weekend update


The market opened the week higher, tried to break out above SPX 1775, pulled back to 1761 Wednesday morning, then made all time new highs for the rest of the week. For the week the SPX/DOW were +1.45%, the NDX/NAZ were +1.70%, and the DJ World index was +1.5%. On the economic front negative reports out numbered positive ones 7 to 4. On the uptick: wholesale inventories, the monetary base, the WLEI and the Treasury deficit improved. On the downtick: export/import prices, the NY FED, industrial production, capacity utilization, plus both the trade deficit and weekly jobless claims were higher. Next week we get a look at the Philly FED, CPI/PPI, Retail sales and the FOMC minutes.

LONG TERM: the bull market continues

After the bear market low in Mar09, and the five waves up to form Major 1 in early 2010, we tracked Primary wave I until it peaked in early 2011. The 22% Primary wave II correction that followed was quite steep for even the choppiest of bull markets. During this time we analyzed Primary I, determined the characteristics of this bull market, and this eventually led to our projected bull market high within the OEW 1779 pivot range. We had noticed the first waves were strong, third waves were weaker, and fifth waves were the weakest of the three impulse waves. Our price assumption was that Primary waves III through V would equal all of Primary I.


This week those characteristics changed when Primary III in both the SPX and NDX exceeded the length of Primary I. This relationship, as many EW pundits would know, is generally what is considered normal: good first waves, stronger third waves, and a variable fifth wave. The general rule also suggests that once a third wave exceeds the equality of the first wave the next Fibonacci ratio is 1.618 times wave 1. This would suggest that Primary III would end around SPX 2200. We are certain you have heard this number being touted on the internet.

We took a look back at all the bull markets since the early 1980’s. Each time the third wave of a bull market reached that sort of relationship or greater to the first wave, the first wave was relatively small in time and price. During this bull market the SPX doubled during its first wave and it took about two years. That is anything but small. These types of 1.618 relationships work much better with smaller waves. Nevertheless, nothing can be totally ruled out in this type of FED/QE driven bull market. However, from a Fibonacci Primary III to Primary I wave relationship there are still two significant price levels ahead, SPX 1970 and SPX 2070, before SPX 2214 should even be considered.

MEDIUM TERM: uptrend

The SPX uptrend we have been tracking started back in August at 1627. This we have been labeling this low as the Major wave 4 low of Primary III. Thus far we have counted five waves up from that low. Four of which have completed and the fifth has been underway. Since this is Major wave 5 we are counting these five waves with an Intermediate degree: Int. i SPX 1730, Int. ii SPX 1646, Int. iii SPX 1775, Int. iv SPX 1746 and Int. v SPX 1798 thus far.


The market is gradually approaching the first resistance level for Int. wave v at SPX 1810. The next resistance level is at SPX 1826, which falls within the range of the next higher pivot: SPX 1828. After that we are looking at SPX 1849 and then SPX 1875. These levels are still quite a way from Friday’s SPX 1798 high/close. The next two OEW pivots above 1828 are 1841 and 1869. So these Fibonacci price levels and the pivots match up quite well. Technically we have seen an upturn in the daily MACD and RSI. But both are currently suggesting a potential negative divergence at Friday’s new highs. We will be monitoring this situation next week. Medium term support is at the 1779 and 1699 pivots, with resistance at the 1828 and 1841 pivots.


From the Major wave 4 SPX 1627 low Int. waves i and iii each unfolded in five Minor waves. Intermediate wave v is obviously unfolding in the same manor. Minor wave 1 rallied to SPX 1773, from the Int. wave iv low at SPX 1746. Minor 2 pulled back to SPX 1761 on Wednesday morning, and Minor wave 3 has been underway since then. Currently Minor 3 (37 pts.) is already longer then the somewhat short and quick Minor 1 (27 pts.). A Fibonacci 1.618 relationship would come into play in this situation, for these Minor waves, at SPX 1805. This is close to our SPX 1810 resistance level, which is based upon Intermediate waves. With a negative divergence building on the hourly chart we may see the market stall around those levels.


Short term support is at the 1779 pivot and SPX 1746, with resistance at SPX 1810 and the 1828 pivot. Short term momentum is displaying a negative divergence and quite overbought. The short term OEW charts remain positive with the reversal level at SPX 1781.


The Asian markets were mixed on the week but generated a 0.8% gain thanks to the 7.7% gain in Japan.

The European markets were also mixed but ending with a 0.1% loss.

The Commodity equity group were mixed but gained 1.0%.

The DJ World index remains in an uptrend and gained 1.5% on the week.


Bonds appears to be downtrending but gained 0.4% on the week.

Crude is downtrending and lost 0.5% on the week.

Gold is downtrending as well and lost 0.1% on the week.

The USD is uptrending but lost 0.5% on the week.


Monday: the NAHB index at 10am. Wednesday: Retail sales, the CPI, Existing home sales, Business inventories and the FOMC minutes. Thursday: weekly Jobless claims, the PPI, the Philly FED and Leading indicators. Busy week for the FED. Tuesday: FED chairman Bernanke gives a speech at 7pm. Wednesday: FED director Gibson testifies before the Senate. Thursday: FED governor Powell gives a speech at 9:45. Friday: FED governor Tarullo gives a speech at 12:15. Busy week, wild bull market run, enjoy the weekend and the week!

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

About tony caldaro

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221 Responses to weekend update

  1. Mr. CL- EE says:

    Hey H D
    I changed my avatar so you could see the buck taken at my Dad’s place in the Heartland with a bow.
    Measured twice shot once .
    Sorry about the off topic , back to what u guys were doing.

    Hey R C and Uncle !

  2. H D says:

    are we there yet? :mrgreen:

  3. bobhopium says:

    Think the LOD is in… added another small long here.

  4. rc1269 says:

    don’t go chasing waterfalls

  5. Tony

    Primary III topped ?

    What is your target for Primary wave IV , how many points are we looking for ??

    Thank you

  6. pooch77 says:

    Ican just twittered market could have big drop,very cautious

  7. rc1269 says:

    starting to look good here

  8. 777daimon says:

    sorry bears … not gonna happen….this 4’th wave of wave 3 is ..a triangle.
    I’m getting back long here as I’m break-even considering the price where I exited this morning.

    • you maybe right, But only God knows we this market is going

      • 777daimon says:

        I was not right… at all.
        A and B tricked me with a triangle-like formation.
        a C wave just caught me.
        I’m lucky that I’m long in a bull market so I can stand this move.
        4’th post, sorry Tony!

    • mjtplayer says:

      Downside to 1,780 – 1,785 – then minor 5 to complete primary 3? However, if the ED is broken to the downside, then primary 3 is already in and down we go; wouldn;t be making any major bets either way…

      Cash = low stress and a good nights sleep 🙂

  9. Nobody is expecting a correction before year end and I guess why would they we rarely get a down day. the only indicator i have gotten was a dear old friend who told me this morning to throw my charts out the window as I have continued to expect a sell off.

  10. 16golfer says:

    The Master has not posted. May have been in the line of huge storms across the Midwest yesterday. Praying for his safety.

  11. manunidhi21 says:

    Namaste Tony !
    Can OEW provide time frame .. like how much months the primary IV will last (when it sarts) and the Primary V time frame which you said will be Winter end- Spring 2014.
    Any updaes on that

  12. bobhopium says:

    Diamond top on S&P fut 5min…break down gives 1794…break up gives 1806.

  13. mjtplayer says:

    So on “mutual fund Monday”, with heavy POMO, the day after a full moon, we’re only able to get 4pts higher on the S&P?? Looks like minor 3 is ending, minor 4 down to 1,780 – 1,790 in the coming days?

  14. weekend update

    The market has continued to climb in what we are terming Major wave 3 of Primary wave 3. These are the strongest of waves, and it has started at 1267 (End of Major 2).

    Our projection since September 12th was for 1829 for the high end of Major 3. We sent a chart out on that date showing 1829 in bold on the chart….

    How does this all fit for a near term Major 3 high?

    1. The sentiment measures I read this weekend in IBD are showing that Investment Advisors are at 52% bulls vs. 15.5% bears. Anytime that ratio is at 3 to 1 or higher, your near market peaks… with no exceptions.

    2. The % bears at 15.5% is a 5 year low…. again, another indicator of an impending high

    3. The commodities are dropping hard… corn, gold, silver, sugar, coffee, copper…. early indicators of softening

    4. The wave patterns are pretty clear

    At 1822-1829 the SP 500 will have a 161% Fibonacci ratio to the Major 1 rally of Primary 3. Most Wave 3’s are capped out at 161% of wave 1.

    At 1822 we have a 555 point rally off the 1267 Major 2 lows. 555 points is the first leg of this bull cycle 666-1221

    We would expect with the 3d stocks popping hard and bubbling and the % advisors bullish vs. bearish that these are all signs of a Major 3 high coming.

  15. elmer510 says:

    Thanks for the update, Tony.

    I would also give credit to Stemski and Sverker’s contributions. Their count is very similar to what I find in my own european market with minor 3 of IM 3 of major 3 which give a lot of space for more euphoria in the market. Tony’s preliminary thoughts about a possible SPX 2200 would also fit well in this context.

  16. RDC says:

    Market pullback on Wed/Thur.

  17. Caldaro are you seeing anything out there that would indicate a topping process?

  18. gary61b says:

    Looking for a min. retrace of 1792.5 on spx.

  19. buddyglove says:

    I had a look at all my global charts this weekend and they are looking very good for the bulls.
    Everything from China,India,Japan to US,Europe and UK look primed and ready for a serious Bull run into the new year.

  20. bobhopium says:

    Hi all again…with ref to my comments below here is my Dow charts updated from last week that maybe of use to some.
    Call it a box, sideways continuation, whatever, I believe the mkt is proving this structure is Not a top. First target @16300/330 into mid/Jan and then 17670/690 into mid/spring. I am not worried about overboughtness,valuation, vix or high sentiment indicators as I believe we are entering the manic /eurphoria phase and all these will be ignored for now. I expect this rally to be swift and leave many stuck like deer in the headlights without participation…GL to us all.
    Dow weekly

    Dow Fut hourly

  21. 777daimon says:

    from dailyfx.com data streaming, published a few minutes ago:
    ”S&P 500 Daily Sentiment Index (DSI) now at 93% bulls. Historically has been a dangerous game when gets so one way….
    18 Nov @ 01:39:38 PM GMT”
    “VIX DSI has just 7 handles to go to reach “total complacency” ie 0% bulls”

    Now I’m starting to get worried…this are conditions ripe for a reversal.
    I’ve limited my long exposure. No shorts taken.

    • The writing is on the wall people. Fed policy is ensuring a damaged/worthless currency and accumulating massive debt for the USA taxpayer. We are redistributing wealth from taxpayer to wealthy stock traders, is this really the answer to our economys problems? PLEASE share thoughts , and comments. BEST OF LUCK.

      • 777daimon says:

        🙂 ..don’t be naive!
        All FED people are top 10 US top banks’ ceo’s and managers. What does this tells you ? 🙂
        It’s the same revolving door between politicians and bankers but adapted inside of the system: between FED and big banks.
        So: we all know that , are you trying to reinvent the wheel ? :D?
        Better watch out in cash the ratio inside wave 5: where wave 3 if it is 1.618* wave 1 it’s 1804.12 in cash !
        We will open at that level …..

        A reversal to 1685 or to 1670 is at hand.
        BUT: also if wave 3 is 2.618* wave 1 we are talking about 1732.48 in cash!
        So watch out ! Leave those politicians, FED’s and banksters, watch out your money or while you’re talking here, they will steal it from you! 🙂

  22. blackjak100 says:

    It looks like there’s a good chance for DOW 16,000 today based off of futures. I hope Bouraq keeps updating his DOW chart as the action at the red line will be revealing.

  23. bobhopium says:

    Greetings to all.
    For my own trading purposes here is what i am working with…Hope it is useful to others.
    Not much to add from last Monday and my midweek comments except to say I believe the train has left the station and we have entered the euphoric/mania phase of this bull cycle, I am on-board and the train is certainly NOT crowded.
    The SPX “Running” triangle (Wrongly identified as a bearish wedge by 90% of TA’s) is morphing into a trend channel and I expect a fast move towards the top blue, this is currently @1871. It would not surprise me to see 3 or 4 gap up and go days in a row as the mkt will try to take as few with it as possible, anyone waiting for an oversold/pullback setup maybe disappointed.
    I am going with the above unless the market proves otherwise…..GL to us all.
    S&P fut (Continuous)

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