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.


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