weekend update


After ending last week near an all time high at SPX 1818, the market gapped up twice this week reaching 1845 on Friday before settling at 1841. For the week the SPX/DOW were +1.45%, the NDX/NAZ were +1.25%, and the DJ World index gained 1.50%. Economic reports for the week were again positive. On the uptick: personal income/spending, PCE prices, durable goods orders, FHFA housing prices, new home sales, and weekly jobless claims improved. On the downtick: the WLEI and the monetary base. Next week, another holiday shortened week, will be highlighted by construction spending, ISM and auto sales.

LONG TERM: bull market

After pin-pointing the March 2009 SPX 667 low, nearly to the day, we turned somewhat long term bullish expecting a 50% retracement rally to around SPX 1150. When the market hit that level in January 2010, we noticed the next correction in February to around SPX 1050 was corrective, and not impulsive. This suggested to us we were already in a long term bull market, and not a bear market rally.

Then in mid-2011 we became cautious on the market as it had completed five waves up into SPX 1371. The market then corrected in an elongated flat losing about 20% of its value. Soon after the market started impulsing again as Primary III was underway. The previous five wave advance was Primary I and the steep correction Primary II.


This summer, 2013, we observed a possibility that Primary III could be ending. We expected about a 10% correction. But all we got was 5% and the market moved higher. This fall we observed the same possibility. But this time the market pulled back only about 3% and then turned higher. Primary wave III continues to unfold.

When Primary III does conclude we should see the biggest correction we have seen in over a year for Primary IV. Which may coincide with the four-year presidential cycle low. Then another advance to new highs for Primary V. We had a bull market target of SPX 1779 by Q1 2014 for quite a while. But recently extended it out to Q3/Q4 2014 around the high SPX 1900’s.

MEDIUM TERM: uptrend

We continue to count this uptrend from the August low, and the DOW October low, as Major wave 5 of Primary wave III. From late-August to late-November, in the SPX, we had a five wave advance: 1627-1814. There was also a five wave advance in the DOW, but of a shorter duration. Heading into December the market corrected only 23.6% of the advance, when the FED projected an end date to QE 3 and started tapering. We counted the first advance as Intermediate wave one of Major wave 5. The pullback Intermediate wave two. And the current rally Intermediate wave three. Both in the SPX and DOW. Possibly the trifurcation of the past few months had ended.

In an October weekend update we offered three potential counts: https://caldaro.wordpress.com/2013/10/12/weekend-update-418/. One was quickly eliminated: the Primary III high. But the other two are still active. We have been tracking the Major 5 underway count on the SPX/DOW charts. And the Minor wave 3 of Int. three of Major 3, bubble-type count, on the NAZ charts. This count we feel is an alternate to more obvious count posted on the SPX/DOW charts.


Last weekend we posted several price projections, resistance pivots, that the market needs to overcome to continue to move higher. SPX 1828 was the first, and the market closed there on Monday. SPX 1841 was next, and the market closed there on Friday. The next resistance pivots are currently SPX: 1869, 1884, 1901, 1955, 1970 and 2070. Should Int. waves three through five equal at least Int. one, then SPX 1955 is achievable before the next significant correction. Medium term support is at the 1841 and 1828 pivots, with resistance at the 1869 and 1884 pivots.


Short term support is also at the 1841 and 1828 pivots, with resistance at the 1869 and 1884 pivots. Short term momentum ended the week near neutral. The short term OEW charts remain positive from SPX 1785 with the reversal level now 1830.


The current Int. wave three rally has only advanced three waves thus far from SPX 1768: 1811-1801-1845. Minor wave 1 of Int. wave one, also advanced a similar amount in its first three waves from SPX 1627: 1661-1641-1705. Should the similarity continue we should see a decent pullback soon, then another rally to about the OEW 1884 pivot before even a larger pullback follows. For now, we are assuming the first three waves up of this rally are part of Minor 1 of Int. three. Anticipate, monitor and adjust. Best to your trading!


The Asian markets were all higher on the week for a net gain of 1.2%.

The European markets were also all higher for a gain of 2.0%.

The Commodity equity group were all higher as well for a gain of 0.9%.

The DJ World index is uptrending again gaining 1.5% on the week.


Bonds continue to downtrend losing 0.7%, as 10YR yields crossed 3% for the first time in 2.5 years.

Crude continues to uptrend gaining 1.1% on the week.

Gold is trying to uptrend again gaining 0.9% on the week.

The USD is still downtrending and lost 0.3% on the week.


Thursday: weekly Jobless claims, Construction spending, and ISM manufacturing. Friday: Auto sales. The FED gets active again with two speeches on Friday. FED governor Stein at 1:15, then FED chairman Bernanke at 2:30. Best to your weekend and week and Happy New Year!

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

About tony caldaro

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86 Responses to weekend update

  1. 777daimon says:

    1st of January 2014 – major (!) Bradley turn date.😉

  2. gary61b says:

    Good morning, In regards to gold on the daily chart at the 1272 level is a possible neckline of a H&S that has broken through and has a potential of 1103 target, and this morning on the 60 min. it is at lower support of possible bear flag with potential of 1134 target.

  3. blackjak100 says:

    If earnings growth accelerates big time in 2014, then it’s possible the bull will continue through 2000. If it stagnates or decreases, a bear will be ushered in IMO. It would not shock me to the economy improve in 2014 and see the market flat or down. Always the opposite of what everyone thinks.

    • mcmasoniam says:

      Sounding like CNBCer’s there, bj. NO, not YOU! LOL!
      Interesting opinion by you on SPX, VIX and all below this post. Guess we’ll know about B wave soon. Thanks bj; GL today.

  4. kisshu2 says:

    hi Tony are you talking about a minor wave 1 target of 1881 to 1884? and do minor wave 1 of 3rd intermediate waves often exhibit a .618 fib relationship to the intermediate wave I and a 1.618 extension of the minute wave 1 of the minor wave in progress?

  5. $SPX $SPY $TNA $NUGT $TWTR $UVXY, The “You’re Out Of Time” roadmap for the coming week: http://standardpoor.wordpress.com

  6. blackjak100 says:

    I found it interesting to read the DOW has NEVER been up 5%+ in 6 consecutive years. If 2014 is up more than 5%, it would mark the 6th consecutive year. Quite a feat it would be! I personally believe something is ‘off’ about this recovery and there’s a major disconnect between the market and the economy. We now have the 2nd highest market cap to GDP valuation outside of 2000. The last 2 years we’ve had 20% earnings growth yet a 50%+ rise in the market over that timeframe. I’m a big believer the FED has created huge multiple expansion. However, I do think the economy is getting slightly better.

    In EW terms, this should translate into a B wave. The VIX could not break 11 in this bull and it broke 10 in 2006. I realize this has very little meaning. If it is a B wave, typically we should not see the S&P trade above 1892 (138.2% extension of the A wave). Above 1900 and I’m in the new secular bull camp. Regardless of the count, I believe we will not trade through 1900 and I do believe we will test the 2007 high in 2014 and bounce from there. It will be the depth of the bounce which should reveal the true count.

    • hucky2 says:

      Mahendra Sharma (http://www.mahendraprophecy.com/index.php) predicts that the bull market will rage through 2014 & 2015 possibly reaching 3200 with a major pullback in 2016
      Funny &%#@ LOL
      (his predictions are more accurate than most, though not perfect)

      • torehund says:

        Hucky, then the usd will have to tank ” ala P.Schiff”, and when all scream hyperinflation you buy some bucks, lol.

      • tommyboys says:

        Dollar does not have to tank at all in fact I see the dollar strengthening WITH equities rallying. Strong economy and strong markets result in a strong currency…it will happen. A dollar investment here may in fact be the best play out there!!

      • torehund says:

        Tommy, I see commodity plays rebounding and then the dollar behaves mostly weak, and the continued printing doesn’t benefit it until we eventually enter a popping bubble… And the bubble has to be fueled by good gains on the oversea companies helped by a weak dollar. Sure it doesn’t have to happen but it surely could. The C possibility on my NOK/USD Chart tells me there could be a plunge with the dollar not yet in a bull. Since my bullish equity chart is alive, the latter scenario gets more and more likely.

    • Haven’t we long since exceeded the 2007 high in the $SPX?

    • Ryan Parker says:

      You mentioned 20% earnings growth over the past 2 years. I sure haven’t seen that. According the #’s I track the operating earnings for the S&P 500 were $97.00 in Q1 of 2012 and $102.00 in Q3 of 2013. More like 5%, not 20%. Would make sense that the economy improves a bit but the market doesn’t respond on the upside the way many would expect. Similar to the market being up so much over the past 18 months yet earnings growth has been quite stagnant.

  7. Hi Tony

    I agree with your call I and II in 2011, and III since the low of 1075, with waves 1 – 2 – 3 – 4 as you depict them, and wave 5 of III (in blue bold in your charts) starting in Nov 2012.

    What do you think of the following for III?

    Wave 1 on Oct 27’11, wave 2 on Nov 25’11, wave 3 on Sep 14’12, wave 4 on Nov 16’12 and since then in wave 5 of III ending in principal on Aug 2’13 and since then in extension: Sep 18 – Oct 9 – Nov 29 – Dec 18 and currently in the 5th leg up to 1943-1969.

  8. Something strange. My count and projection. I’ve got it based on my count and applying Fibonacci proportions.

  9. Anonymous says:

    awesome update. 2014 will be intresting. especailly with rates over 3% now.

    But it seems the XMAS rally came this year, like it normall does Check out the amazing chart here => http://bit.ly/1kS8YcZ

    Right now everyone is talking about 2014 crashing, however we are in an accelerated bull market right now, And tony has been spot on with some of his projections this year. :-)))))))

  10. hucky2 says:

    I starting to envy you people in cold climates it’s 102f here at the moment. (4.30 pm)

    • pooch77 says:

      Well you can quit enveying us right now as we had 1 balmy day at 37 derees and the highs for the next 3 days are 0,2,3.Very hard to take chill out of bones and cold weather screws everything else up.Cant grill outside,to cold to hottub,cant work outside,3 seasons room to cold to heat up,give me hot hot weather

  11. ariez5 says:

    Hi Tony,
    It’s been a while since I posted, but I am still lurking. I find the urge to post in order to boost my own interpretation of the market is very strong, and it is an urge I force myself to resist. But today I must ask a question:
    On the SPX chart, why don’t you consider this possibility for Major 5?
    Int 1: 1627-1729
    Int. 2: 1729-1646
    Int. 3: 1646-1813
    Int. 4: 1813-1768
    Int. 5 ongoing since 1768

  12. Thanks for the update Tony.
    We had a good looking setup for a bearish outcome the other Friday on SPX but as soon the highs were broken and the stops triggered the upside momentum was re-ignited and that was that. We’ve reached an interesting juncture on both SPX and NDX. I’d say we’re at the threshold of bubble territory on both. We’re up against trend line resistance that once broken opens up much clearer air for bubble possibilities. A modest pull back off these areas seems to make most sense to me right now though.

  13. $SPX $SPY $IWM $TSLA $FB $TWTR $NUGT $GOGO, $UVXY, roadmap for monday and the coming week:

  14. thanks for the update Tony! Fabulous! It has been quite the ride, and an easy one for that matter too, since that now infamous FOMC Wednesday, so soon I expect the market will throw many off again (minor 2 dare we say?!)

    Question; you wrote “Should the similarity continue we should see a decent pullback soon, then another rally to about the OEW 1884 pivot before even a larger pullback follows.” Did you mean with “a decent pullback” minor 2, and with “a larger pullback” intermediate iv?

  15. Hi Tony!

    Thank´s for the update.
    The present wavecount seems to have a very high probability of being the correct one.

    I have some problems in pinpointing the start of intermediate 3. There are different low Points in SPX and Dow in the cash market.
    In Dow I see the lowpoint dec 12 (15.704). But in SPX dec 18 (1768).
    Perhaps this is of academic interest only, but the minor wave Count might differ between the indices. We might be in minor 3, using the Dow count. Do you have a comment on this?

    Best wishes Sverker

  16. cmparis says:

    Hi Tony
    Just reread your weekend update from last week.
    If Wave 4 of current rally corrects more than 13 points would you give this Int. wave more odds of being the end of PRI III? 50/50?
    Thanks for all the help this year – Happy New Years

  17. blackjak100 says:

    Thanks Tony!

    The counts are still not clear to me on the indices so I’m still sticking with my technical theme of long gold/short crude in the first half of 2014. The waves seem to be more clear in these indices. I’m still looking for the ‘final flush’ (or fifth wave down in OEW) to complete in gold down to $1155-$1170 within 2 weeks. We still could see $1230-$1240 next week in gold, making the final flush even more dramatic! I’m still short gold and have not shorted oil yet. Still looking for $103-$105 before I initiate the trade and would not be surprised to see it in Jan. I have recently seen some analysts jump on the bandwagon with crude price targets of $70 in 2014. Thanks to EW, I’ve had that target for a month now.

    • mcmasoniam says:

      bj, think there’s a distinct possibility of WTI going lower than 70 at bottom of secular Bear mkt. 50 would not be out of the question, but by no means sustained. Once 103ish is struck, I will also short WTI. Like your take on gold also.
      Simplify. M

      • blackjak100 says:

        I agree but since I’m a short term trader, I have trouble looking out that far. Let’s see if a significant decline from $103-$105 (61.8% retrace of decline from $112-$92) unfolds towards $70 first and then reassess. Fundamentally, it seems like supply is no longer an issue. Demand and political issues are always a wild card which is why I like to refer to the charts. I like your simplify theme and I don’t there’s any simpler chart of crude than the one below. It looks like a no brainer trade to me, but I’m not correct everytime! Cheers McM!

      • mcmasoniam says:

        Oh hey, I agree with you bj; no way to tell about prices with any true assurance this far out. Just thought I’d share what’s being talking about in the industry. From the looks of your chart, 50-70 isn’t unimaginable. As for “Simplify”; I think we all tend to make things more difficult than they truly are. The lesson of Occam’s Razor if one of, if not my favorite.
        Simplify. M

      • mcmasoniam says:

        bj, meant to say about the political ducks that might take flight. OPEC would have a very difficult time with oil below 80. And 70 and below, extremely (as in ‘the end of OPEC as we know it’) difficult. Perhaps the time for such change is upon the world.

      • mcmasoniam says:

        No need to seek power that I already have, and others that I don’t want. However, suggest that many people consider embracing a rattlesnake – carefully:


  18. Thank you Tony. Minor wave 1 of Int. wave one, had one push higher from 1705 to 1729.86 to complete 5 waves before starting a decent pullback of Minor wave 2. Does it mean we should see one more push high to complete five waves of Minor Wave 1 of Int Wave Three before we would see a decent Wave 2 pullback?
    If that holds good I am ready to short EEM for a quick trade when the wave 2 pullback starts.
    Have a great weekend.

  19. mcmasoniam says:

    Mahalo, Tony!

  20. torehund says:

    G morning all, yes its happy times in the market, gap and go in stocks as in indexes. At one time I guess major 4 will come but until 1900 on sp 500, I am relatively relaxed. We have to watch the dollar closely as I think a dollar rally will coincide with the major four.

  21. M1 says:

    Thanks, Tony.
    So, any drop larger than 5% on the spx will suggest PIV is underway ?

  22. chrisk44342 says:

    Happy new year Tony. Thank you for your insights and objectivity.

  23. pooch77 says:

    Interesting that SHJ has a target of 1965 this spring

  24. rolandu11 says:

    That was a good year. The DOW has done something amazing at the end. Some have already been shown here, the long-term trend, but mostly with negative comments. I do this rather neutral. These are just the facts. What happens next will decide the future.

    Happy New Year to all here!


  25. pooch77 says:

    Top of the morning to ya Tony

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