Monday update

SHORT TERM: flash crash Monday, DOW -588

Overnight the ES futures opened 10 points below Friday’s close. After an hour or so they were 20 points lower. Overnight they dropped to 60 points lower. Then about 1/2 hour before the open they hit limit down 100 points lower: (-5.0%). Then just as the market opened they dropped to 140 points down. The cash market opened down 96 points at SPX 1875, dipped to 1867, and then started to rally without the futures. Instead of the tail (ES) wagging the dog, the dog (SPX) was wagging the tail. The market then rallied to SPX 1911, dipped to 1875 just before 10am, then rallied to 1932 before 10:30. A wild first hour of trading. By 10:30 the SPX was down to 1909, rallied to 1928 just before 11am, then dropped to 1909 by 11:30. Then by 1pm the SPX was at 1954. After that it headed back down again. Around 3:30 the SPX hit 1880, rallied to 1925, then closed at 1893.

For the day the SPX/DOW were -3.75%, and the NDX/NAZ were -3.80%. Bonds gained 10 ticks, Crude lost $2.30, Gold slipped $6, and the USD was lower. Medium term support drops to the 1869 and 1841 pivots, with resistance at the 1901 and 1929 pivots.

The gap down opening today made no doubt that the market is in Primary IV. Kudos to those that called it a month ago. The four major indices have already had their largest corrections since 2011. Today’s activity, which was quite volatile, looks similar in some ways to the flash crash of 2010. Only that occurred during trading hours. As a result of today’s activity we have updated all the SPX charts to display a Primary III high at SPX 2135, a Major A at SPX 2044, a Major B at SPX 2133, and Major C underway. Support for Primary IV should arrive between the 1828, 1841 and 1869 pivots. The market dropped to the 1869 pivot this morning, rallied to the 1956 pivot, and then started to decline again. Volatile day! Short term support at the 1869 and 1841 pivots, with resistance at the 1901 and 1929 pivots. Short term momentum only managed to get out of oversold territory during today’s midday rally, then closed at oversold again. Careful out there, this is a very volatile market.

Late last week Stock charts deleted the Java mode I was using to update the charts, and now it requires some new mode. It will take me some time to figure it out. This the reason the charts have not been completed updated.

MEDIUM TERM: downtrend

LONG TERM: bull market


About tony caldaro

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252 Responses to Monday update

  1. tony – first, again as ever thanks for your selfless sharing of valuable knowledge.

    As a novice – and probably there many out there – i wanted to share and ask a couple of things.

    I get lost in waves but i have a grip on the mains ones and have been waiting for the start of P4 for sometime. So i was a bit “shocked” to note that we are so close to its end and only down to a minimum of 1820ish!

    after sifting through many posts, I realize that you now favor P4 having started May 21st when S&P closed 2130. OK fair enough; so 3 months of P4. So all that anticipation and we are now days of completing P4 and only about 2-3% further downside. A bit of anti-climax!

    But my issue is this (and question), Are we embarking on P5 (soon) to take us to new highs? if P4 is ending – and could be very soon – we are now assuming the bull will resume to your target of 2500+?

    Question 2: Assuming the above is all correct, how long in comparison to other major waves does a P5 usually last?

    I’m not holding to it of course 🙂 but that would mean a VERY low risk investment to make at least 30% on the s&p. Almost a no brainer.

    Have i missed something big!?

    many thanks

    • tony caldaro says:

      We were expecting downtrend, but did not know it would be to this degree.
      But here we are.
      Would like to see this downtrend end soon, without much further damage.
      Then assess the potential targets for P5.
      The current target was based on a EQE calculation which obviously did not develop.

      • Thanks Tony. my gut – as an investor not trader – says I mustn’t put money in the market yet. I ask myself why and I list;

        * Rising Volatility
        * PE Valuations
        * The Emerging markets (where our company does a lot of work) are hurting bad. These will continue to drag on the developed markets companies and hence further affect PEs. The strong dollar due to outflows for the last couple of years has been the major factor in destroying their economies. The Fed dragging the “tightening” story is killing the world. They must put up or shut up. Do it (and take accept volatility for a while) or forever ease!

        I like this definition of why the market will go up (along with Sentiment);

        “If economic conditions are good and expected to continue that way, investors tend to feel confident. Companies are more likely to perform well and deliver strong profits when the economic climate is benign so they are more likely to pay rising dividends. Under such circumstances, demand for shares tends to rise and prices increase;”

        We must reflect on this definition every now & then!

        I guess QE4 – if hinted at – at Jackson Hole might be a driver for P5. That would certainly fix the Emerging markets story!


  2. nardobeme says:

    LL’s on the plate? I think so…

  3. zepfan123 says:

    One word for this close. WOW ! Just like yesterday..the Dow drops about 500 pts in the last 2 hours. The SPX low print yesterday on that 1000 pt Dow drop in the morning was 1867.01- We tagged SPX 1867.08 just a few seconds ago and looks like we actually close just above that around 1867.68. Veddy interesting. Double bottom here ? I say NO.

  4. I did so well with last Monday’s Sell signal that I’ll give this one real-time: my indicator generated Buy signal just now, see last night’ms post for details.

    • stephenk1980 says:

      Buying too. For me it’s a cheap wave 4 play with sl to lows. Having serious concerns this is more than PIV now though.

      • nardobeme says:

        Hi FRB. I’m looking for that LL tomorrow and will go long. Thanks for letting us know! GL. Has anyone traded $SVXY? I was thinking of…

        • It’s possible Nardo. That’s what occurred when same Buy signal was generated Jan 15, one last early-morning drop to flush the weak hands then up baby up. So LL certainly possible (if so I’ll buy more, rally is certain now) but usually after one of my signals the market gaps-and-goes in the expected direction. The back-to-back nature of last Monday’s Sell signal and today’s Buy signal usually garners even stronger gains. Up we go. In a market which most deem to be unpredictable, I’ll demonstrate that it’s absolutely predictable to one who knows how to simply interpret what the market is shouting. GL

    • Did see it and remember it well. Thanks, Financial, much appreciated.

  5. thecustomer14 says:

    Pivot magnetism yet again… amazing. Thanks as always Tony for laying out a fine roadmap!

  6. Classic case of taking the elevator down … 470 INDU points in exactly 60 minutes.

  7. blackjak100 says:

    Dang traderjoes triangle looks to be invalidated

    • chrisk44342 says:

      yep i feel for anyone who tried to predict the market on that one. Just goes to show you that good analysts are not necessarily the best traders. That’s the danger of EW. The allure of a system that can predict market moves sounds great, but in practice, in the absence of some other confirmation, it’s just not reliable enough to plan trades with. I hope you continue working with the vix and bbs, you’re on the right track there.

    • Why doe say is invalidated? No compriende, missing a wave? His wave 4 triangle looks working out. Help..

  8. zepfan123 says:

    And the wild swings continue. A few hours a go we were up 400 Dow points. And now it looks like we’ll close in the red.

  9. Dex T says:

    Oh no… there goes the rally!!!! Too bad… and Wall Street was so excited about the rebound!

    Congratulations to Newbie, Mjtplayer , El Matador, Learned, Zepfan and several others for their excellent chart work and Technical analysis reading!!

  10. torehund says:

    Nerve-wrecking Usd/Euro fight. If EOD keeps itself under the previous wave, we could possibly get a 3 down fitting a rate hike after close tonight. Looking at Shanghai, there is a possibility (slim chance) it runs from here, otherwise 2300 is in the cards. Exciting times, for sure. And we are surely in the fast line….

  11. There is no doubt. All of the action since the Monday lows is corrective and portends lower levels to come. Whether we head directly down from right here or make one more up move to make a diagonal triangle or higher remains to be seen. In any case another Newbie move is in the offing. LOL

  12. GYN LAB says:

    Good afternoon! Spending all day in big fat green but come end of the day SPX is about to go red… w5 of C of P4 for Bradley bottom tomorrow/Thursday? I will be a buyer from ES1830 (Monday bottom) and around 1828 pivot

  13. 2 possibilities I see here. Firstly, since SPX was kind enough to put in a nice double top I like those highs as the 4. From there I’m counting it at 16000/1907 as 3 of 3 of 5 (actually counting the INDU). If the 4 is still in progress then one should be buying here. I am not.

  14. thecustomer14 says:

    Dow Transports now negative for the day and R2K not that far away…

  15. The irritating thing to watch on CNBC and FOX are the analysts who yesterday were saying the selloff was obvious and predictable and now today it s buy buy buy…correction is over.(after the fact of course).Gasparino at least is saying this bounceback is lousy. .but he s not a trader or analyst.Of course I don t LISTEN to them anyways.i still think 16500 is the top of this run.

    • Dex T says:

      That’s the way the entire financial industry operates- from analysts and brokers to journalists, etc… Good luck finding a “professional” who actually knows what they’re talking about. Just try walking into any bank to sit down with an “investment advisor” and gauge their knowledge level. (I do so frequently)

      The basic message is the same- just keep buying and don’t ask too many questions.

      Everyone of them has an explanation after the fact but couldn’t make real calls to save their life. Why do you think we bailed out so many firms?

      Personally I don’t watch the news and never understood why so many bother. All the info necessary to be a profitable trader is located in the charts together with risk management and some discipline.

      • zepfan123 says:

        When a financial “reporter” makes a few million bucks a year to do nothing but describe what has happened..or “is” happening in the markets..and other than maybe some company stock and their own 401K which is probably worth 7 figures whether it’s way up or way down…has no real high risk skin in the market game..we can’t really expect much out of their mouths that will do a trader..or even an investor much good. Great gig if you can get it. I’d love to have Joe Kernan’s morning reporting job on CNBC. -3 hours a day and $5 million a year just to tell us what has already happened,and,ask a guest analyst a few questions like “So do you think the average investor should get in at these levels ?”
        With that set up you’re really not too worried whether the market (DJIA) goes to 20,000 or back to 10,000. you’ll be just fine either way.

  16. H D says:

    pivots and fibs, 34 point hit from HOD and rally right back to 1929P. When does the window dressing start? Some seeing triangle, dangerous pattern IMO.

    • H D says:

      where r the pivot doubters today? 1929-1869 swiftly. Triangles I have found less than 50% accuracy in my studies.

  17. I was looking for a low this week, Guess im going to be wrong.

  18. Yesterday, I made a rather specific prediction that today would be a triangle with some very specific parameters. It relied on the premise that, “the net distance traveled in a wave four is often the same as the size of wave two”. That post can be found much earlier in this Tuesday update. Here is how the intraday count in progressing today. (More text below chart).

    SP500 (5 Min)  8_25_2015 TC

    This is one of the benefits of learning all of the rules & guidelines of Elliott Wave theory. It’s helps ‘predict’ things. Thus, when the futures are up 70 points, one is not surprised. Look at ‘where’ the gap is in the count (hint: in a wave three).

    The triangle of course is a “continuation pattern” meaning more downside is likely. A typical target for the triangle is “the width of the triangle added to the breakdown point”. The further down we go, the more it puts P4 on shaky ground. As one trader noted earlier in here, the London FTSE has already invalidated.

    • chrisk44342 says:

      your proposed d is probably near the cash pp, so there’s some symmetry there

      • A couple of things to remember about triangles: they can be very tricky to call. On rare occasions, they can extend to 7 legs instead of 5 (a-b-c-d-e-f-g). The further that price goes into the apex of the triangle, the more likely it is likely to turn into a “non-limiting triangle” rather than a “limiting triangle”. A “limiting triangle” is one in which the usual price target is met. A “non-limiting triangle” is one in which price has been squeezed into the apex so much, that the price target is ‘greatly’ exceeded to the down side. Usually, the dividing line is when price reaches into more than 80% of the length of time into the apex. That was a study performed by Glenn Neely.

    • JD C. says:

      Traderjoe, I greatly appreciate your posts. There’s a lot of noise “out there”, and predictions out the #%@^&. It’s good to have some meaningful analysis and something to possibly learn from. We’ll see if it pans out. Good investing/trading to everyone.

  19. So far yesterdays highs held. Could be the last leg down. Maybe China wont matter tomorrow and we still tank. for a bottom on the 26th. good luck

  20. SPX daily …headed lower today. imo Yesterday the 20sma crossed the 200sma and today or tomorrow the 50sma will cross the 200sma also know as the death cross. Suggest you keep an eye on it. May have been the reason for the big move yesterday since at the close Friday the 20sma was ready to fall. gl

  21. RC, Are you here today?

  22. johnnymagicmoney says:

    All I know is most of you guys overshoot on the downside and upside. There definitely was worry and bearish sentiment as the market was rolling over in the last few months and kudos for those who placed their bets appropriately but now that the doom is come everyone has these very near term gloomy numbers. Everyone was wrong about the B wave that never materialized back in October 14 off of 1820 including Tony. I will admit that this looks different this time around and a rally is probably a fake one but people’s bounce levels are pretty friggin low and pretty short in nature. That negative sentiment makes me think this runs a bit before doom returns. Just my two cents.

    • zepfan123 says:

      I don’t think SPX 1820..give or take is a gloomy number considering where we came from just 6 years ago..that being SPX 666. And remember.the pre-crash 2007 SPX ATH was 1576…so even SPX 1820 is still quite a high number and way,way above those 2007 highs. We’ve been making multiple NEW… new all time highs since we finally surpassed the 2007 highs over 2 years ago in 2013…so the run up has been quite long and nothing short of spectacular.-And the FED basically doubled the National Deficit from 10 Trillion to almost 20 trillion to not only save the market back in 2009 but get many of these stocks up over a 1000% from their 2009 lows. All well and good,the market got saved from going into a depression… and everybody who got in stocks back then made a ton of profit..even with the market drop the last 3 or 4 days..but a rally based on that kind QE can’t go on without reality check pullbacks. – 2015 may just be one of those reality check pullback years. We get back over the SPX 2130 area and Dow 18,400 into the end of the year..then I stand corrected.

      • johnnymagicmoney says:

        I dont disagree I just am saying when people finally get the direction right on here they tend to overshoot or undershoot their near term projection thats all

        • zepfan123 says:

          I hear ya johnny..but i look at a specific target given by somebody,say on the SPX as more of a directional “ballpark” area with with a margin of error of maybe 20 pts or so either way. One really needs to throw in a reference point target number for nearer term predictions out a week or so.- SPX 1820 would work for me at either 1840 or 1800. If you’re shorting from todays SPX area of SPX 1910(ish)…you’re going to be real happy if the SPX even drops to 1860..and probably start scaling out of parts of the position by 1860 on down. If 1860 is as low as it still won’t be too upset if it doesn’t get all the way down to 1820.- I’ve seen some calls later in the year for SPX 1700 and even lower…and right now thats too arcane for me… as I can’t see that happening unless we decisively go below that Oct 2014 low of SPX 1820..which by the way is also the current 52 week low. Easy to look at a 12 month chart of the S&P and see why 1820 is talked about so much as it’s a key technical number we might revisit almost for sure if we break those Monday SPX lows around 1867.-At SPX 1800 i’ll start entertaining the possibility that SPX 1700 or lower becomes absolutely a possibility if all stocks and indicies seem to be re-pricing themselves for a different scenario the super continuation of the long bull market conditions many thought we had just 2 weeks ago.

  23. did china lower rates after the market closed? So there market will be up huge tomorrow? No. which means we should be up No?

  24. RC,
    Good morning, are you here today? If so, do you mind shedding some light on credit the past few days? Thank you.

  25. Mr C how do you explain the thing called”turnaround Tuesday”.I mentioned it yesterday to someone on here, but didn t buy…thinking instead I d lighten up on what I had.Amazing how it happens time after time.

  26. blubrd67 says:

    Anyone knows why XIV is greatly under-performing UVXY today? Usually it’s roughly half the value of UVXY in opposite direction, but today it’s virtually flat, while UVXY is sinking.

  27. Page says:

    The Chinese ETFs in US are doing good so far, there is a good chance Chinese markets will rally tonight so I took a chance and bought some Chinese ETFs today.

  28. cmucha68 says:

    2100 within 10 days.

  29. zepfan123 says:

    Well as impressive as those S&P futz looked this morning up about 73 pts…so far..I don’t think todays rally is all that least as far as conveying with confidence that we bottomed yesterday morning..and we are now on our way back to SPX 2100 and higher soon. So far ..we haven’t even got back to yesterdays highs we hit when we rallied off that 1000 pt Dow drop in the morning and we’re down only a 100 Dow pts for a bit before we fell back off 588 Dow pts for the day.- I still think we’ll go below yesterday mornings lows soon and at least approach that SPX 1820 level at least.- At SPX 1932(ish) now on this big morning’s hard to believe just 3 trading days ago..SPX 2070..and certainly SPX 2040 were considered concrete support levels.-The path of east resistance looks down to me here at the moment.

  30. There is no cash on sidelines folks… everyone was margined to the hilt.
    The 13-34 cross on weekly after a 1060 point SP 500 wave 3 rally is not going to end with a simple 11% correction…
    We may not get past 1948 even, this may be a wave 4 right now next few days, then an ugly 5 down to about 1813

      • Dex T says:

        Some great points and nice chart!

        The market crash may not even have been due to China or interests rates but like 2008 could simply be investors selling to raise cash. Margin level are already at all time high and the big guys are tapped out so where will all this excess liquidity come from?

  31. Oversold rallies are impressive, but this correction is a process.If, however, P IV is somehow over then we ll know soon and go from there.My view is we can go to 16500 or possibly even 17100 both in a bearish scenario.I bought some today thinking the line in the sand was drawn for a while.Now we ll see where the line is drawn to the upside.Gold is horrible and I m selling the 6% gdx I have now…but I have 4 hrs to change my mind if it rallies this morning.Good luck all.

  32. mjtplayer says:

    With the gap-up open, the DOW & SPX are both sporting hourly -div’s

  33. If yesterday’s high 2054 is taken out them either P4 ended or in Major B. otherwise more downside.

  34. cmucha68 says:

    Market (SPX) rising mode is far from over. It is fooling everyone again like always in the past. Give it 10 days and we are back above 2100. The market has its own dynamic. China, Arab Spring, Fed, Ukraine, Greece etc. has nothing to do with it. Still there is no alternative to stocks. Who did not buy Yesterday below 1900 cannot be helped anymore. The chance of the chances. But I agree with Tony concerning a last big move up to end this bull market. My congrats to newbie. After several month of screaming down down down he eventually got what he wanted. He for sure has made multi millions in profit, or maybe not ?? Well, only he and God will know.

    • mjtplayer says:

      FYI: when you get panic/capitulation moves down like yesterday morning, those lows are almost always tested in the future. Yes, time to rally, but a major B rally – IMO. The lows will get tested in Sept or Oct, so don’t go all-in just yet.

      • spindoc73 says:

        Yesterday got the attention of the 401K crowd, but the market kept moving up while they were watching all day. Today all looks calm with huge gap ups and explanations from overseas (China lowering rates, etc), so I doubt the major flush of selling from this pool has materialized yet either. Maybe a couple/3 weeks of sideways/down consolidations (failed rallies) that end on a mini flush to low 1700’s. My position is 100% cash.

    • fishonhook says:

      “Who did not buy Yesterday below 1900 cannot be helped anymore.” eh…did you call it before today’s huge rally in the futures. If so, good for you and well done. If not then add this to the many other “i told you so” after the fact comments which are such a waste of the posters time and ours.

      • cmucha68 says:

        Most People here are using Tony’s analysis as an additional help next to their own work. He told about several support areas below 1900. And sometimes it is just too obvious what to do. If the market broke all major supports and arrives at the lower end you can only buy. Also the SPX tried numerous times to break higher and failed always. I went short at 2103 and out at 1915 and long at 1877. You don’t need to forecast and try to guess. The market gives you enough hints what to do. You only need to act at right times. And if you miss something so what ? The next train is coming. That has been the game for the last 100 and will be the same still in 100 years as long as there is a market to trade.

    • Dex T says:

      There is an alternative for stocks and it’s cash. Despite his continuous shilling for equities Buffett and Berkshire Hathaway has held huge cash reserves for his entire life and he never worried about having to spend it all, inflation or his ROI.

      Debt loads and margin levels are at extremes again and lots of people and firms need to liquidate. There are no more bargains anywhere to be found.

      The bull will continue in the future but has to take breathers now and then.

  35. mjtplayer says:

    Yesterday’s minor A rally high was 1,954, then minor B down to 1,879. Minor C = A at 1,966 to complete int A of major B by my count, which is close to Tony’s 1,970 pivot area.

    • instigator928 says:

      Your Major A looks right. If 1966 target (futures right now) pans out, where would you target the downleg and subsequent upleg for major B? Thx.

      • mjtplayer says:

        Given the volatility, I’d expect int B to retrace most of int A, at least .618 and probably .786

        Ultimately, major B should top out in the 2,000 – 2,040 area (.50 – .618 retracement area).

        • argento1 says:

          I’m with you on those levels for B to top, should then be a much more controlled down move than the impulsive A leg!But for now shorts will get squeezed….!


  36. torehund says:

    SSEC heading to a lower high, Tonys aim at around 2300 is in sight (good call).
    Interesting development and by first glance the downturn then looks corrective in an A-X-b-C down right around 2300. Starting to think about what happens then…

  37. In EUROPE now we’re Flying but i fear it’s only a rebound

  38. argento1 says:

    August 6, 2015 at 6:58 am

    “PIII already topped…PIV is still in the hanging phase so don’t miss it when she comes down!The longerterm macd’s and breadth are giving you the clues!
    Cycle low date mid October..then buy buy buy!”

    IMO she should stay up with this oversold bounce into friday and start heading lower next week for the final wave C into mid October for the 7 year cycle low and buy of a lifetime!Primary V should then commence….the lower monthly bb on the SPX is around 1800 and expect a pierce through that only before we can come back up!Primary III took 4 years, give Primary IV a month or two more!


  39. llerias7 says:

    There is an intense discussion the bottom is in or not in global markets, now that the Chinese joined the low rates bandwagon…

  40. blackjak100 says:

    I like traderjoes hourly triangle idea for wave 4 of 3. Keeping it simple, this suggests a high print of 1940ish this AM to complete wave c in the triangle.

  41. 2 am right now.2 hours ago…Hang Seng was up 300, Nikkei up 200…our futures up 44 naz,20+ s&p,200 dow.
    Now Hang seng down 200 Nikkei down 500 our futures flat.Shanghai was lousy all night but in the afternoon session it fell another 3% from the 3% it was already down.Same juiced up algos run their computers as ours.As much as everyone wants a bounce over there…it s not happening.Maybe once I turn this tablet off for the night…I once knew a guy who gambled on sports…who thought if he turned the volume off, he d win…that lasted 2 games…lol

  42. ko68 says:

    Thanks Tony!
    “Support for Primary IV should arrive between the 1828, 1841 and 1869 pivots”
    In theory major C could have bottomed out yesterday at 1867 in your view?

  43. Dex T says:

    Chinese market hit again with sizable losses. Tomorrow may end up being another down day!

Comments are closed.