Monday update

SHORT TERM: pullback resumes, DOW -92

Overnight the Asian markets lost 0.3%. Europe opened lower but gained 0.6%. US index futures traded around neutral all night. At 8:30 Personal income (+0.4% v +0.5)/spending (+0.2% v +0.9%) were reported higher, as were PCE prices: +0.1% v +0.1%. The market opened two points above Friday’s SPX 2104 close and then began to pullback. In the opening minutes the market hit SPX 2098, then bounced to 2104 by 10am. At 10am ISM manufacturing was reported lower: 52.7 v 53.5, and Construction spending was reported higher: +0.1% v +0.8%. The market pulled back to SPX 2097 by 10:30, then rallied to 2105 by 11:30. Around 11am FED governor Powells’ speech was released: Then market then headed lower hitting SPX 2087 just past 1pm. For the rest of the day the market worked its way higher and closed at SPX 2098.

For the day the SPX/DOW were -0.40%, and the NDX/NAZ were -0.20%. Bonds gained 13 ticks, Crude dropped $1.70, Gold slid $8, and the USD was higher. Medium term support remains at the 2085 and 2070 pivots, with resistance at the 2131 and 2198 pivots. Tomorrow: Factory orders at 10am.

The market opened two points higher to start the week, but then immediately started to pullback. After a choppy beginning to the day the market broke below SPX 2095 just past 12:30, then continued down to 2087. The drop below SPX 2095, which was initial support, confirms the recent rally from SPX 2064 was indeed a corrective three waves: 2011-2095-2114. The choppiness continues. As a result we labeled the recent high Minute wave b. A lower Minute wave c should now be underway. Short term support is at the 2085 and 2070 pivots, with resistance at SPX 2114 and the 2131 pivot. Short term momentum was quite oversold at the lows, but ended the day neutral after Friday’s negative divergence. Best to your trading!

MEDIUM TERM: uptrend still choppy

LONG TERM: bull market


About tony caldaro

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115 Responses to Monday update

  1. zepfan123 says:

    So more confirmation of NOTHING….Dow and S&P wise anyway. The trading range is actually getting smaller the last week. I see no clue what so ever that makes me think we’re going to blast up through the ATH of 2130 or dump hard below 2070 and 2040 in the next week. Obviously we’ve seen some really nice individual stock corrections ,but those have been very selective and mostly in rotation so far …making it difficult to get the broad market to really sell-off multiple days in row. But I also don’t think we make new ATH’s soon either. This floozy floating sideways action between 2080 and 2120 could last a while longer I think.
    Predicting the SPX could go back up to 2100 or down to 2085 by tomorrow isn’t my idea of market predicting, so I guess I’ll just wait until I see something that makes me think at least a 50 pt SPX move is coming soon before I throw number out there.

  2. sibyn says:

    DAX—> 10400

  3. mjtplayer says:

    Call options in the weekly Aug 7th VXX contracts are trading 3:1 puts. Also, the 16 strike Aug 7th VXX call options are trading 3x average daily volume and more than 1.5x all the Aug 7th put strikes combined.

    Don’t get to complacent….

    • uncle10 says:

      I agree for sure!! but that goes for the bears too. we going to have a trend move soon. im 60 percent sure its going to be up. 😉

      • EL MATADOR says:

        But a 100% chance we see 2040 before we see 2135 🙂

        • uncle10 says:

          Most all bears are very confident in their positions.

          • No i am bearish..n freaking out …ready to puke my guts out!! It’s not easy being bearish and hold positions. Easier going long NFLX, FIT etc. SPY 202 this week wouldn’t surprise me

          • EL MATADOR says:

            Uncle, am no bear nor bull, so I cannot speak for the bears, but let face it the bulls are just as confident about new ATH’s no correction we going rocket to the moon yada yada yada. Thus far the bulls have been dead wrong since start of 2015. Since January 5th I have repeated singled out 2130ish as the most Probable P3 top and I also repeated stated that 2015 was going a wild and interesting year. While i’m not always right my swing trade post here (going all the way back as Nov 2014) speak clearly from themselves.

        • uncle10 says:

          hey El, im going to stick with 40% chance we hit 2040 before 2135 60% we don’t. 😉 gl

    • I can’t stop but look the chart pattern n structure from July 2011, and compare that to July 2015. We could be getting a 7.5% correction minimum down to 1950 spx by next week once the 2040 pivot breaks…20% down by mid-late September

      • zepfan123 says:

        1950 minimum by next week ? Right or wrong..”that” is a market prediction. I’m on the sidelines trading wise at the moment..but I’d hate to miss that kind of action. But I need to see some across the board index breakdown before I throw much money on SPX,SPY or DIA puts. Still too much rotation going on to get me super confident.

  4. H D says:

    Tricky little 3 wave moves. There is some theory from my neighbor Glenn Neely regarding the lower TL on the DOW and/or SPX since PII lows as we correct in time, not price. That data point may define the wave and we simply won’t know until price and time meet there. JMHO

  5. NEWBIE says:

    The economy cant handle a rate increase and they know it. If they raise rates they know the end result. With that being said the raising of rates will be an intentional destruction of the economy or an event will occur and that event will be used to blame for economic implosion. Either way market is going to implode. The CB’s will not want to take the blame so most likely something else is the cards. When that “event” takes place they can say everything was great and point blame elsewhere. Is it a coincidence that while we are printing trillions and trillions of fiat currency- gold and silver are getting demolished??? this is no coincidence- they don’t want you to buy gold/silver and more importantly they want everyone in the market- why? well because the market is the only safe place to put your money- ahahahaha. NOT- they are going to smash this market into the ground. Writing is on the wall- wake up !!!

    • Newbie, I don’t agree with you too often but that’s pretty well written. One thing to consider, since none of the PTB desire a crash as that would essentially remove their influence (and perhaps their heads if too extreme), is that another QE program will be implemented. On top of that, as deflationary pressures continue to build one could almost guarantee QE or some other mechanism. And that would ultimately lead to hyperinflation. Checkmate. 😉

    • H D says:

      JMHO, ur not the best spokesman for risk and where to put money. #UVXwhy

    • senrex says:

      The FED has itself in a quandary. They need to raise rates so that they have some ammunition (i.e. the ability to lower rates which cannot be done at 0%) when the next recession hits. But if they raise rates, then the $ gets stronger and that hurts US exports (which will hurt earnings and threaten the market). What a mess.

    • NEWBIE says:

      Willie says it Best:

      Fed Cant Raise Rates- Here’s Why:

      1) It would ruin their own balance sheet of $4.5 Trillion/ most of it sitting in treasury bonds

      2) Ruin Wall street Portfolios – wall street portfolios loaded with bond carry trade ( borrowed money at 0 percent that is invested in 10 and 30 year bonds and loading on leverage with futures contracts)

      3) No buyers for Treasury Bonds, no demand and huge supply.

      If the Fed raise rates the system collapses.

      • H D says:

        Tony and a couple others have really tried to give you some perspectives to consider. I will offer 1 more and then it’s good luck.

        “The market can stay irrational longer than you can stay solvent.”

      • Gary Lewis says:

        You may be right Newbie but don’t forget, they did away with Mark-to-Market at the CB and banks. So they can be underwater for years but disguise it on their balance sheet. Most of the bad stuff is in special offshore entities anyway and those aren’t required to be listed on the balance sheets. So the charade may continue on ad infinitum. Just sayin.

        • NEWBIE says:

          HD, if I wasn’t solvent I wouldn’t be here

          Gary, If BRICS nations get the nod by the rest of the world to become the New World Reserve Currency Backed by Gold/ Silver it wont matter what the CB’s want. Also maybe its the CB’s plan to reset the system.

          • EL MATADOR says:

            C’mon now Newbie, do you have a corrupted China govt threatening to imprison you for sell or short their pig of a currency?

          • EL MATADOR says:

            sorry meant want not have

          • NEWBIE says:

            El Mat, I speak of only possibilities. What I want has nothing to do with the outcome.

          • EL MATADOR says:

            No problem Newbie, but since anything is possible even though there is a zero chance in hell it will ever happen. So when conducting sound assessments why not narrow things to what is probable since it has a much greater chance of happening. That said the aforementioned BRICs currency will never ever replace the GREEN BACK.

          • Noob, of course you’re solvent, because imo you have never risked a dime of you part-time burger flippin’ job in your life. I see you Noob, I see you.

    • reddragonleo says:

      “The CB’s will not want to take the blame so most likely something else is the cards”…and it’s called a “False Flag Event”, just like 9/11 was. They will stage something else and blame the crash on it. Then they will go to war (for profit of course) with whomever they blame the false flag on. Just another patsy like so many others in the past. There are NO real enemies in this world, only made up one’s to keep the war machine going.

    • uncle10 says:

      one day you going to nail the top newbs. You looking for rational and logical but you aint going to find it…. especially in the markets.
      I tried to find some shares of UVXY to short but no luck. 😉

    • Noob, Baloney, imho. When Fed finally,raises rates (sept imo) it should be good news for equities, as it will acknowledge stronger economic growth, its almost certainly priced in anyway. Wake Up !!! , and stop reading Zerohedge.

  6. fotis2 says:

    Looking for a retest of yesterdays lows at least with luck 2085 today lets go Newb short the darn thing!!

  7. Is anyone else thinking B wave triangle off of the 2044 low?

  8. EL MATADOR says:

    These days most are talking up ‘Fear” as if it’s a one way bullish ticket. I say ya need to check your own “fear gauge”. I way I see it is goes like this, yes there is a lot of fear to buy these lofty overvalued equity markets but at the same time there is a lot more fear to even think about shorting these overvalued equities. So what is the net result here, I say a net negative for the equity markets due to lack of new buy interest and lack of short interest = INDICES GRINDING DOWN with individual stock flash crashes.

  9. H D says:

    AAPL has now dropped (21) from 1(34) to 1(13) * caution

  10. Gary Lewis says:

    NFLX up big again, propping up the market. Sure does remind me of the bubble. Some analyst would say XYZ is going up 25% and presto, seemed like that very same day, up 25%. We all know how that ended. Just have to “stay the course.”

  11. How long can this tug of war continue, getting tedious.

  12. gtoptions says:

    Thanks Tony
    SPX ~ Monday Hammer Simplified. 😉
    Still Bullish!
    FYI ~ AAPL investors have become sensitized to the Media BS.

  13. stephenk1980 says:

    Evil market today. Gone from a bull flag to a larger bear flag over time. Still bullish although will get very worried sub 2091 and probably quit @ 2088. I will be very, very surprised if we don’t end green today, for me it’s just a case of how we get there.

  14. AAPL weekly pitchfork lower TL near 100.00

  15. blackjak100 says:

    AAPL has no problem correcting 15% so far in less than 3 months, yet the indices sure have a hard time correcting even 10%.

    • EL MATADOR says:

      It’s not just about aapl alone, it about the aging leaders all correcting in unison. aging leaders are Financial (e.g. GS, JPM, WFC, V, MC, etc), retailers (e.g. NKE, DIS, HD, CMG, PNA, YUM,MCD, etc) Techies (e.g. GOOG, NFLX, TSLA, FB, AMZN, etc), BIOs etc

      • Gary Lewis says:

        When you put it in those terms, and I review the monthly charts of these stocks, looks like we have a long time to wait for many of these stocks to turn. Several months at the earliest. What’s your forecast?

    • reddragonleo says:

      Just a game of “shells” BJ… you know it. They just move the pieces around to make the SPX, Dow, Nasdaq, and Russell look like they are strong. All an “Illusion” to keep the sheep in the game long while they unload the garbage on them.

      It reminds of a movie called “The Grand Seduction” ( where this small town of only 120 people wanted to land a contract with some company that would give them all jobs at a factory that the company would build in their town. Problem was that the company needed to hire more people then the town had in it.

      So, they devised a plan where they invited the company big wigs to a town meeting in the local bar where everyone in the town showed up. They pitched them on the reasons why they should bring their company to the town and build a factory there to hire all the people.

      But one of the big wigs pointed out that there wasn’t enough people in the town to fill all the jobs at the factory as he counted all the people in the bar and asked if that was everyone in the town… and if so, they couldn’t build the factory there.

      So the mayor pulled a “slight of hand” move where he said no, that’s only half the people in the town as the rest of them are in the church several blocks away. He said I’ll take you there to see them now if you wish. The big wig guy agreed and they proceeded to walk out of the bar and down the street several blocks to see the people in the church.

      Meanwhile all the people in the bar ran out the back door and hurried down some back way to enter the rear of the church. Then when the mayor and the big wigs showed up at the church it appeared that there was another 120 people there too. So they got the contract to build the factory as the big wigs were deceived by the local people of the town.

      Of course in the world of the stock market it’s the sheep that are being deceived by the wolves hiding the dead weight stocks by shift sectors to prop up the pig of a market. Eventually there won’t be enough legs left to hold up the pig and it will all come crumbling down (as John Cougar Mellencamp said some while ago).

  16. Where s support on Apple…105? The way Transports and Russell are going today I thought it was going to be one of those days I ve seen a lot …drop into negative territory barely then go up the rest of the day…with shortcovering after 1pm…wind up 200pts on the Dow.Wouldn t surprise me.

  17. lots of chop. Dow up 20, back down to even up 30 back down to even. looks like market trying to shake a lot of people. Im looking for a big down day today. will see

  18. @Tony,

    Please help me to count NSEI,

    7940 is labelled as ‘A’ and
    from 7940 stil and wave ‘B’ which tgt near 8800,and after that
    7765-7850 for 4th ???

    Since 7940 MACD and RSI not giving clear signal.



  19. john b says:

    my 1st target es 2095 area

  20. mjtplayer says:

    All 3 indices opened slightly green – no open gaps to fill. SPX tagged 2,100, roughly a 50% retrace from 2,114 to 2,087. Time to head lower on turnaround Tuesday, overnight lows are 2,091 – that’s the first target…

    • GYN LAB says:

      Looking at 2104, yesterday resistance and also .618 of 2114-2087

      • mjtplayer says:

        Yeah, could be. Bulls desperate to hold-up the market here. After the open, the Nasdaq opened slightly higher and then started selling-off. All of the sudden, the Nasdaq rallies 15pts in less then 10 minutes on no news. Traders might be on vacation, but the bots are still turned on 🙂

  21. NEWBIE says:

    Weak volume on spy in pre market usually means we going down.

  22. fotis2 says:

    Oil bounces evrything spikes up geez what a Market no prisoners….

  23. IMHO the market has room to go down. As Tony has mentioned before this is a very choppy market, however, for this reason I feel this correction will last longer and ultimately correct deeper than most expect. As mjtplayer has pointed out several times the market is complacent. IMO its quite astonishing. The market should soon correct this condition. I don’t know to what extent, however, IMHO the vix will certainly need to trade above 30 and the SPX below 1800.

  24. C_H_M says:

    Thanks so much TC. I follow about 180 of the “top” traders on twitter. About 90% of them say we go down by some measure. (Anecdotal I am aware) If they are all right, who is wrong? No chart, but I guess if I had to write the script I would chop for a bit longer with a decent rally or two, followed by a better downdraft to clear out the weak players to be then followed by a series of higher highs and probably a marginal new high, and then when 90% of these tweeters are bullish and everyone is convinced we are headed to the moon I would drop the hammer on PIV. Just a thought. It just seems like too many are publicly calling for a big drop. Maybe this is the market that does not lie……not sure but still long for now (small). 80% cash.

    • By all rights Newbie gold should take off with all the massive shorting statistics I ve seen.Lots of bullish peripheral data that in the past led to quick 10-15% rallies…I m waiting…lol

      • But then again…as I argue with myself, if deflation is going to take over, then gold WOULD go below $1000, bonds below 1.7% and as we learned from 1930s deflation, stocks go down as well.IF there s deflation coming…and it may well be.I have a theory that maybe the Fed will get involved behind the scenes with knocking down the dollar to combat deflation…but they better do it soon.

    • mjtplayer says:

      Newbie – gold is heading lower. Short-term, gold and miners are very oversold and should bounce, but LL’s ahead. Support lies at $1,033 – the 2008 high. If that is broken, then $1,000 psychological support is next, followed by $875 (the 1980 high) and $670 (the 2008 low). These are the downside targets for a gold bottom, me thinks it will be around $875, that’s when I’ll be buying physical gold. Until then, watch and wait.

    • How lowww can it go? The surprise would be…this market gets so boring we make lower Vix numbers than we d think possible.Of course then a big unwind.

      • zepfan123 says:

        Actually i think the VIX will stay in the 12 to 17 area in this semi unpredictable volatility in the SPX 2040 to 2130 area.- If the market (Dow and S&P) were just inching up miserably slowly to new ATH’s day after day in tiny daily increments….”that” is how we might see the VIX move back to the alltime low levels from 1993 into the low 9’s. The VIX got into the 9’s again for a bit in 2006 working it’s way to the 2007 highs. The all time low VIX close was at 9.31 on Dec 22nd 1993.- I actually don’t think we’ll get back to that low VIX reading for a long time. I think before the year is over we’ll see some wider range volatility that gets the VIX in the 20’s or higher. And the all time high VIX close was at 80.86 back on Nov 20th 2008.

        • Absolutely…the odds favor what you say…I m just saying its p o s s I b l e that we don t bounce at 12 and sneak under it while we meander around the 50d.Getting stranger and stranger.For the record 10% S&P stocks…13% gdx,30% bonds the rest cash…since a week ago or so.

  25. uncle10 says:

    Thanks Mr T.
    I think Im flopping from short to long tomorrow. Interesting set up we have. Market is tight. We need to pay attention as always. good luck all.

  26. Alert for a possible double bottom on the DOW JONES.
    graphic on the link below

  27. Lee X says:

    Hey R C !

    I can’t believe its August already.
    Have you been to the Olympic peninsula yet to party with Mick Dodge ? 😉
    I’m still involved with WTI but have not traded any equity futures in a long time, been tempted a couple of times though 😉
    How bout you ?

    • rc1269 says:

      mick dodge hahaha. i wish! i’m not crusty enough to hang with that dude.
      things are good. loving my summer weather out here, as always.
      otherwise just whippin bonds around and keepin my nose clean as best i can.
      cheers bud!

  28. EL MATADOR says:

    Question for MrCooLWig, you still bullish BHP and BP? Got new for ya, another LL is coming just keep your eye on the ball.

  29. Thanks TC! Gotta love this action! Ugh no… Traded on two breaks of 2097’ish bull trend violation; one for minor loss, one for gain plus cover of loss. Will hold other positions to Op-Ex as I hate short-term trading. 😉

    With move back above the bull trend threshold we are in semi-bullish mode, but barely. The numbers for tomorrow (with minor adjustment after the rookie hour) are as follows:

    Move below 2095.16 places bull in tentative mode with Sell below 2082.21 and Stop 2103.82
    Good fortune!

  30. Jack Zhu says:

    I think it’s totally impossible to use wave theory analyze this market.

    • zepfan123 says:

      All we can say for sure is we keep going sideways in a very small and the range seems to be getting even smaller that last few days. I’ve seem summer doldrums before but this is one of the more extreme cases for my memory.

    • amy8walter says:

      You seem to have negative comments on wave theory, so what is your tools for analyzing the market? Can you name some? It will be nice if you can share with everyone on this blog.

  31. Tony,
    While I do favor your count, I was wondering if there is any significant probability that 2132 labeled as minor a was only minute a of minor b and 2063 was minute b and that we make make a run at 2132 again to finish off minor b?

  32. mjtplayer says:

    Thanks Tony!

    Nice EOD rally, new mutual fund buying from 401(K)’s helped (first trading day of the month). Spot VIX never rallied much, only getting into the mid 13’s and closing in the mid 12’s – no fear, still a very complacent market.

    Daily “hanging man” candles everywhere today, LL’s ahead

    • stephenk1980 says:

      Not this week though IMHO – think we are going up to the highs now. Massive dividend payments are due this week and the market hates shorting those.

      • stephenk1980 says:

        If Tony is right and we break today’s lows in short order then fair enough, the party’s over for a while at least.

      • ufa123 says:

        Stephen – interesting point. Have you or anyone else done any research on dividend payments and its impact on the market?

        • stephenk1980 says:

          No, I just know from bitter experience when I first started out and was a serial shorter. The market would reverse strongly and I would lose dividend payments out of my account, go bust and then the drop I was expecting to happen, happened; it occurred too often that I now always factor it in. Obviously easier to track with the Dow than the spx, as you’ve only got 30 companies!

  33. Lee X says:

    Thanks Tony

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