Monday update

SHORT TERM: gap up opening, DOW +46

Overnight the Asian markets open, finished higher. European markets opened higher and gained 1.0%. US index futures were higher overnight. At 9am FED governor Tarullo’s speech: was released. The market gapped up to SPX 2114 at the open and rallied to 2121 by 10am. The market had closed at SPX 2108 on Friday. At 10am Factory orders were reported higher: +2.1% v +0.2%. After a pullback to SPX 2113 by 1pm the market tried to rally again. By 2:30 the SPX hit 2118, then dipped to close at 2114.

For the day the SPX/DOW were +0.25%, and the NDX/NAZ were +0.15%. Bonds lost 3 ticks, Crude slipped 20 cents, Gold rallied $10, and the USD was higher. Medium term support remains at the 2085 and 2070 pivots, with resistance at the 2131 and 2198 pivots. Tomorrow: the Trade deficit at 8:30, then ISM services at 10am.

The market gapped up at the open today for the second day in a row. Within the first half hour of trading the SPX came within 5 points of the all time high at 2126. After that, and an extreme short term overbought condition, the market started to pullback. Nothing has changed from the two counts posted over the weekend. The market could be rising to finish the ‘e’ wave of a diagonal triangle, as noted on the daily chart. One of the four negatively diverging long term indicators, we noted over the weekend, improved today. In fact, if it continues to move higher it could eliminate the divergence. Then the potential P4 correction would drop to a low probability. Will keep everyone posted. Short term support remains at the 2085 and 2070 pivots, with resistance at SPX 2121 and the 2131 pivot. Short term momentum hit extremely overbought at today’s high then pulled back. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: bull market


About tony caldaro

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117 Responses to Monday update

  1. scottycj1 says:

    Have a cycle low due today

  2. sloop says:

    have to get above 2108 again for hh

  3. wave 1 of 1 in or close to in ….wave 2 of 1 at 2100 wave 3 of 1 at 2030

  4. lunker1 says:

    Weekly 34 EMA 2084 at pivot?

    • berniebaruch says:

      Lower BB at 2079 and 125dma is at 2064. Makes for interesting trading.

      • blackjak100 says:

        extreme oversold RSI (5) reading (<10 ) on the hourly usually good for a 15-20pt bounce at the minimum. I'm suspecting we see 2015ish no matter what. I'm slightly favoring a 'b wave' just completed though.

  5. sweinv says:

    Hi Tony! Do you have some idea about the DAX major 4?

    A (12391): 11671. 10 of april to 17 of april.
    B (11671): 12047. 17 of april to 28 of april.
    C (12047): so far 11323. 28 of april….

    Major 2 was a zig-zag and major 4 looks like to be a zig-zag to. Maybe this i only intermediate A? And now soon intermediate B up to 12300-400 and then intermediate back to around 11000 again. But the major 4 has been working since 10 of april, soon one mounth and maybe this will be a zig-zag finish soon around 11000? Or do you expect a flat?

    Have a nice evening!

  6. Lee X says:

    pivot time again

  7. CB says:

    QQQs have already filled the gap..

  8. sloop says:

    sounds like its busy with a micro/nano? 4

  9. GYN LAB says:

    bouncing off the .618 at 2093, a good place for long for either scenarios (B or ED) now if we have another ATH I will be extremely cautious around 2131 pivot, c=a at 2136

  10. IMO This is another great opportunity to short crude.

  11. sloop says:

    good numbers Lunker,nice rr for a trade imo

  12. All, as Tony has mentioned, the economy is “fine.” We had the crash (panic attacks), then we had to stop the bleeding (aka stabilization), then follow the mechanical repair and re-alignment process (we are closer to the end of this stage), next will follow escape velocity but first lets get that P4 outta the way shall we

  13. fotis2 says:

    So far 5 down from 2120 move back up looks kinda impulsive I’m not a good counter so may be wrong but close above 2110 I go long.

    • zepfan123 says:

      A few hours ago this morning you said you were still long.

      • fotis2 says:

        ”Still long” as in still bullish.I went long as per post on Wensday at low 2080s target 2120 reached, closed and now waiting for another entry if you keeping count.

  14. sloop says:

    corrective up/down,spy looking like it had done a dzz down ,now something up again

  15. Whos ready for the swoosh down to 2090-2085?

  16. Peter Sliney says:

    The old adage “The market can stay ill rational longer than I can stay solvent” come to mind.

  17. johnnymagicmoney says:

    Here are my top ten reasons for going short this morning

    1) Inability to make new highs after many tries and being near the top
    2) IWM looks absolutely awful. There was an ascending wedge and then it broke through the channel to the downside, then restest the channel from below, touched it and fell further, and lastly has been underperforming for a coupel weeks the broader averages.
    3) TLT is breaking down
    4) Europe
    5) GDP was almost negative and with imports today shows contraction probably
    6) How can you get more valuation expansion when profits are negative Q over Q?
    7) VIX is basing and near the bottom of its base
    8) Negative divergence everywhere
    9) We are overdue for a good pullback frankly
    10) Because Newbie has to be right eventually =)

    • tony caldaro says:

      Europe joined the DOW in a downtrend today

      • mjtplayer says:

        Greece rumors helped take the market down this a.m. Markets should remain cautious heading into the Euro-meeting next Mon May 11th with Greece’s large IMF debt payment due the very next day. An “11th hour” fix perhaps?

        The larger question comes in June. Between June 4th – 19th, Greece has several ECB & IMF debt payments due, totaling over 5b Euros. There’s no way they can make these payments without the next 7b Euro tranche of bailout money.

    • stephenk1980 says:

      Speaking of Europe, the FTSE could surprise everyone and challenge the highs this week. And no, I haven’t been drinking too much kool-aid. Honest!

  18. nardobeme says:

    Sold my $SPY puts and went long UPRO…

  19. stephenk1980 says:

    Will be surprised if we breach the 2076 to 2093 range, although in this crazy chop chop market anything is possible. I am looking to go long until the end of the week after today’s pull back.

  20. wavediver says:

    Hasn’t it been the norm for the market to rise the day of a Yellen speech only to fall the days after?

  21. lunker1 says:

    2094.5 34 DEMA
    2092 top of pivot

  22. filipozze says:

    so far it’s an ending diagonal…2.135 / 2.145 should be the top

  23. Page says:

    Volatility will continue to shoot higher until Thursday/Friday and it may get ugly next week for SPX.

  24. Lee X says:

    FWIW 2098 ESM was .382 back from yesterdays high – Thursday low
    MA’s caught up with SPX after Fridays rip

    • Lee X says:

      Well looks like rabbit was right on CL and it’s Cinco de Mayo…kind of spooky haha
      Watch those intraday fibs in ESM . .50 back so far
      GL all

      • Lee X says:

        Those floor pivots have been helpful lately in SPX/ESM and imho they only are when it’s volatile
        Another 3 wave move just now guys ?

      • uncle10 says:

        Sup Dr. CL. I shorted some QM just now ( CL is only for the big boys 😉 you have any thoughts for the short term? thx
        reckon if rabbits igloo made it through the heat?

        • Lee X says:

          Hey uncle
          I think up side risk right now is 61.70 ish
          So that’s kind of a cheap short u got there uncle
          I cannot believe Rabbit has not taking a victory lap here yet , hopefully he didnt have a sledding accident ?

          • Lee rabbit is serenading right now

          • uncle10 says:

            thanks Lee.
            Back when he was making his oil call he was playing it with UCO calls. It was trading around 9-10 I believe? not sure he made any money on it 😦 im sure he added when it was down though and made a killing.. its the net #allwinnersalllthetime 🙂

    • berniebaruch says:

      Relax Newby. Its only 9 sp handles. Lot more to go before its “newby time”

      • I’m relaxed, your the one showing emotion. I simply posted a cycle chart. 🙂

        • Personally, I m at “hope”…as in I hope I m not in stocks when they start to freefall…lol.10 year bond is behaving bearishly all of a sudden (strange considering we just had a .2 GDP).Dax is down 200 as ruminated.That market is totally the barometer for Greece, forget rumors of an agreement –watch the Dax for the truth.I m still short term trading(week to week) based on no agreement.Very light in equities (was 55% two weeks ago-cut down to 15% last week).Good luck all..

    • lunker1 says:

      Cycle of Newbie’s Emotions

      1. crash
      2. Crash
      3. Crash!
      4. CRASH!!!
      5. The market is rigged.

  25. Welcome to the chop. At some point, somebody will be right. 😉
    Buy above 2125.49 with Stop 2103.76
    Sell below 2090.76 with Stop 2112.44

  26. mjtplayer says:

    tony caldaro says:
    May 4, 2015 at 6:52 pm
    four possible contributors to weak Q1
    1. dock strike in California, many wholesalers received spring goods quite late
    2. the shut down of many oil producing sites due to lower crude prices
    3. the USD rise causing inflated export prices
    4. the weather, mostly in the northeast

    Tony – agree with points 2 & 4, each had a roll in reducing GDP. However, I don’t buy #1 and I think #3 was largely offset by the collapse in oil prices. After all, inventories added 0.7% to Q1 GDP, it’s not like the shelves were bare due to the port strike, they continued stocking the shelves in Q1. If it we’re for inventory building, we would’ve had a -0.5% Q1 GDP.

    Net exports were a major drag, but that’s nothing new. The Dollar had a roll, but remember we had $50+/- oil in Q1 – that was a major positive to net exports.

    Excuses aside, the economy sucks. It’s been a lousy 2% recovery for 6 years, the worst post-recession recovery in US history. There are many reasons why, but weather, the Dollar or oil are not the reasons. How about: high taxes (both direct and indirect), a mountain of new regulations post Dodd-Frank and Obamacare, a hostile gov’t & DOJ hunting down money & ZIRP robbing the elderly of any income and forcing them to work part-time to help make-up the difference – taking those low-level jobs from the youth. Cumulatively, these are the reasons are why the economy sucks.

    • tony caldaro says:

      There has been little long term capital investment in the US and Europe.
      Certainly companies are buying computers and upgrading their networks, but very few have been investing for future growth.
      Until that changes we will not see big GDP numbers.

      • Until there is a complete return to GAAP, nothing is believable.

      • mjtplayer says:

        It’s the chicken or the egg problem. You need long-term business capital investment to boost GDP, but without a sustainable higher GDP businesses don’t need to invest – there’s no growth to invest for.

        Easy solution – dramatically reduce taxes on the middle class. That allows people to keep more of what they earn, immediately increasing spending and thus increasing GDP. The reduction of tax revenue on the Federal side will partially be offset with higher economic growth and getting people off the dole and into the work force. But in addition, you’ll need to make dramatic cuts in Federal gov’t spending and shrink the size of gov’t – that’s the political problem.

        Also, repeal Obamacare and repeal Dodd-Frank and Sarbanes-Oxley; re-institute Glass-Stegal. This would cut a LOT of red tape and allow small business and small banks to actually have a chance. I would also break-up the corrupt big banks and force them to either go back to banking of become an investment bank – but not both.

        • tony caldaro says:

          appreciate your opinion

        • Good points; but until you address the debt, there is no return to anything. All things will be revealed in time. And unfortunately, it will only get worse, before it gets better.

          • mjtplayer says:

            Higher sustainable economic growth will help reduce debt as a percent of GDP. The problem is that people are be suffocated in taxes: Federal income taxes, state income taxes, FICA taxes (SSI & Medicare), property taxes, sales taxes, excise taxes, sky-high health insurance premiums thanks to Obamacare (indirect taxes) and the laundry list goes on and on. After a middle class family gets done paying all the taxes and insurance premiums – what’s left to live on??

          • Absolutely, .GOV needs to be restrained and that will only happen once there is a system-wide reset (because .GOV will never curtail their own lifestyle) 😉 . And that will only happen when the world repudiates the USD as reserve currency (in progress). And that is a thought with ramifications so far reaching I shudder to think of the aftereffects. Which leads me to my, “it will only get worse, before it gets better” conclusion. Plan accordingly. 🙂

    • Amen on your last paragraph. Great summary.

  27. gtoptions says:

    Thanks Tony
    SPY/SPX ~ Remains trapped in the Triangle

  28. zepfan123 says:

    Looks like we may be going back to SPX 2100 again this morning after all.

    • zepfan123 says:

      And there is SPX 2100. Roulette wheel time again. Hope to see us below SPX 2070 this week,but I have a feeling we get a big fight at this 2090/2100 area here again.

  29. fotis2 says:

    Doesn’t look like the sky’s falling still long.

  30. ABchart says:


    A rumor of an agreement between Europe and Greece stopped consolidating the CAC and DAX and reversed the trend.

    The € / $ has consolidated 200 pips in 48 hours (1.1270 > 1.1070) for a target at +/-1.10 before probable resumption of the increase.

    It is possible that the SPX will not drop as much as I thought yesterday but remain above 2100 before climbing to about 2140/50 and higher in the coming days, because an increase of € / $ will be favorable to him.

    The evolution of the € / $ will be the key.



  31. fishonhook says:

    Buddyglove, if you still around, I just read your comment. Hope you and your wife come through this unscathed. It puts everything else into perspective. Wish you well.

  32. torehund says:

    ..just could not resist, we have seen so many violent bears here lately 🙂
    This one is from Russia and the pictures are going “viral” at the moment.

  33. gtoptions says:

    Thanks Tony
    The doji on the SPY makes me think failed ‘e’ wave, or just a of ‘e’, as I see 3 waves up from SPX 2078, so far. But, like Tony, I also see the momentum strengthening on the weekly charts. Feels kinda mushy though! 😉

    Peace & Good Health to Buddyglove & your wife.

    • torehund says:

      GT: As a general rule the failed fifths occur when the macd is below Zero, in essence it isn’t a failed wave “per se” its just that it is so weak that it bends down (however the wave finishes itself just in a downward trajectory, like an overdone spaghetti).
      Another issue is the suspicious quality of the waves we have seen for some time now, they are corrective up and corrective down of equal length, but these X-waves are still tilting in an upward slope. If some of them are the first attempt of 3 a of 3 is debatable, however the first part of a wave 3 are often corrective looking, before it later on molds into a motive or impulsing wave. If this is a real wave 3 it is still a bit weak and and abnormal, as you would expect when lots of folks needs to be shaken out before a “possibly” very large move upwards.

      Just look at where the macd on monthly were residing at the flash crash 2011, right around zero, and then it dipped into negative during the crash. And look at gold, it didn’t plummet hard initially (as the monthly macd was very elevated when it finally topped out).
      Its the Sub Zero long range macd values that makes the bloodshed declines possible, not where SPX monthly macd is at the present moment.
      But watch Oil and Euro, they can both flash crash “at any moment” due to previous chart damage (with macd weekly and monthly far below Zero).

      Hope this clarifies and always judge the waves in relation to the long range macd.

      • torehund says:

        One more note: It isn’t primarily the stock market that is in trouble these days, its the governments and their notes, bonds and currencies that are perilous to own as the governments may further dilute their value vs stuff by printing more of them, not to succumb to insolvency. However if they don’t print what they need and instead rises taxes to hysterical levels we all go down, both governments (as increasing taxes limits spending and later reduces revenues, dog bites his own tail), and the stock market enters a bear market as consumers will have less money to spend.

        • torehund says:

          Ooops the geo-part of the world is upset too, Port Morisby PNG just had a 7,8 quake which is equivalent in size to the recent one in Nepal…

      • gtoptions says:

        Thx tore, interesting info as always.

      • Thanks for the excellent technical insight,

  34. What a great interview by Stanley Druckenmiller on Bloomberg right now. Tune in quickly.

  35. nardobeme says:

    Good golly… I’ve had to re-think my long plan, as I recieved a confirmation $SPX sell signal about 2.30 today. Amazing, as I did not expect it. Am quite concerned with Transports (as discussed below) and small caps at this time. At this level, I think a pullback to 2100 or 2080 is quite possible after this impulsive move.

  36. Page says:

    Thanks Tony.

  37. JeffMilano says:

    Thanks Tony. BuddGlove hope things will go well. The computer system is still on the sell side, however this morning it looked impulsive and then backed off. So, Matador and Newbie a correction as Mr. C has put is well into the cards. I think that wed is the key day that will tell us, and perhaps Tomorrow near the end can even get a glimps. Thanks all.

  38. On Dec.26 of 2014 The DJ Transportation Average made it’s all time closing high of 9200, only slightly above it’s Thanksgiving closing high and actually below that late November 2014 intraday high. The DJTA has been in a downtrend ever since. Up to about the beginning of April of 2015 it was widely believed that the US economy was strengthening. In the last 3 weeks it has become increasingly apparent that this is not the case, notwithstanding the fact that the 10-year yield has not subsided much since the awareness of this condition began to crystallize. The DJTA understood more than 5 months ago that the economy was going to weaken much more than most believed was possible, or at least likely. The DJTA is still noticeably lagging the DJIA which recently made all-time highs. I don’t think the $SPX can decisively resume it’s rally (become impulsive) until the Transport sector develops a strong uptrend, challenges, and then surpasses it’s all time highs of late last year.

    • CB says:

      it seems that the DJTA weakness is indeed tied to the previous weather issues and to the longshoremen strike. The Fed buys the story. Equities and long bonds seem to buy the story as well. Let’s see whether the DJTA plays catch-up soon.

      mjt, stockcharts is showing 12.10 as the low today on the Vix. Perhaps they’ll change that later…those data glitches seem to happen all the time, unfortunately.

      • CB: Thanks for the insightful comment. Also, what do you think was the actual VIX low today?

      • CB: Also I don’t remember if it was apparent early last December that it was going to be another severe winter in the Eastern and Central US, but I doubt if it was. So the Transport sector was sensing something other than bad weather.

        • mjtplayer says:

          Perhaps the transports were sensing a lousy economy? After all, we just printed 0.2% in Q1. Yes, weather was a factor, but not the whole reason as weather for most of the country was fine – it was the northeast that was buried in snow. Could be that simple…

          • NJT: Yes that was exactly my point. The Transport sector makes money when there is a large flow of goods and passengers (on airlines). When the economy slows down, those revenues and profits decrease. Insiders, or wealthy investors with access to transportation industry insiders, saw this slowdown begin to occur months ago. That is what they call the markets’ discounting ability.

          • CB says:

            A good sign for The DJTA .., “Hotels in U.S. raise rates as travel picks up” ; )

        • The weather was fine….govts ability or unwillingness (whether by incompetency or hideous methods) to inform the public on the true state of the economy is were the failure rests. We have winters every year and it don’t stop me or millions of workers from showing up at work. and it sure as hells don’t stop the growing internet ecommerce from thriving. Blaming the weather is just their excuse and an opportunity for them to making correction to their otherwise over hyped up prior estimates that failed to materialize.

          • tony caldaro says:

            four possible contributors to weak Q1
            1. dock strike in California, many wholesalers received spring goods quite late
            2. the shut down of many oil producing sites due to lower crude prices
            3. the USD rise causing inflated export prices
            4. the weather, mostly in the northeast

          • Tony agree with 1, 2 and 3 and but not buying the weather thingy as an excuse for the 1Q. If I recall earning calls correctly, not even our Trannies boys thought the weather was an issue. Not to mention that had the economy been in an escape velocity boom the weather excuse would never even had enter front page.

        • CB says:

          Thanks George. Great point about that lag. We should always respect what has always worked before. Our GDP is increasingly created by transporting gigabytes of data via the internet, where no movement of physical goods is involved, so one would hope that the future composition of the DJTA should increasingly include some of the players in the info/broadband area…And I agree with you, mjt and matador about the weather (not a big deal.. 😉 There might have been, however, some carryover negative sentiment early last Dec. , going back to the harsh 2013/14 winter, that caused some anticipatory capital outflows based on weather expectations. In addition to what you guys & Tony have mentioned , the Russian sanctions affected international trade & the Ebola virus slowed down international travel, both of which hit the transportation sector hard. China’s slowdown played a role, too. And the negative sentiment from the oil market meltdown must have spread to the transportation sector as well. The question is now, technically, where does this leave us? Equity markets now see China’s weakness mostly through a liquidity lens, expecting more gov. stimulus, so a positive for equities. The other factors which affected the $DJTA negatively a few months ago should be considered “transitory,” which means that the DJTA can now play catch-up. Unless , of course, the Ebola scare rears its ugly head again…
          I like the chart you’ve posted above,$TRAN as it shows multiple tests of the support area and improved money flows recently. Let’s see how it plays out now.
          As far as the $vix is concerned, today’s low is displaying a + divergence. So let’s hope we can retrace the most recent move. The larger picture , however, shows large U.S. Treasury outflows recently, and that money has to go somewhere…into equities, quite likely .(?)

          • good stuff CB. I would also like to point out that the global trade first hit an impasse during the “Great Recession” as countries turned to protectionism. The Ukrainian thingy and the Russian sanction only further aggravated global trade. The other problem with the global trade impasses are the “Free Trade” pacts which are further being hampered by manufacturing initiatives in which our trade partners are pissed at us for reshoring our manufacturing industry in an effort to re-industrialize ourselves,
   , as every country wants to be a net exporter.

          • CB says:

            Very interesting matador. Thank s for sharing. I haven’t read much about that initiative. That’s a very positive new employment trend for our country.
            Also, you are absolutely right about the dangers of protectionism during recessionary times. Hopefully history will not repeat itself..
            It’s interesting how Obama recently had to convince a few of his anti-globalization friends in Congress to lend their support to his trade initiatives with the ASEAN countries. He knows we’re dealing with a delicate balance here. On one hand, you can create more American jobs (and Union members, obviously, right?, which Obama wants) ; on the other hand we, as a country, need to participate in the ASEAN trade deals, or else China is going to completely take over that region economically, which would endanger our strategic interests. Now that Obama is a lame duck, he is clearly more interested in our long-term strategic interests, as he should be.

  39. CB says:

    Thanks Tony

    Best to you and your wife, BG.

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