weekend update


The last two days, of a holiday shortened week, resulted in a nasty decline for the entire week. The market started Tuesday with a gap up opening, hitting SPX 1849 in the opening minutes. Then bounced around between SPX 1832 and 1847 by Wednesday’s close. Thursday, however, started with a gap down opening and the market continued to decline into Friday’s close. For the week the SPX/DOW were -3.05%, the NDX/NAZ were -1.55%, and the DJ World index lost 2.55%. Economic reports for the week were sparse. On the uptick: FHFA housing prices, leading indicators and the WLEI. On the downtick: existing home sales. Next week is a busy one. We have the FOMC meeting tues/wed, Durable goods orders, the Chicago PMI, and Q4 GDP. Best to your week.

LONG TERM: bull market

We continue to count this bull market as Cycle wave [1] of the next Super cycle bull market. Rising Cycle waves unfold in five Primary waves. Primary waves I and II completed in 2011, and Primary wave III has been underway since then. Primary I divided into five Major waves with a subdividing Major wave 1. Primary III has divided into five Major waves, but both Major 1 and Major 3 have subdivided. Recently we have been in a steady Major wave 5 since August in the SPX, and October in the DOW.


When Major wave 5 concludes, if it not already has, we should see the largest decline since 2012 for Primary wave IV. This type of correction should take the SPX near or below the Major wave 4 low at 1627, and/or the DOW’s Major 4 low at 14,719. After it concludes we should get a resumption of the bull market to all time new highs to conclude Primary V and Cycle wave [1]. We have been projecting this all to unfold by Q3/Q4 2014.

MEDIUM TERM: uptrend weakening

We have been tracking this Major wave 5 uptrend in the SPX since August, and the Major wave 5 uptrend in the DOW since October. The two counts have been slightly shifted in what we have called a trifurcation market: all four major indices moving to a different wave count.


As of last weekend we had counted nine waves up in the SPX, but only three waves up in the DOW awaiting a higher high. We offered two potential alternate counts last week suggesting this uptrend could be coming to an end as soon as the DOW makes new highs. This week, when the DOW failed to make a higher high again, and then began to selloff, we remained with our original SPX count posted above.


After this week’s late selloff, and a serious weakening of the uptrend, we post that alternate count again. This count suggests Primary wave III could have ended at SPX 1851 after nine waves up, and with a fifth wave failure in the DOW.


Since the DOW did make new all time highs during Major wave 5 this would not be considered a fifth wave failure in the medium term. Which the SPX had once during this bull market. But a fifth wave failure on a short term basis, which has occurred at least once before. This bull market has had notoriously deceptive fifth waves.

In a review of the first daily SPX chart above, we observe a Minor wave 2 pullback of about 80% of the Minor 1 advance from the August low. Since we are still carrying this pullback as a Minor wave 2, the 1779 pivot range would represent a similar support level. A break below that range (1772-1786), and then a drop below SPX 1768, would suggest the Major wave 5 uptrend has ended and Primary wave IV has been underway. Similarly, if the DOW drops below 15,704 any time soon, that would almost assuredly confirm a downtrend in the DOW as well. Heading into next week keep an eye on these two levels: SPX 1768 and DOW 15,704. Medium term support is at the 1779 and 1699 pivots, with resistance at the 1828 and 1841 pivots.


Short term support is at the 1779 pivot and SPX 1768, with resistance at SPX 1800 and SPX 1814. Short term momentum ended the week extremely oversold. The short term OEW charts remain negative with the reversal level now SPX 1825.


As noted above, a pullback to the OEW 1779 pivot would be an equivalent of the pullback during the previous Minor wave 2. However, for the past two days the market has acted somewhat lifeless. The rallies have been small and short lived, that have quickly been followed by lower lows. We have posted the main SPX count above, and the DOW alternate count below. The alternate counts posted in the medium term section are located at the very end of the public charts. Best to your trading what sets up to be a wild week ahead.



The Asian markets were mixed on the week for a net loss of 0.7%.

The European markets were all lower for a net loss of 4.2%.

The Commodity equity group were all lower for a net loss of 2.1%.

The DJ World index lost 2.3% on the week.


Bonds appear to be uptrending and gained 0.5% on the week. Rates are in a downtrend.

Crude is trying to confirm a new uptrend and gained 2.7% on the week.

Gold is uptrending and gained 0.9% on the week. Should equities continue to head lower Gold has an opportunity to move higher.

The USD appears to be heading into another downtrend losing 1.0% on the week.


Monday: New home sales at 10am. Tuesday: Durable goods orders, Case-Shiller and Consumer confidence. Wednesday: the FOMC statement and Bernanke’s last meeting. Thursday: Q4 GDP (est. 3.0% to 3.5%), weekly Jobless claims, and Pending home sales. Friday: Personal income/spending, PCE prices, Chicago PMI and Consumer sentiment. The FED has nothing scheduled beside the two day meeting. 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. Thought SPX not going go to below 80-82, so went in at 81, two large contracts, fortunately, it returned just shy of my stop loss, else, today was RED day ……..Anything is well that ends well..out at 92.7!!!

  2. congrats to those who bought the 3 % correction. most likely the lows for the year

  3. lunker1 says:

    1791 is the 123.6 of 1576->667
    nice hammer?

  4. hucky2 says:

    Tomorrow is 3 billion POMO but Friday was 3.5 billion and we know how much that helped.
    Wednesday there is none – does that mean positive news from FOMC or that they just don’t care?

  5. The looks of the may/june 2013 correction, You know what happend when that one bottomed.

  6. H D says:

    good job fellas! It was pretty but….Thx for the pivot Tony, 1803 becomes and interesting price now IMO

  7. JK1987 says:

    Time to change the green Minor 2 to blue Minor 2 with + div?
    That’s the last defense line.
    If going below, then can throw away this chart?

  8. kjb0 says:

    Got to luv the Bulls…….but I will see them bail at SP 1400 level. Then up to new highs before the Bear in 2015.

  9. Looks like + div is forming on the hourly RSI(5). Lower end of 1779 OEW pivot (1772-1886) holding?

  10. Caldaro in response to “Where are all those guys who said the market can not go down on its own? 3% or 4 % is hardly considered going down. I am sure your not expecting to confirm a P4

  11. Three reasons for a bottom around 15780 for the Dow:

    1) rsi almost oversold
    2) 15874 = a 0.382 retracement from the abcde rectangel pattern (may/october 2013 period)
    3) price reached the upper line of that rectangel

    Price bounced already december 12th from this upper line

    Same pattern is valid for S&P
    Bounce in a correction or up again?

  12. 777daimon says:

    sorry for the 4th message:
    I’m long and strong from 1774.77 like a black’n’slick dog😀 …

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