    • cmucha68 says:

      Perhaps a little bounce to 1300 but it looks somewhat ugly.

    • Gold is still in a bear market. Amazingly wave 4 of this prolonged bear market appears to have finished earlier today. Gold has just completed 5 waves (that’s why your understandably nervous) which could be the start of many such declines if indeed wave 5 has started as gold will be on the nose for another year or so. On the positive side a corrective rally will now follow the very recent $16 decline. It fell from $1312 so its difficult to see it climb any higher than that. I would sell into that rally. The rally will be partly corrective and partly inspired by stocks crashing. Best of luck.

  4. 11.40an New York time … DOW, SPX, FTSE & DAX all have completed a 5 wave decline. Now performing odd looking abc corrections. Next up another 5 wave down. The first decline was just a baby bear decline. Poppa bear up next.

    • cmucha68 says:

      What level do you mean with next up ? I also do not see much upside but I guess without the imposing of sanctions on the breaking news by the EU for Russia market could have easily gone higher than 1986. Now new game indeed.

    • buddyglove says:

      Excellent commentary Mr Jordan .. Thnx.

  5. Went long ES at 1968.5 for wave c of E of Triangle

    • perversionofthemean says:

      What’s your target range for it?
      Am I correct that c of E will be terminal, and this board is expecting that minor 5 then ends and Int. 4 begins?
      Last, are throw-overs fairly common in an ET?

  6. Elliott Wave Forecast July 29, 2014 – $SPX $DJIA $COMPQ – Must break 618 levels at the open
    Positions Update July 29 – $AAPL W3, $YY 2 before 3, $TQQQ breakout 3, $NUGT top of B break
    Top 5 ‘Net July 29 Elliott Wave – $BIDU $FB $QIHU Big upside in W3, $YELP $YHOO must break B

  7. rc1269 says:

    it’s Tuesday. so you know we’ll be going green.
    not to mention the cnn money fear/greed indicator has plummeted to a frightening 34. which is quite clear from the fact stocks are off 0.6% from all time highs and credit spreads remain at post-crisis lows.

  8. You have described and we can see a 5 wave structure developing from the 1953 low. You have characterized it as a likely diagonal triangle. But I thought DT’s were 3 wave structures. Are there exceptions to that rule or can the present pattern be broken into a-b-c’s?

  9. budfox9450 says:

    Mr. C. Thank you for the SSO chart.

  10. The market finished in an exceedingly interesting position at the close. The bullish case requires 5 waves up from Monday’s lows. The bearish case, meaning the final lows for this decline are yet to be seen, requires only a 3 wave rally pointing to the move as a correction of the trend one degree higher currently in play. Looking at the move off today’s lows 3 waves can be clearly discerned and a 4 wave is currently in progress. If the market rises above Monday’s highs in a fifth wave then the lows are in and the impetus is up.
    Not so fast. There is a question mark about the 3rd wave. Is it complete? Is the market in wave 4 of a 5 wave move or is the market in 4 of 3 of a 3 wave move? In other words a higher high on Tuesday could very easily look like a 5 wave move when in actuality the advance is only 3 waves and therefore corrective. Using a 1 minute chart and a magnifying glass it’s still virtually impossible to make a categorical call as to whether the 3rd wave completed at Monday’s highs.
    There is other evidence to suggest the market has not finished Minor 4 and lower lows are coming before this amazing bull market continues on its merry way. TC believes its “not likely” that B of Minor 4 could have exceeded the starting point of A because “int ii had an irregular top”. Let me quote from Elliott Wave International on the subject of corrections:
    “Far more common, however, is the variety called an expanded flat, which contains a price extreme beyond that of the preceding impulse wave. In expanded flats, wave B of the 3-3-5 pattern terminates beyond the starting level of wave A, and wave C ends more substantially beyond the ending level of wave A …”
    Other corroborating evidence exists that the market needs to take another 5 waves down. Perhaps the most clinical is the DAX. In early July it completed 5 waves down (A) after topping in Primary III. Since then it has had an ABC correction (B) and is currently in wave 4 (of C). Of course I could have that count wrong, but then again, maybe I haven’t.
    If the market rises to new highs on Tuesday watch the “correction” at the end of the “5th wave” very carefully if you intend to buy the pullback. My high target for Tuesday is DOW 17040. My target for July 31st is SPX anywhere below 1960.23 otherwise no rally into October, instead a decline which does not make sense as TC’s longer term analysis looks spot on. Finally, still targeting 16700 and 1940 for the Minor 4. Remember to do your own due diligence and have a nice Tuesday.

    • This rally was very weak. IMO we go lower from here or if we do rally I would be a seller. Initial target SPX 1956. The geo-political climate is changing the risks are rising the rallies are waning. The number one most important ingredient for prosperity is peace.

    • So some more clarity has offered itself 30 minutes before the New York open on Tuesday. The 3 waves up from yesterday’s lows was actually a of b of C, a 5 wave move. On the 24 hour charts I can see b of b of C (an abc correction) following that rise. Thereafter c of b of C (another 5 wave rise) has brought the market to fresh highs. On my system I have the DOW reaching 17036.5 (thus far). If Minor 4 is still in play then we are set up for c of C of Minor 4 which will take the market to new lows. Don’t you love this game.

  11. Will someone explain the “e” and “d” wave thing. I always thought corrections were only ABCs. When did this ‘d’ and ‘e’ wave come about? Sounds a little fishy like the EW theory is trying to have it all ways when it doesn’t fit into the standard model. Triangles are supposedly wedges, right? So in triangles, you get extended ABCs? Confused.

  12. RDC says:

    Gap up open tomorrow!!!

  13. Tony,

    Just a quick query – and it is probably a question that you have answered before:

    How do you qualify / identify a gap open? What is the criteria?


  14. Looks like that wave e peak could happen on the FOMC day this Wednesday, and then we roll over on Thursday and start that downtrend to 1940 area I guess?

  15. esvxm says:

    Thank Tony for the analysis!
    German DAX forms an important pattern, perhaps a short term bounce is in the making.

  16. Thanks Tony. I’m seeing a reverse head and shoulder pattern taking shape in IBB. It needs to start higher in the next day or two for that to complete as it should.

    Market just doesn’t look quite ready for the big drop at this moment. Not quite ripe.

  17. Again with the chart of the relative strength (RS) of the $RUT vs $SPX. It really does look like it is trying to make a double bottom at .572. If the $SPX goes into Int IV corrective mode while the RS of the R2K vs. $SPX bottoms out and starts uptrending, that could signal that the small caps would be market leaders in the Int V rally. That kind of strength by the R2K ($RUT) could imply a strong and extended Int V rally.

  18. Is there a possibility consistent with OEW theory that the 4 minute waves you described today are micro waves of minute 1 of minor 5 of int 3?

  19. torehund says:

    Thanks Tony, I can only agree :), lets go…

  20. timing101 says:

    Thanks Mr. C.
    Daytraders market lately. You are favoring the triangle, over the minute i and ii count? Does it look impulsive, like a 3rd wave, off the lows today?

  21. Jordi Güell says:

    Tony, I’m confused, why there isn’t a “d” on the Dow? thanks in advance

  22. llerias7 says:

    wave (e) should peak at spx1990-1992?

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