weekend update

Stocks rallied nicely early in the week. Then consolidated thursday and friday. The SPX/DOW made new highs for the bull market, and the NDX/NAZ made new highs for the uptrend. Overall, the SPX/DOW was up 1.5%, and the NDX/NAZ 2%.
The bull market continues, as the economy slows down to a normalized, sustainable, growth level of 3%. OEW analysis continues to display an ongoing extension of Primary wave V. A bull market typically contains five Primary waves. Our bull market started in October 2002. Four Primary waves have been completed. Primary waves I – II ended in March 2003, and Primary waves III – IV completed in Auguest 2004. Since then, Primary wave V has subdivided into five Major waves. Major waves 1 – 2 completed in April 2005, and Major wave 3 is currently still underway. In fact, Major wave 3 is also subdividing into five Intermediate waves. Intermediate waves i – ii recently completed in July 2006, and Intermediate iii is currently underway. Thus from an OEW viewpoint, the bull market is currently in Intermediate wave iii, of Major wave 3, of Primary wave V. Until all these subdividing waves complete, the bull market will continue to rise higher.
I posted a chart at the end of July displaying the potential for the SPX over the next year or so. Based upon my proprietary Long Term Elliott Wave pivot point analysis, and the OEW wave structure. I was able to project the wave structure to complete the bull market, and the levels the SPX should achieve. I’ve posted the SPX.2000 chart again below. It is also posted in the photo section.
All major indices remain in uptrends as the market continues to rise toward the SPX 1383 target. Near the end of July we were able to pinpoint the end of the most severe correction the market had encountered since 2005. A major positive SPX/NDX divergence occurred, with positive RSI/MACD divergences right at the lows. Then, within a few days the SPX and DOW reversed thier downtrends and started moving higher. The NDX/NAZ followed shortly thereafter, and the uptrend began. Thus far, there appears to be two completed waves up from the lows and the third wave is still underway. Expecting the third wave to complete shortly, then a small fourth wave correction, followed by the fifth wave up into the targeted area. The Market Momentum Indicator (MMI), appears to have peaked two weeks ago. This often occurs during the third wave thrust. It then pulled back last week, and has now started rising again. a negative MMI divergence is expected when the market makes its highs for this uptrend. All four major indices: SPX/DOW/NDX/NAZ continue to unfold with the same patterns. The SOX index continues to rise, but some of the semiconductors are beginning to slow down. The TRANsports has been uptrending, but it has been quite choppy, as has been the R2K index.
I am noticing some short term negative RSI divergences on the 15min and 60 min charts. It is possible that, wave 3 of wave iii as labeled, could have completed and a small wave 4 pullback is possible over the next couple of days. See 60min chart below. If the SPX holds short term support at 1334 this rally can continue to extend. We’ll see how this unfolds. Either way, the uptrend should continue higher until wave iii is achieved, and then a wave iv pullback, before heading higher again to complete the uptrend.
Asia: All indices we follow continue to uptrend, as India’s BSE approaches its potential bull market high.
Europe: After some hesitancy by the FTSE in recent weeks, due to the commodity pullback, both indices are now trending higher.
Bonds: Their medium term uptrends appears complete, as both the 10Yr and 30YR bonds reached their targets, and their yields hit support. The 2YR yield, which is the one I have been monitoring during the trend, hit its previous 4th wave support perfectly and is now rising. Waiting for a trend reversal confirmation.
Dollar: Continues to trend higher, but it still looks corrective.
Gold: The downtrend continues, but will be scrutinizing this market over the next fews days.
Crude: Remains in a downtrend, but there are positive RSI divergences at the recent lows, and could be reversing. Will be examining this market closely as well.
Uptrend in stocks continues to look good. Bonds should have ending their uptrends. Crude may be reversing as well.
I would like to welcome four more market enthusiasts to our private International OEW group. Ashley and Max from Australia, Marc from Canada, and Achal from the USA. This brings our small but selective group up to 20. Twelve investors have been fully trained, and are already putting the OEW technique to good use. Making money in this market! We all continue to exchange ideas, and are gathered at a private forum on the web. Email me if you are interested in joining us caldaro@msn.com       

About tony caldaro

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5 Responses to weekend update

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  2. tony says:

    Hi Andrew,
    You have an excellent point.
    The "3" I placed at the recent high represents wave 3 of wave iii.
    Wave i rallied about 90 points from the July low. Wave iii has thus far rallied 50 points, from the ealry Sept low, and is still ongoing. Only waves 1, 2, and 3 of wave iii should be completed. A pullback here and then another rally should end wave iii. But we would still have wave iv and wave v to complete our run up to 1383.
    Good question … sorry for the confusion on my part.


  3. tony says:

    Hi Amit,
    How have you been. Hope fine!
    I do not see your ending diagonal triangle on the daily charts. But, I do see a small five advance from the recent, early Sept, 4th wave low. It is definitely time to be careful with the Sensex, as a fifth wave failure is always a possibility.
    Say Hi to my friends in India 🙂
    Sending my best regards,


  4. Amit says:

    Hi Mr.Caldaro,This is Amit.
    I have a bit of doubt about BSE,the channel from the lows of June suggest an Ending Diagonal for wave 5,so the internal count has to be 33333.And i am getting it too,on my hrly.Is my count correct.
    Also do we see an Ending Diagonal from recent wave 4 again.
    Warm Regards


  5. Unknown says:

    tony, with regard to your labeling. If wave 3 topped at 1340.28 with the fourth wave to come later this coming week, followed by wave 5, there is a problem because your target of 1383 far exceeds permissable distance for wave 5, given that wave 3 (as labeled by you) is shorter than wave 1. But we all know that wave 3 can\’t be the shortest wave of the three advancing waves. Now wave 1: 1290.93 to about 1324.97 = 30.04 point advance; wave 3: 1310.94 to about 1340.28 = 29.34 point advance. Wave five should not exceed 29.34. That leaves your target of 1383 unreachable by wave 5 if we follow Elliott wave rules. Let me know where I got it wrong, if so. Thanks.


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