weekend update

REVIEW

Markets worldwide turned back all the fundamental negativity this week and staged a fairly good rally. The US stock market approached new highs again, fell short, but still gained on the week. The SPX/DOW were +1.40%, and the NDX/NAZ were +2.25%. Asian markets gained 1.4%, Europe soared 4.1%, and the DJ World index gained 2.5%. Economic reports this week ended on the plus side, with gainers outpacing losers 6 to 4. On the uptick: FHFA housing prices, new home sales, Q1 GDP, consumer sentiment, the WLEI, and weekly jobless claims improved. On the downtick: existing home sales, durable goods orders, the M1 multiplier and new home prices. Next week there is a plethora of economic data, plus the FED/ECB both meet. Should be quite an interesting week.

LONG TERM: bull market

The Cycle wave [1] bull market we have been tracking continues to unfold in quantified waves which have been seemingly relentless at times. We have been anticipating five Primary waves to unfold during this bull market. Primary waves I and II completed in 2011, and Primary wave III has been underway since SPX 1075. 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 of Primary III completed in early 2012, and Major wave 3 has been underway since then. Intermediate waves i and ii of Major wave 3 completed in late 2012 and Intermediate wave iii has been underway since then, or completed at SPX 1597.

SPXweekly

Looking ahead. We still have to confirm a downtrend to know that Intermediate iii has completed. When it does there should be a small, i.e. 4.5%, Intermediate iv correction, then an uptrend to new highs to complete Major wave 3. Then after a Major 4 correction another uptrend to new highs will complete Primary III. Finally after a Primary IV correction, another uptrend to new highs to complete Primary V. Currently we are estimating this entire process will conclude in late winter – early spring 2014. With a price target between SPX 1650 and 1780.

MEDIUM TERM: B wave rally, or uptrend extending

This Intermediate wave iii uptrend started in mid-November at SPX 1343. Since then it has had three extended rallies of about 100 points, and three pullbacks of about 50 points. One would think the third rally ended the uptrend at SPX 1597, and the third pullback had started a correction. Yet, this week the SPX rallied to within four points of that 1597, then had a minor pullback to 1578 while ending the week at 1582. Was this big rally a B wave, or is this relentless uptrend preparing to extend yet again. Since we are in Intermediate iii, of Major 3, of Primary III this activity should not be all that surprising.

What has been surprising is the downside pressure from most foreign markets, declining foreign currencies versus the USD, a rising bond market, and declining commodity prices during the past one, two, three months. Even the NDX/NAZ confirmed downtrends. Yet the SPX/DOW has thus far shrugged off these negatives and continue to hold its uptrend. This has not occurred once during this entire bull market. With both sides in mind, should be down trending – still up trending, we now offer an alternative count.

SPXdaily

Our main count remains five Minor waves completed at the SPX 1597 high: Minor one 1424, Minor two 1398, Minor three 1531, Minor four 1485 and Minor five 1597. Then a Minor A down to 1536, and a Minor B to 1593, Minor C should be underway now. We continue to display this count on the SPX charts.

DOWdaily

The alternate count is still Minor one 1424, Minor two 1398, and now the alternation. Minute one 1531, Minute two 1485, Minute three 1597, Minute four 1536, and Minute five of Minor 3 currently underway. We are displaying this count on the DOW daily chart. Medium term support remains at the 1576 and 1552 pivots, with resistance at the 1614 and 1628 pivots.

SHORT TERM

Short term support is at the 1576 and 1552 pivots, with resistance at SPX 1597 and the 1614 pivot. Short term momentum bounced from oversold to neutral on Friday. The short term OEW charts remain positive with the reversal level now SPX 1574.

SPXhourly

With two working counts, the main and the alternate, we should be able to set some market parameters to determine which count is the markets active count. And we can. The key level to watch going into next week is SPX 1563. The false rumor flash selloff low of Tuesday. Should the SPX trade below this level, into the OEW 1552 pivot range, before making a new bull market high. Then the main count is in effect and Minor C of Intermediate iv is underway. Should the SPX make a new high, above 1597, this level is no longer of importance as the alternate count is underway. It’s a tough call either way with all the economic activity this week.

FOREIGN MARKETS

The Asian markets were mostly higher on the week for a gain of 1.4%. Five of the eight indices are still in confirmed downtrends, with Australia and India improving.

The European markets were all higher this week for a gain of 4.1%. Six of the eight indices are in confirmed downtrends, with France and Greece improving.

The Commodity equity group were all higher this week for a gain of 2.4%. All three remain in downtrends. So the total markets down trending drops to 70% worldwide.

The DJ World index made a new high this week gaining 2.5%.

COMMODITIES

Bonds remain in a one month uptrend gaining 0.1% on the week. Ten year yields have declined from 2.086% to 1.643% this week.

Crude has been quite wild of late, is still in a downtrend, but gained 5.4% on the week.

Gold is having a serious bounce off the recent $1322 low, hitting $1485 this week, and gained 3.4% on the week.

The USD is trying to establish a new uptrend, but lost 0.3% on the week.

NEXT WEEK

Monday: Personal income/spending and PCE prices at 8:30, then Pending home sales at 10:00. Tuesday: the FED starts its two day FOMC meeting, plus Case-Shiller, the Chicago PMI and Consumer confidence. Wednesday: the ADP index, ISM manufacturing, Construction spending, Auto sales and the FED’s FOMC comments. Thursday: the ECB meets, weekly Jobless claims, and the Trade deficit. Friday: the Payrolls report, Factory orders, and ISM services. Also on Friday there will be a speech from FED governor Tarullo in Wash,DC. Best to your weekend and week!

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

About tony caldaro

Investor
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204 Responses to weekend update

  1. Talal Sabha says:

    Hi Toni. Thanks also for this great update. I very much appreciated your outlines on the impact of the QE-programs on the S&P500 back in June last year: For every $20 bln the FED purchases in long term debt the stock market rises 1%. ( https://caldaro.wordpress.com/2012/06/23/weekend-update-350/ ). Could you please update on that matter? Thanks in advance. Kind regards. Talal

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  2. Leetired says:

    BREAKING

    U.S. to pay off debt for first time in six years..
    Nice 🙂

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  3. gtoptions says:

    Setting up “The Wave of Mutilation” 😉

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  4. H D says:

    SPX, I think double top trade until proven wrong. Did they front run Tuesday again this week?

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  5. CB says:

    -d on 5 min and r3 – could be IT for today.. I am out

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  6. Tony, anything your sixth sense telling you? minute v of minor 3?

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  7. manunidhi21 says:

    Hi Ancient Tony..
    Still B or alternate?

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  8. Leetired says:

    Like

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