Monday update

SHORT TERM: holiday trading, DOW +47

On Sunday FED vice chair Fischer gave a speech and was told “just do it”: Overnight the Asian markets gained 0.3%. Europe opened higher but lost 0.3%. US index futures were relatively flat overnight, and the market opened one point above Friday’s SPX 2015 close. By 10:30 the market had pulled back SPX 2011, rallied to 2019 by 11am, and then started to pullback again. At 1pm the market hit SPX 2013, rallied to 2018 by 3:30, then closed at 2017.

For the day the SPX/DOW gained 0.20%, and the NDX/NAZ gained 0.25%. Bonds gained 10 ticks, Crude dropped $2.20, Gold gained $5, and the USD was lower. Medium term support remains at the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivot. Tonight a speech from FED governor Brainard after the close. Then tomorrow: Treasury budget at 2pm.

The market opened relatively flat today, then went into an 8 point trading range, 4 above/below Friday’s close, for the day. Looks like a lot more people took the day off than expected. Nothing has changed in regard to the count: Int. iii underway from the recent SPX 1976 low and it’s still only one wave. Short term support remains at SPX 2000 and the 1973 pivot, with resistance at the 2019 pivot and SPX 2040. Short term momentum stayed above neutral for the whole day. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: bull market


About tony caldaro

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127 Responses to Monday update

  1. rc1269 says:

    i guess 10th day down was the charm on the VIX

  2. johnnymagicmoney says:

    I get the feeling the way JPM has been trading (along with BAC) in this bogus rally is that the JPM earnings report is going to be a stinky one and some people know it

  3. Here the futures have been updated to the hourly chart to keep 120 – 160 candles on the chart. Yesterday’s triangle wound up morphing into a flat in the over-night. And then the fifth wave up. The primary reason for showing this chart in near real-time, is that after “five waves up”, there should be “at least” three waves down. The secondary reason is so those not as familiar with wave counting can still see how a triangle and a flat can be ‘equivalent’ until they are not.

    ESZ15 - Hourly - Oct-13 1439 PM (1 hour)

    This is another clear example of “the fourth wave conundrum”. It happens on every time scale and every degree of wave, and it results in some frustrations .. but that’s part of what a trader is paid for putting up with.

    Cheers and enjoy the chart!

  4. uncle10 says:

    Thanks Mr. T.
    When things look shakey and there is uncertainty buy AMZN the 250 billion dollar company that never has and never will make any money. I got a good laugh when they reported a few pennies of “profit” last quarter and people called it “harvesting”. I often feel like I got dropped on the planet called Earth where everything is the opposite of what it is supposed to be. Of course being a trader for 20 years won’t help if one is searching for logic and rationale.😉
    good luck all.

    • johnnymagicmoney says:

      I moan about AMZN constantly. Believing AMZN will grow into their valuation is like believing Obama really cares for his constituents

    • tony caldaro says:

      But their sales are increasing, and they have drone deliveries, and they’re planning to colonize Mars with off-planet warehouses😉

      • uncle10 says:


      • rc1269 says:

        as long as they overpay their employees with ever-growing equity it will help my home value here in Seattle, so i’m all for it. 😉

        go AMZN go!

        of course, i’d never buy it. i feel like i’m already leveraged to that stock price just in the real estate market here. it is the currency of choice for the multitude of all-cash deals here these days.

        • uncle10 says:

          It all makes sense in the end…. even AMZN. There is a ton of money that has to be invested in growth stocks and there are not that many to pick from. Bezos figured out he only had to grow revenue and tell a good story about future profits to be considered a “growth company”. I remember like it was yesterday back in 1999, a fellow trader and myself were talking about amzn and I predicted to him that it would never make much net profit given the business model it had ( and still has). Just another example of how right one can be and still be so wrong…… 🙂 hehehe

      • mike7x says:

        But will they still have over-night delivery for Prime customers?

    • Dex T says:

      Too true. AMZN could drop 95% tomorrow and would still be incredibly overvalued. The run up this year from 300 to 548 is pure irrational exuberance.

      The tech sector is one area where you definitely have to leave logical thinking out. Hype and sci-fi style daydreaming take precedence over profitability.

  5. EL MATADOR says:

    Trannies don’t drop 2% without sending a message to the rest of the market….Just saying

  6. 4bolt says:

    Still looking for a nasty “C-Wave” down into the 1700~1750 area before this Wave-IV is complete …

    SPX might possibly spike to +/- 2030 first … But, to me, at least … This rally looks a bit long in the tooth right about here …

  7. johnnymagicmoney says:

    The Ode to the Turtle Head

    There once was a turtle who poked his head out
    Much after doing a FED induced pout
    But it may take some time for the turtle is slow
    But sooner or later down she will go
    So bears mingle round and and do not fear bull
    The bull is quite fat and from QE is full
    Our prophet named Newbie foretold the new day
    He was deemed a lost mind but he did pave the way
    So I call on Raphael, Leonardo and Donatello
    And every other great bear and together let’s bellow
    The Turtle Head has come and the Turtle can see
    That this market’s a joke so you Bull fuks should flee

  8. aahmichael says:

    Sell signal in SPX just triggered at the close of the 1:30PM bar at 211.94. Get short here with a stop at 2022.35.

  9. GYN LAB says:

    Good afternoon!
    Looks like final 5 of 5 started today from 2006, as long as we stay above, ED could be playing out. looks like the first 2 legs are just completing

    • Hi Gyn Lab. I see you mentioned E-D. I just wanted to comment that it is most typical (i.e. the most usual pattern) in an E-D for all five waves to be formed ‘above’ wave 3. In other words (i) is higher, than 3, (iii) is higher than (i), (v) is higher than (iii). This reflects the typical fact that each of the legs is a ‘motive’ wave, and moves price beyond the prior price. So, an E-D would ‘most likely’ be formed entirely ‘above’ primary 3. I am only citing what is ‘the most usual case’ according to the definition – and trying to be helpful, so mentioning prior times when you think it’s happened in the way you are thinking would not sway the discussion much.

      Please see the diagrams in the Elliott Wave Principle (Prechter), or in Mastering Elliott Wave (Neely) if there are questions. Cheers.

      • GYN LAB says:

        Thanks for your comment, but I don’t quite understand the ‘above W3’ bit. In this potential ED, (i) finished at 2022.34, higher than the Fri high at 2020, and so far (ii) looks to have finished at 2008.50. Now this needs to hold above the LOD open of 2006.10 and push higher than 2022.34 for (iii) which may happen today or tomorrow morning. Then (iv) down ideally staying above TD connecting the lows of 2006-2008.50, then the final (v) with possible under/overthrow.
        Of course I will throw this out the window once it breaks below LOD 2006.

        • Sorry, my apologies. Without a chart it was unclear if you were describing an E-D to end a truncated Primary 5th wave higher. I understand now you are only referring to a possibility from 2006, and higher.

  10. Here is an updated blog post for your reading pleasure. Please do not be confused by it. It is trying to make a rational point.Best wishes to all.

  11. johnnymagicmoney says:

    akin to CN’s big down set up I have a new alert called the Turtle Head …………poking through important pivot (2020) then reversing and going into the red becoems the turtle head set up. You can refer to it as the Big Turtle if you prefer. Also like CN’s big down set up, if we close deep in the red today combined with Gartman coming on CNBC and saying to buy the dip we then have a “Confirmed Dump” So far we just have a turtle head.

    ps – paying homage to you CN. You have made great calls

  12. EL MATADOR says:

    Still not seeing any impulsive on any index from any of the August or Sept lows. Keep wishing Bulls

  13. fotis2 says:

    Many thanks to all those who answered my question.Taking into acc.yesterdays hourly close 3BR on hour chart probability of a close above 2020 high could be forming a DT but don’t like the higher high today but hey you never know.

  14. alexh110 says:

    Daily MACD histogram seems to be starting to roll over: ebbing momentum doesn’t seem to fit well with a bullish count.

  15. The only thing I think is interesting is will gold break through a major resistance level at 1170.Unless we get some big economic news that s upbeat…it would seem more probable than not.Gold is $4 away and S&P 4 pts away from 2020—the weak dollar trade helping both…no coincidence.

  16. cj32 says:

    May find Interesting chart analysis.

  17. I m surprised we re not lower today with China indicating a “recession” for them.GDP with imports and exports at -3% and -20% should be 6.5%, a recession for China. Gold should be down for lack of demand, same with oil.But the dollar is not soaring so that s the whole ballgame.The Fed is doing what it wants.Walk the tightrope again.For every Fed person that says rates are going up, one says No.Just the way they want it—and the market wants it.No consensus on up.

    • rc1269 says:

      that day isn’t over yet

    • scottycj1 says:

      The day is not over yet

    • johnnymagicmoney says:

      Remember Sesame Street……………..”which one of these things is unlike the other, which one of these things do not belong”


      China’s exports are down considerably
      There imports are down considerably
      There utility numbers are down
      There PMI numbers have shown contraction like 8 months in a row.
      But there GDP is still around 7% !!!!!

      Now considering this country is one of the least trustest countries in the history of mankind, is communist controlling all media and print, manipulates their stock markets, jails people who short (or threatens others they will end up in a ditch), and respects little copyright and patent laws, it is amazing to me anyone really thinks they are growing that fast still.

      So play the little song in your head again and ask yourself which number does not belong and which number is unlike the other?

  18. Dex T says:

    Oil demand will continue to remain weak through next year.

    IEA: Crude oil glut will remain in 2016

    Posted on October 13, 2015 | By Bloomberg

    “Global demand growth will revert to long-term trend levels of 1.2 million barrels a day in 2016, down from 1.8 million this year, amid a softer economic outlook for oil producers such as Canada, Brazil, Venezuela, Russia and Saudi Arabia. Consumption worldwide will average 95.7 million barrels a day next year, about 100,000 a day less than projected in last month’s report.”

    • Dex T says:

      All talks of Mideast instability from Russia are fully overblown. Iraqi oils wells are going strong. If they run into any trouble then Iran will soon be able to pick up the slack.

      “In the meantime, a defiant OPEC has been pumping at record rates, often exceeding its 30 million barrels a day production ceiling. This despite calls from some of its members, such as Venezuela and Libya whose governments are struggling with lower oil revenues, to cut output to help lift prices.

      The IEA reported that OPEC crude supply rose by 90,000 barrels a day in September to 31.72 mb/d “as record Iraqi output more than offset a dip in Saudi supply.”

  19. rc1269 says:

    This is a very unusual pattern in the S&P, on the medium term chart. Having come back to the 2020 area, after having two declines, I would say generally there is an extremely low – and I mean, very very low – chance that we do not shoot above 2020 in the near term.

    However, it’s also highly irregular that we did not make a lower low after the initial August low in SPX. Yes, we got close. Is close enough? I don’t know.

    Maybe this pattern just *closely* goes over 2020. this is an odd setup, IMO. but i guess we have to just assume that this follows the typical set up and we take off higher after closing over 2020.91

    naturally in the time it took me to type this the SPX just rallied the last 3 points it needed to get back to 2020

    • blackjak100 says:

      Looks like a textbook flat in the $spx now medium term. Am i betting we fall below 1867 now? No. I don’t think it’s unusual EW wise, but a ZBT to occur during a primary Dow sell signal less than 10% off ATH is very unusual I believe. Not sure it’s ever occurred.

      • rc1269 says:

        Fair enough re the flat; that is in fact presently my base case. However, given that the Dow and NAZ didn’t even get back within 3.5% and 4.5% of their prior lows, resp, that makes that structure (the flat) harder for me to swollow on the SPX.

        looking at the SPX through the lens of the Dow and NAZ make me cautious that everything from the late August lows have just been a big A-B-C counter trend B wave (currently topping out in C). we shall see!

  20. frommi2 says:

    Theres a good chance that wave v of 5 of the impulse from the bottom just finished, so get into da shorts!🙂
    (XBI looks like a good candidate…)

  21. H D says:

    “potential symmetry 2006 SPX” nice 10 HanDle rally right off it.

      • johnnymagicmoney says:

        its all about China right? Well imports fell 20% yes that means we should buy!
        its all about energy right? yesterday crude slipped almosty 5% and the S&P closed up. Today another bad energy report and crude is up and the market is flat now today

        Technology is a great thing but it has become a bad thing too in my mind. After all of the overbought conditions, the 2020 reistance level which has been repelled a number of times recently, the bad data, and the run up from 1870 without a fart of a pullback, I figured there to be a bad day today. Maybe it still closes down hard but if it goes to 2040 today on the hopes of more stimulus Ill throw my hands up, say F you and just laugh. I blame Google and the algorithm geeks. F-em all lol

        • Europe down around 1% which would be 170pts for us….but no dice-YET.Gold was down $10 at 6am and rallied to even.Surprising but investors are looking for a new trend to catch. Not sure it s gold-YET.

        • H D says:

          I’m trying to keep is simple, don’t think a perfectly symmetrical ABC from the 2019P has anything to do with anything but price action, China, energy report? IDK

        • johnnymagicmoney says:

          did I fail to mention that earnings have been abysmal so far?

  22. I’ll be watching the Friday 10/9 low and where price is relative to that level, especially at closing time.

  23. mjtplayer says:

    Page says:
    October 12, 2015 at 7:37 pm
    I doubt Fed will even raise rates in 2016. Recession is upon every country. QE4 is coming up next year.

    No Page, QE is done. Many people are discussing QE, especially in the bullish camp, but QE is done. The Fed and other central banks have tried it, have gone all-in on it, and it has not helped the economy one bit – not in the US, not in Japan and not in Europe. The surprise may be instead of raising rates, they go the other way and try NIRP. It hasn’t worked in Europe and has instead reduced bank capital as more people hold physical currency or transfer balances overseas or to the UK. The same will happen here, inducing cash/gold hording or transferring assets elsewhere. It will have the opposite effect as they think and will instead contract velocity, reducing economic growth and create deflation, just like in Europe.

    Big picture, you have to understand that it’s not about the economy – it’s about suppressing rates as much as possible so that gov’t (Federal, state & local) can finance themselves. With higher rates, they’re broke. The Fed and central banks will always find a reason to keep rates low and will continue rigging the inflation data so that it almost never shows any kind of real inflation, to help justify low/zero/negative rates,

    This is all about helping gov’t to survive, but as a result of low/zero/negative rates, pension funds will go broke, which will bring down state/local governments anyway, as the unions have negotiated that these pensions (and healthcare) cannot be altered or restructured. As a result, they will sink municipal governments, just like in Detroit. Chicago and Baltimore are next.

    • tomasso60 says:

      correct MJ
      then municipalities raise taxes upon property to continue to fund their pensions and keep civic employees. raise taxes on all sin products (state and federal) tax, tax and more tax.
      until they cannot do it anymore due to civilian population fighting back.

      • mjtplayer says:

        The death spiral: raise taxes to help finance debt and obligations, people leave or never move to those states/cities, as a result the politicians don’t receive the revenues they expected, so they raise taxes further – rinse and repeat.

        The biggest threat to real estate prices is not rising rates, it’s rising property taxes.

        • chrisk44342 says:

          All true. This is why I moved away from IL. That and the weather (:

          • torehund says:

            What happens when you drop the interest tool: All discrepancies are to be reflected in the currencies, and large shifts are bound to occur. This can be alleviated with huge import taxes fueling money into governments, ala the Trumps 35 percent import tax proposal. Would fit well if the dollar doubles.

  24. blackjak100 says:

    TC, still drop below 1956 pivot before you question the count?

  25. Is there a possible 1-2-i-ii situation from the 37-38 low in Crude oil right now?

    It is certainly worth a shot IMO. Risk is very limited.

  26. fotis2 says:

    Question :If one was staring a long term buy and hold portfolio from scratch what sectors should one look at for a 10 to 15% return return on investment including dividends spread over a dozen different companies?

    • fotis2 says:

      Looking at Gold miners,Platinum,Crude and Banks so far thoughts?

      • Well, oil stock must be taken in consideration for sure. As a long term buy. CVX, KMI, OXY, MUR…

        Gold miners too. FCX?

        Plus: INTC, CAT maybe.

        O is a great stock, good long term hold. DLR too, REITs pay good dividend.

        I’m not sure about the banks at this point in time though. JPM and WFC seem most conservative, therefore good long term holds.

        My 2c.

      • alexhartley1 says:

        The Gone Fishing Portfolio?

        • fotis2 says:

          Hahaha you know the story active trading is hard work…🙂

          • alexhartley1 says:

            It isn’t necessarily in a long term bull market but as we come to the end of this bull market in the next year or two (maximum) it could be pretty hard to make money on the long side. I remember Tony wrote once here that most (or a lot of) stocks will not make new highs during Primary V. I haven’t forgotten that.

      • rc1269 says:

        i would not look to buy any metals/mining except *maybe* RIO if you were so compelled. otherwise that’s a sector not to touch for a few years on the equity side, IMO.

    • frommi2 says:

      Buy and hold forever? None at the current point in time. You can`t hold cyclicals forever.
      Consumer stocks like PEP, CHD, etc. are not cheap enough for that kind of return.
      Its hard enough to find stocks that will compound their earnings/free cashflow at 10-15% for a long long time, and thats the only way i know of that will increase the price of a stock for the long term. But to reach these returns you have to buy them cheap, good luck at the bottom of the next bearmarket.

    • frommi2 says:

      When i think about it, maybe you have a chance for 10-12% returns with something like BRK.B,MKL,Y,MA,CHRW,LKQ,TDG,MCO,PCLN.

      • johnnymagicmoney says:

        buy GILD – great growth, great pipeline, and trades at an 8 PE. You could buy CELG, and AMGN too ………..regardless of what Clinton barks demographics support more wealth in the drug markets. Lots of companies got whacked in this correction and some deserved to be but from a valuation/growth/sell-off standpoint and holding long term I would back the truck up on GILD. My best long hold idea. I started buying in the 20’s.

  27. frommi2 says:

    DAX has finished its impulse from the bottom (9394) and already did one impulse down yesterday with a nice abc correction into the close. FTSE looks similar. So europe should get a big red day today.

  28. Just watching the Cubs/Cards, Mets/Dodgers games…they definitely have enough Viagra commercials going.They all have gorgeous women walking around in an empty bedroom talking about men with ED problems.I think it would be more realistic if a guy with an overweight, bad looking wife stood next to him and he said “If Viagra works for me with MY wife, it ll work for you”.Not the models they have on there now.Who needs Viagra with those women? Come on!!Cubs in 4.

  29. fishonhook says:

    I think all markets are inter-related now and now all floating on a sea of liquidity and QE, the latest one being the bank of China last night.

    Looking at the charts, I think China and Hong Kong need to turn down from here or the bear case will be lost/delayed. IMVHO

  30. Mark Moffitt says:

    My first post. Up until now I’ve been a lurker. IMO, EW is a vocabulary, not a tool for predicting the market. EW is tool for describing the past and an effective tool for communicating one’s opinion on the future direction of the market and nothing more. Tony is good at predicting the future direction of the market and using EW to describe his predictions. I suspect he would be just as good at predicting the future direction of the market without using EW. My opinion only. I understand many here will disagree with my assessment. TC, I appreciate all your effort on hosting this site. I enjoy reading daily. Good trading to all. Going back to lurker mode.

  31. EL MATADOR says:

    My 2c, if this was a true W3, it should have been stronger than W1 and it does not appear to have been. Even the Oct 2014 rally was stronger then this rally. I smell trouble brewing up ahead if not then I get to eat my own words.

  32. EL MATADOR says:

    CSX reports tomorrow AMC and it looks like a good short. That said is the cho-cho ride about over?

  33. Arthur Knopf says:

    Brief comment. Record high today in $SKEW at 148.9 (+14.2) only published since 2012 so a somewhat limited history. Previous high was 146 mid-Sept 2014. Also near-term high mid Sept 2015 at 142 three days before a top and a 100 pt decline in SPX. I have been waiting (as sign of top) for UVXY to drop to 30 vs ATL at 24, as well as 50% avg daily $ vol on VXX (today still at 70%).$SKEW&t=LINE&size=M&v=0&g=1&p=D&d=X&qb=1&style=technical

  34. Thanks, Tony.
    If this is actually intermediate wave-3
    of major wave-3 of primary wave-5 and we’re still in minor wave-1, there should be no surprise if we get a take-off Tuesday with a jaw-dropping gap up open and run for +2.4% into the close to complete minute wave-5 of minor wave-1.

  35. Roxie97 says:

    They better raise rates soon – Many Pension funds and Municipalities in deep trouble because inability to invest in equities – the next crisis is upon us.

    • mjtplayer says:

      They won’t raise and if they do it will only be a token amount. The days of getting 5% on a money market, T-Bill or savings acct are gone and never returning, at least not if the foreseeable future. Thus, pension funds will go broke, due to mandates of having 60%, 70% or as much as 75% in “fixed income”, depending upon the fund – but having target rates of return of 6%, 7% or even 8%.

      if the Fed normalizes rates, say back to 3% or 4% on the Fed funds, then the Federal gov’t and local municipalities go broke, with their combined $22 trillion (and counting) of debt.

      The Fed truly is between a rock and a hard place with major long-term ramifications. Broke pensions funds, or broke gov’t?

    • Page says:

      I doubt Fed will even raise rates in 2016. Recession is upon every country. QE4 is coming up next year.

  36. johnnymagicmoney says:

    The way I see it is this…………………..raise and the bull is over. Dont raise and its over anyway just not as soon. Wish people just accepted the global economic reality and repriced stocks now. This manipulation was great for a while but its beyond old now. Just get on with it you scumbags.

    • Dex T says:


      There are a maximum of a few months left of the bull if we haven’t topped already.

      And all of the Fed hand holding won’t be able to keep it up for ever.

  37. fionamargaret says:
    I wish someone would shut them up – makes you wonder what their holdings are – totally manipulative.

    Thanks Tony

    • Dex T says:

      Agreed. Weak trading day and after hours futures spike up. Due to this, obviously.

      The Fed members have been talking nonstop regarding rates. It seems like every few days another one of them is in the news- repeating the same damn thing!!! Rates will rise one day but we must be careful blah, blah….

      It should be illegal for any of them to own equities or any financial instruments during their tenure. Give them a pension and that’s it!

      • EL MATADOR says:

        Give them savings bonds and that’s it. no pension, no annuity just plain good ole US savings bonds.😉

        • Dex T says:

          Even better! But none of them would take the job… which could be the best thing.

          • johnnymagicmoney says:

            Infaultnthe FED plenty but investors and fund managers just as much. The writing is everywhere and has been visible for a long time. Moreover the Feds history of creating and mismanaging bubbles is well documented and recent at that. So to place so much faith in the FED or other central bankers or that the government of China is truthful about their data or that corporate earnings are good (when clearly they are not and that’s with the aid of massive buyback a mind you) is merely a reflection of greed and how that greed makes you completely unintelligent in your positive macro stance. Then again maybe investors and managers are just plain stupid.

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