weekend update

REVIEW

A choppy but interesting week. The market had 1% swings several days this week, after it had remained in a 1% range for the entire previous week. In the end, new uptrend highs and the uptrend reached the OEW 1523 pivot range on friday. For the week the SPX/DOW were mixed, and the NDX/NAZ were +0.45%. Foreign markets did not do as well. The Asian markets were -0.3%, European markets were -1.3%, and the DJ World index was -0.4%. Economic reports for the week were light, but remained with a positive bias. On the uptick: factory orders, the monetary base and the WLEI, plus weekly jobless claims and the trade deficit improved. On the downtick: ISM services, consumer credit and wholesale inventories. Next week we get retail sales, industrial production and consumer sentiment.

LONG TERM: bull market

While some are still calling this four year bull market a bear market rally. The NAZ hit its highest closing level since 2000, and we at OEW are still counting uptrending impulse waves from the Mar09 low. One may be wondering what is driving this bull market, while GDP growth has remained meager and some have remained pessimistic throughout. The following chart, which we have been tracking since 2010, illustrates the FED’s liquidity programs: QE 1, QE 2 and currently QE 3 are the driving force. The liquidity created by the expanding monetary base.

fmonetaryBase

Notice as the FED increased the monetary base from $875 bln in late-2008 to currently $2.829 tln, with the three quantitative easing programs noted above. The rise has unfolded incrementally in Elliott waves. QE 1 created Primary I and Major 1, QE 2 created Major 3 and the completion of Primary III. Now QE 3 is creating Primary wave V. The stock market, however, bottomed in March 2009 only after the monetary base had doubled. This is similar to what occurred during the last deflationary Secular cycle 1929-1949. When FDR doubled the monetary base in early 1933, by calling in all the gold in the country to the treasury and then increasing the price of Gold from $20.67 to $35.00 an ounce. We were on a gold standard then. FED chairman Bernanke knows his history.

While the monetary base has continued to climb, the stock market has risen in Elliott waves of its own. We have been counting the March 2009 SPX 667 low as the beginning of a multi-decade Supercycle bull market. Just as we have counted the July 1932 DOW 40 low as the beginning of the last multi-decade Supercycle bull market. The one that ended at DOW 14,198 in October 2007. Supercycle bull markets unfold in five Cycle waves. Cycle wave [1], after the 1932 low, lasted five years. This Cycle wave [1] is currently in its fourth year.

SPXweekly

Cycle waves unfold in five Primary waves. In this bull market Primary waves I and II completed in 2011 at SPX 1371 and 1075. Primary wave III has been underway since then. Primary wave I divided into five Major waves with a subdividing Major wave 1. Primary III is following a similar path, but Major wave 3 is also subdividing. Major waves 1 and 2 ended in 2012 at SPX 1422 and 1267. Major wave 3 has been under way since that low. Major wave 3, just like Major 1, is subdividing into five Intermediate waves. Intermediate waves i and ii also completed in 2012, but at SPX 1475 and 1343. Intermediate wave iii is the current uptrend, and it has already made new bull market highs.

MEDIUM TERM: uptrend

The current uptrend, Intermediate wave iii, has been naturally unfolding in five Minor waves. Minor wave 1 was relatively easy to count, it unfolded in five Minute waves with a subdividing Minute wave i, and ended at SPX 1424. This count is posted on the hourly chart. Minor wave 2 was complex and unfolded in an irregular flat, ending at SPX 1398. Minor wave 3 has been rising since that low, and was relatively easy to count until it hit SPX 1510 a week ago wednesday. After that the market had more significant pullbacks, but continued to make slightly higher highs on the rallies.

SPXdaily

We posted a count in last weekend’s report, and remained with that count until late friday. Now it is clear there was an extended wave within nano wave iii. This Minor wave 3 has subdivided into five Minutes waves, five Micro waves, five Nano waves, and even five Pico waves. We are out of waves labelings at the Pico level so these extensions should end soon. This choppy week, and relentless upward churning, nevertheless, has carried Minor wave 3 into our target: the OEW 1523 pivot range, (1516-1530). With a negative divergence now starting to unfold on the daily chart, we believe this pivot range will contain the progress of Minor wave 3. Then a Minor wave 4 pullback, between 30 and 44 points should follow. After that another Rally, Minor wave 5, into the OEW 1552 pivot is expected. Medium term support is at the 1499 and 1440 pivots, with resistance at the 1523 and 1552 pivots.

SHORT TERM

Short term support remains at the 1499 pivot and 1471/75, with resistance at the 1523 and 1552 pivots. Short term momentum hit overbought on friday and ended there. The short term OEW charts remain positive, after a couple of swings both ways this week, with the reversal level now at SPX 1507.

SPXhourly

We adjusted, based on recent market activity, the high of Micro wave 3 to SPX 1514. This puts Micro 4 at SPX 1495, then Minute waves iii and iv at SPX 1515 and 1498 respectively. Minute wave v of Minor 3, should be underway now. Typically, during this bull market, Minor waves have unfolded in distinctive patterns. We have not seen that pattern to suggest a Minor wave 4 has occurred. Therefore we are labeling this rally from SPX 1398 as a continuation of Minor wave 3. However, we are now carrying an alternate count on the DOW charts suggesting Minor wave 3 and 4 have already occurred. The deciding factor, at this point, would be the OEW 1523 pivot. Should it be cleared before a sizeable pullback occurs, then the DOW count becomes primary. If not we would expect a sizeable pullback after this rally ends. Extending, subdividing waves, are always difficult to anticipate and count in real time. Best to your trading.

FOREIGN MARKETS

The Asian markets were quite mixed on the week losing 0.3%. We now have two indices in confirmed downtrends: S. Korea and India.

The European markets were all lower except for Greece and lost 1.3%. We now have four of the eight indices we track in confirmed downtrends: France, Germany, Spain and the Stox.

The Commoditiy equity group was mostly lower for a net lost of 2.2%. Brazil is now downtrending.

The DJ World index is still uptrending but lost 0.4% on the week. This week the selling in Europe, and other areas, have shifted the world scene from 100% uptrending to only 65% uptrending. This typically occurs when the US is getting close, within weeks, to an end of its uptrend.

COMMODITIES

Bonds continue to downtrend but gained 0.5% on the week.

Crude remains in an uptrend but lost 1.9% on the week.

Gold is still trying to get an uptrend going but ended the week flat.

The USD is still downtrending, but gained 1.4% on the week.

NEXT WEEK

Tuesday kicks off the economic week with the Budget deficit. Wednesday: Retail sales, Export/Import prices, and Business inventories. Thursday: weekly Jobless claims. Then on friday: the NY FED, Industrial production and Consumer sentiment. The FED has a speech and testimony scheduled. Monday: vice chair Yellen speaks at 1:00 in Wash., DC. Thursday: FED Governor Tarullo testifies before the senate on Dodd-Frank. Best to your weekend and week.

CHARTS: http://stockcharts.com/public/1269446/tenpp

About tony caldaro

Investor
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133 Responses to weekend update

  1. Ronin I3 says:

    Please Paypal me before proceeding to the best forum for all trading/investment ideas and comments.
    http://tinyurl.com/cm7s9lo

  2. Tom Green says:

    Boy these diagonal wedges are tough enough. Sounds like too many participants have their thongs on too tight.

  3. CygnetNoir, formerly known as, THDT says:

    I tried to post earlier, but it seems not to have taken. This is a test. Ignore me.

  4. mokiepon says:

    Wonder what Tony does when he runs out of pico waves? M

  5. pooch77 says:

    Looks to me we go up into Obama speak 1521-25 tomorrow

  6. H D says:

    I don’t post these very often but 30 seconds sums up my market thoughts.

  7. torehund says:

    Seems like the solar sector is trying to break out, could be start of wave 3.

  8. pooch77 says:

    Anyone we gonna break 1518 today??

  9. scottycj1 says:

    Market peaked Friday 2-8……serious correction about to start

  10. CygnetNoir, formerly known as, THDT says:

    Hi Tony,

    Are you considering the possibility that we did get our minor 3 top on Friday, and that this here is the begnning of 4? Or do you think odds favor we work that 1523 pivot a little more?

    By the way, I am changing my handle to cygent noir, which is another of my internet personas. It has been a bit too easy for people to confuse me with HD (The homeles daytrader, i.e. THDT was too close to “HD,” and sometimes it was even shorted to “HD.”) So out of respect for the real HD I will from here on out be known as cygnet noir, or CN for short.

    For now, the avatar remains, so if there is any more confusion, just remeber I’m the guy who lives out of a shopping cart down by the goose poop.

  11. the new weekly 2faced trades are:
    the new weekly shorts are: psmt ann, tck, nsp, ivc, pmfg, echo, guid, ssd and rvbd.
    the new weekly longs are sgi, rsh, cimt, sncr, lci, ntwk, manu, edap, whx and ntap.
    purchases will reflect friday’s closing prices, 2013/02/08.

  12. mike7x says:

    Thanks for the Weekend Update Tony! Let’s get to that 1552 (SPX) pivot by the end of Feb. before the Sequestration hits on March 1…cuz the geniuses on Capitol Hill are looking for a fight. The timing fits for that 5% (or more?) “correction” though.

    Anyway, hope your weekend is going well and I hope we’re done with Pico waves. Did you know that there is a volcano in the Portuguese Azores called Ponta do Pico? Confuses me too! ;)

  13. fionamargaret says:

    Here is an update to the “megaphone” pattern submitted a few months ago……
    http://www.amateur-investor.net/Weekend_Market_Analysis_Feb_9_2013.htm
    …note the S&P has to go above 1576.

    Bradley’s looks somewhat similar…….
    http://www.robertew.com/invest/bradley/br2013.jpg

    Thanks as always Tony.

  14. Tony, Looks like you have a line in the sand, Jan 2 gap fill 1423, this month. And what if? Trying to figure out what that would do to your count. Just a thought.

  15. torehund says:

    The large japanese C that could have taken the index to just below zero really isnt done until its as long as wave A (from 18 000 to 7000). Instead of dipping all of japan into the sea it still is a C but bending upwards. So then projections are pretty enormous if the positive bend on this wave persists. Good thing is that when the C plays out we will get a brand new motivated Japanese wave. Ok a little madhatterish I am, but still…

  16. ko68 says:

    Thanks again Tony. I’m though å little confused here. Yoy said last week that a minor 4 pullback had to be at least 30 SP500 points to be valid. In this update you generate an alternate Dow-count where minor 4 is finished and minor 5 running.

    Anyway; whats the probability of the Dow-count as you see it?

    Thanks.

    • tuamotu says:

      Ko,
      If we took SPX from 1451.64 and consider this move 1509.94 – 1496.74 – 1514.41 – 1495.02 as a-b-c we get a 30.9% retracement for wave 4…
      We can consider a 23.6% retracement to be relatively shallow but this can fit.
      If this is the case, we are in wave 5.

    • tony caldaro says:

      no probabilities … just using the 1523 pivot

  17. pooch77 says:

    So how deep of drop is Demark talking about? I see Tonys drop to 1480 then a run back up to 1550-75 and then a more substantial drop to 1400-47 area.1st drop will tease bears and when we go back up the will capitulate and miss the big move down.

    • alexhartley1 says:

      I basically agree Pooch. I see us topping this week around this Wed/Thurs (market will hold up till then being expiry week) and then dropping to 1470s max into end of month.

      I think we’re then likely to trade in a range through March before a push higher in April probably targeting 1550-75 like you mentioned (maybe even higher I guess if Tony’s potential forecast of 1700 is to come true) and then a bigger fall to shake the tree into mid-June perhaps. I see June as a key date and will be interested to see if we’re rising or falling into this date.

  18. pooch77 says:

    Tony not sure what you meant here,your wrong that we retrace now around 1475-90 or the bloggers call for up are wrong…..tony caldaro says:

    February 9, 2013 at 8:00 am

    was wrong =)

    Reply

  19. Excellent information Tony. I have studied the current DeMark counts today, and noticed an amazing similarity to last year. This too suggests that we are still missing one more pop in this wave (could be the 5th your are looking for).
    http://tacticalstrategist.com/2013/02/09/climax-top-still-missing-tactical-view-2013-02-02/
    However, this also suggests that the air to the upside (for the short term) is becoming thin.
    Junk bonds collapsed and the European markets faltered. Those have been leading indicators before, but aren’t 100% reliable.
    In any case, with this much liquidity sloshing around, we should go up, but maybe not in a smooth fashion (see Japan). And once interest rates rise (not counting this little squiggle up), the FED will have to debase the Dollar to fuel the rally. Debt destruction by inflation will not cause people to behave more responsible ….

  20. https://standardpoor.wordpress.com
    friday,after session close, 2013/02/08
    1.short term indicators/systems:

    eliott PSTT: remains on buy signal. the most heavily weighted indicator.
    qqq indicator: +5, down from +6, remains on buy signal.need 0 to sell ………and -6 to short..
    smart money indicator: -10 , remains on sell signal. a sentiment indicator.
    feb. monthly 2faced longs +0.24% profit today.
    feb. monthly 2faced shorts 1.23% profit today.
    weekly 2faced longs , original algorithm -0.43% today
    weekly 2faced shorts with etfs, original algorithm, 0.40% loss today

    still working on fine tuning the algo for both the weekly and daily 2faced systems.

    spy +0.65%.

    2.long term indicators or systems:
    crash indicator at +6, a rare -10 signals a 2008 type of crash.

    3. trades:
    no trades today. still 99% cash except for spy puts.

    4.stock watch:
    long breakouts:kerx, sgmo, isis mcbc, svu, cndo,ctcm., adding ……………furx,mcbc and bby
    actions:cndo probably broke out this week.
    short breakouts: mflix, fbc, sanm, fbc, iag, osis. adding lqdt.
    other folios: long term folio possible signal to buy aapl this …………..coming week, 10% of total ……………….portfolio, watch comments. new post in the works by monday.

  21. mokiepon says:

    In addition to our Sequester issues, there’s the issue of Draghi refusing to lower interest rates, or to devalue the Euro in any way. Although both of these things can be carried to an extreme (our Fed, for instance), Europe is in such a state right now that the last thing It needs is to have a strong currency.

    I have friends in Europe who give me regular reports; esp. one in Greece. One of my Supervisors (there are so many, LOL) is from Germany, All the southern countries are in HUGE trouble, and just because the media’s decided not to report on it for the time being, there might not be a choice when Euro stock markets begin to tank.

    It’s one of those events that all of a sudden, you wake up one Monday morning to find it’s all gone to hell in a handbasket.

    M

    • torehund says:

      Melinda as with my surfing history it started with me sleeping behind a large stone in Chicama, and everyone made ridicule of me. Then a sufrer was born. Later on when stocks did me unwell and surf was still in the dumpster I gave up. Haphazardly I entered the water in a give up mood..then something happened out of nowhere, I automatically gave my destiny to the waves and got the ride of my life.
      Market just has to give up, thats all….

    • torehund says:

      Melinda, every artform or dance that may be executed in a judgemental free environment is ok for me. The reason I choose to be in the waves is that they never have an attitude, sure they can be nasty but not by intent or purpose as humans can be . They are without an agenda…Pure, honest and only requires the same in return from the surfer.
      And it doesnt separate on social status and size of the wallet. God damn, it demands purity of mind and spirit to deliver the goods. Thats heaven….

    • mokiepon says:

      The pullbacks in U.S. stocks in the last week or so were preceded by pullbacks in European stocks. M

      • torehund says:

        Melinda, market has to give up( or more precicely not struggle of fight it) to ascend… Thats how universe works.

        And now a little philosophy around markets, take the Dow as it easily tracks far back…Then appreciate the entire curve and imagine it in a 3 D frame. Then you will see that the waves appear much closer to us in the screen(or bigger) from 2000 and onwards.
        If that should tell us something it could be heightened awareness, like the universe comes from quitet slumbering and looks at us all, just coming closer to have a look, saying hello.

  22. torehund says:

    Heck Melinda, you wanting all that dark chocolate, thats what they treat depression with, go disco…
    Ouch need some too, thats bullish, lol.

  23. torehund says:

    If this is a reversed 5 from bottom where wawe 2 ends, there is a smooth walk into end of wave 1. If this part of the whole structure is bent upwards this market could go very big.
    As I see the ABC pattern of the wave 3 we are working on as a corrective pattern that should if it had pointed down(instead of bent upwards) would be at 860 now, o` boy what is in our future if a new motivated wave starts next week..

    • torehund says:

      If we at any time in history can mentally accept the sweetest tunes of disco, and at the same time embrace classics and heavy metal, then flexibility of taste makes our soul whole, not one part struggeling the other. Then the waves can be played without fight as we accept transformation of mood, much before it has already happened…

      • mokiepon says:

        Disco was NEVER meant to be listenable music. Disco is only good for dancing! M

      • torehund says:

        The song is called upside down, because she is not talking about herself but about the man. But then I was talking abouth the waves, lol.

      • mokiepon says:

        Thank you, torehund. Yes, I know the song well. I was at the discos when the song first came out. I can’t remember if it was after she hooked up with Gene Simmons or not. M

  24. thebbliss says:

    Tony,

    Thanks for the nice update. When I adjust my sub-wave counts to your revised SPX count, I can now easily see below Pico level waves on my 15 min charts. Just wondering if this kind of price action is unusual or fairly typical when the market extends? I don’t remembering seeing this during previous treads.

    Regards,
    Bill C

  25. Pingback: Risk-Reward Report – week 6 | The Risk-Reward Report

  26. torehund says:

    Bernanke, is he the driver of the economic ghost train ? I bet he doesnt get it right until he gives up, as go wave hunting, as goes the economy !

    • torehund says:

      Just some nocturnal thoughts. We all have 5 motivated fingers, and when we want to correct their position we have 3 phalanx to do it with…

  27. torehund says:

    http://seekingalpha.com/news-article/5544561-study-validating-ability-of-micrornas-to-predict-progression-of-bladder-cancer-published-in-british-journal-of-urology-international

    Good news for sufferers of bladder cancer, now ROSG can determine which tumors need agressive treatment and who dont. This abolishes the need for subjective (and often misleading) evaluation by pathologist and surgeon in descision making. Crazy that this finding is not highlighted more (why not on Bloomberg ?).
    In evaluationg tumors ROSG is groundbreaking (from protein histochemistry towards siRNA detection) and I think they will take over a large chunk of cancer diagnostics and concomitant personalized treatment in the future.
    But a truth isnt a truth in medicine until the majority thinks so and the shares are through the roof, but its a gamechanger !
    Just a tale from the real world, but chart looks good too, after ABCs to oblivion ! And just 35 mill or so mcap wise when Pfizer is 200 bill or so..

  28. mokiepon says:

    torehund said, “…Sometimes this EW counting is pretty scary mentally, …”

    I can vouch for this! LOL!

    Melinda

    • torehund says:

      M: Worst time was around Mayan calendar crossing, and if Japan had made a big C(multiyear chart), yes there was space for it on the chart without bending the C, it would have ended right above zero. Well japan didnt slide into the pacific and the world got another chance, lets take a firm grip on it,…

  29. rolandu11 says:

    Hello,

    have no medium term sell signal for the US markets, but I had a sell signal for europe on monday from my long-term volume indi. So I think it is good to be more cautious now. On the other hand the long-term volume indi does look not so bad for SPX/DOW and IMHO the current overheating is not really high enough yet. From here I would say a interim high in the SPX is possible between mid-February and the beginning of March.But of course after a pull back we should see more gains.

    In the view of my seasonal chart (20 years, changed formula) important days could be 15.2; 5.3. and 8.3. +/- 1 or 2 days (and then 19.3.; 26.3.)
    http://s1.directupload.net/file/d/3161/yzatbbpw_jpg.htm

    • mokiepon says:

      A sizeable sell-off in Europe would definitely affect U.S. stocks to the downside. Europe AND a fight over The Sequester, and there will be a fight, it’s started already.

      Guess we’ll all know more next week. Good luck to All !

      M

      • rolandu11 says:

        Melinda, it´s possible that europe go up with the US market now, but make a lower high (and then down).

  30. torehund says:

    Appreciate the FED stimulus graph pinpointing the occasional lag in effect of the stimuli.
    Making things more expensive in a pulsative fashion is what FED does, if they are reading the waves or acting independently, is hard to tell.

    Sometimes this EW counting is pretty scary mentally, one good example is a Nowregian mining company called Northland Resources (NAUR). It traded until recently at 8 nok and had a large bullish crowd of renowned investors, although RSI had been knocking on 80 for quite a while, everyone thought of the company as sounder than ever…. But if they had looked at the long term chart there was room for a last limp of a C, and yes it descended abruptly to 0,57 nok( as out of thin air they missed 2 mrd nok to finish off the financing). So now its a perfect long term ABC and a buy (almost, lol, afetr another smaller reformated ABC ? ), but I am sitting there with the gauge to see that A and C are equal in length as a millimeter measured wrongly can now half the stock further.
    Of course this stock is getting bearish, and to such an extent that there are unfounded rumors the mine will be given away for free to the locals, with gruesome consequenses for the stock and bondholders alike….
    But it aint all black, as I think iron ore prices soon will change the minds of the investor community.
    Nice weekend to all on this board, and especially the inventor himself.

  31. semievolved says:

    Hi, I am wondering where you are getting your WLEI values? I see ECRI values but these are typically 130 or so. I don’t find any tabulations of leading economic indicators that are centered around 50 and I am wondering if this is a published value or some parameter that you are calculating based on other values.

    Thank you

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