weekend update


Another productive week for the equity markets. For the second week in a row the SPX made new bull markets highs, and is now just 5% below its all time high. The DOW is around 2% below its all time high. For the week the SPX/DOW gained 1.5%, and the NDX/NAZ were mixed. Foreign markets were quite mixed. Asian markets lost 0.6%, European markets gained 1.7%, and the DJ World index gained 0.9%. On the economic front positive reports outpaced negative ones again. On the uptick: FHFA housing prices, leading indicators, the monetary base, the WLEI, and weekly jobless claims improved. On the downtick: new and existing home sales. Next week, the FOMC meets on tuesday/wednesday and we get a plethora of economic reports including: Q4 GDP, the Payrolls report and PCE. Best to your week!

LONG TERM: bull market

The 2009-2013 bull market continues to unfold as expected. We continue to envision this advance as Cycle wave [1] of a new Supercycle 3 bull market. Bullish cycle waves unfold in five Primary waves. Primary waves I and II completed in 2011 at SPX 1371 and 1075 respectively. Primary wave III has been underway since then. Primary I unfolded in the typical five Major waves, with only Major wave 1 subdividing into five Intermediate waves. Primary wave III is also unfolding in five Major waves, but both Major wave 1 and 3 are subdividing into five Intermediate wave structures.


Thus far, Major waves 1 and 2, of Primary III completed in 2012 at SPX 1422 and 1267 respectively. Major wave 3 began from that low. Within Major 3 the market has completed Intermediate waves i and ii in late 2012 at SPX 1475 and 1343 respectively. Intermediate wave iii has been underway from that low and has already made new bull market highs.

The weekly chart displays all the counts from late 2002. The bull market from 2002-2007 to complete SC1. The bear market from 2007-2009 to complete SC2. And, the current bull market. Observe how the MACD has spent much of the time well above the neutral line, similar to the bull market during 2002-2007. Also observe how the RSI has hit extremely overbought levels, similar to the previous bull market as well. One last note is the extreme RSI overbought readings during the Major waves. This indicates Major wave 3 has much more work on the upside ahead.

MEDIUM TERM: new uptrend high

The current uptrend, Intermediate wave iii, began in mid-November at SPX 1343. Thus far it has already risen 160 SPX points: 11.9%. We are tracking this advance with basically five Minor waves, the first subdivision of Intermediate waves. Minor wave 1 was short, ending at SPX 1424. Then the market experienced a quite bullish irregular Minor wave 2 flat, ending at SPX 1398. Minor wave 3 initially shot up off that low, then entered a steady advance after that.


When Minor wave 3 concludes, probably within the range of the OEW 1523 pivot, a substantial pullback should follow. Then after it concludes that Minor 4 low should lead to a Minor 5 rally to complete the uptrend. Notice the daily RSI has already become extremely overbought. This indicator is likely to set up a negative divergence when the entire uptrend concludes. Based upon the characteristics of this bull market we have been expecting this to occur in February, and within the range of the OEW 1552 pivot. Not too far from the SPX 1576 record high. Medium term support is now at the OEW 1499 and 1440 pivots, with resistance at the 1523 and 1552 pivots.


Short term support is at the 1499 pivot and SPX 1471/75, with resistance at the 1523 and 1552 pivots. Short term momentum ended the week slightly overbought. The short term OEW charts have remained positive since SPX 1420, with the swing level now at 1487.


This uptrend has been quite interesting to track, in that it has been using even the smallest of pullbacks to define waves down to the Nano level. The Nano wave is three sub-levels below the Minor wave: minute, micro, nano. During Minor wave 1 we were able to track the five Minute waves, labeled on the chart, down to the Micro level. Even after the Minor wave 2 low at SPX 1398, both Minute waves i and ii of Minor 3 remained at the Micro level. However, Minute wave iii from SPX 1452, immediately moved to the Nano level. Fortunately, we were able to identify this newer subdivision as it was unfolding.

Currently we count Minor wave 3 having completed four Minute waves: 1468-1452-1502-1491 with Minute v underway. Since Minute iii did end at the OEW 1499 pivot, and Minute waves i and iii were 70 points and 50 points, respectively. We see no reason not to expect Minute v/Minor 3 to hit our OEW 1523 pivot target. After that Minor 4 could pullback as much as 40 points. Then Minor wave 5 should rally to the OEW 1552 pivot to complete the uptrend. Best to your trading!


The Asian markets were mixed on the week for a net loss of 0.6%. All are in uptrends, but S.Korea appears to be weakening.

The European markets were all higher on the week for a net gain of 1.7%. All are in uptrends.

The Commodity equity group were mixed as well for a net gain of 0.2%. All are in uptrends.

The DJ World index continues to uptrend gaining 0.9% on the week.


Bonds prices continue to downtrend losing 0.6% on the week. 10YR yields are rising, and the 1YR looks like it’s about to start rising again as well.

Crude continues to uptrend gaining 0.2% on the week.

Gold has been trying to establish an uptrend but selling pressure this week (-1.6%) keeps it in a downtrend.

The USD barely remains in an uptrend losing 0.4% on the week. The EURUSD continues to uptrend gaining 1.0%, and the JPYUSD remains in its steep downtrend losing 0.8%.


Monday kicks off a very busy economic week with Durable goods orders at 8:30, then Pending home sales at 10:00. Tuesday: Case-Shiller and Consumer confidence. Wednesday: Q4 GDP (est. +1.0%), the ADP, and the FOMC statement. Thursday: weekly Jobless claims, Personal income/spending, PCE prices and the Chicago PMI. Friday: monthly Payrolls, Consumer sentiment, ISM manufacturing, Construction spending, and monthly Auto sales. The FED meets on tuesday and wedneday with nothing else scheduled. Best to your weekend and week!

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

About tony caldaro

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124 Responses to weekend update

  1. mokiepon says:

    Slightly nasty close there. Anxious to read Tony’s Update.


  2. ronini3 says:

    M, good call on VIX!

  3. rc1269 says:

    looks like it’s about that time to kiss some new highs today

  4. rc1269 says:

    on a daily MACD and RSI basis the TRAN index is the most overbought it’s been in the last 20 years. in case anybody was sitting there wondering…

  5. Tom Green says:

    Might want to look at AAPL daily chart. Dr T just posted a tentative green 4.


    • CB says:

      wow, she already dyed her hair blue and still nada, huh?
      Hey Lee, just say something -we’ll all be tickled because we care :))

      • CB says:

        maybe it sounds funny to yas but there is an explanation for almost everything…it’s the big Jup – been going retrograde for a few months -it’s in Gemini, so it affects communications . It’s turning direct on jan 30 so its basically not moving now -so dead silence -everything has already been said, there is nothing more to say…only the market is walking the talk : )

      • tony caldaro says:

        Ah, so that is the reason for Ackman vs Icahn friday, and Dent’s fiasco.
        Jupiter wasn’t moving 😉

      • CB says:

        haa..too bad I missed it, and it makes sense Tony: the first two are doers ,so they do their talking with their money and Dent is a true talker, isn’t he, so yes, he must be at a diasdvantage now
        Lee, you know we’re all dying to hear from you now, right? ..and it’s ‘how you say it’ Lee that’s so intriguing, so pick any subject….
        hmm, there is one thing that would get Lee to say something….pssst.. : )

    • H D says:

      I was looking for a song caled window dressing but couldn’t find anything PG

  6. torehund says:

    Bulk may soar, countwse it could be a 5 wave down reversed on Free ships, with a print at 18c end double 5. Lost it and not too sure it turned, I expected 11c as bottom.But lots of others like ESEAS.

  7. mokiepon says:

    Traders/Investors must be expecting gold to fall further because GLL rising fairly steadily.

  8. tommyboys says:

    10 year at 2% today… about an 8 month high.

  9. saf18hornet says:

    Looking at the daily and weekly charts for FB, seems like it’s setting up very well for missing estimates this week…. leading to a very nice wave 4 correction. Thinking that might be a nice play coming out of that wave. I know a lot of folks are thinking it posts a strong quarter following GOOG earnings last week, but the divergences have me seeing something different….

  10. rc1269 says:

    first hour selloff, then buy the dip. something about this pattern is oddly familiar, but i just can’t quite place it…

  11. thebbliss says:

    Hi Tony,

    Does it look like potentially another irregular flat forming for Micro 2?

  12. scottycj1 says:

    Its done …over….The top is NOW and will go no higher in this leg. By he end of the week we are down good.

  13. This market has shown an amazing resilience. I was actually expecting another pullback, but with every day that passes it becomes less and less likely. The similarity to 2010, 2011, 2012 is amazing.
    The level of bullishness is a bit concerning, but can persist for a while.
    Topping signs are still missing on my charts, volume analysis is supportive and indicators are still in bullish mode:

    • torehund says:

      Its gap and go…even Prechter cant stop it.

      • mokiepon says:

        torehund, I bought rosg this morning at 4.65. Hope for a pop.


      • torehund says:

        M-if you are patient with this Israelian pharma spin-off, there could be a tsunai in the works for the stock. If it passes 60 bucks I will run naked around in my neighborhood and scream Halleluja, lol.

      • mokiepon says:

        torehund, what israeli pharm, rosg or another?

      • mokiepon says:

        torehund, Cimatron is also Israeli pharma (I think) and just tearing it up. Since I have a couple of them, be sure to tell me which one you’re talking about. As for you running naked… I won’t pay to watch it, but if you want to leave funds with me to bail you out of jail, I’ll gladly do so. LOL!


  14. torehund says:

    Nikkei, IF it starts a C-leg up could bring it to 13 000. My earlier projection was just a little lower.

  15. Ryan Parker says:

    Also platinum is worth a mention. Looks to me as though it is easily going to take out its 2008 high. Been trying to find the best way to play this. Unfortunately PPLT isn’t very liquid and has no options. The miners there still aren’t looking that great either. Anyone know of a way to play platinum aside from futures, PPLT, and SPPP?

  16. Ryan Parker says:

    Tony: As always appreciate your insights. Had a quick question regarding biotech. When looking at the $BTK it looks to me like it is currently in major 5 of primary wave III. Labeled as follows:
    I= 102-812= 710
    II= 812-275= 537
    III- In progress broken down into
    1= 275-894= 619
    2= 894-542= 352
    3= 542-1515= 973
    4= 1515-1001
    5= In progress
    Haven’t heard much talk about biotech and the BTK looks very bullish. Curious as to your opinion on this count. Cheers!

    • tony caldaro says:

      Unfortunately it does not currently count that way.
      There is a nice 13 waves up from 2009-2011.
      Then a 33% selloff in 2011.
      Since then it has done 9 overlapping waves into the recent highs.
      Best count would be:
      Completed Cycle [1] in 2011, wave A down in 2011.
      Since then irregular B wave up into 2013.
      For now it’s bullish, but a B wave advance.

  17. valunvstr says:

    TLT is forming several bullish divergences. RSI, ULT, MFI and MACD. At the same time, S&P is getting close to some important resistance. It might only be a small correction as per your comments, Tony, but it seems like a tradable correction is coming. I’ll be buying TLT under 117.25 and selling the S&P at 1520ish for a trade.

  18. thebbliss says:

    Hi Tony,

    Thanks for the very nice weekend update. I’ve been following the sub-levels using 15 min charts in effort to confirm the waves and your comments in this report were helpful.

    I’m wondering about the Irregular Flats in this recent uptrend. I believe you have Minor 2 and Minute iv as these type of waves. However, in the report you identify the Minute waves as 1468-1452-1502-1491 with Minute v underway. I thought the top of Minute iii would be 1495 and 1502 would be the Micro b under Minute iv. Any clarification of this labeling that you could provide would be greatly appreciated.

    Bill C

  19. Tony. As far as I understand a 10+ pts correction before the OEW1523 is not expected. Correct?

  20. http://standardpoor.wordpress.com

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    the 2 faced shorts selected on 2031/01/09 shows a 1.04% profit vs. spy’s +2.97%.
    the combined system, the way it should be traded, shows a 9.72% profit versus spy’s +2.97%. quite a good start for this experiment.

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  21. Pingback: Risk-Reward Report – week 4 | The Risk-Reward Report

  22. M1 says:

    Hi Tony.
    Great weekend update. As usual !!
    It is good to see that the Fed is still in charge of the markets and no bear market will start without their approval. Fed close friends will know in advance when the money printing will end. Hope we get the waves in advance from them.
    I still have my alt count
    Have nice weekend

    • tony caldaro says:

      May fit with the end of Bernanke’s term

    • thebbliss says:

      M1 or Tony,

      Does the slight overlap of waves i and iv when looking at the DOW, potentially negate this alt count? I believe the overlap is on both an intraday and closing basis. Sorry for nit picking, but I previously considered that count and ruled it out due to the overlap. I’m just trying to make sure I have a clear understanding of OEW rules and techniques.

      Bill C

  23. Brent Calis says:

    Thank you Tony and the wonderful community of contributors of comments to this site!

  24. llerias7 says:

    Hello Tony,

    Thank you for your great and generous daily work.

    My question: do you think the small caps (i.e R2000) will keep outperforming large caps on the $SPX? If so why and for how long?

    • tony caldaro says:

      Hi Ilerias,
      It looks like the public is entering the market with these small caps.
      Small cap, lower price, less risk. Or so the seem.
      Should last for a while.

  25. Pingback: AUD/USD Observations | Before You Leap

  26. piazzi says:

    My methods indicate that
    next trading cycle low is due from her into Feb 7

    Next intermediate cycle low is due in the April 5-May 17 time frame

  27. bolderbob says:

    Hi Tony,
    In Cycle 1, Primary 1 was about 700 points. Shouldn’t Primary 3 be at least as large in magnitude?

  28. Tony, any thoughts on the FXE here? How much further do you see it going, and is it in a wave 3 uptrend or 5? Thanks.

  29. H D says:

    Great update Tony. I have been too cautious. Brilliant read on the market. Congrats.
    A true 4-5 would change my perspective on this.
    Enjoy the weekend all.

    • tony caldaro says:

      Thanks, our little short term chart indicator has already made over 80 SPX points.
      Quite an unusual run for that indicator.

    • CB says:

      thanks HD. I am a bit confused re: leading diagonal (5-3-5-3-5) vs. ending diagonal (3-3-3-3-3). If anyone can straigten me out on that, I’d appreciate it. Thanks.

      • CB says:

        haha!..Gracias HD..OK gotcha, ST implications are the same for both, so yes we can smell lthose burnt tires : ) ). Pardon my ignorance, just trying to undertand what ur envisioning LT. Here’s what I’ am assuming, so pls correct me where I am wrong. Ur 1 was 5 waves, ur II was 3 w’s, and now wave III is setting up to be 5 waves in LD, right? thanks.

      • CB says:

        1074-1422 is 5 waves, right..or not? : ) )

      • H D says:

        The wave count I am showing is just for consideration. I defer to Tony.
        A LD would retrace all in 1/2 time before 3 of III up. A w2 down on deck?
        1074-1422 3-3-5 subjectively

      • CB says:

        Thanks HD. I really appreciate ur help with this & thanks so for much for the extra explanation! I need to make sure I understand the terminology correctly; I’ve been laboring under the assumption that EDTs consist of 3 wave structures & imply the end of a trend, and LDTs contain 3 and 5-wave structures and imply trend continuation. Both imply sharp corrections when they end, but the LDT (in an unptrend) keeps the dream the alive, so to say (which is Ben’s favorite, I presume). I hope to get a better understanding of this as this things develops & I really appreciate the oppty. to ask you questions about all those EW patterns which you understand& apply so well. Thanks again HD.

  30. eeid26 says:

    Hi Tony,
    Thank you for your updates. I just want to make sure that I read your public charts correctly. The $NDX (Nasdaq 100) is done with Cycle [1] of supercycle [3] and now its correcting in Cycle [2] of supercycle [3]. is this correct?

  31. torehund says:


    From May 1st- 2011 until today it could be a finished ABC flattishly tilting down (wave major 2). Then wave 3 is beginning, just a thought !

    • torehund says:

      Alt.. 2009 bottom to may 11 (A-wave), May 11 until now (B-wave), then waiting for a C that should be equal in length to the A-wave.

      • torehund says:

        I hold a nanocap seismic surveys offshore comp and a nanocap chemical tanker stock, plus the Par Petroleum ( former Delta petroleum). They should profit if oil appreciates.

      • torehund says:

        M: lets ceate a fund called SUGAR DIRECT, lol. At the and of the bull Direxion will maybe make one. Like UNG was created at the end of the nat gas bull…………..

      • mokiepon says:

        torehund, we need SUGAR DIRECT now! LOL! Why waste a good bull run, then set up an ETN? So, you’re going with India stock instead of PEIX?

        BTW, you’re a sm. caps guy, did you see what CIMT did on Friday? I wouldn’t go for it now, but sure want to catch a wave just like that one!


      • torehund says:

        M: peix is not for sale. But if cycc runs to 26 usd, l will sell it in exchange for a sugar play. KMSUGAR looks nice too…from India.
        Planning ahead.

      • torehund says:

        M- nanocaps have to be caught before a run starts, or one may end up as a long term bagholder. I try to buy the sound ones with good techs and fundamentals. It is not always successful, but I d my best. Ew helps but is no guarantee of any big wins.

      • mokiepon says:

        torehund, I hear ya. Bought rosg this morning, as it still looks as though it hasn’t popped yet. Maybe up 1-2% last week at most. Looking for a bit more. What do you think about it right now?

      • mokiepon says:

        cycc at $26?! Really? That’s a HUGE gain!


    • Ryan Parker says:

      One potential I have been watching for on oil since the 2011 high is a triangle. If this plays out oil should top soon (which would be D) followed by a leg down to a slightly higher high than C ($77.28). So maybe $80.00? Then the next move up.

      • torehund says:

        Ryan: there is a divergence between May 2011 and now, if it doesnt hold its pretty negative for oil. However sentiment is generally subdued for oil, oil service etc, not what signals a peak. Seasonality is a little skewed this year,due to FC-talk and US elections.

      • torehund says:

        Ryan: Yes I see, one more test not piercing the low before “driving season”.

      • Ryan Parker says:

        I hadn’t taken driving season into account. Just looks to me like a bullish consolidation via symmetrical triangle. Would imply a top between here and $105, then another leg down to $80 or so, then the next move up.

      • torehund says:

        Ryan, went through it once more…and it could just be…abc up from recession lows, then a weak abc down for oil. More clear count on sugar abc up, abc down + huge pos div.
        In ethanol the double abc to peak is lucid, decline is fuzzy. If it pans out we will soon see the mother of all commodity rallies.

      • mokiepon says:

        torehund, so you didn’t find anything of note to play sugar direct? What a shame. Well, ethanol it is then. PEIX…


    • mokiepon says:

      Oh geez, torehund, rosg starting to lift now! Man, I bought this just in time! Hope it continues.


  32. ipman1893 says:

    Hello Tony, I am a new reader of your blog in the past few months. Your analysis has been very inspiring and much for me to learn.

    What do you think about the Hang Seng Index uptrend? I find it quite hard to manage counts as its movement is very cloggy and trading in small range recently.

    With the US markets are reaching the all times nearly, how would the Chinese markets catch up? Or they are already very overbought?

    Thank you and deeply appreciated.

    • tony caldaro says:

      Welcome Ipman,
      The HSI is in a bear market rally from 2011.
      It’s pattern has been all abc’s.
      It usually follows the west, but is also influenced by China.
      The SSEC could rally back to 3000, and is likely to top after the western markets.
      good luck!

  33. ctfp999 says:

    Hi Tony,

    What is your thought regarding the 10-Yr UST yield? Do you think it can break through the current resistance or it may have to wait a little longer? TIA.


  34. rolandu11 says:

    Thanks Tony,

    a very intersting update. And very interesting week. I read a lot of overbought market in this week. Yes the market is overbought (and a pullback can always occur), but not really overheatet. In the last 2 years my indicators showed 2 times per year a excessive heating and then good sell signals. Hope (and think) we will get also such situations in 2013.

    In the last year a lot of people discuss a bad performance oft the DJ Transportation. But it was just a test of the long term uptrend (Trandsp.with longer macd-hist.).


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