Monday update

SHORT TERM: correction continues, DOW -83

Overnight the Asian markets lost 0.3%. Europe opened lower and lost 0.9%. US index futures were lower overnight, and the market opened four points below Friday’s SPX 2093 close. The market bounced around a few points in the opening minutes, then started a gradual decline to SPX 2079 by 1:30. After a bounce to SPX 2087 just before 3pm, the market headed back down to end the day at the low 2079.

For the day the SPX/DOW were -0.55%, and the NDX/NAZ were -0.95%. Bonds gained 7 ticks, Crude dropped 80 cents, Gold added $3, and the USD was lower. Medium term support drops to the 2070 and 2019 pivots, with resistance now at the 2085 and 2131 pivots. Tomorrow: Wholesales inventories at 10am.

The market opened to the downside to start the week. Heading into the afternoon the SPX hit 2079, its lowest level since early May. Then after a bounce to SPX 2087 the market ended the day at 2079. We can now count five waves down from Minor b at SPX 2122: 2102-2113-2086-2101-2079. This may be the completion of Minute a, or the market will need to enter the 2070 pivot range, and set up a positive divergence to end Minute a. Then after a Minute b wave rally, Minute c should end the correction. With the SPX/DOW both in confirmed downtrends this correction could very well end this week. Short term support is at the 2070 pivot and SPX 2058, with resistance at the 2085 pivot and SPX 2099. Short term momentum ended the day oversold, after hitting extremely oversold earlier. Best to your downtrend trading!

MEDIUM TERM: downtrend underway

LONG TERM: bull market


About tony caldaro

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84 Responses to Monday update

  1. this whole wave structure is about around top with series of HS/IHS patterns. today LOD forms the neckline of a decent sizable HS pattern. If I’m reading the wave structure symmetry correctly the RS should be developed by a series of increasing sizable IHS patterns (see 5 min chart for first mini-IHS) until one or two of the 3 gaps (2113, 2123 and 2126) get filled

  2. fotis2 says:

    On AH trading looks like DB confirm 30MIN chart upside target 2095ish =38.2%retrace=WB?

  3. stmro says:

    Bullish daily hammer forming. Test of 2100 tomorrow if we close a few points above 2085. Then more down.

    • CB says:

      interesting stuff, those hammers…
      Actually, I am still wondering why those two weekly $SPX hammers are considered bearish…. a hammer candle is essentially a bullish structure, isn’t it?..

      • stmro says:

        I find weekly hammers are very powerful indicators of the end of a correction in a prevailing uptrend (see weeks commencing 03/02/2014 and 13/10/2014). They’re less effective for spotting counter-trend moves.

        However you have to be very selective in what you call a hammer. In my experience it doesn’t matter whether the candle closes up or down. The key is that the body is around 25% or less of the total range and is entirely situated in the top or bottom third of the candle.

        Today, i think if we close above 2081ish then odds for a bounce increase (daily hammer). However we really need to close above the 100d MA at 2085 for a better shot.

      • CB says:

        was referring to those two candles, just to clarify..
        .a long wick and the body that near the top of the candle…that’s a bullish structure if I understand correctly

        • stmro says:

          You’re right – those definitely looked bullish. The last few months have been pretty atypical for the bull market. Really difficult to read.

        • CB, there are 4 consecutive hammers there, the last one being an inverted hammer (fyi – some will claim this is a shooting star which IMO the candle by itself an inverted hammer) and the first three are typically called “hanging man” only because they occur at the top. But here is one of the main reasons why they are bearish, for each of the hanging man candles at the start of the each week the supply (aka sellers/bears) took control but where counter by the demand (buyers/bulls) running into exhaustion by end of the week and failing to follow through the follow week, then during the fourth week (inverted hammer) the demand (buyers/bulls) managed to attempt a follow through break out but were immediate ran into exhaustion and was counter by supply (sellers/bears)…..during this time I repeated warning that supply was out greater demand

          • CB says:

            Amazing candlesticks, eh? Good stuff, guys.
            Agree, matador, that recent inverted hammer clearly shows lots of resistance.. Long wick at the top shows that the new high that was tested just couldn’t hold at the close.
            The previous 2 candles with those longer wicks at the bottom (arrows) show that there was a lot of testing of the lows, and yet the market didn’t close near those lows (that’s the bullish part). The bearish part, (mostly for investors) is that the weekly close was not much above the weekly open in both cases. And we all remember that sideways market that was great for traders. Just not great for investors.
            In the last few days, it seems, we’ve decided to go back to the same area for more testing. So, I guess, in the future, we would have to interpret such a set-up as indicative of more testing ahead, perhaps…
            So it was an important warning, as you’ve indicated in the past, matador. Good work, bullfigher! : ) One would have to conclude that with the Fed in the picture now, we’ve got lots of time to test the entire range thoroughly…. not particularly bearish (yet)… just killing time b4 the Fed and trying to find some solid support.

          • CB says:

            good work, bull fighter!…that is is, sorry..typo🙂

          • Thx, and you do go work too enjoy reading you post and charts.
            Me still working on my bull flying dive almost got rear end on the last attempt…LOL

          • CB says:

            LOL ! …just maintain that altitude and you’ll be fine !
            Thanks, matador. Great charts and comments and lots of great humor from you that we all enjoy here every day. Cheers!

  4. Can it get over 2085. opens the door for a world relief rally tomorrow. Or does it die here. tough call

  5. uncle10 says:

    Thanks Tony.
    That natty gas buy looking pretty good🙂 and that “classic big down set up” from our long lost but not forgotten friend CN is good for about 50 spx points so far. Took off half today. thanks all and good luck. and Newbs hopefully you took a little off on this spike in uvxy??

    • CB says:

      he’s back under a new name…so, don’t worry too much : )

      • uncle10 says:

        you got it all figured out CB. did I miss his return because in my quick glance through the comments I sure don’t see anything close to the quality and actionable ideas that worked much more than not and many times when right he was right big. never any big losses given where he got in and where he put his stops .He did it here for years for all to see and mostly caught crap for his posts. For the good of the blog hopefully hes back but I doubt it.

        • CB says:

          agree, he should be back under his original name mostly because of his many loyal supporters here and because the guy who was giving him a hard time seems to have given up on him…so why not be here under the same?…Btw, not sure why people change names…everyone has their own style that’s easy to recognize…so why bother with multiple names(?)… it’s a waste of time
          OK, back to the time for distractions.. cheers, uncle!

          • CB says:

            under the same name, that is…

          • uncle10 says:

            since I appreciate cn posts and you say he is back, maybe you will be so kind as to let me know what name he is under? thanks

          • CB says:

            would not be appropriate for me to do that..
            It’s a little bit like with the charts…different people can be looking at the same chart and seeing different things… and that’s just if something doesn’t jump out at you, then just don’t think about it, uncle. And let’s hope CN can join us here soon.

          • uncle10 says:


          • CB says:

            Have to respect people’s choices, uncle, so sorry if it disappoints you.
            It really would not be appropriate.

          • uncle10 says:

            so YOU are trying to protect CN and respect him by not telling me what name he is posting under ?? hahaha that is funny good stuff with the irony there

          • CB says:

            Anyone is free to post under any name. That’s part of everyone’s freedom, I think. Interfering with that would not be OK.
            “watch what happens” ..that’s all : )

  6. mjtplayer says:

    I think the overnight futures low and this a.m. regular trading hours low was minor A, now rallying in minor b to the SPX 2,100 – 2,110 area? 50% retrace = 2,104

    I don’t think the VIX will drop much during this bounce in the SPX, VIX topped out in the mid 15’s thus far, would be surprised if it broke 14 to the downside; currently trading 14.92. After a pullback during the stock bounce, the next leg higher in the VIX later in June should test resistance in the 17 – 18 area at a minimum.

  7. Peter Sliney says:

    The daily $VIX looks so lazy. It’s hard to imagine any explosive up side. Maybe just a sideways trend for a while. Maybe the big index drop will just be a droop.

    • mjtplayer says:

      Sign of complacency, everyone just assumes the Greece debt situation will work out. They could be right, but as we get closer to the deadline with no deal, volatility will rise

  8. GYN LAB says:

    +ve div at the low, probably we get a relief rally of some sort in the next couple of days target 2097-2103 (.500-.618 retrace of 2122-2072)

    • 10.883 at the low today….broke the rising wedge—another fake breakdown? No follow through like the Transports did a couple weeks ago….yet.See you all tomorrow.

  9. The Nasdaq is fighting the S&P …fwiw, I ve seen these Nas drops unproporionately
    to the rest of the market a few times and reverse.Easily could happen again..S&P fighting to stay above 125d.Transports testing late May low and holding so far.Waiting to see what happens but until 2070 is broken decisively you have to think it ll bounce.Good luck all.

    • jeffbalin says:

      Naz probably trying to catch up, needs to hit at least 4888 before this correction is over

  10. mjtplayer says:

    Greek 2yr notes trading over 25% at 25.16%, that’s above the May highs. There’s some resistance at 26% from late April, but if Greek 2yr notes move beyond 26% there’s no resistance until 30% – the April high. There’s no resistance above 30%, it’s open space…

    Greek CDS continues to rally, now trading over 3,100 – up 30% over the past few weeks.

    The markets are worried about Greece and that concern is growing. Expect volatility to continue rising, stocks grinding lower until the end of the month deadline or until there’s some type of resolution.

  11. zepfan123 says:

    Well hopefully that reverse from up to down has set the tone for the market the rest of the week…but the Dow really needs to take a big hit here soon to make me happy.Good to see the COMP back below 5000 and the VIX over 15 but with 2 short current trades on the SPX and SPY indexes want to see this close below at least SPX 2070 today or tomorrow.

  12. Hello Mr Caldaro,
    last time i have asked you about DAX you told me that the downtrend target is around 10600.
    Today we have touched 10850 before rallying up.
    Do u have any specific count?
    many thanks
    Best regards

  13. blackjak100 says:

    It looks like the ED has ended at 2135. I’m not longer seeing anything bullish in this pattern as the i-iii trendline has clearly been breached with no bounce. MACD has started to increase downwards indicating a third wave is possibly underway targeting 2070ish. I believe a 4th wave bounce to 2090-2095 starting today is imminent from 2075-2079. GL and Cheers!

  14. fishonhook says:

    Things that may give newbie some comfort.

    the MACD looks like an open bucket pouring out.
    the $AORD and $TSE sure look to me like some top has been put in place. However if we have learnt anything in the last 6 years it is that QE/Ziirp/ CB games trumps TA/EW and it could turn on a dime

    • Agree…unless there s a monster rally…looks like an Aspen ski slope potentially.We ll find out shortly because in 2009 it didn t take more than 3-4 months to see MACD had bottomed and crossed to the upside for good.However 1998s fake crossover could be comparable to now.What I can t tell is how much separation there was back then between the fast and slow lines.There must be a point when the horses can t be put back in the barn, so to speak.In 1998 obviously we never reached that point—only in 2000 did it break decisively down.Margin debt also was a major factor at that time signaling the bear market to come.No sign of that yet in margin debt (new all time highs).Plus with my double January effect indicator still in the back of my mind–which in its rare history has foretold some big drops and bear markets…I m looking at this all rather suspiciously.Good luck everyone.

    • fotis2 says:

      Those weekly side by side hammers worked well Mat.

      • Yes indeed, they have very high success rate. What is interesting is that the SPX has 4 consecutive hammers (the last hammer is inverted). I have only found one other instant in the last 35 years with 4 hammers (one was inverted too) during Aug-Sept of 1999 during the B-wave of Inter 4 of Pri 3 of SC 1.

    • CB says:

      nice work, matador..thanks

  15. bhupal777 says:

    Thanks Tony.
    All novice traders out there, here is a tip for you. Based on Tony’s count, as soon as you see some corrective rally don’t bet your farm to go short with leveraged ETFs or weekly options thinking to ride that C wave down. That is a probable count. So exercise your risk management. Don’t come to this blog and bash Tony if the count doesn’t play out. In fact my advice is not to use EW for short term trading. That is probably a controversial statement. So let me put it this way it did not work for me and it could be I am not adept at it yet.

    Same applies on long side with Tony’s intermediate count.

    Good Luck All.

    • Lots of counts still out there. This could be wave 4 with 5 up to 2154. Could be int 2 of major 5. Could be P4 started at 2134 or P5 started at 2134. Maybe others, but seem to be the top 4. Casino opens at 9:30 eastern time. Should get narrowed down in the next two weeks.

  16. Update on last weeks post:Since March we ve only stayed under the 50d(S&P) for no more than 4 days.Today is day 3.At least 4 times we ve dipped under and then rallied. (two times was 3 days one time was 4 and two times was one day).We ll see what the algos decide…they re in control.Good luck all.

  17. berniebaruch says:

    Sitting below the lower BB and on top of the 125 MA. Is it time for the cub to become a bear?
    Shorts need to play a little smaller.

  18. 56rambler says:

    Thanks, Mr. Caldaro,

    When Minute c completes, does that also mean that Minor c and Intermediate ii are completed as well? Then, we should see the beginning of the uptrend for Intermediate iii?


  19. Page says:

    Thanks Tony.

  20. gasman88 says:

    There is a bear market in many stocks that is being masked by indexes. Just look at individual Dow components, many stocks down 20-30%. Dow is being held up by GS, AAPL, JPM and DIS only

  21. zepfan123 says:

    Well I don’t consider myself a bear here yet..but as somebody holding some SPX and SPY short trades..I wasn’t unhappy with that close. Now it’s all about what this market does tomorrow. Obviously I’d love to see it get taken to the cleaners and go well below SPX 2070 tomorrow.Certainly looks possible with the drop many key indexes and indicies had today. We shall see.

  22. stmro says:

    4 down days in a row is rare, so i’m expecting some form of a bounce tomorrow/Wednesday up to the 50dma currently sitting at 2099.

    If however, we bounce and stall between 2085 and 2090, then i think there’s going to be an exhaustion move to the downside, at least 1%, and then a bounce. Either way, i’m expecting a relief rally soon.

    The question is how next week behaves. OPEX weeks are usually positive, but i think this one could be the exception and put in a big down week. Put/call ratio is way too low considering the circumstances.

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