Tuesday update

SHORT TERM: gap down opening, DOW -55

Overnight the Asian markets lost 0.9%. Europe opened lower and lost 1.5%. US index futures were lower overnight, and at 9am Case-Shiller was reported lower. The market gapped down at the open to SPX 2085, then after a bounce to 2087 by 10am the market headed lower again. At 10am Consumer confidence was reported higher: 92.6 v 90.0. The market found short term support at SPX 2082, bounced to 2086 by 11am, then dropped to 2080 by 2pm. After a rally to SPX 2084 by 3:30, the market closed at the low 2080.

For the day the SPX/DOW were -0.40%, and the NDX/NAZ were -0.65%. Bonds gained 6 ticks, Crude ended flat, Gold rallied $14, and the USD was lower. Medium term support drops to the 2070 and 2019 pivots, with resistance at the 2085 and 2131 pivots. Tomorrow is the last trading day of the year.

The market gapped down at the open today, bounced around a bit, and then hit SPX 2080 by 2pm. This 14 point pullback, 2094-2080, equals the second largest of the uptrend. We can now count Minute wave one with four waves from SPX 1973: 2012-1992-2094-2080 so far. Posted the count on the hourly chart. With short term momentum hitting quite oversold today, this 4th wave may be over or will make a lower low tomorrow. Then we should get another rally to new highs to end Minute wave one of this Minor wave 3 uptrend. So it looks like the market could be choppy for a few days, as Minute waves i and ii complete. Short term support is now at the 2070 and 2019 pivots, with resistance at the 2085 and 2131 pivots. Short term momentum bounced off quite oversold in the last two hours of trading. Happy new year!

MEDIUM TERM: uptrend

LONG TERM: bull market

CHARTS: http://stockcharts.com/public/1269446/tenpp

About tony caldaro

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112 Responses to Tuesday update

    • Hey BuddyG – I saw that yesterday on twitter. A great share for us over here – Thank you, and Merry New Year!

    • fotis2 says:

      Nice,food for deep thought. For this year I hope to not let myself get influenced by Breaking News specials, Doomsayers,Trading ‘Gurus’ or just other ‘I have the insider info’ bloggers for I have realised by now it is not long or short that matters in the least in this business but a conviction in my trade and seeing it from start to finish according to what the chart, the indicators and the price is telling me and based on my own past experience in similar trading setups I have encountered.

  1. simpleiam says:

    Yes, looks like YE tax selling.

  2. I will stick to my call that we had a “fake” breakout. Dollar at 90, oil plunging without any sign of a bottom, and overseas recession getting worse. Going to be a rough first 5 months of New Year.
    Cork the bubbly!

  3. gtoptions says:

    Thanks Tony ~ Happy New Year All
    535 from the high. Should bottom soon. 😉

  4. For the last time this year I Will say the 330 ramp and vix smash will take place with algos buying 600 emins every 15 mins

    • perversionofthemean says:

      End of year month, quarter, and year. Important to *someone* out there where the final close is placed. Probably not subject to the usual 12:30 ramp.

  5. afarsid says:

    Sold my vix calls and bought vix and sds puts

  6. Tony – my apologies for I did not get the chance to elaborate on the daily reversal doji’s last night, nonetheless, base on what the doji’s are telling me, I am starting to sense that shadow feeling again similar to the one back in October. Are you getting the same sense?

  7. mjtplayer says:

    Spot VIX now trading well over 19 and above the front 5 months’ futures contracts; the VIX is trading as if the DOW was down 200 or 300pts. I’ve been saying it all day, something is going on, something the stock market hasn’t fully figured out yet.

  8. blackjak100 says:

    lost +D on the hourly, but NYAD still strong relatively speaking. RUT and NYA leading which is interesting. Still think 4th wave completed just now.

  9. llerias7 says:

    It seems that minute (ii) of minor 3 concludes today. If so then is a huge buying opurtunity for a minute (iii) of minor 3…

  10. uncle10 says:

    Thank you Tony! and all.
    Great 2015 to everyone!!
    I’m a buyer Friday morning. 😉

  11. fotis2 says:

    To everyone that contributes on this site to you and yours have a Happy New Year and may the good calls keep on rolling into next year.For Friday I can already visualise the usual ‘But technical damage has been done on the downside’ comments on the various blogs and , god forbid , we drop a bit more than we gonna have the Guttenburgers out in force and all the ‘Ive been telling you people all along this will happen’ guys .Nonetheless jokes aside this is one super site with first class info on trading.Many thanks and best wishes to the blogmaster Tony the Gentleman Caldaro without whom none of us would be here.

    • methinks this the beginning of something bigger than either man or ema. I’m thinking Big, and I’m thinking DOWN, and I’m gunning for a retest of the Dec lows, possibly lower …

      • rc1269 says:

        if so your long bond trade should work out A-OK

      • blackjak100 says:

        If this is a 4th wave correction, it should end about now. NYAD fairly strong indicating to me a corrective move for now. I think DOWN does come mid Jan. Cheers!

      • That bond trade … went to stop myself out of it yesterday when it traded ’05, but it didn’t look like there was very much supply ready to dump, so I held overnight with a 43’31 stop – it traded 44’04, and so far it is consolidating the highs of this leg of the bounce. So what to do what to do? I missed the Big Up entry in the low 143’s, so unless we break and hold above ’22,, I think I’ll get flat this trade and revisit it on Friday.

      • stayed long those ZBH’s, though I would have thought the stock selling would have goosed the bonds into the close. So I am short ES and long ZB and wondering if I’m going to be saying “Ahhh shoot!” when Globex resumes trading.

  12. mjtplayer says:

    Spot VIX now trading in the mid 17’s, above the Jan futures and at a 2-week high. This is not the action one would expect to see during light volume holiday trading, especially with the markets higher.

    Something is going on….

  13. CB says:

    gap from Dec23 filled, and + div on 60 min…

  14. FTSE has turned SELL on my model, SPX and INDU will be SELL as well if they close at the levels now (2079) etc. Ben QE theories not only for breakfast but also for lunch and dinner.

    Italy is saying it is improving and there have been no QE in Italy. QE gives only temporary reprieve. America today is like Lehman Brothers, Bear Sterns. A month before both went down; Bear Sterns/Lehman were “STRONGEST Buy” (as they call it).

    • CB says:

      “Bear Sterns/Lehman were “STRONGEST Buy” (as they call it).” … when they were at their “strongest”, they just couldn’t get any stronger, only weaker, it seems 😉
      Shrihas, the ones that were left standing became all the more stronger, though 🙂 because :
      1. their competitors were eliminated ; and
      2. the “survivors” got some nice “gifts” from the taxpayer
      “Someone” simply chose to “pick the winners” at that point and those guys are all brand-new and in great shape right now

  15. mjtplayer says:

    I think we make new highs into mid Jan, but nothing huge, maybe another 1% – 2% higher than the most recent ATH. In mid Jan, I do think earnings will be OK, but not great due to a strong USD; forward guidance will be terrible in the energy sector, expect massive earnings estimate cuts and dividend cuts/suspensions in energy companies in 2015 beginning in late Jan/early Feb when they report.

    Also, refiners shut down for several weeks in late Feb/early March to transition from heating oil to gasoline output. Refiners are the largest purchasers of crude, these seasonal shutdowns could press oil even lower as there’s no place to store the excess oil.

    I think the long awaited larger correction occurs in Feb – March. Not sure if it’s Greek elections late Jan that triggers the correction, could be another leg down in oil to the low $40’s, which would really blow-up many oil drillers, E&P companies, oil sands projects and anything deep water. Could be a culmination of several things: another leg down in oil, earnings guidance and Greece elections combined.

    Another log on the correction fire could be no QE from the ECB, they’ve disappointed so many times already, perhaps their intention is to just jawbone the market but not actually do anything. This comes into play if the Greece elections go towards the “Syriza” party. Do you think Germany will agree to QE and Greek bond purchases if Greece is giving them the finger and threatening to end the bailouts and austerity???

  16. shark says:

    The three most heavily traded leveraged ETFS are TZA, NUGT, and SDS.
    Common denominator: Traders fading the primary trend, whether for speculative or hedging purposes.
    Unless human nature has changed, the stock bull/gold bear markets will not end until TNA and DUST and SSO are the most heavily traded leveraged ETFS.

    • rc1269 says:

      SSO is traded more than SDS.
      30 day avg vol of SSO = 3.6mm shares. x $131 dollar price that’s $471bn notional traded.
      30 day avg vol of SDS = 7.5mm shasres. x $21 dollar price that’s $157bn notional

      therefore, there is 3x more money playing in SSO than SDS. comparing volume alone in securities with such a large $ price differential is meaningless.

      • shark says:

        The dollar-weighting measure is an attempt to identify money flow. The concept here involves sentiment and parallels the most active list being littered with penny stocks, which is a function of unrestrained speculation regardless of dollar-weighting (ie., hundreds of millions of shares of low priced stocks dominating the most active list on NASDAQ.) At the major inflection point, there should be virtually no interest in bearish speculation or hedging, at which stage the bullish leveraged ETFs will top the volume list irrespective of the dollar-weighting differential you reference.

        The link included above will allow anyone who is interested to monitor for themselves.

      • CB says:

        That’s very interesting, shark. Thanks. Wish there were more posts like yours here. Happy New year Tony and all.

      • rc1269 says:

        thanks i was using bloomberg’s 30 day avg vol numbers. though using your site the story doen’t change at all
        i’m not trying to identify money flow since i’m not stating anything about directionality. i’m merely recognizing that when anybody, be it retail or institution, looks to place a trade it is always thought of in terms of notional dollars put at risk and not share count. shares are an afterthought. if shares are split, volume typically doubles. market value of trades is whate matters. share counts, and share based traded volume is irrelevant.

        “at which stage the bullish leveraged ETFs will top the volume list irrespective of the dollar-weighting differential you reference.”

        that’s highly unlikely. case in point: volume in SDS peaked 4-6 months prior to the bear market low in March 2009. Furthermore, volumes in SDS have surpassed the prior peaks (both the actual volume peak in Nov 08, as well as the volumes at the SPX low in March 09) several times since then.

        i appreciate where you’re trying to go with this. but unfortunately you’re just incorrect.

  17. 16golfer says:

    financial….many bloggers go days and weeks without posting and if they should go over Tony’s “suggested” guideline of 3 per day on occasion, I think it should be overlooked. After all, if it was a problem with Tony, I’m sure he would say something. Chill out man and have a glass of bubbly…..

  18. 16golfer says:

    RC….Curious to hear about your mother-in-law indicator.

  19. mjtplayer says:

    Anyone else notice the VIX and VIX futures quietly moving higher this week? Spot over 16 and Feb contract over 17. There’s nothing unusual about the term structure, normal contango, it’s just elevated.

    ‘Tis the season for VIX smashing, you’d expect the VIX to get hit during the quiet holiday trading of last week and this, especially as the market has moved higher, but the VIX has remained stubbornly elevated. Spot poked it’s head down to 14 last week, but has reversed and here we are at 16.34 today – something to watch. Traders are obviously nervous about something (Greece elections in a few weeks?)

    • spindoc73 says:

      Noticed that too. Whatever downward moves that may begin in this area if not already started, would also lead observers to become nervous about the kickoff of earnings season as well. Not following closely, but AA could get things off on the wrong foot.

    • torehund says:

      ….or indexes are about to roll over to the upside, turn chart upside Down, would you then buy it 🙂 🙂 Cycle W 3 ?

      I wish all on board a happy New year, and an special thanks to Mr Caldarof or guiding us through the rough seas.

      • simpleiam says:

        Happy New Year to You, our resident Viking Surfer Poet!

      • spindoc73 says:

        I try not to get overly convinced of any outcome, but the basket of junk sensor stocks I follow have been levered heavily over the past week or so in a series of moves that could be deemed complete. Took a very small position in SPY puts this morning and flipped positions in micro stocks from long to short. On the latter, I am not too convinced and may step aside if the indices do not head lower on the day/2. Momentum funds have been piling on individual risk stocks, so just trying to determine when they leave/reverse. To answer your question, I would just observe and study if the market rolled higher from here. If it continues to head lower, I will be expecting continued volatility and probably moving in/out.

    • simpleiam says:

      Rise in VIX because of slide in price of crude (and energy stocks).

    • smugtwo says:

      If new highs are in order after the new year XIV looks interesting for a trade, looking for solid earnings with the help of lower oil, Greece just seems like noise to me, they cant get their sh%* together. The VIX pump feels like hedging. DTO also has potential with the continued oil decline although with some tight stops. Any thoughts?

  20. rc1269 says:

    Happy new year Tony and crew
    Best of luck for a happy and lucrative 2015

  21. buddyglove says:

    Thanks Tony and Greetings to All.
    2014 was a Blast, and looking forward to trading/investing with everyone here again in 2015.
    No change of opinion, and I still view long global equity, short gold and long usd/yen as the best way forward into next year unless the mkt shows me otherwise. Imo 2015 will be the best year so far of this much hated mega-Bull.
    Good health and prosperous new year to all.

  22. reddragonleo says:

    Charts tell me we are going up today. However if there is no big institutions buying we could rollover I guess? But the technical’s are turning back up on many time frames and point to a rally today and probably Friday too. I don’t have any targets but I wouldn’t be surprised to see most of yesterday’s down be retaken. But again, without the big boys buying it might struggle.

  23. chrisk44342 says:

    thought i’d just do a year in review vid given that trading is a non starter this week.

  24. Hi Tony and a Happy New Year. I see the orange count in August showed an 85 point decline for wave 4 followed by a 115 point rally for wave 5. This would take us to 2010 followed by 2125. Should I be expecting something similar? Thanks 🙂

  25. bouraq says:

    Happy new year!
    $SPX $DJIA $RUT $OIL $GOLD $GBPUSD $EURUSD $AUDUSD http://www.tradingchannels.co.uk/2014/12/happy-new-year.html

  26. fotis2 says:

    Yesterday before the open the ADX on the 4hour chart crossed over negative for the first time during this uptrend and with the black line well above 40 it looks like we are closing in on a trend reversal however it again crossed positve this morning so it seems one final push to a wave 5(micro) before any reversal for a minute ii wave I will be watching the ADX cross on the daily for a trigger to that .This would fit nicely with Tonys count

  27. soulsurfer says:

    thanks tony! A zweig breadth thrust event did not occur today either.

  28. Tony – If the daily reversal doji’s being recorded and confirmed by the varies indices have their way, and I think they will, then I expect a bigger pullback then what the oversold hourly indicators are telling us. If I find some spare time tonight I’ll will do my best to elaborate on what the doji’s are indicating. Also tomorrow the bears will have history on their side too, since historically the last trading day of the year tends to be a down day.

  29. Now that the fed is finished QE, I wonder what sort of scam job they will run in 2015.

    interesting chart they do not want you to see is here ==> http://bit.ly/1fMcakI

    I know the 22nd of JAN, the EUROPEANS will be starting QE, and JAPAN already have, so that is very interesting.

    I think people looking for the SPX to go to 666 next year will be bitterly disappointing. Do not fight the fed is the best advice you can get at the start of 2015.

    • The FED has not, will not and cannot afford to stop its liquidity progam b/c the economy cannot support the current market level. The FED is trapped into providing liquidity..otherwise market tanks and I don’t believe that will happen just yet.
      Major activities are brewing which we all will learn about in the next few months. There are many who will be jailed!!!!
      2015 will be an interesting year, especially later in the year.

      • Lunker to answer your question on what count we are in the answer is it does not matter and has not mattered. To be honest its not effective at this point in time.

        So far in 2014, ONLY 10 stocks of the S&P500 were responsible for about 1/3 of the index performance. Oil (and commodities) decline has started to impact the high yield markets, especially energy debt. Low growth, intolerable debt burdens, and misallocated capital are at the core of global challenges.

        I come to this board because Caldaro offers Good history of the past and does have some excellent advice and always seems to maintain his calm. But this market started its run with the Fed and it will end where it started with the Fed. I am by no means degrading what Caldaro does. I respect his work and what he does. Again I think it does not matter under these circumstances. Ironically enough I have emailed and Caldaro about his course because I want to understand better how he thinks and what makes him use the method he uses.

        . I will assume sir I am a lot older than you. When I was on the floor many moons ago the best advice a person who made a fortune told me when I was studying Elliot wave for and edge was that He does not know what to wear until he gets up in the morning and looks outside and I was foolish to do otherwise.

        I also read and enjoy all your work as well. I would like to wish you a happy new year and the best of luck trading in 2015

      • lunker1 says:

        truth, my point is regardless of anyones age (46) I think the repeated snickering smart aleck in the back of the classroom schtick from some of you guys is childish especially when you’re not putting anything out there for daily critique….or cheap potshots.

      • I state my view on the market and am at least honest about it. I do not insult people, i do not post pivots and targets and other nonsense because let’s face facts they are usless now. I try to keep it light out there. As far as putting things out there Lunker let me be honest nobody cares what you say or what you post. I am willing to bet I maybe one of the few who actually click your link to see what your thinking. Fish made a comment I thought it was funny. At my age (25 years OLDER than you I look to laugh as often as I can). if your ever in the NY area ( OLD WESTBURY) I would be more than happy to buy you dinner. Let me know..

      • magicianme says:

        lunker, I find the healthy cynicism of some of these posters useful. Not as useful as Tony’s posts, but useful all the same and only partly because they balance out some of the sycophantic (and inaccurate) comments about how Tony has nailed every single move.

        Tony does a great job and is extremely patient with all the negative comments, but embedded in his posts are often variations of the “market may go up or may go down” type, hardly useful, and very rarely of the “x% probablity of y happening”. It does help readers like me when we see the alternate views and other intelligent comments / observations. And you provide a great many of them too. My motivations for visiting this blog are over 80-90% to read the comments, I sometimes skip Tony’s post altogether.

        BTW, I don’t agree with a lot of what thetruthtrader1 says, but I do share his belief that a simple news item or Fed move can make a mockery of any count ….especially on the minute and minor level. On those levels pretty much any move – expected or unexpected – can be explained by the current count or some alternate count made to fit the chart. Which is why all the other opinions are valuable, IMO, as long as they maintain a certain amount of respect for the host and other participants.

        So how about a NY resolution to stop bashing the bashers? 🙂

      • Simple I have never pounded any one of Caldaro’s moves or counts. I don’t trade off his advice so why would I. All I have advocated is this is a market pushed by the fed and all central banks. I view keeping a count at this point like keeping score of a scrimmage game. why would you?

      • simpleiam says:

        Why are you here, TTT? Just curious…

    • That’s 3 posts Lunker – you’re barred!

      Just kidding, Merry Xmas to everyone on the blog, and big thanks to Tony for sage advice and a cool head throughout 2014.. Wishing everyone a successful 2015.

  30. liborval says:

    Hi Tony, minor ii should be about 20 pts? so from 2100 to 2080 or so?

  31. fotis2 says:

    Thanks Tony give it a shot on long tmrw but like you say its gonna be tricky

  32. scf51 says:

    Tony, how is this quite oversold? I thought we expected 20-30 points, and this isn’t even 20.

  33. simpleiam says:

    Muchas gracias Antonio!

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