Monday update

SHORT TERM: consolidation day, DOW -24

Overnight the Asian markets finished mixed. Europe opened lower and lost 0.5%. US index futures were lower overnight, and the market opened two points below Friday’s SPX 2075 close. As the market continued to pullback New home sales were reported lower: 468K v 552K at 10am. Also at 10am the SPX hit its low for the day at 2067. Then the market tried to rally. At 1:30 the market had risen to SPX 2074, but then it pulled back to end the day at 2071.

For the day the SPX/DOW were -0.15%, and the NDX/NAZ were +0.10%. Bonds gained 6 ticks, Crude lost 75 cents, Gold slipped $1, and the USD was lower. Medium term support remains at the 2070 and 2019 pivots, with resistance at the 2085 and 2131 pivots. Tomorrow: Durable goods orders at 8:30, Case-Shiller at 9am, and Consumer confidence at 10am.

The market opened slightly lower to start the week, traded down to SPX 2067, and then drifted sideways for the rest of the day. The pullback from Friday’s SPX 2080 uptrend high to today’s 2067 low was enough to trigger a wave reversal. We now have six waves from the recent SPX 2017 low: 2055-2042-2078-2064-2080-2067 (so far). There are a few possibilities here. A pullback to SPX 2064 would suggest Minute i ended and Minute ii is underway. A pullback to below SPX 2055 would suggest Minor 3 ended and Minor 4 is underway. If the market makes new highs before either of these two, Minor 3 is still subdividing in Micro waves. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: bull market


About tony caldaro

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92 Responses to Monday update

  1. amy8walter says:

    There is a gap on SPX daily at 2055-2058, we’ve only reach 2058.84, will it get fill some times between today (15min left) and tmrow b/4 next leg up? Thx!

  2. Dex T says:

    A huge drop- No surprises here!

    BP quarterly profits collapse on tumbling oil prices

    “Net profit dived 64 percent to $46 million (42 million euros) in the three months through September, compared with $1.29 billion a year earlier, BP said in a statement.

    Profit adjusted to reflect the value change in oil inventories sank 40 percent to $1.82 billion from $3.04 billion. That however beat market expectations of $1.26 billion and sent BP’s share price higher.”

  3. pooch77 says:

    Transports getting hammered

  4. nazdaq is so excited yellen is speaking tomorrow, probably going to be green at the close in anticipation.

  5. lobohemes says:

    The spread between QQQ and IWM is the widest in 14 years. The same for QQQ and SPY. It seems like a high probability pairs trade.

  6. To add just another ‘lens’ on the market – regardless of the wave count being used, the chart below shows that hourly S&P is currently traveling in a ‘wedge’ shape from the September low – rather than a parallel. Wedges can resolve into parallels in two ways: the lower line can drop to form a better wave fourth wave, or the upper line can be pushed out much higher to make a better third wave – thus forming a better parallel. So, the presence of the wedge shape ‘does not’ mean this wave is becoming an ending diagonal.

    And, we all know there is a Fed meeting result tomorrow. However, if the upper wedge boundary line acts as resistance to further upward movement, it could result in a turn, regardless of the wave count being employed. And, if the wedge pushes out much higher, it would be sign of a stronger market, rather than a weaker one, instead. Something to keep an eye on.

    SPX - Hourly - Oct-27 1343 PM (1 hour)

    Cheers and enjoy the chart.

  7. ABchart says:

    Minor 1 was 48 points.
    If Minor 5 = Minor 5, target 2059 + 48 = 2107
    If Minor 5 = 1.27 Minor 5 , target 2120

    ES: MP give target 2114.50 (SPX 2120 cash)

    Just saying 🙂

  8. Page says:

    Expecting a significant markets drop this week, SPX could go below 2000.

  9. Dex T says:

    Another side of the oil investment world. Oil continues to get beaten down even as the S&P, Do and Nasdaq have rallied. If a rally can’t get started soon- by the end of the year -then it’s going to be a long time before there will be a new bull market.

    New way to bet on oil wipes out billions in investor savings

    “In the past year, investors have lost $20 billion in publicly traded drilling partnerships, or $8 of every $10 they had invested, according to a report prepared by FactSet for The Associated Press. That figure does not include losses from $37 billion of bonds sold by the partnerships in the five years since 2010, many down by half in last 12 months, or losses from bets on private partnerships that don’t trade publicly and are difficult to track.”

  10. ABchart says:

    Hidden positive divergence on CAC and DAX. SPX (cash) reached 2062. The low may be done, even if the ES still have a goal at 2051.50 (may be after the regular market)
    uptrend for me tomorrow.
    ES from friday:
    SPX from sunday:

    Good luck!

  11. nsteve24 says:

    upper tag of the downward sloping 3-day trend line, should be down rest of the day from here

  12. fotis2 says:

    A little early but looks like option1 and Minute ii uderway.

  13. kckim04 says:

    Tony, you and your team has been pretty spot on calling the wiggles. So thank you. Any thoughts on downside target for Minute Wave 4 and upside target to end Intermediate Wave 3? Thanks!

  14. uncle10 says:

    Thanks Tony.
    Oil and the yen should not be ignored.
    It’s all the Fed’s fault…. 😉
    gl all.

    • torehund says:

      Oil entering the monster slide.

      • Would take stocks with it, if it happens.

      • simpleiam says:

        Sure is looking like it. This is my last trip to Europe, and I was supposed to be assigned through next year, but just got told it’s done after this one. O&G cutting back hard now, but not all are announcing it.

        • EL MATADOR says:

          O&G corps will most likely announce any “one-time” write-downs ( note I say “one-time” because its not really a one-time thing in truth) separate from there eps announcement, either before or after depending if they plan to goose their eps. last week I mentioned that it was interesting to see both XOM and CVX announce on same day and AMC. Something big is coming out the mouth from those two heavy weights.

  15. blackjak100 says:

    I know my opinion doesn’t matter to OEW, but sure looks like minor 4 as the chart has the ‘right look’ for it.

  16. gtoptions says:

    Thanks Tony
    SPY ~ WPP @ 205.73 ~ Gap @ 205.22
    Gl all

  17. pbnj123 says:

    Tony good morning
    One question that has been confounding me has to do with the long term view.
    Why couldn’t 2000 have been SC1 2002 SC then 2007 C1 2008/09 C2 and we are just moving up now in the first parts of C3?
    It fits your criteria of what “is” to happen with the potential upcoming decline of 45-50% BUT it already happened.
    Can you shed some light on this?
    I just don’t see 3 back to back 45%+ declines in 15 years.

    Now I will say this – in Snowball (the book on Buffett) he talked about that period from 1967 to 1981 where the DOW went exactly nowhere for 17 years and maybe the same in cyclical terms can happen here, but even then back at the completion of that period the economy grew 5 fold and the profits of the fortune 500 companies grew as much BUT the market went nowhere – this time around I have no idea as everything seems so polluted and the fed intervention has things all over the map…
    so maybe the great decline (45-50%) already happened?

    Just thinking out loud but would like your view to help clear what I am not seeing here.
    Thank you

  18. blackjak100 says:

    TC, what if pullback bottoms between 2056-2063? Still minute ii you think?

  19. mjtplayer says:

    Bad durable goods numbers just reported (-1.2% – which was slightly less negative than expected) but with big downward revisions to the Aug data. The parade of bad economic data continues

    • tommyboys says:

      Chronically looking at the economy to decipher the stock market will land you in the poorhouse.

      • nsteve24 says:

        just watch Oil and the Yen
        CLZ5 down to 43.14, another -2% yet again, no new highs without an Oil rebound
        Yen strengthening too, word from ministers is no BOJ stimulus Friday

        • nsteve24 says:

          CL just broke below 43

          • nsteve24 says:

            CL has clearly broken lower support level at 44 which has held since Aug. 27, projects a wave 5 down to retest lows at 37 maybe a bit further.
            still believe SPX heading to 1950 weekly gap closure at minimum, call it Major 4 if you are Bullish or 61.8% retrace of Major 3, this also aligns with the ’11 analog for those tracking that, could very well have completed Major 3 of V at 2080

  20. rc1269 says:

    morning Tony

    SPX 208/500 companies reported:
    sales -2.76%
    earnings – 2.68%

    happy Tuesday!

  21. Anyone interested in fractals might want to overlay the weekly 2011 chart with this year.Interesting.A drop,rally, test(double bottom)and a rally for 3 weeks into October–like this year.2011 had a 9% correction after that second rally.2012 similar, but earlier in the year.Some late night food to munch on–no charge.

    • Actually meant 2010 similar to 2011…2012 not an example.Both 2010 and 2011 had that second rally(like we re in now) sell off substantially.We shall see if history repeats again.

  22. torehund says:

    …you find the man, we find the crime. If you just scratch the surface on a company like Valeant, an oasis of “sleeping crimes” appear. Nailed for a first crime, the scandal has ample substrate to feed upon itself. Judges act on reflexivity, not on objectivity (then they would have been jailed a long time ago, and never reached this far).

    • torehund says:

      ..and if the Boots very far up in the political system have had an interest in making the Valeant “acquisition dreams” come true, what better way to hide it than going against it, just before leaving office.

  23. torehund says:

    Thanks Tony.
    A day of nutting in the markets, like a day spent in the bureaucracy.

  24. tomasso60 says:

    thanks Tony

  25. EL MATADOR says:

    Tony are you seeing any “spooky” fractal/symmetry between the Oct 4th to 28th 2011 rally (218 points in 23 calendar days) vs current rally form Sept 29th 1871ish low (208 points in 24 calendar days so far). check out the Bars, RSI(5), and MACD on the hourly, daily and weekly time frames, spooky symmetry, IMO.

  26. simpleiam says:

    MLPs getting destroyed. I might work O/G, but I don’t buy the stuff, except to fill up the tank.

  27. nsteve24 says:

    nice jump in the VIX to 15.31 today too up +6%

  28. simpleiam says:

    Thank you, Tony.

  29. nsteve24 says:

    CLZ5 just hit 43.66 after the close down another -2%
    if it doesn’t turn around there will be no new highs

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