weekend update


The beat goes on. While foreign markets have bounced around between uptrends and downtrends the past several weeks the US market has remained in a steady uptrend since November. In fact, not only has the DOW made new all time highs, the SPX is within six points of doing the same. For the week the SPX/DOW were +0.65%, and the NDX/NAZ were +0.65%. Asian markets gained 0.7%, Europeans markets lost 2.3%, and the DJ World index gained 0.3%. On the economic front reports remain positive, as improving reports outnumbered declining reports 9 to 6. On the uptick: Q4 GDP, durable goods, Case-Shiller, personal income/spending, PCE prices, consumer sentiment, new home prices and the WLEI. On the downtick: consumer confidence, new/pending home sales, the Chicago PMI, the M1 multiplier and weekly jobless claims rose. Next week we get a look at monthly Payrolls, Consumer credit, and the ISM’s.

LONG TERM: bull market

The Cycle wave [1] bull market continues to unfold as expected long term. Cycle wave bull markets unfold in five Primary waves. Primary waves I and II completed in 2011. Primary wave III has been underway since that SPX 1075 Primary II low. Primary wave I divided into five distinct Major waves with a clearly defined subdividing Major wave 1. Primary III is also dividing into five Major waves, however, both Major wave 1 and 3 are subdividing into five distinct Intermediate waves. Major waves 1 and 2, of Primary III, ended in 2012. Major wave 3 has been underway since that SPX 1267 Major 2 low. Intermediate waves i and ii, of Major wave 3, completed late 2012. Intermediate wave iii has been underway since the SPX 1343 Intermediate wave ii low.


Five wave advances, dividing and subdividing into five wave advances are the signs of an ongoing bull market. Other signs include our weekly MACD remaining above neutral, for the most part, since 2009. Notice it performed in a similar fashion during the 2002-2007 bull market. However, during the 2007-2009 bear market is remained below neutral. The weekly RSI also displays a bullish pattern. Extremely overbought at times, with only short periods of being oversold. Again the same as 2002-2007. However, the 2007-2009 bear market was quite the opposite. Short periods being overbought with extreme levels of being oversold.

We continue to project a bull market high between Feb/Apr 2014. The wave pattern suggests there are still three more uptrends, after the current one, to complete the pattern. The market still needs to complete Intermediate wave v to end Major wave 3. Then Major wave 5 to end Primary III. Then Primary wave V to end the bull market. Our current price target, which may be raised, suggestes SPX 1650-1700 by early 2014.

MEDIUM TERM: uptrend new high SPX 1570

The current uptrend, Intermediate wave iii, began in mid-November at SPX 1343. Our original forecast of a February high around the OEW 1552 pivot, has been exceeded in time and price. As the SPX entered the OEW 1576 pivot range on friday. Simply put, this uptrend has been quite relentless even for us bulls.


As you can observe from the daily chart. The previous Intermediate wave, Int. i, divided into five Minor waves with a subdividing Minor wave 3. Intermediate wave iii is doing the same thing, except Minor wave 5 is extending this time. While previously is was shortened and truncated. As a result, Int. iii (227 pts) has already exceeded the length of Int. i (208 pts). This uptrend also happens to be Int. iii, of Major 3, of Primary III. Often a powerful wave and the point of recognition for the bull market.

Trying to identify the high of this uptrend has been quite difficult. Every time the market stalls, and gets choppy, the uptrend has eventually resumed. Currently Minor wave 5 (85 pts) is about equal to Minor wave 1 (81 pts). They also about 0.618 Minor 3’s (133 pts). These are common wave relationships. This suggests, if Minor 5 continues to extend it could equal Minor 3 which would take it to the OEW 1614 pivot range. However, we continue to observe negative divergences on the daily RSI/MACD, with an extrenely overbought weekly RSI. Nonetheless, when this uptrend does end we are expecting only about a 4.5% correction before the Intermediate wave v uptrend gets underway.


Short/medium term support is at the OEW 1552 and 1523 pivots, with resistance at the 1576 and 1614 pivots. Short term momentum ended the week overbought. The short term OEW charts remain positive with the reversal level now SPX 1558.


The hourly chart displays the entire uptrend from SPX 1343. Each Minor wave divided into five Minute waves i-v, and Minor wave 2 and 4 alternated. A classic bullish pattern. Minor wave 5 is currently in Minute wave v, its last rally. Observe Minute v of Minor 1 was quite short. And, Minute v of Minor 3 was much better, but ended in a diagonal triangle. Minute v of Minor 5 is also displaying this potential topping pattern.

Currently we can count this pattern as potentially complete. Especially with the negative RSI divergence. However, since this uptrend seems to just keep on rising we are raising our critical support level from SPX 1539 to the 1552 pivot range. On any pullback the market needs to stay within the 1545-1559 range to keep the uptrend intact. Should the SPX drop below this range a downtrend is probably underway. Best to your trading!


The Asian markets were mostly higher on the week for a net gain of 0.7%. China, Hong Kong, India and S. Korea are in downtrends.

The European markets were mostly lower on the week for a net loss of 2.3%. Greece, Italy and now Spain are in downtrends.

The Commodity Equity group were mostly lower but gained 0.3%. Brazil and Russia remain in downtrends.

The DJ World index is uptrending and gained 0.3% on the week.


Bonds appear to be entering an uptrend gaining 0.4% on the week. Bond yields are already downtrending.

Crude also appears in an uptrend gaining 3.7% on the week.

Gold is also uptrending, for the first time in months, but lost 0.7% on the week. Silver and Platinum, however, remain in downtrends.

The USD remains in an uptrend and gained 0.8% on the week. The EURUSD lost 1.4% and the JPYUSD gained 0.4% as both are downtrending.


Monday kicks off the economic week with ISM manufacturing and Construction spending at 10:00. Tuesday: Factory orders and monthly Auto sales. Wednesday: ADP, and ISM services. Thursday: weekly Jobless claims. Friday: the monthly Payrolls report, Unemployment rate, Trade deficit and Consumer credit. As for the FED. There are two speeches on thursday: FED chairman Bernanke in Ohio, and vice chair Yellen in Wash, DC. Best to your holiday and week!

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

About tony caldaro

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184 Responses to weekend update

  1. 7dayyss says:

    Turnaround Tuesday or Ruby Tuesday!


  2. CygnetNoir says:

    Peace, love and understanding … Tell them, brother Edwin …


  3. uncle10 says:

    for the forex folks. I am buying the hated Yen, via shorting USD/JPY and CAD/JPY.


Comments are closed.