weekend update

REVIEW

Quite a choppy week in the US markets after four gaps openings. We had to go back to the end of June 2012 to find a similar week of indecision. That one ended with the indices eventually moving higher. For the week the SPX/DOW were mixed, and the NDX/NAZ were mixed. Asian markets lost 1.6%, European markets lost 1.9%, and the DJ World index lost 1.0%. On the economic front, reports continue to come in positive. On the uptick: housing starts, building permits, the FHFA index, existing home sales, the Philly FED, leading indicators, the WLEI, and the monetary base. On the downtick: the NAHB index and weekly jobless claims rose. Next week we get the final revision to Q4 GDP, the Chicago PMI and PCE prices.

LONG TERM: bull market

With the DOW at all time new highs, and the SPX recently within 12 points of a new high, one could certainly state the FED’s liquidity programs, and Government spending, have averted a depression. The FED recognizes this accomplishment, as most other central banks are effectively doing the same thing. So why is it some american politicans complain about government spending on one hand. Then with the other hand pass bills to continue it. Politics!

The Cycle wave [1] bull market continues to unfold from the March 2009 low. The first two, of five, Primary waves ended in 2011, and Primary III has been underway since then. Primary I divided into five Major waves with a subdividing Major wave 1. Primary III is also dividing into five Major waves, but both Major waves 1 and 3 are subdividing. Major waves 1 and 2 completed in mid-2012. Major wave 3 has been underway since that low. Intermediate waves i and i completed in late-2012, and Intermediate wave iii has been underway since then.

SPXweekly

Before this bull market concludes it will still need to complete Intermediate waves iii, iv and v to end Major wave 3. Then after a Major wave 4 correction, a Major 5 uptrend to complete Primary III. Finally, a Primary IV correction will be followed with a Primary V uptrend. We expect this wave pattern to conclude in late-winter/early-spring of 2014. With the SPX topping out somewhere between 1650-1700. Until then enjoy the bull market.

MEDIUM TERM: the relentless uptrend continues

After a choppy week, and then a thorough review of the charts, we must conclude the market is still in an uptrend until it breaks what we consider critical support. This Intermediate wave iii has naturally been dividing into five Minor waves: SPX 1424, 1398, 1531, 1485 and 1564 so far. Minor 1 was a simple wave, Minor 2 an irregular flat, Minor 3 subdivided into five Minutes waves, Minor 4 a zigzag, and now Minor 5 may be subdividing into five Minute waves as well.

SPXdaily

Despite the extreme overbought condition on the weekly chart, and the negative divergences on the daily charts, there may been a bit more upside before this 3 of 3 of 3 wave concludes. As a result we have upgraded the SPX hourly chart to display this potential subdivision. The upside may be limited to the OEW 1576 pivot range, or even extend to the 1614 pivot range. Currently Minor wave 5 (79 pts) is nearly equal to Minor 1 (81 pts). If this uptrend extends to the 1614 pivot, then Minor 5 would be about equal to Minor 3 (133 pts). These are natural fibonacci wave relationships.

The one caveat is that the market does not break below critical support, which is now at SPX 1539. Should this occur, then a downtrend is likely underway. With the market closing at SPX 1557 on friday, there appears to be about 20 points risk on the downside with the potential upside may be as high as 60 points. After this uptrend does end, we then expect about a 4.5% correction before the next uptrend begins.

SHORT TERM

Medium/short term support is at the 1552 and 1523 pivots, with resistance at the 1576 and 1614 pivots. Short term momentum ended the week overbought. The short term OEW charts vacillated all week between positive and negative, ending positive, with the reversal level at SPX 1552.

SPXhourly

As noted above we are allowing for a potential extension of Minor wave 5 from the late February 1485 low. The two largest pullbacks during this rally have been a quick 24 points (1525-1501) and a zigzag 25 points (1564-1539). These two lows could be labeled Minute ii and Minute iv of Minor 5. The price activity off that low, SPX 1562 and then 1544, could be Micro waves 1 and 2 of Minute v. Should the market clear SPX 1562, then 1564, it is certainly on its way higher. Keep in mind, however, a drop below SPX 1539 would invalidate this count signalling a downtrend is probably underway. Best to your trading!

FOREIGN MARKETS

The Asian markets were mostly lower losing 1.6% on the week. China, Hong Kong, India, Singapore and S. Korea remain in downtrends, with China improving.

The European markets were all lower on the week losing 1.9%. Greece and Italy remain in downtrends.

The Commodity equity group were all lower losing 2.2%. Brazil and Russia are in downtrends.

The DJ World index is uptrending but lost 1.0% on the week.

COMMODITIES

Bonds remain in a downtrend but finished flat on the week.

Crude is still downtrending but gained 0.5% on the week.

Gold is downtrending as well but gained 1.1% on the week.

The USD continues to uptrend gaining 0.5% on the week.

NEXT WEEK

Tuesday kicks of this holiday shortened week with Durable goods, Case-Shiller, Consumer confidence and New home sales. Wednesday: Pending home sales. Thursday: Q4 GDP (est. +0.3%), weekly Jobless claims, and the Chicago PMI. Friday, while the markets are closed: Personal income/spending, PCE prices and Consumer sentiment. As for the FED, on monday at 1:15 PM FED chairman Bernanke gives a speech in London, UK. Best to your week!

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

About tony caldaro

Investor
This entry was posted in weekend update and tagged , , , . Bookmark the permalink.

148 Responses to weekend update

  1. H D says:

    hey this 1552 price is important IMO :mrgreen:

  2. Lee says:

    BTW why is there no one quoting 10 yr bonds lately here ? Time for a pop ?

  3. uncle10 says:

    Again, I always think it is a good idea to take some profits when you have them. If you shorted late Friday or at the open, I think it is good to take some of the trade off the table. If it continues down you make money if comes all the way back at least you took some profits. I remain bearish, and will look to short again an any pull up again…. gl and good day.

  4. H D says:

    How many days til EOM/EOQ?

      • H D says:

        TY! How was fishing?

      • H D says:

        so market reopens April fools day? There has to be a decent joke somewhere.

      • Lee says:

        Hey H D
        Not good at all ! Too cold but u guys knew that.
        Good news is the water levels on the small lakes and ponds have almost if not totally recovered water levels from last years drought in most areas here .
        Yes trading on Easter Sunday then re opened on April fools.
        The CME is open more days than Chinese restaurants.

      • CB says:

        Europe closed on easter Monday?, anyone..seems like.Europe always gets 2 days off during major holidays…

      • H D says:

        Same hear, slow, water levels were pretty low but alot of cold snow run off coming in. Caught 4 species; white bass, small mouth, carp and a buzz.

      • Lee says:

        hahaha nice !
        Well I went 0-4 then :(
        But ..I kidnapped my Mom and brought her home with me…Its corn bread and fried chicken and greasy beans til Thursday when I bring her back to the Heartland.

      • mokiepon says:

        CB says:
        March 25, 2013 at 2:40 pm
        Europe closed on easter Monday?, anyone..seems like.Europe always gets 2 days off during major holidays…

        I think this is a very good thing. Could see lots of inflow on Monday, esp. w/Europe quiet, if only for an extra 24 hours. M

      • CB says:

        Thanks M & good point!…that way it’ll be easier to fool some of the people some of the time.. ;)

      • mokiepon says:

        CB, the vast majority of people in mut funds aren’t traders and they’re sweating it, but have to do it. They can’t get the return anywhere else. Cash from the sidelines and not rotation out of bonds. M

      • CB says:

        Good points, M, like you’ve said: sometimes there are no good choices and ppl have to cope with that..

  5. blubrd67 says:

    Tony, I wanted to ask you for a while, but this is the perfect scenario of that kind…. If the market like today passes a crucial point (1565) but just briefly then heads down hard, how do you interpret that? Do you think that was enough of a sign we’ll head up in a short term before in iv down? Or could that blip not be counted seriously enough… Or could we have started int iv today?

    • blubrd67 says:

      It seems to me there are many confused with this short clearing upwards, then hard down.

    • tony caldaro says:

      Blubrd,
      Have seen this before, sometimes a top, sometimes a pause.
      No way of telling until levels are broken.
      There are a number of potential short term patterns possible.
      All we know for sure it the market just made a new high in a 4 month uptrend and continues to struggle.

  6. Lee says:

    Go IU and A !
    ltr all

  7. H D says:

    SPX traded HWB to the penny. Back to work everyone.

  8. Lee says:

    PP and .50% back pit @ 1549.ish ESM

  9. Young Tom says:

    M
    You’ve been calling the bottom of these fast sell offs recently! Kudos

    • mokiepon says:

      Some things these aged eyes recognize. Also know and believe in dark pools, which let certain orders through first. Important right now is the end of the quarter with all the cash that will come in off sidelines; might not be like January was, but enough to run stocks up real hard. (Then I get the hell out, quick). M

      • wcagle says:

        Could it be they are closing out their books on the quarter today? 3 day settlement being Thursday….then they go home for Easter? Buy ‘em’ back next week? I’m hoping for a big red candle like FDX and Oracle printed….lol

      • mokiepon says:

        wcagle, correct. I think that’s exactly what’s happening. They could start buying back later this week, but wouldn’t be surprised to see buying first couple days of April instead. M

  10. mokiepon says:

    Buy! Buy! BUY! (That’s my other Cramer imitation. LOL!) M

  11. Lee says:

    R2 to S2 @1539.50 in ESM
    The Bots are in a giving mood . 1552 SPX pivot is on fumes
    CL its whats for dinner ..nothing to see here move along folks
    Peace and soullllllllllllllllllllll

  12. Ronin I3 says:

    MMM looks heavy..107 stop, 100.07 tgt
    DIS 57.9 stop, 53.6 tgt.
    By 4/8~4/12.

  13. jeffbalin says:

    Ok, so, that tiny little sliver of a spx new high, is enough for this uptrend to continue? And, why, does the daily rsi (and macd for that matter) look nothing like what is actually happening

  14. Lee says:

    So see where were going on the right side of the chart I look left.. JMO

  15. mokiepon says:

    Lots of buying in tna right now. Haven’t checked upro or any others. GL Everyone. TTYL. M

  16. almostnrml says:

    St. Louis Fed ‏@stlouisfed 1m
    Chart: Commercial and industrial loans at commercial banks rose more than $8 billion in February to $1.529 trillion http://bit.ly/X46T48

  17. uncle10 says:

    uncle10 says:

    March 22, 2013 at 1:02 pm

    If we get a solution to Cyprus over the weekend and gap up, it will be a good place to short, if we don’t get a solution to Cyprus then…. my play is short some and looking to add on any pop on Cyprus news. gl and good weekend all.

    So far so good. stop goes just above todays high for short term traders.

    Gl everyone.

  18. M1 says:

    At this point the market could start its final wave down of this correction. Support levels to watch (Dow):
    1. 14,308
    2. 14,152
    On the other hand, 1566 (spx) needs to be cleared before I get more confident the market still have more room to the upside.
    GL

  19. mokiepon says:

    That’s right; get those sellers going, so institutions and other big money can come in later this week and next and buy stocks, etc. cheaper. M

    • wcagle says:

      Maybe some of that Russian mob money will come over???? lol

      • mokiepon says:

        Hi wcagle! Don’t need that Russian mob bucks, LOL! End of month and end of quarter; this is the usual behavior. Watch toward the end of this week, or early next week, they’ll come in a buy at lower prices. It wouldn’t surprise me to see a blow-off top. M

      • mokiepon says:

        Wonder how many members of Cyprus Parliament might mysteriously disappear after all these votes, etc. LOL! Not really funny, but reality always trumps fiction. You can’t make this stuff up! M

    • wcagle says:

      Russians were our allies in WWII against Germans & Japanese. Won’t be this time around I’m thinking….Powers to be should have let Patton do what he wanted to do back then….

  20. wavedreamtrance says:

    Ok. I went short this past week and Friday (1545 and 1555). I know things are getting bullish with Cyprus getting bailed out and we don’t know how long this supposed wave 5 is going to be (short or extended). But here is my possible strategy: Hold on until my next stop of 1565? hold on until Intermediate iii ends and recover/possibly make gains with intermidate iv (3-4% decline)? If Minor wave 5 extends, hold on until Major 3 ends and Major 4 drops (hoping calculations of Major 4 is going to be 8-10% down and would bring me down to lower than 1545 to make gains). Anyway, holding on from shorting the SPX at 1545 should bring me back to this level somewhere in June-July?

    Any thoughts? I still have 80% cash i can play with. The above is a 20% short investment against SPX.

    Thanks

    • budfox9450 says:

      Yes, depending on the type of short position.
      There is good reason to believe we are very soon,
      coming to an end – in the Intermediate W3 up pattern.
      I would suggest holding, until the Intermediate 4 wave
      ends, or 1503 is reached. At 1503, I would be looking
      to get into an investment that will leads to shor term profits
      on the way to 1600-1622. Good Luck….

    • CygnetNoir says:

      My only advice would be this: You should have these questions answered for yourself and by yourself before you ever put the position on. It is one thing to trade with open-ended profit targets, and wholly another to trade without a stop.

    • andysingal says:

      same here went short 2nd half of shorts today in SPXU

  21. M1 says:

    A 40% haircut ? I guess some people will be very dissapointed.
    I suggest an extra security and life insurance for those who make this possible.
    GL
    http://www.marketwatch.com/story/cyprus-troika-reach-bailout-deal-reports-2013-03-24?link=MW_story_latest_news

  22. pooch77 says:

    Never ever bet against a bailout ,they may always sound dour but they are never going to fail in the short run,but since 2008 I cant remember a bailout that went sour were the market didnt have triple digit gain

  23. for those who are long or short; be careful out there, please have tight stops;

    longs: you are likely about to bank on a 5th of 5th wave; often the weakest of all waves… As Tony said in one recent update: wave 5 can end whenever it wants. It has pretty much meet many requirements of FIB related extensions.

    shorts: 5th waves can be mavericks in that they can extend; so be careful (first mouse gets the squeeze, 2nd mouse gets the cheese…)

    personally i am in cash since 1555 and letting this one play out. i am finding the current price level neither worthy of a decent long nor of a low-risk short (shorting in uptrends is always riskier). NOT TRADING ADVICE (but one doesn’t have to trade every move to be profitable, one has to trade the low risk high rewards moves).

    GL out there!
    ps: given the level of the futures right now, it seems as 3 of 5 of 5 (of etc…) has started IMHO

    • cicelyalaska says:

      Well put, live to trade another day. I don’t like the odds in either direction right now. Previous euro crises have always ended with the can kicked down the road a little further. This one ends a little differently if they give the Russian mafia a haircut. Messy.

  24. pooch77 says:

    Looks like market is looking for a full fledge bailout for Cypress,fututes up nicley

  25. M1 says:

    More than US$30B are from Russians. I guess they are going to be very dissapointed abt the +20% haircut and their funds being frozen in Cyprus.
    I guess Merkel will need some extra security.

  26. M1 says:

    Tony, how possible could be a small run from the EU banks because of the Cyprus situation ? USD & America: safehaven ?

  27. Pingback: Low Priced Stocks Reporting Earnings Next Week + MORE

  28. 5wavemodel says:

    I think there are two levels to watch. To continue the current uptrend, the SPX needs to move above 1587. If the market falls below 1545.90 it is over.

    Thanks,
    Steve
    http://5wavemodel.blogspot.com/2013/03/weekend-outlook-03232013.html

  29. mokiepon says:

    Thank you Tony. Melinda

  30. vikasvrao says:

    Thanks for the report Tony. Any thoughts on Natural Gas here? Thanks.

  31. fbender7 says:

    Tony,
    I like what you’ve done by including the possibility of Micro waves i and ii of Minute v as part of your count. An alternative count is a triangle (a-b-c-d-e waves) to complete Minute iv:
    a – 1556 (Fri. 3/15)
    b – 1561 (Mon. 3/18)
    c – 1539 (Tue. 3/19)
    d – 1562 (Wed. 3/20)
    e – 1544 (Thu. 3/21)
    This would mean that Minute v began with the rise Friday (3/22): SP500 +11, Dow +91. With either count, the implication is similar in that the market would be expected to move up from here.

  32. ldsag says:

    Tony, I have been following you for a few years and so far you have proved the bears wrong however I’m getting a bit confused by your longer term count. You think we are basically in Intermediate wave 3 of Major wave 3 of Primary wave III. So far this bull market is 4 years old and you see the whole market topping out in “late-winter/early-spring of 2014,” only a year away. That really is hard to believe considering the time relationships IMO. Any thoughts? Thanks!

    • tony caldaro says:

      Idsag,
      Actually, the time relationships is exactly why we’re expecting a top early next year.

      • ldsag says:

        Tony;

        Thanks for getting back to me. The “timing” is what’s confusing to me. You have Primary wave 1 ending at 1370 and that took about 2 years. Your Primary wave 2 took nearly 5 months plus. Your count is now a bit more than half way through Primary 3 and so far it has taken about 18 months.

        Can you please explain what the typical relationships of time regarding the remaining Primary waves compared to the previous Primary waves 1 and 2. I realize that OEW is different than EW but it just seems like a short time of only 1 year to go through the rest of Primary 3, Primary 4 and Primary 5.

        So, in your comments, “Before this bull market concludes it will still need to complete Intermediate waves iii, iv and v to end Major wave 3. Then after a Major wave 4 correction, a Major 5 uptrend to complete Primary III. Finally, a Primary IV correction will be followed with a Primary V uptrend. We expect this wave pattern to conclude in late-winter/early-spring of 2014. With the SPX topping out somewhere between 1650-1700. Until then enjoy the bull market.” Is the spx topping of 1650-1700, the top of Primary 3 or Primary 5? This is where it gets confusing, it took 4 years to get to the middle of Primary wave 3 and you are saying will only take 1 year to complete the rest of the Primary waves up.

        Perhaps I’m not understanding properly, maybe you mean the 1650-1700 area is the top of Primary wave 3, that would make more sense to me regarding time relationships.

        Thanks for the time and effort to respond.

      • tony caldaro says:

        Actually I wrote it exactly as we see it.
        In a normal bull market wave 3 is usually the longest and biggest.
        You are comparing this bull to the norm. Which it is not.

        In this bull market wave 1 is the strongest and longest.
        Wave 3 is weaker and shorter, and wave 5 the weakest.
        For example, in Primary I, Major 1 took one year.
        But Majors 2, 3, 4 and 5 took only one year too.
        In Primary III, Major 2 took only six months, not one year.
        Also we do not see Primary V dividing into any waves, just one uptrend.

      • 7dayyss says:

        Your response mostly answers my question about Primary IV and V. It was basically about the time frame. I was going to ask if historically IV & V are shorter and more importantly, more volatile with larger swings from day to day, hence no subdivisions. This would coincide with the Primaries being able to finish up in the time frame you mention. Since this isn’t the “typical” bull market, then historically IV & V are of longer duration with not as much volatility? Thank you!

      • tony caldaro says:

        Since this is a Cycle wave bull market, no direct comparisons can be made regarding Primary waves.

      • tony caldaro says:

        Can make one historical comparison.
        Major 3 of Primary III of Cycle [3] lasted from 1953-1961.
        Wave 1 was 3 years.
        Wave 3 was 2 years.
        Wave 5 was 1 year.
        Waves 2 and 4 each took one year.

      • 7dayyss says:

        Ah yes, Cycle wave. I forget where I’m at in the waves at times!

  33. scorp100 says:

    Hi Tony, is there a level you watching for AAPL bullish case?

  34. pooch77 says:

    Cyprus now wants 25% haircut on deposits over 100k euros.Is that good or bad for market? Seems to me this would start a bank run with Euro dropping, dollar rising and markets dropping.

    • fbender7 says:

      Anything to keep Cyprus from outright economic collapse would be a positive. Cyprus has an economy the size of Boise ID. Doubt it would rattle the global markets to collect 25% (ouch!) from the Russian mafia. Though if I were a Cypriot government official I would definitely be watching my back if this plan goes through.

    • fbender7 says:

      The great thing about using Elliott’s Wave Principle for guiding one’s trading decisions is that we don’t have to be able to divine in advance how any particular news event, economic or otherwise, is specifically going to affect the markets. Nature’s patterns, as expressed in the price action of the markets, hold true no matter what. Otherwise, we would all be fundamental traders instead of technical traders and we’d be hanging on every word that comes out of Jim Cramer’s mouth (God forbid). The news unfolds within the context of the Wave Principle and not visa versa. The question is always, what are the price charts telling us? We’ve all seen, hopefully, that markets can rise on bad news, and markets can fall on good news. So news is not the determining factor. Nature rules.

      • Ryan Parker says:

        Good points bender.

      • pooch77 says:

        30 minute spy says down

      • tony caldaro says:

        In this case it’s human nature rules

      • 7dayyss says:

        Isn’t it possible that waves can extend or subdivide further do to news? Hasn’t any of the QE programs, whether being pulled or announced, influenced extending by virtue of further subdivision?
        This week we were deciding if int iii was done and iv starting. Couldn’t all the Cyprus press factored into the wave extension, if indeed it does?

        Also, I forget my manners, I don’t thank you enough Tony, if at all for the work and knowledge that you selflessly share with everyone here on your blog. So Thank you Tony! Mark

      • tony caldaro says:

        Certainly waves can extend.
        But the best news is already out … unlimited QE 3.
        Think all we can get from here is bad news.

  35. 5wavemodel says:

    Thanks Tony.

    Steve

  36. M1 says:

    Tony, one last question.
    What is the long term support for this uptrend that began in 2009 ?

  37. CB says:

    Great update Tony. Thanks so much for sharing your work with us. Have a great weekend everyone.

  38. M1 says:

    Tony, could we all be wrong and primary III is over ?

      • M1 says:

        Thx.
        I guess we all be more confident if spx breaks out above 1566. Next resistance at 1617.
        Have a nice weekend

    • mokiepon says:

      Not to worry M1, it’s only trading. Looks like wave v got ahead of me:

      mokiepon says:
      March 20, 2013 at 2:57 pm
      Tony, I trust your wave count. Int. 4 zigzags the rest of this week and some of next week. Then, int. v at end of next week-Apr 1 &/or 2; new money comes into mkts because of end of month and end of quarter. After that, int. waves done. M

      M

  39. M1 says:

    Thanks, Tony

  40. rolandu11 says:

    DOW/SPX: No medium term sell signal (volume indicators worsen/flat; overheating Indicators still improved). There are some interesting developments in the ndx. I will probable tell more about this next week.

  41. Pingback: Risk-Reward Report – week 12 | The Risk-Reward Report

Comments are closed.