weekend update


Quite a volatile week. The market started the week trading from SPX 1843 to 1816 on Monday. Rallied to all time new highs at SPX 1851 on Wednesday. Then dropped to SPX 1835 on Friday, before closing the week nearly unchanged. For the week the SPX/DOW were mixed, the NDX/NAZ gained 0.65%, and the DJ World index gained 0.1%. Economic reports for the week were positive two to one. On the uptick: the treasury budget, retail sales, export prices, business inventories, the NY/Philly FED, the CPI/PPI, industrial production, capacity utilization, the WLEI, plus weekly jobless claims improved. On the downtick: import prices, the NAHB index, housing starts, building permits, consumer sentiment and the M1-multiplier. Next week will be highlighted by Housing and the Leading indicators.

LONG TERM: bull market

We continue to count this now five year bull market as Cycle wave [1] of Super cycle wave 3. Cycle wave bull markets unfold in five Primary waves. Primary waves I and II completed in 2011, and Primary wave III has been underway since then. This week Primary III not only exceeded Primary I in price, but now also time: 27 months v  26 months. Primary I divided into five Major waves with a subdividing Major wave 1. Primary III has also divided into five Major waves, but both Major waves 1 and 3 subdivided. Since we have been in Major wave 5, without any trend reversals, it is yet to be seen if this one subdivides as well.


When Major wave 5 does conclude, ending Primary III, we would expect the biggest correction since 2012. Then after that Primary IV correction ends we would expect a new rally to all time new highs to end the bull market. Currently we are expecting the bull market to top in Q3-Q4 2014 in the mid to upper SPX 1900’s.

MEDIUM TERM: uptrend

The Major wave 5 uptrend that started in the SPX in August, and the DOW in October, continues to unfold. This week the SPX made an all time new high. We have been counting this SPX uptrend quite aggressively, in an attempt to get the SPX and DOW back in sync. We have counted five Minor waves up from SPX 1627 to 1814 to end Intermediate wave i. Then after an Int. wave ii pullback to SPX 1767, we counted Minor waves 1 and 2 at SPX 1849 and 1816 respectively. Minor wave 3 announced its presence on Wednesday with a new high.


Since Minor wave 1 was 81 points, we would expect Minor wave 3 to at least equal it. This suggests it could reach the OEW 1901 pivot range before it tops. Minor wave 2 at SPX 1816, met all the technical parameters we were expecting. An oversold daily RSI, a negative cross on the daily MACD, an extremely oversold RSI on the hourly chart, and it found support around SPX 1814. Despite all the positives we have noticed a potential, more conservative, alternate count.

After this volatile week, and Friday’s decline, we just had a chance to take a closer look at the advance in the SPX from its Major wave 4 low in August. We also reviewed the uptrend in the DOW from its Major wave 4 low in October. As a result of the wave activity in both of these major indices we now have a new potential count.

The SPX has risen nine waves, with the ninth currently underway, from its Major wave 4 low. The waves SPX: 1729-1646-1775-1746-1814-1768-1849-1816-1851 so far. The DOW has risen five waves: 16175-15704-16588-16241-16505 so far. Five wave and nine wave structures are normal impulse waves, which could complete, when done, an uptrend. When we look closer at the SPX we observe two strong rallies, and three quite normal rallies. The strong rallies occurred in October and December. If we then consider these potentially third waves, of some degree, we arrive at a significantly different count.


Notice the October rally could be Intermediate wave iii, since the pullback after that rally did not overlap the previous high. Also notice, Int. iii was longer than Int. i, so Int. v can now be any length. The December rally could be Minor wave 3, since it was stronger than the previous rally, Minor 1, and its pullback did not overlap that previous high either. Also, since Minor wave 3 was longer than Minor 1, Minor 5, currently underway, can be any length. This count also displays alternation between waves: complex and simple pullbacks.


The DOW, not surprisingly, also offers a different count that would fit. If we count the recent 16,588 high as Int. wave iii, and the pullback to 16,241 as Int. wave iv, it is also in its fifth wave of this uptrend. Since 16,241 did not overlap 16,175, and the pullbacks were somewhat different, we have a potential five wave structure. The difference is, however, in this wave structure the DOW has limitations for its fifth wave. Intermediate wave iii was shorter than Int. wave i. So the upside limitation for the DOW would be 17,125, or 4% above Friday’s close. Should the SPX then track the DOW, we are probably looking at a high in that index in the low 1900’s. Medium term support is at the 1828 and 1779 pivots, with resistance at the 1841 and 1869 pivots.


Short term support is at the 1828 pivot and SPX 1816, with resistance at the 1841 pivot and SPX 1851. Short term momentum ended the week oversold. The short term OEW charts are negative, with the reversal level now SPX 1841.


After hitting the Minor wave 1 high at SPX 1849 on the last day of the year. The market pulled back for nearly two weeks to the Minor wave 2 low at SPX 1816. Then the market surged to a new high in just two days kicking off Minor wave 3. This rally to SPX 1851 can be counted as Minute wave i, with Minute wave ii currently underway. The low, so far, for Minute ii is SPX 1835. Typically waves of this degree, during this uptrend, have only pulled back 10 to 13 points. But there have been occasions when the pullback has stretched into the lows 20’s. So the OEW 1828 to 1841 pivots, which have overlapping ranges, should provide support. If the market were to drop all the way back to SPX 1816 the count will need adjusting. Best to your trading!


The Asian markets were mostly higher on the week for a net gain of 0.7%.

The European markets were also mostly higher for a net gain of 1.3%.

The Commodity equity group was mixed and ended unchanged.

The DJ World index is still uptrending and gained 0.1% on the week.


Bonds are still in a downtrend but gained 0.2% on the week.

Crude is still downtrending but gained 1.3% on the week.

Gold continues to try to confirm an uptrend and gained 0.4% on the week.

The USD is uptrending and gained 0.8% on the week.


Monday is a holiday and US markets are closed. Nothing gets reported until Thursday: weekly Jobless claims, the FHFA housing index, Existing home sales and Leading indicators wrap up the week. All in one day. The FED has nothing scheduled. A quiet week economically. Best to your extended weekend and week!

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

About tony caldaro

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105 Responses to weekend update

  1. can you provide me the links for real estate sector updates

  2. blackjak100 says:

    Futures are trying to ramp up. Will we see the gains disappear by open or will we see a big gap up and go?

  3. well, seems that Jan OPEX was the reason to keep her down… now, it’s time to run…. $#$# em all.

    • torehund says:

      WE can hope, just hope the low is in for China, and if it is expect some fireworks pretty soon. A justified retrace is 2000 points on their index. I count 4 waves from the bottom on the BDI, and if thats in agreement and waves aren’t just separated there is one missing. I am not popping any Champagne yet !

  4. THis is old, I posted this back in September…. but if Primary 1 was 704 points, why would Primary 3 be 704 points.. so that is why we are going ALOT higher for Primary 3…. 2200 ish… so this can only be major 3… just working it backwards you’ll see… near term Major 3 coming to close in early February we think. Gold and Gold stock our preferred trade since mid December on

  5. jim bez says:

    “Should the SPX then track the DOW, we are probably looking at a high in that index in the low 1900′s”
    The high for P3 ? Can someone kindly clarify. Thanks

    • torehund says:

      ..a Chinese wax Job…lol.

      • mjtplayer says:

        A good year for the budget deficit, when the Fed’s receive all the new Obamacare taxes in 2013, but Obamacare spending doesn’t begin till 2014.

        One would expect the budget deficit to rise in the years ahead, with Obamacare spending now beginning, rising rates and the army of baby boomers retiring/piling onto social security at a rate of 10k per day over the coming 4 years. Some boomers will also work, paying some taxes into the system. But, some will quit work altogether and go from working and paying taxes to retired and collecting SSI & Medicare – a massive 180 on the system.

  6. bob682 says:

    Another observation that suggests the pull back to last week’s low was par for the course

  7. the roadmap for tuesday:
    many new long and short penny stock ideas

  8. torehund says:

    Concerning SSE comp: From sept 13 it looks like an abc down, so if it turns here a wave 3 could be on its way. There was a “fat finger” on SSE at that time think the print was 1850 or so. If that breaks too, next is the 1500 area. If it holds and makes a positive price div, then prepare for a wave 3. Don’t think China presented alarming conditions at all, numbers look fine to me, however the boots always cover themselves in some far fetched economic explanations. Good trading to all for the next week !

  9. blackjak100 says:

    If P3 breaks below the upper trendline of the monthly channel going back to 2009, that would be initial confirmation either P4 is underway or the bull market has topped. This trendline sits just below 1800 this week. I still think 1815 can be broke as long as 1800 holds for a trip towards 1865.

  10. Thanks Tony! Brilliant new counts. It’s always good to challenge our “settled views” especially based on new data: Anticipate, monitor, adjust. Fantastic! I very much like the more conservative counts especially at this stage of the bull run. Namely, seeing some individual stocks that I follow breakdown of late (KKD, BBY, DECK, TGT, etc). Signs of exhaustion, first cracks in the wall.

    However, back to the overall market. Just looking at some TIs, first thing I notice is that the daily Bollinger Bands are starting to “squeeze”. This often means a big move is coming up. Given where the market is per any of your 3 suggested counts, that move is likely up, IMHO. Likely minute iii or minor 3 (SPX, DOW, respectively.

    Also, my daily SSTO-indicator gave a buy tuesday/wednesday and has remained in a buy since.

    Assuming the DOW can only rise ~4% more, that would bring it very close to the 1.764x extension of Major 1, measured from Major 2: 17,057. Nice!! It would also put the SPX at the low 1900s, which would coincide well with a 0.764x extension of the move from major 4 low to the 1813 high, measured from the 1767 low: ~1909, and thus likely within the 1901 +/- 7 OEW pivot. Nice!!

  11. StemSki says:

    Here is an ETF that I am keeping an eye on. Its ECH (Chile). It had a massive wave up from 19.49 in 2008 to 76.98 at the end of 2010. The decline since looks corrective and most likely a double zigzag. Any comments would be very welcomed. If I am right than a large rally could be in the works soon

  12. StemSki says:

    Here is a chart that I have been tracking since the Primary Wave 2 low @ 1075.

    This count is based on two things
    1. No bear market before Obama leaves office.
    2. The economy actually does pick up which sends market even higher

    • StemSki says:

      Here is a closer look at the count from 1560. Just a possibility.

    • simpleiam says:

      StemSki, I think your numbers for P3 top are way too high. If the numbers were for P5, then might make sense. JMO.

    • you are right, same count we have. We are in final stages of Major 3, not Major 5 of Primary 3…. soon Major 4, then Major 5… 2200 before we are done with PRimary 3… dont worry, counts will get changed multiple times on this blog… but its pretty straightforward stuff in our eyes…

  13. piotrekfx says:

    Tony. So in both scenarios we should reach 1900. The question is if it is going to be minor iii or v? is that correct pls?

  14. We were discussing the Law of One the other day here on the blog. The 5 books of LOO are available free online from the owners of the material in pdf format. Here is the link in case anyone is interested in reading. Interesting and thought provoking material.


  15. bhupal777 says:

    Tony, Like your conservative alternate count. Great blog to follow for EW followers. Thank You.
    Those who are tracking Emerging markets, your views are much appreciated. Here is mine..

  16. Hi,fibonacci projection “IF” dow passes this level,chart in arithmetic scale

    38,2% of flag target reached(16495),next 16840(61,8%),it can be seen in previous chart

    i believe ~16850 could be hard to pass

    trendline of tops 2000/2007 was breaked in both scales


    good weekend to all

  17. walkerjb says:

    Tony, have been reading your blog since 2009. Can’t express how much I appreciate what you do. I look forward to your market analysis, and responses, day after day. You are a very special person (STO). Thank you for the OEW tutoring (this was one of the best investments I ever made). Thank you for mentoring. Just thanks!

  18. Anonymous says:

    sure are some blog saying a crash is coming this week. WOW big call, how about we just work with what we have weekly chart looks pretty schwweett right now => http://bit.ly/1iaZlqz

    Call me crazy but i Think the market has never been better! We are stuck in nice upwards channel, and I agree with tony!

  19. Pingback: Risk-Reward Market Report – 2014.03 | The Risk-Reward Report

  20. Nice analysis, Tony! The Fed is still pumping billions a month. Market going higher until the gravy train stops. Hope you are enjoying your weekend. It’s c-o-l-d up here in Michigan. I’ll hibernate in front of the fireplace this weekend. Stay warm, sir!

  21. fionamargaret says:

    Interesting weekend update Tony. Thank you.

    Now for those who are tired of Bradley, and want a bear scare, how about Gann’s 45 year cycle?
    ….seems we reached the top on December 31, 2013.

    Torehund, this is for you

  22. rlr12345abc says:

    Does any one else see the ending diagonal on the SPX that started last Sept.and IMHO finished last week with a small double top. The market has negative divergences on the weekly, daily and hourly charts on the MACD, RSI and Stochastics. IMHO the SPX drops down to the 1650 area in the next 4-6 weeks.

  23. mjtplayer says:

    Hey Tony,

    Do you have any comment on the DOW “megaphone pattern” that many long-term chartists are pointing to? Top of the cycle in 2000, then A down in 2002, B up to 2007 (higher high), C down into 2009 (lower-low), D now to higher-highs with E down to come – presumably to lower lows than 2009 to complete the pattern. Same pattern as the late 60’s and 70’s, just a larger wave degree/cycle.

  24. bob682 says:

    Thanks Tony. Much appreciated.
    The similarity between this current rally from the August 2013 low and the rally from the November 2012 low has been mentioned here before, but it is quite striking and fits in perfectly with your primary count. The feature that both rallies have in common is that they both contain a debt ceiling issue and can kick resolution marking a key low. The SPX weekly chart below illustrates the comparison between these two rallies and I also include the time & price data for the key highs/lows within each rally.
    I also attach daily and weekly charts for the DJIA illustrating the bullish scenario on that index too.
    [https://twitter.com/bob682/status/424635263755632640/photo/1] SPX weekly chart
    [https://twitter.com/bob682/status/424635464583086080/photo/1] SPX time & price data
    [https://twitter.com/bob682/status/424633743538548736/photo/1] DJIA daily chart
    [https://twitter.com/bob682/status/424634234129494016/photo/1] DJIA weekly chart
    There’s plenty of support for a bearish outcome here, but I’m leaning bullish.

  25. kvilia says:

    Thank you, Tony! One question, though:
    “Doc It should, but no longer has to.” Could you please define the range that Primary IV low CANNOT violate to be in compliance with OEW?
    Have a great weekend, sir!

  26. gtoptions says:

    Thanks Tony
    Appreciate the alt count update.
    Enjoy the Weekend.

  27. Thanks Tony!

    Superb update.
    I think the alternate, more conservative count, is supported by the low value of the Vix index.
    With vix already at its lowpoint, around 12, it is difficult for the market to gain momentum for an extended rise.
    If the stronger count is under way, it will reveal itself in the coming week. The strong count will place us in minute 3 of minor 3 of intermediate 3. Third of a third of a third should propell the market at a fast pace upward next week.
    If we only progress in a moderate fashion next week, the more conservative count could end this major 5 wave way sooner than anyone expect it.

    Best wishes Sverker

  28. denmo83 says:

    Hi Tony. After the bull market to top in Q3-Q4 2014 in the mid to upper SPX 1900′s, can you comment as to where you see the markets going? Thanks!

  29. bouraq says:

    Weekend charts:
    #DJIA #RUT #EURUSD #GBPUSD #USDX #OIL #COPPER http://www.tradingchannels.co.uk/2014/01/weekend-charts.html

  30. RDC says:

    Tony, Thank you for an outstanding weekend update.

  31. simpleiam says:

    Thank you, Tony! Always interesting (as you said yesterday) and surprising information. I still feel that the slightly larger pullback of Minute2 is due to OPEX falling on a Friday before a 3-day close for U.S. markets, and await Minute3 of Minor3 as it should be rewarding. Appreciate all Your hard work, and thought I’d make my motto part of my name. Change can be good.


    • simpleiam says:

      Tboys, very interesting and informative. I give the author credit for at least concluding that “chances are” The Crisis wouldn’t have happened, as it’s impossible to be definitive that FAS157 alone was THE sole cause of The Crisis. Good information! If FAS157 is eventually found to be a larger cause in what happened, it’s even more impetus for keeping govt out of the private banking business, but, we’re in way over our heads now. Thanks for posting!

  32. mharrison60 says:


    Thanks for the interesting analysis. What level would you need to see on the Dow to say Minor 5 Int V has truncated?

    Thank you & enjoy the long weekend

  33. 16golfer says:

    Thank you Tony! This bull market chart sure looks sloppy compared to the 2 preceding it….with several big corrections in it…even enough to qualify as bear markets within this 5 year period. Can you speculate or give a possible reason for that? As an investor, I would think it would be because everyone was shell shocked after what happened in 2008-2009 and took profits thinking that was all they were going to get back after being clobbered in the crash.

    • tony caldaro says:

      Golfer =)
      The 1987-2000 bull market has some steep corrections too.
      A 20% correction during a bull market is unusual, but not as rare as one thinks. i.e. 1990, 1998 and 2011.
      Actually I think the media has a lot to do with it too.
      They consider any 20% drop to officially declare a bear market.
      But in reality, after that type of correction, the bull market usually reasserts itself within days.

  34. attitude928 says:

    Thanks Tony. So what are the implications of the new alternate counts? Would you expect P3 or P5 to end more rapidly over time? If so, how much sooner? Thanks!

  35. rolandu11 says:

    The SPX is slightly lower than last week. But the bulls could still collect some plus points. Thus, the attack of the bears was repulsed and the SPX managed intraday all-time high. Also RUT, COMPQ, and NDX succeeded new highs. But the bears are not ready to give up .


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