Monday update

SHORT TERM: gap up opening faded, DOW -21

Overnight the Asian markets gained 0.5%. Europe opened lower but gained 0.2%. US index futures were higher overnight, and the market gapped up at the open to SPX 2056. The SPX had closed at 2048 on Friday. At 10am the SPX hit 2063 and then began to pullback. Around 11:30 the SPX hit 2049, then rallied to 2058 by about 1:30, and then headed even lower. Heading into the close the SPX hit 2042 and closed there.

For the day the SPX/DOW lost 0.20%, and the NDX/NAZ lost 0.35%. Bonds were flat, Crude rose 65 cents, Gold rallied $16, and the USD was lower. Medium term support drops to the 2019 and 1973 pivots, with resistance at the 2043 and 2070 pivots. Tomorrow: Export/Import prices at 8:30, then the Budget deficit at 2pm.

The market gapped up to SPX 2056 to start the week, hit SPX 2063, and then pulled back for the rest of the day. Lots of choppy action since the SPX 2075 uptrend high. Three waves down: 2043-2067-2034, three waves up: 2061-2042-2063, and now heading lower again. In the meantime negative divergences remain on the daily chart. Short term support is at the 2019 and 1973 pivots, with resistance at the 2043 and 2070 pivots. Short term momentum touched overbought during today’s rally, then ended the day oversold. Trade what’s in front of you, but invest on what you believe is ahead.

MEDIUM TERM: uptrend weakening

LONG TERM: bear market


About tony caldaro

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287 Responses to Monday update

  1. since the end of February, largest pullback was like 40 points. impressive. just to get back to 2033 need 47 from here

  2. vivelaamo says:

    Lowest volume of the year in SPX. Yeah really strong rally. I’m short until I see good enough reason not to be. Will scalp in the mean time.

    Cracks me up how we any kind of move up and it means ‘P5’!

  3. Tony Jordan says:

    Probably all of the 3 of 3 done now. 4 of 3 likely no further back than 17660/2055 at the deepest. Below 17645/2050 invalidates the count. Good luck tomorrow.

  4. mrtraderguy says:

    Stocks go up?! Inconceivable!

  5. ajaysinghi says:

    Expiry at 2095. Retracement tomorrow and then 2088 and 2096 on the day of expiry.


  6. Got stopped out on my shorts and TVIX. you win some and you loose some.
    This market is still relentless!

    • I will be out on a long weekend and tomorrow is my last trading day. As I am out the next days i hope this market doesn fall then.

      Need to regroup and wait for the momentum to turn

  7. johnnymagicmoney says:

    don’t worry folks I just heard on TV that the market is now expecting growth of earnings significantly higher in 4th quarter of this year!!!!! LOL

  8. frommi2 says:

    Looks a bit like the next bulltrap. Really hard to see something bearish, but thats exactly the problem. Nikkei could have finished its wave 2 now, so maybe we see some red futures overnight again. But we shouldn`t go much higher or the bulls will finally win.

  9. student8888 says:

    TraderJoe, what an amazing call when many were expecting a big drop today! Do you have other technical indicators to support your 4th wave triangle? one of the reasons why I was skeptical of the big sell off today is because of opex week.

    bulls win this battle almost 80% of the time on day 2! since max pain is around 2040, we could pullback the rest of this week. nice call again TJ. enjoy reading your your thoughts and analysis.

    • Thanks student. The most important Fibonacci five factors were 1) the DOW having reached the 1.618 extension, as I had noted on here. Elliott tells us we ‘should’ look for an impulse then, meaning this would have been a fourth wave ‘of some type.’ When a ‘C’ wave makes a 1.618 extension, the drop should be fast an furious, not the overlapping mess of the last few days, 2) the channeling guideline was met perfectly, with wave 4 coming down to attack the channel to generate bearishness, and further wave 4 met a perfect 0.236 Fibonacci retracement, 3) the Elliott Wave Oscillator had not retraced more than -40% with 120-160 candles on the chart (i.e. the 2 hr chart below), 3) the market was ‘essentially’ holding the 18-day moving average of closes, or “line in the sand” as per the paraphrase of Ira Epstein’s trading rules that appears in my blog, even though the “battle between the bulls and the bears was clearly shaping up at that level, 4) per my proprietary sentiment index, the % bullishness was only 49.7% bullishness, meaning a lot of people were still negative (including many on this site), and 5) the fractals that had to break on the down side to generate lower counts simply hadn’t broken.

      SPX - Two-Hourly - Apr-12 1644 PM (2 hour)

      Hope this helps.


  10. H D says:

    Tuff market. Think SPX has only closed 7 days over the 2043 pivot this year. Stalking a B wave? from 2033.80 C=A 2066.57.

    If higher than 2073 pivot ET’s triangle count will be gold medal winner.

    • aahmichael says:

      fwiw, from the 2033.80 low, I’ve got A up to yesterday’s open at 2062.93, and B at this morning’s low at 2039.74. So, with that grouping, C=A at 2068.87. Today is the 6th day in a row that we’ve essentially traded both 2042 and 2062.

  11. Sandra Dons says:

    Strange kind of bear…

  12. NINJA SHADE says:

    LOL that massive stop trigger above 206.07

  13. llerias7 says:

    You have to be a bull these days IF want to make $$ (minor 5 of major 1 of P5 underway)

  14. fishonhook says:

    I note EW’ers tend to go silent when it goes against their count. And then reappear later with the alternate
    Pugsma hasn’t tweeted since April 5th
    Our host has quit commenting (which is his perogative)

    Coolbiz just cancelled his bear stance and said oil going a lot higher.

  15. mharrison60 says:

    From weekend note “Any rally above SPX 2061, before breaking 2034, could suggest the uptrend is extending yet again”.

    Thoughts on extension target for B wave?


  16. zvyezda says:

    Possibility of a corrective wave from SPX 2075 consisting of a larger A-B-C still in formation with A being 2075.07 to 2033.80, currently up in B from there and I think targeting 2066, with a C afterwards taking us down to 2024. If we break 2071 then I think the pattern fails.

  17. vivelaamo says:

    What I don’t get is if it’s risk on then why is gold holding up?

    • sixpack says:

      Maybe the money has to go somewhere. Can’t all go into stocks. And ya, maybe it will create a bubble. Who knows. I know this much… the top of P5 I’m gone.

  18. johnnymagicmoney says:

    Oh I finally get it. man what was I thinking. The GDP at zero, earnings down ten percent, China chuck full f ghost cities, Japan at 270% debt to GDP with deflation and in a recession, and Europe with no growth and deflation was all taken care of by an agreement between Saudi Arabia and Russia on freezing some crude. Wheew man for a second there I thought there were problems out there. man I am going long now!!!!!

    • NEWBIE says:

      Greatest Depression Coming, it cant be stopped only prolonged.

    • ewmarkets says:

      Looks like all those problems tanked the market in August and then again in January and early February. Now the market is looking six months ahead, into the 4th quarter. And seems to me, so far, the market has decided 4th quarter won’t be worse than now and perhaps it will even be better than now.
      Really, how bad it is right now is not driving the market. Is it getting worse or is it getting better in six months?

      Perhaps we are not in a bear market or P5. Perhaps we’re still in P4 🙂

  19. sixpack says:

    Great chart Trader Joe. I follow Fedex closely. Been following it for years. I labeled P3 alot different than you did, but I’m at the same place with P5. The 165 level has alot of touches the last couple of years. It’s a resistance level. Looks like it might clear it today. Bull market roll on.

  20. DAX still looking very interesting.

    W1 10100
    W2 9400
    1.000 W1 = 10800
    1.618 W1 = 11700

    Might happen in a very unspectacular grinding fashion. Anyway, been wrong more than I’ve been right.

    Nikkei will crash though.

  21. fishonhook says:

    I would hate to know the cumulative losses sustained on the blog waiting for this damned C.
    I know I have my share

    • mrtraderguy says:

      Yes, very painful to read most opinions here. I feel for them.

      • johnnymagicmoney says:

        its just not a market you can trust. But should that be surprising? Each market is different and this one as well. I just think technology in some ways has utterly destroyed things.

    • vivelaamo says:

      At risk of losing a lot of what was made from the whole move up?Live and learn hey. Still not convinced with the move up although very close to having to take loses. It’s still chop chop in my books.

    • johnnymagicmoney says:

      I am actually ok. Could be having a banner year but its just ok. I just took off the SPXU trade I had the other day for a profit that will allow me to go to dinner but that’s about it. Still have longs in utilities and treasuries and have lost in hedges. every time I am tempted to go further long I look at the charts and say how can I buy right here? Just doesn’t make sense to me

  22. So yet another day, of Buya short setups, 3 bar reversal setups, double negative divergence etc etc all to be trashed by the bull, Bears go home again shacking there heads, how could this be. Lowered earning lowered GDP. Well that’s just what a bull does. Squeeze. 2016 common, try 2116.

    Giddy up

  23. ..just thought I’d mention the FDX chart now (already) has five waves up off the Jan bottom, with another new most recent high. (Could go further here – just noting five waves up can be counted).

    FDX - Primary Analysis - Apr-12 1347 PM (2 week)


  24. fotis2 says:

    Looks like a good place for short with few $ risk stop just above trendline

  25. so i am an ex enron. when you put all the smart guys in one room what happens. when you have smart guys on one forum what happens. we have all seen it in pass few days

  26. Arthur Knopf says:

    HALFWAY THERE. Over the weekend I posted that the markets would likely rally into opt exp to SPX 2070/80 on the back of strong oil before any substantial decline. We got 2/3 of it the first two hours Mon, then pulled back for the typical turnaround Tues

    • reddragonleo says:

      I still think we are going to 210 on the SPY before really rolling over, but certainly we could pause at your targets for this week.

    • simpleiam says:

      Lots of resistance around 2100, a whole lot. We make it to new highs, then pullback, would you want to BTD? It’s worrisome any way you look at it.

  27. looks like the only question is do we end up 30 or 40 points today.

  28. Tony Jordan says:

    A primary bear case proposition revolved around the 1-2 i-ii count to the downside. But each time the market bounced up again another i-ii buckle my shoe had to be added until the likelihood of a material move lower in the near term has all but vanished. If we put the bear case to bed for the time being and turn our attention to the possibility or probability of a HH and the potential termination area. For example, Trader Joe’s chart has wave 1 (from 1810) measuring 137 points and wave 3 at 184 points. If we assume wave 4 ended today at 2039 then we have a long way to go assuming again we are in a 5th wave. This makes some sense when we look at the time duration of the sideways action of the wave. Specifically the longest consolidation since 1810 therefore validating the likelihood of the larger 4 in the sequence. If the 5th wave was only 50% x wave 1 the target would be around 2107 and that would be a minimum projection based on generally accepted fib relationships. In the very near term looking for “3rd of a 3rd” on the INDU to top out around 17733. If we going to 2107 or higher then this would be only 3 of 3 of 1.

  29. sixpack says:

    The fed is trying to drive that cash out of the banks. That’s the whole idea behind negative interests rates. We shall see if they can do it.

  30. mrtraderguy says:

    There seems to be much confusion and frustration that the market and commodity stocks are shooting up today. Do not be surprised.

    What would you guys say if I told you there is NO OIL GLUT?

    Ponder that for a moment.

  31. sixpack says:

    Dex – It may be true that there are alot of people that have very little (including all the youth right), but for the people that do have money….there’s mountains of it. The banks are bursting at the seams with cash. That’s why they won’t pay any interest. They don’t need anymore money. If they raised the rate 1% it would gush all over them.

    • simpleiam says:

      This was likely the discussion in the Fed meeting and with POTUS. Auntie’s in a bit of a pickle. Anything she does has negative consequences for someone.

  32. simpleiam says:

    Y’all have a great day. No more posts for me today. (Yea! Yeah, I know.) Bye!

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