weekend update


An expected volatile FOMC/Options expiration week did not disappoint. The market started the week with a gap up opening, held those highs on Tuesday, then spiked when FED chairman Bernanke did not taper QE 3 as was expected. Then the unwinding of that spike unfolded during Thursday and Friday’s expiration. For the week the SPX/DOW were +0.95%, the NDX/NAZ were +1.45%, and the DJ World index was +2.0%. Economic reports for the week ended positive. On the uptick: industrial production, the CPI, existing home sales, the Philly FED, leading indicators, the monetary base and the WLEI. On the downtick: the NY FED, the NAHB, housing starts, building permits, and weekly jobless claims rose. Next week: Q2 GDP (est. +2.5%), PCE prices and more housing reports.

LONG TERM: bull market

With the markets inflection point out of the way, and the much anticipated QE 3 taper a non-event, we can concentrate on the long term count. The recent August correction only declined about half of what was expected. The three previous Major wave corrections, during this bull market, had ranged between 7.4% and 17% in the SPX and 6.7% and 14.9% in the DOW. So we expected something about in the middle, around 10%. At the August low, however, the SPX had only corrected 4.9% while the DOW corrected 5.7%. This correction, being the smallest of the four Major wave corrections, could not be anticipated in advance. Our error, we got it wrong.


While there has been some discussion of a more bullish count long term. We are maintaining our conservative bull market count as we have been reporting now for a few years. This bull market remains Cycle wave [1] and should unfold in five Primary waves. Primary waves I and II ended in 2011. Primary wave III has been underway since then. Primary I divided into five Major waves with a subdividing Major wave 1. Primary wave III has also be dividing into five Major waves, but both Major waves 1 and 3 subdivided. Major waves 1 and 2 of Primary III ended by mid-2012, and Major waves 3 and 4 appear to have just ended in mid-2013. Major wave 5 of Primary III should now be underway. When this uptrend concludes it should end Primary wave III. Then after Primary IV correction, the next uptrend, Primary wave V, should end the bull market. We still expect a bull market top by late-winter to early-spring 2014.

MEDIUM TERM: uptrend

It was a disappointing August downtrend for many traders as the market only declined to the 1628 pivot, found support, and began to rally. However, the downtrend was sufficient to trigger a confirmation in the bellwether DOW which retraced over 80% of its previous uptrend. As a result of this OEW activity we have labeled the recent low as Major wave 4 in both the SPX and DOW. The uptrend, which has been underway since the late August low, is Major wave 5.


Since Major wave 5, of Primary I, was the shortest of those Major waves, and did not subdivide. We are expecting Major wave 5, of Primary III, to be a one trend advance. A subdividing Major 5, however, can not be totally ruled out, since Major waves 1 and 3 have subdivided. But to anticipate something that is uncharacteristic of this bull market is not being objective, nor conservative. When this uptrend concludes the next correction should give us the answer. Typically, after a large five wave advance the market should have a significant correction. Primary wave II declined 22%. That was somewhat extraordinary for a bull market, as many turned long term bearish the exact day it bottomed. Typical corrections during this bull market have been about 10%. Medium term support is at the 1699 and 1680 pivots, with resistance at the 1779 pivot.


Since we are expecting a one trend Major wave 5, we have been labeling its advances in Intermediate waves. Intermediate wave i was a leading diagonal from SPX 1627-1662. Intermediate wave ii was a sharp decline, which often occurs after diagonals, to SPX 1641. Intermediate wave was a simple five wave advance to SPX 1730. Intermediate wave iv should be underway now, as the market has pulled back 21 points from its high. This is the same length as the entire Int. wave ii decline. After this decline concludes the market should rally to new highs to complete Int. wave v, Major wave 5, and Primary III.


Short term support is at the 1699 and 1680 pivots with resistance at the 1779 pivot. Short term momentum ended the week quite oversold. The short term OEW charts remain positive with the reversal level now SPX 1692. Best to your trading!


Asian markets were mostly higher on the week for a gain of 2.1%. All indices uptrending.

European markets were mostly higher on the week for a gain of 1.4%. All uptrending too.

The Commodity equity group were all higher for a gain of 2.1%. All uptrending as well.

The uptrending DJ World index gained 2.0%.


Bonds had a good week gaining 1.2%, but have not confirmed an uptrend yet.

Crude sold off this week losing 3.5%, and should be confirming a downtrend soon.

Gold lost only 0.2% on the week, thanks to Wednesday’s rally, but appears to be downtrending.

The USD was also in the red this week -1.2%, and is now downtrending.


Tuesday: Case-Shiller, the FHFA housing index and Consumer confidence. Wednesday: Durable goods orders and New home sales. Thursday: Q2 GDP, weekly Jobless claims and Pending home sales. Friday: Personal income/spending, PCE prices and Consumer sentiment. The FED has only one speech on its agenda: FED governor Stein on Thursday in Germany. Best to your weekend and week!

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

About tony caldaro

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224 Responses to weekend update

  1. blubrd67 says:

    Is “Dr. Doom’s” enthusiasm for stocks one of the signs that market is topping?

    “Prominent economist Nouriel Roubini, who is known as “Dr. Doom,” on Monday offered a negative take on gold and certain emerging markets, along with kind words for U.S. and Japanese stocks and the dollar.”

    Although, he is in line with Tony on commodities.

  2. bcm52 says:

    Question for the group. Because we are in a long term uptrend or bull market, is it wise to short counter trend waves such as 2’s and 4’s? Or should one just stand aside and wait for the decline, then go long? Not sure if that makes sense. I have a tendency to think I need to be in the right direction for every wave, but is that necessary? Thoughts? Thx.

    • zvyezda says:

      BCM, base it on your own comfort level and the wave degree and point change to be expected. The shorter ones can be very tricky and not worth the risk – especially in options. I am trying to overcome that inclination myself. Try to have at least two magnitudes of waves and preferably three lined up as a force multiplier to work in your favor and to make up for any slippage in timing entries and exits.

    • hucky2 says:

      “All losses in the stock market are entirely attributable to not investing with the PRIMARY trend.” – Quote

    • tony caldaro says:

      In a bull market, if one buys too early, they will recover and profit sooner or later.
      If one shorts too early, it may take weeks, months, years, or possibly decades to recover, if ever.

    • glacialspeed says:

      BCM, I would say it depends entirely on your time frame. I would prefer to invest and not trade and still struggle with the question of which wave is “big enough” to worry about. Guess I’m a slow learner. It took me awhile to realize investing and trading are not the same thing.

  3. zvyezda says:

    Tony, under your stewardship, the board seems to have settled down for the purpose you have always intended, so that we can help each other. I don’t think we should have any major problems going forward. Many thanks as always!

    But just in case, thought for today!

    “If you cannot make yourself what you would wish to be, how can you bend others to your will? We want them to be perfect, yet we do not correct our own faults. We wish them to be severely corrected, yet we will not correct ourselves.”


    • tony caldaro says:

      thank you Zvy
      and nice words!

    • torehund says:

      Follow some wise Words from the bible (or similar texts), and attempt to refrain from projecting any negative energy toward other bloggers (thats like begging for something in Return, and a Vicious circle is created). Other traders strive With problems of their own, and needs support not harassment.
      ……And if both the Fish and the Fisherman get “hot headed” they will eventually separate.

  4. 7dayyss says:

    RUT almost positive, bodes well for higher up instead of another leg down!

  5. Tony,
    Do Intermediate wave v’s sometime come up short/weak or maybe fail? I thought I remember you saying something about this several month ago. Thank you.

  6. torehund says:

    As election is over maybe Merckel dares to goose Greece a bit ?

  7. jackkendo1987 says:

    I report the following post as a personal insult, no market related comment at all.
    per your 1:22 pm post.

    lunker1 says:
    September 23, 2013 at 1:14 pm
    wow who fed the parrot today?

  8. lunker1 says:

    wow who fed the parrot today?

  9. A 10 points, B 5 points, C 2.62X A=26 points ; 1720-1725-1700?

    GL all, I am on travels all week and not posting much intra day.

  10. torehund says:

    double abc, last one complex, could be IT…

  11. jackkendo1987 says:

    Is the line in the sand for int 4 of major 5 at 1692 (low end of 1699 pivot)?

    “The short term OEW charts remain positive with the reversal level now SPX 1692. “

  12. jackkendo1987 says:

    int 4 of major 5 concluded at 1697.10 (1699 pivot).
    int 5 of major 5 targeting 1779 pivot (1772-1786)?

    “Medium term support is at the 1699 pivots, with resistance at the 1779 pivot.”

    • JACK, we are keeping the number of posts down… No need to spam and repeat Tony’s comments or keep asking him the same question over, and over.

      • jackkendo1987 says:

        I remember you!
        ur the guy posted video with virus, and your only purpose here is criticize other leaders of the forum.
        You are into my ignore list!

        • tony caldaro says:

          For the past nearly 24 hours the comment section has quieted down quite a bit.
          Maybe some have left. Which is fine, posters come and go to whomever has the hot hand.
          Two posters, in particular, have created a lot of noise over the past several weeks.
          They have even changed names, one several times, to create more noise and confusion.
          We have a really good group of professional traders here.
          In an attempt to keep this blog going in a positive fashion: helping others.
          All personal insults to anyone, or anyone’s approach to the markets, will not be tolerated.
          Those that choose to do this sort of thing will be marked as spam.
          If they continue, their IP address will then be blocked.
          In the 8 years doing this blog I have never needed to block anyone.
          Guess popularity has its drawbacks.
          If anyone notices a post that is out of line please bring it to my attention.
          If we all monitor the comments it will be a better place to share ideas.
          best to your trading!

      • VIRUS, Youtube Virus?

        You’ve got a problem kid, it was so much nicer without you, but keep it up, I am sure Tony will let you know himself.

  13. uncle10 says:

    Afternoon all.
    Thanks Tony.
    I was looking at your weekly chart of SPX and it has 4 higher highs but four lower lows on the RSI with the last not getting above 70. That is a classic looking medium/longer term top. Looks like CN is going to nail the bottom and the top- again. I will be very surprised if we make a higher high before a “Big Down”. The VIX MACD with the lines together right at the zero ( if it begins to rise from here)- it is forcasting a big move down in the market. Gl all.

    • jackkendo1987 says:

      Major wave 5 of Primary III should now be underway. When this uptrend concludes it should end Primary wave III. Then after Primary IV correction, the next uptrend, Primary wave V, should end the bull market. We still expect a bull market top by late-winter to early-spring 2014.

      After this decline concludes the market should rally to new highs to complete Int. wave v, Major wave 5, and Primary III.

      Medium term support is at the 1699 pivots, with resistance at the 1779 pivot.

    • tony caldaro says:

      Yes, there are major negative divergences longer term

  14. maubos says:

    Hi Tony.How do you see eurusd in the short/medium?Thx

  15. jackkendo1987 says:

    Would be lovely to see a label of iv at 1697.1
    Here int 4 of major 5,.60 Min RSI is at the same bottom level as major 4. Also with a positive divergence.
    cheap long at the 1699 pivot.🙂

    • greenroger22 says:

      morn all..1706 and hold 7-10… fwiw..currently looking for rut 1040ish…stop iwm..106.77..gl all…daily IMO looking lower

  16. wolf7219 says:

    On May 2, 2011, bin Laden was shot and killed, finish Primar 1
    September 18, 2013, Bernanke non-taper, finish Primar 3 ?

    • jackkendo1987 says:

      ur comparing Ben to a shot & killed terrorist?
      Listen to Tony,
      We still have int 5 of major 5 to come, I am ready and positioned for it.
      Here int 4 of major 5 bottomed at 1699 pivot with RSI bottom.

    • Wolf, listen to Jack, look at this picture, it tells you everything you need to know.

  17. torehund says:

    Many Stocks are converging to start a wave 3 from their respective bottoms.

  18. Leetired says:

    Morning Tony
    z-St. Louis and some volatility never hurt anyone😉
    Ur the new pivot guy so make us proud !
    Jack Frost in da house

  19. Tony

    What would make you think Int Wave V topped out and major correction underway? Any levels ?

  20. kloutt says:

    ES open tested the weekly range 50% fib and failed then tested friday low looking for buyers and failed

    now we bounce at -1.38% from fridays high

    here is the 1min chart

  21. jackkendo1987 says:

    1699 pivot for int 4 of major 5?
    RSI is at bottom.

      • jackkendo1987 says:

        Tony Thanks
        I will be bullish and buy at 1699 to ride for int 5 of major 5.

      • Aggressive Bears had the all-time high double top above them as they pressed it down for three straight days. Bulls looking for higher highs, still need to find a support level for a push beyond the Bernanke top. For a sustainable push, I think they don’t step in aggressively until we test the gaps down below. $SPX 1688 is the first of those. That doesn’t mean we can’t retest the previous high of 1709 and the take-off point from the Bernanke bounce at 1714: it just means I think big money is waiting down below where we are now, at the spot roundie of $SPX 1700.

        What does this mean for int 1-2? It was 20 handles and we’re currently around 30 handles. so 1-2 will not equal a potential 3-4, if it were called here. My thinking is that we have a different count to look at. Typical quarter-end shenanigans and Capitol Hill fiscal-year end news bombs will provide opportunity for traders and tough for us to map on the chart.

    • alexhartley1 says:

      small rally here with a chance to re-visit lows tomorrow or slightly lower before int. 5 starts

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