weekend update

REVIEW

The week started off on a positive note. Continuing the rally from SPX 1639 and hitting 1670 on Monday. After that the market made a lower downtrend low on Wednesday, bounced, and nearly hit that low again on Friday. Talk of FED tapering took back seat to the upcoming debate on the debt ceiling, and the crisis in Syria. For the week the SPX/DOW were -1.55%, the NDX/NAZ were -1.75%, and the DJ World index lost 2.2%. Economic reports ended the week on the positive side with a flurry of positive reports on Friday. On the downtick: durable goods orders, pending home sales, the M1 multiplier and the WLEI. On the uptick: Case-Shiller, consumer confidence/sentiment, Q2 GDP, personal income/spending, PCE prices, the Chicago PMI, and weekly jobless claims improved. Next week, shortened by the Labor Day Monday holiday, will be highlighted by ISM, the FED’s Beige book, and the monthly Payrolls report. Best to your weekend!

LONG TERM: bull market

We have been counting this bull market, from March 2009 at SPX 667, as a five Primary wave Cycle [1] bull market. Our expectations have been for an early 2014 top between SPX 1650 and 1780. Since the market has already reached SPX 1710 this August. Its upside potential would appear somewhat limited in the months ahead. We would welcome an upward revision, if necessary. That, however, somewhat pales in comparison to what we see unfolding after this bull market tops. A Cycle wave [2] bear market, lasting one to three years, with a potential market loss of 45% to 50%. In the mean time the bull market continues to unfold.

SPXweekly

Primary waves I and II completed in 2011, and Primary wave III has been underway since then. 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 have subdivided into five Intermediate waves. Major waves 1 and 2, of Primary III, completed in mid-2012. Major wave 3 completed this month, and Major wave 4 should be underway now. When it concludes, probably in September around SPX 1540, a simple Major wave 5 uptrend should follow to end Primary III. Then after a Primary wave IV correction, a simple Primary wave V uptrend should end the bull market. Two more uptrends to new highs after this correction.

MEDIUM TERM: downtrend

After the SPX 1710 Intermediate wave v uptrend high the market started to decline in what we anticipate to be a three wave pattern. Thus far only the DOW, of the four major US indices, has confirmed the downtrend. We expect the other three indices to confirm this coming week. This correction is unfolding in what some would call a double three: an abc down, followed by an interim rally, then another abc down. We prefer to label this type of correction as an abA-B-abC. Since it is a Major wave correction it is three Intermediate waves, with the two declining waves dividing into three Minor waves.

SPXdaily

Since the recent uptrend completed a five Intermediate wave pattern which began in mid-2012. This correction should be bigger than the two previous corrections of 8.9% and 7.5%. During this bull market the three Major wave corrections have been: 17%, 7.4% and 10.2%. We believe this one will be about 10%: SPX 1540. A Fibonacci 38.2% retracement of the entire Major wave 3 targets SPX 1541. Also there is a cluster of previous fourth waves, of a lesser degree, all around SPX 1540. Our expectation for this correction was SPX: 1630-1670-1540. Thus far the market has declined SPX: 1639-1670-and now heading lower. The downtrend low should occur some time in September. Medium term support remains at the 1628 and 1614 pivots, with resistance at the 1680 and 1699 pivots.

SHORT TERM

From the SPX 1710 high, Intermediate wave A unfolded as follows SPX: 1685-1700-1639. Then the market rallied in three waves during Int. wave B: 1657-1642-1670. Now Int. wave C appears to be underway with a Minor wave a decline to SPX 1627 on Wednesday, then a Minor b rally to SPX 1646 on Thursday. Minor wave b may not be complete, as you will notice Minor wave b of Int. A took a bit of time unfolding. However, when the SPX breaks through the 1628 pivot range (1621-1635) Minor wave c should then unfold rather quickly.

SPXhourly

With this week’s rally to SPX 1646 we offered an alternate count, which is posted on the DOW charts. This count suggests Int. wave A completed at SPX 1627, and Int. wave B is underway now. We consider this count unlikely since the market is already quite close to making lower lows. But it is worth noting since this recent rally carried a few points higher than what was expected.

DOWhourly

Short term support is at the 1628 and 1614 pivots, with resistance at SPX 1636-1640 and SPX 1648-1649. Short term momentum ended the week near neutral. The short term OEW charts have been negative since SPX 1660 with the reversal level now 1646. Best to your trading!

FOREIGN MARKETS

The Asian markets were quite mixed on the week for a net gain of 0.2%. India, Indonesia, Japan, Singapore are in confirmed downtrends and Hong Kong is quite close.

The European markets were solidly lower on the week for a net loss of 3.3%. Six of the eight indices we track are quite close to confirming downtrends.

The Commodity equity group was also negative on the week for a net loss of 2.6%. Russia is in a confirmed downtrend.

The DJ World index loss 2.2% on the week and is close to confirmed a downtrend. Currently 30% of the world indices are in confirmed downtrends, and 35% more are quite close.

COMMODITIES

Bonds continue to downtrend but gained 0.4% on the week.

Crude continues to uptrend gaining 1.4% for the week.

Gold is also uptrending but ended the week flat.

The USD is close to confirming an uptrend and gained 0.9% on the week. The EUR is close to confirming a downtrend and lost 1.2% on the week.

NEXT WEEK

Monday: holiday. Tuesday: ISM manufacturing and Construction spending at 10:00. Wednesday: the Trade deficit, monthly Auto sales and the FED’s Beige book. Thursday: weekly Jobless claims, the ADP index, Factory orders and ISM services. Friday: the monthly Payrolls report, (est. +175K to +210K), average has been 195K. Best to your holiday weekend and week!

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

About tony caldaro

Investor
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341 Responses to weekend update

  1. davidmlamos says:

    Apogee

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  2. opader says:

    thanks Tony for your objectivity, my thoughts:
    A Change In Trend … From Bullish To Neutral
    http://balancetrading.blogspot.com/

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  3. Leetired says:

    Thanks Tony for what you do and what you don’t do
    I’ll stop mentioning the St. Louis Cardinals until they’re 5 games up on the Pirates.

    Thinking I might bring the X wave out of retirement to post a count I have in Oil soon 😉

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  4. gauravsuri17 says:

    Tony sir as you said gold can come down toward 1349-1272 sir is your view still the same

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  5. lunker1 says:

    today’s low backtested the resistance TL from Friday afternoon’s highs. better seen on SPY.

    targets are 1657, 1658 and 1659.
    if 1633 is minute b of minor c and if c of c=a of c=1657
    or 1659 where minor c=1.62 minor a.
    the 109% fib of 1576->667 is 1658.
    (reminder that 1709 was the 114.6% fib of 1576->667)

    on the other side, it would seems a move below 1633 is curtains for minor b and 1627 should seal it.

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    • lunker1 says:

      or target 1672 if 1651 was minute a and 1633 is minute b and minute c=1.62 minute a.

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    • blackjak100 says:

      couldn’t agree more lunker…just was thinking 1658 is a huge level (besides being 50 dma) with all the fib confluence. However, I think we have to chance to go higher than that towards 1668 before the next shoe drops. Classic and I mean classic whip saw action

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  6. M1 says:

    Tony, have you heart any rumor abt a possible downgrade of the US debt in the near future ?
    How do you think it may impact in the markets at this point ?
    Thx

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