Monday update

SHORT TERM: market back in pullback mode, DOW -208

Overnight the Asian markets gained 0.8%. Europe opened higher but lost 0.4%. US index futures were lower overnight, and the market opened 4 points below Friday’s SPX 1907 close. Right after the open the market continued to pullback until its hit SPX 1889 just past 11am. After that it rallied back to the opening level at SPX 1903 by 1:30. Then the market sold off into the close hitting SPX 1876, then closing at 1877.

For the day the SPX/DOW lost 1.40%, and the NDX/NAZ lost 1.50%. Bonds gained 8 ticks, Crude sank $2.35, Gold rallied $10, and the USD was lower. Medium term support drops back to the 1869 and 1841 pivots, with resistance at the 1901 and 1929 pivots. Tomorrow: Case-Shiller and the FHFA at 9am, Consumer confidence at 10am, and the FED starts its FOMC meeting.

The market opened the week at SPX 1903 and headed lower. It did not get any support from Crude as it declined from being +50 cents overnight to -$2.00+ during the day. The market tried twice to rally, getting back to SPX 1903 at 10am and then again at 1:30, but sold off into the end of the day. We labeled Friday’s SPX 1909 high as Intermediate wave A. Minor c was 0.618 Minor a. With the market in the Intermediate wave B pullback mode now, we see three levels of support SPX: 1872, 1861 and 1849. The first two are right around the 1869 pivot, and the latter the 1841 pivot. An Intermediate wave C rally should follow when B concludes. Short term support is at the 1869 and 1841 pivots, with resistance at the 1901 and 1929 pivots. Short term momentum fell to oversold after Friday’s negative divergence. Best to your trading this volatile market!

MEDIUM TERM: uptrend may be underway

LONG TERM: bear market


About tony caldaro

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334 Responses to Monday update

  1. Dex T says:

    tantrum rally

    Oil rallies on “calls” for production cuts from some OPEC members

    Equities rally because of “supposed” QE from the FED

    Been hearing these reasons for over a year now. We’ll see if there’s any truth tomorrow but I doubt it.

    • johnnymagicmoney says:

      honestly oil probably goes lower but I think its retarded that its this low regardless of the supply. When milk and other basic items costs more than oil its a little bit ridiculous. Adjust oil over the long term for inflation – its one of the cheapest things for the consumer ever. Its too cheap although I think its get cheaper.

      • Dex T says:

        At this point in time I agree. A few months ago I thought that oil would be contained around 30 and rally to the low-mid 40’s by now. However it isn’t going to rally because OPEC cuts production.

        I still think it can and will get to the 40’s but there is a lot of supply out there and it keep’s increasing. With us being in a bear market I don’t see that much upside.

        I expect it to go under $20 when we are reaching the bottom of the bear

      • valunvstr says:

        Using your reasoning, why is Nat Gas so cheap and has shown no signs for years of recovering?

  2. fotis2 says:

    Some posters were looking for a possible IHS pattern looks almost done 1hour SPX..

  3. phil1247 says:

    extension short es 1892………

    lets handcuff everyone again and close it there ,,,,,,right???

  4. johnnymagicmoney says:

    johnnymagicmoney says:

    January 26, 2016 at 1:56 pm

    this afternoon selloff looks quite corrective looking………….I see us closing near the highs. Bullish short term. Ultimately f-in bad


  5. Looks like PK is pretty money so far.

  6. Dex T says:

    Goldman Sachs thinks a new ‘commodity deflation cycle’ is just beginning and Caterpillar is going to get crushed

    “We downgrade CAT to Sell from Neutral with a 12-month price target of $51 (13% downside). We see 35% downside to consensus 2017 EPS driven by our view of structurally lower global infrastructure investment in the early stages of an extended commodity deflation cycle. We see 35% downside to consensus 2017 earnings per share driven by our view of structurally lower global infrastructure investment in the early stages of an extended commodity deflation cycle … We see a sustained right-sizing of commodity capex allocation in this cycle due to challenging producer returns and balance sheets – factors that we expect to drive lower cycle over cycle machinery demand and utilization.”

  7. tigertrader1 says:

    /ZB.. Is the bond market nervous ahead of yellin? or just toying with mere mortals.. /zb

  8. fishonhook says:

    The conundrum , as someone mentioned in Shanghai, down 6% yesterday. Has to stay above 2245 to stay above P1 per Tony.

    So that is only 25% lower than where we are now. Hence the S and P probably wont hit the catastrophic suggested by some of the uber bears, but will probably have 20% or so go on the way down.


  9. Lee X says:

    CL might be silly but it has decent hours,
    I’m spent, see you guys later and don’t let the hope of having certain posters getting stopped out of their internet positions take away from your own trading😉 you might miss something.

  10. aahmichael says:

    The market just put in a 30 minute 3br. If I was a daytrader (which I’m not,) then I would wait until the next hourly bar closed at 3:30, and if that is a down bar, then that will complete a 60 minute 3br. I would get short at the close of that bar, with a stop at 1905.19.

  11. GYN LAB says:

    Good afternoon all!
    double bar and 3 bar reversal expert fotis! Could you please help me out here – trying to learn more about these patterns: I think there is Double Top on hourly, also 3 bar reversal. Could you please explain briefly how to read these patterns, and what would be the target depending on the close of this bar?

  12. pbnj123 says:

    Question for rc1269
    Please look at the last page of Tony’s charts – the zzzzUST:$DJCBP weekly chart
    From where you sit on the credit side of things – is this saying anything to you that us equity guys are not paying any attention to – or am I just reaching?
    Lastly – during our domestic credit crisis 08-09 all the talk was on interbank faith/lending and trust – anyone watching that or at least the risk on players like DB or those that have large exposure to the collapse in commodities recently?
    Again – just wondering out loud and figured I would go to those that know WAY more than I.
    Thank you

  13. mjtplayer says:

    Low volume short-covering rally ahead of tomorrow’s Fed announcement – IMO. Nice a.m. gap-up, but it’s become boring, just trading sideways over the past 3+ hours.

    The SPX unable to get above Friday’s high is curious, stopped 2pts shy.

  14. spindoc73 says:

    Without having a vested interest, the perpetual AAPL stimulus pattern would seem more likely to turn opposite if this is a new bear market. It has been interesting to observe just how many gadgets the public can absorb though.

  15. phil1247 says:

    uncle 10

    are you saying i didnt cover my shorts at the low?????????????

    tightening stops on 75% of shorts

    i dont want to get trapped down here
    phil1247 says:
    January 20, 2016 at 11:44 am
    1798 next target
    kvilia says:
    January 20, 2016 at 12:01 pm
    Stops hit?
    phil1247 says:
    January 20, 2016 at 12:45 pm
    75% stopped at 1811

    • uncle10 says:

      hey phil, those posts are from a week ago? I was commenting on your todays post? you were just reposting you covered at the low from a week ago??

      • phil1247 says:

        did not cover any shorts today

        thought you were talking about when i covered shorts last

        not sure what your point is…..sorry

        • uncle10 says:

          you posted the following this morning along with a chart with some lines on it:
          caught bet ext short and long from lows …not adding any shorts until the long from low fails.
          so I assumed you were talking about today?? no biggie Phil just givin you a hard time. Keep up the good work and thanks for sharing. cheers🙂

  16. phil1247 says:


    CL coming back to test ext short .50 level at 32.63

    it failed there twice

    • John Arella says:

      Don’t believe it will fail this time, daily Macd turned positive and Toronto market is rallying from the lows but needs oil and gold to rally which are in fact rallying so looks good for oil right now.

  17. SDS $22.69 Long

    Stop at $22.50

  18. 123 abc says:

    Intermediate-B complete and five waves up…?:

    Tony et al, the OEW calls have been flawless; from the weekend report: “Intermediate wave B should find support around SPX 1860 (the 1869 pivot). Then Intermediate C should kick in for another rally.” —This is exactly was has occurred thus far when looking at the SPX futures. Thank you for sharing the wizardry of OEW, much appreciated.

  19. phil1247 says:


    what is your plan if we break above friday high???

  20. valunvstr says:

    Crap is rallying hardest again. For those still hanging onto a new market high, this is proof of a bear market rally.

  21. EL MATADOR says:

    Question for everyone; has anyone ever seen a True weekly Hammer (strictly book speaking) fail to make a HH above it’s own candle high prior to taking out it’s candle low? I don’t recall ever seeing one on SPX within the last 88 years of data.

    FYI – Careful not to confuse it with the Long-Legged (rick-shaw) Doji or Hanging Man.

    • rc1269 says:

      when you say “candle low” do you mean the body or the shadow?

    • rc1269 says:


      didn’t go back any farther than that. admittedly, they are rare

      • EL MATADOR says:

        10/3/14 …. is too close to the top the bearish dark cloud reversal pattern set was confirmed by the prior candle therefore the 10/3/14 candle should not be interpret as a hammer, IMO…. this was one of the points aahmichael was trying to stress earlier. This is where I think lot of folks misread candles and why Bulkowski’s candle statistical data is unreliable.
        similarly goes for 2/1/02 which the dominant confirmed set-up was the bearish hanging man from week of 12/31/2001
        9/17/99 was the 3rd consecutive hanging man.

        • rc1269 says:

          you asked for weekly hammers, not the context within broader set ups. those three dates all meet the defintion of weekly candle hammers, and a hammer is a hammer is a hammer. a setup, that may or may not validate/invalidate the usefullness of a hammer is a different question. i don’t use bulkowski. but bloomberg’s candle algorithm also agrees with me. and since we’re getting techincal, the week of 9/26/14 did not produce a DC as the open was not higher than the prior week’s close. nonetheless, i’m not sure what you’re trying to accomplish with your question at this point.

          • EL MATADOR says:

            point taken on the DC, let just say we had a one black crow or better yet a CN BD set up prior to this 10/3/14 candle. Question for you, how does Bloomberg algo and/or you distinguish a hammer from a hanging man since they are technically represented by the same candle line? I thought Steve Nison mentioned that the trend has some say on this, no?

          • rc1269 says:

            well the loose definition is that the hanging man “follows an uptrend” whereas the hammer “follows a downtrend.” now, it’s in the definition of what consititutes a “trend” that people enter a debate. in the strictest sense (and i believe this is how Bloomberg charts it) it is merely in relation to the prior candle. ie, if the body of the candle is above the prior week, then it’s a HM, if below, then a Hammer. clearly many would argue that one week isn’t exactly a “trend.” however, veering from that simple form/defition introduces one’s own subjective defition of a “trend.”

            my personal view is that one should take the candle signal in context with MAs, MACDs and where price is in relation to MAs in order to determine whether we’re in an “uptrend” or “downtrend.”

            as it pertains to the present, i would indeed consider it a bullish short term indicator. rarely do they not produce higher highs (not all time highs, just relative to the candle, as you’ve stated). however, context is again key. how many hammers can you count that happened just as we were entering bear markets, with MAs rolling over? and of those, what degree of bounce did they produce on average?

            i don’t know the answers. but i do know that i would temper my expectations accordingly.

        • Ryan Parker says:

          Actually in this case the hammer is coming within a bearish context because it was preceeded by a two black gapping candle pattern which I have found to be a very accurate/reliable pattern.

    • aahmichael says:

      Check out the 2nd week of September 2008, although you may say that wasn’t a true hammer.

    • gtoptions says:

      Agree, SPY weekly is a Doji variety.

    • aahmichael says:

      As I mentioned over the weekend, I can’t recall ever seeing a green (hollow bodied,) weekly hammer that didn’t CLOSE higher the next week, other than the 2nd week of September 2008.

        • aahmichael says:

          As I’ve pointed out many times, the weekly SPX bar of 8/28/15 wasn’t a true hammer, because SPX doesn’t show gap openings correctly. Please refer to SPY and you’ll see what that weekly bar actually was. Candlesticks on SPX are extremely useful, but they show the close relative to the previous close (+/- a couple of points maximum.) SPY shows the close relative to the open, which is what true candlestick bars are meant to do.

  22. phil1247 says:


  23. the 100% guy is surely getting nervous,i mean very nervous ….

  24. Jim Guthery says:

    Out of UTWI back into UVXY, of course with tight stops.

  25. Ryan Parker says:

    Question for Tony: Do you consider the secular bear market to have started in 2000, or 2007? Also, do you consider the previous two secular bears to be 1929-1949 and 1966-1982? Thank you for all that you do!

  26. amittsite says:

    Spx macd negative divergence in hourly…neutral on in balance..

  27. gtoptions says:

    Thanks Tony
    SPY ~ High Probability under way WPP ~ WR1 @ 191.16
    GL All

  28. Bands tightening on 5-minute; getting ready, for, something… 🙂
    Pankaj, I hope you’re right, but the market is one fickle chick; best not to fool with Mother Nature…

    • blackjak100 says:

      Bull pennant??? Internals very very good and holding up well so far

      • When it breaks, either way, could be a ripper.

        • blackjak100 says:

          Just remember You’re only as good as next call – P S next call could be in trouble just as everyone praised his last call – he just stated fri highs will hold

          • Yeah, he’s really putting it out there. It’s easy to go from hero to zero, especially if you have others trading off your advice; but that doesn’t happen around here. 😉

          • Puzzles me why people waddle around deliberately painting a bullseye on their own foreheads. For what purpose? There is no theory to handle nonstationary stochastic processes and even Nobel Prize winners (who really understand both theory and experiment) have been clobbered by the markets.

            It’s quite different if one takes Tony’s approach and advertises an algorithmic setup based on data. Here the structure is known and made public, and because there is no theorem/proof, you do not expect it to be failure-free. New data causes an adjustment to the algorithmic setup. This is really how experimental work leads to the development of theory, and how data suggests provable theorems. Well, or nearly so.

            I am very appreciative of Tony’s work and his approach. I hope people can see the difference between this and spontaneous bullseyes. And BJ, I appreciate your careful and well-explained work too.

          • I thought it was funny when they mentioned Bernanke was in charge of a hedge fund or something like that. Most of these big brains, as you stated, have crashed and burned. Doubt there will be an exception in this case.

            That being said, I hope Pankaj is successful in his own way. We know this trading stuff is hard enough. Yes, he’s being bold (or cocky), but that really doesn’t bother me. Besides, I do my own thing and, win or lose, I stick to the rules; it has worked well over the long term.

            I share your sentiment about TC. And I’m happy to read others views too; quite a few exceptional people here.

  29. rc1269 says:

    The SPX 34 week MA has crossed below the 89 week MA only twice in the last 20 years. First in Feb, 2001, shortly after that bull mkt high. Second in April, 2008, shortly after that bull market high.

    The current readings are:
    34 week MA: 2027.81
    89 week MA: 2026.22

    It will take an immediate and sustained massive rally to prevent that crossover from happening again.

  30. skmcobra says:

    Just going to comment here that if TC is wrong that the Cycle is done and we are in a bear market, many of you could miss a great rally this year in Major(Intermediate) 5 wave. I’m not throwing in the towel yet on the bull taking the reigns one more time to complete this Cycle. I do NOT believe we are in Primary A now. I think this is Major C of Primary 4, but then what do I know…

    • aahmichael says:

      Since the market no longer has the Fed to supply it with drugs, then the only way it’s going to go to new highs is with increased earnings, yet earnings are declining. So, what’s going to fuel the rally?

    • Dex T says:

      That a really, really big if. There are very few technical points in the favor of the bulls or any kind of P5. Just the same group continuously hyping the market like used car salesmen.

      You can always play short term rallies for days or weeks but to go long expecting new highs is a fools game.

  31. johnnymagicmoney says:

    I look at this simply

    after yesterday’s bad day if there was significant follow through I think we were toast and taking out the lows of 1812 in short order. Let’s see how this all ends today but Richmond fed positive, consumer confidence huge and above expectations, oil up a lot, and markets shrugging off China’s markets (which at least for today is a change in sentiment regarding their markets). If we keep accelerating all day, after yesterday’s big drop then this market is going run hard for the next week or two. Of course the FED meeting is a big day but I’m guessing the markets read it positive and hear what it wants to hear at least for this meeting. I like how it sold off this morning and then went to higher highs. Very positive action so far

  32. phil1247 says:

    11: 30 reversal period coming up

    will it ??

    • asaraniti says:

      LOL sounds like you are following DH like me. Isn’t he great. When the room is closed, I don’t trade.

      • asaraniti says:

        that was for phil1247

      • phil1247 says:

        yes dh is amazing ….thats why i dont bother too much with elliot wave for trading because its too iffy…. technical levels hold or they dont..cut and dried…interesting tho is that you can see ew big patterns as he describes his targets on daily and weekly

        • asaraniti says:

          yes, I comment in the room when EW supports his profit targets but he is focused like a laser beam on his methodology…but he is great at what he does.

          BTW are you Phil in the room?

          • asaraniti says:

            David Halsey. He runs a trading site, that is amazing. He uses the same methodology that some algorithms use. He has a book entitled Trading the Measured Move. Website is First 2 weeks are 1 penny if you want to subscribe it’s 29.99 per month. Some free stuff on the website.

            • aahmichael says:

              Thanks. I always wonder, though, if someone is so good, then why isn’t he managing money? Running a subscription website is really for nickel and dimers.

          • simpleiam says:

            Why would anyone want to manage someone else’s money if he has enough money of his own? But do agree about most websites…

            • aahmichael says:

              There are tremendous rewards, beyond the obvious financial rewards, of managing OPM. You can’t put a price on the gratitude that people have for the fact that you have made their lives better, and their families’ lives better for generations to come. In addition, most high net worth and ultra-high net worth people are incredibly bright, smart, and talented, and building extremely close relationships with people like that enriches your life as well.

  33. uncle10 says:

    Thanks Mr. T. almost 50 handle move before market even open. hehe still big boy🙂

  34. Board the train and enjoy the journey to 1560……Market giving wonderful opportunity…..

  35. Lot of short covering in SPX today I d guess.Also in GDX since the H&S didn t work as forecast.So GDX above the 50d(which is good).Now it can t drop back
    below it (which is bad).Silver along for the ride.Not much more to ask for except that it keeps rising from lower left to upper right.Are investors getting into gold anticipating the stock bear or is this just a quick trade?GDX 50d at 13.78 or so.See what happens.Good luck all.

    • I did notice last night a possible -div on gold(daily) if it got above 1113.RSI was through the roof when it did it a couple months ago.No way it could exceed that today.So possibly a pullback after today.

  36. stephenk1980 says:

    At least 1911 then reverse to at least 1840 ‘ish, unless we carry on to 1929, in which case we are going up, up and away!

  37. purplember says:

    thus far from 1909. abc for minor a 1975, abc for minor b 1899 minor c down to complete Int B or up to finish Int A

  38. Welcome to whips/rips-ville! Close gap at 1906.75? Pankaj view being challenged? Cats and dogs living together…

    My updated numbers:
    Bullish above 1900.54 with Stop 1881.06
    Bearish below 1869.43 with Stop 1888.87

  39. phil1247 says:


    was only able to sell a few bonds at 8am before they tanked

    looks good for bond cycles topping like we discussed yest

  40. fishonhook says:

    Ant reason for the blast up? Oil stablizing? or pre-fed short covering?
    RC you normally have read on what is happening out there.

  41. ko68 says:

    Tony. any chance that int B already is completed at 1878?

  42. phil1247 says:


    caught bet ext short and long from lows …not adding any shorts until the long from low fails

  43. Jim Guthery says:

    Come oil rip roar higher..

    • phil1247 says:

      crude is in the exact same situation as es shown above ….so the correlation continues for now…….

  44. mjtplayer says:

    SPX now trading 1,890 – which way for the next 30 handles? Down for a possible int B or up for minor c to complete int A?

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