weekend update


After a rally Monday, pullback Tuesday, the market rallied back to the SPX 1775 all time high Thursday morning. Then the market had its biggest one day reversal in quite a while hitting SPX 1746 just before the close. Friday, however, the market completely reversed recovering all of Thursday’s loss ending the week at SPX 1771. For the week the SPX/DOW were +0.70%, the NDX/NAZ were -0.25%, and the DJ World index lost 0.4%. On the economic front nearly all the reports were positive. On the uptick: factory orders, leading indicators, ISM services, Q3 GDP, consumer credit, nonfarm payrolls, personal income/spending, PCE prices, the M1 multiplier, the WLEI and weekly jobless claims declined. On the downtick: consumer sentiment and the unemployment rate rose. Next week we get reports Industrial production, the twin deficits and the NY FED.

LONG TERM: bull market continues

We continue to count this bull market as Cycle wave [1] consisting of five Primary waves. Primary waves I and II completed in 2011, and Primary wave III has been underway since that low. Primary I divided into five Major waves and so has Primary III. A couple of times over the past two months it appeared that Primary III had ended. The market is in Major wave 5, the last wave of Primary III, and fifth waves have been weak in this bull market. We have been erring on the side of caution. But this bull market has been resilient and ended the week only four points from its all time high.


We had been projecting all along a bull market high around SPX 1780 by early 2014. The market entered that range in late October, retested it Thursday, and now appears to be heading back into that range. This price activity, obviously, is months ahead of schedule. With the SPX and DOW counts out of sync, as they have been since August, making a new projection, at this time, would only be guess work. When these two indices re-sync, which should be during Primary IV, we will get a better idea of where this bull market should end in price.

MEDIUM TERM: uptrend

We have been tracking this uptrend, Major wave 5 from the August low at SPX 1627, as five Intermediate waves. At first we thought they could form an ending diagonal triangle so we labeled the rallies/declines with both numbers and letters. This week Int. wave iv appears to have bottomed at SPX 1746, not overlapping Int. wave i at SPX 1730, and the diagonal triangle is now off the table. This uptrend appears to have completed four Int. waves SPX: 1730-1647-1775-1746, with the fifth wave underway.


Normally we would expect this fifth wave to have some Fibonacci relationship to either waves 1, 3 or both. However, the SPX has had a few fifth waves failures over the past year or so. So Friday’s close at SPX 1771 could have been it. If it isn’t, and the SPX clears the OEW 1779 pivot range, then the next resistance would be at SPX 1810 and SPX 1826-1828. The first two numbers are 0.618 relationships to Intermediate waves i and iii, with the last number a Fibonacci relationship for Major waves of the entire Primary III. Medium term support is at the 1699 and 1680 pivots, with resistance at the 1779 and 1828 pivots.


We counted five Minor waves up from SPX 1627-1730 for Int. wave i. After a steep and complex pullback for Int. ii to SPX 1646. We then counted another five Minor waves up to SPX 1775 for Int. wave iii. Intermediate wave iv was much shorter in time and price, as has been the case for fourth waves during this bull market. But it did drop into the upper end of the price range we expected and then the market rallied strongly on Friday. Intermediate wave v appeared clearly underway on Friday.


Short term support is at SPX 1746 and 1730, with resistance at the 1779 pivot and SPX 1810. Short term momentum ended the week quite overbought. The short term OEW charts are positive again with the reversal level at SPX 1762. Best to your trading the recent stop and go action!


The Asian markets were mostly lower on the week losing 0.8%. China, Hong Kong, Indonesia, Japan, Singapore and S. Korea are all in confirmed downtrends.

The European markets were mostly lower as well, but only lost 0.4%.

The Commodity equity group were mixed on the week losing 1.9%. Brazil is in a confirmed downtrend.

The DJ World index is still uptrending but lost 0.4% on the week. Of the 20 world indices we track 35% are in confirmed downtrends.


Bonds have not confirmed a downtrend yet, losing 0.4% on the week, but 10YR rates have confirmed an uptrend.

Crude is still downtrending and lost 0.3% on the week.

Gold may be in an unconfirmed uptrend, but it lost 2.0% on the week.

The USD is uptrending again gaining 0.7% on the week.


Wednesday: Export/Import prices and the Budget deficit. Thursday: weekly Jobless claims and the Trade deficit. Friday: the NY FED, Industrial production and Wholesale inventories. Also on Thursday: FED vice chair Yellen testifies before the Senate in a confirmation hearing. Best to your weekend and week!

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

About tony caldaro

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151 Responses to weekend update

  1. torehund says:

    possibly g miners could stage a raaly from here, took a breather in the inverse. Micro Pharmas continues to deteriorate.

  2. blackjak100 says:

    For some reason, I knew you would respond. I’m just stating the fact for this rally since 2009. However you would think if this bull had a lot farther to run, 11.05 should be taken out in fairly short order. The fact is it hasn’t been.

  3. blackjak100 says:

    With the vix sub $12.50 again, this is the reading where a sell-off of any degree has always begun during this rally. With less and less stocks participating, I think buying here is ridiculous. Wait for the pullback if you insist on buying.

  4. market action today favors the bulls. Bears who are waiting for a black swan event all but done. although looking at the charts you would think smart investors are slowly taking profits not to disturb price. at least that what the old timer like me says. the other side are people who tell me my charts are uselss. So far they are right and I am wrong.

  5. I see an abc on the 5 minute chart today. Could be the end of minor 2 already, if the market can make a new high. There have to be a lot of stops waiting to be hit at 1775ish.

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