weekend update


Another volatile week. While the range for the week was not that wide, (SPX 1770-1799), the wild swings every day, and sometimes intraday, were. For the week the SPX/DOW were -0.75%, the NDX/NAZ were -0.60%, and the DJ World index was down 1.20%. Economic reports for the week were about two to one on the positive side. On the uptick: Q4 GDP, Case-Shiller, consumer confidence/sentiment, personal spending, PCE prices, Chicago PMI, monetary base, and the WLEI. On the downtick: new/pending home sales, durable goods orders, the M1-multiplier, and weekly jobless claims rose. Next week will be highlighted by Payrolls, ISM and Auto sales.

LONG TERM: bull market

In the wonderful world of Elliott Wave analysis there are now, and have been before, counts floating around suggesting this bull market ended with an ABC up from 2009 at the recent DOW 16,588 high. Two comments on this count with historical references. First. For the past 90 years there has not been one ABC bull market that has made all time new highs. This bull market has already reached nearly 17% above its previous all time high. Second. For the past 90 years there has not been one ABC bull market that has unfolded in a clear 5-3-5 wave pattern. So the probability of this occurring now are slim to none. A review of the typical bearish Secular cycle may be in order.

An approximate 16 year deflationary Secular cycle started in the year 2000. Historically there is a similar stock market pattern to this type of cycle, and the inflationary Secular cycle as well. Stocks hit a bull market high at the start of the cycle. This is followed by a 2-4 year bear market. Then another bull market follows, reaching all time new highs about midway through the 16 year cycle. After that the real damage of the bearish cycle unfolds with a 2-3 year bear market. Then with the damage done, and the actual stock market low for the cycle in place, the stock market launches a new bull market lasting 2-5 years. This is followed by the last bear market of the cycle, ending at a higher low. Then an approximate 16 year bullish Secular cycle begins. This is one of the main reasons we have called the 2009 low the end of Super cycle 2, and the current bull market the start of Super cycle 3.


We have been counting this bull market from the March 2009 low at SPX 667 as Cycle wave [1] of the new Super cycle 3 bull market. Cycle wave bull markets unfold in five Primary waves. Primary waves I and II completed in 2011, and Primary wave III may have just completed this month. Primary I divided into five Major waves, and only Major wave 1 subdivided into five Intermediate wave trends. Primary III has also divided into five Major waves. Yet, both Major waves 1 and 3 subdivided into five Intermediate waves. As a result of these additional subdivisions it is too early to determine if Major wave 5 will subdivide, or be simple like Major wave 5 of Primary I. More on this later.

When Primary III concludes, if it not has already, Primary IV should display the biggest market correction since 2012. Then Primary V will kick in, taking the market to all time highs. Ending the entire bull market some time in Q3/Q4, or sooner, of this year. After the nearly 30% gain in 2013, 2014 should be quite a volatile year.

MEDIUM TERM: downtrend

We have been tracking the recent uptrend in the SPX since Aug., and the DOW since Oct. Two weeks ago we offered an alternate count to the main count we had been tracking. We again discussed the alternate count in last weekend’s report. Then on Monday it appeared the alternate count was gaining in probability. By mid-week downtrend confirmations were triggered in both the SPX/DOW eliminating the main count in favor of the alternate.

The SPX 1851 high and the DOW 16,588 high were both important highs. Now the question arises, as noted above; “Where these highs the end of Major wave 5 and Primary III? Or, just Intermediate wave I in a subdividing Major wave 5?” We will attempt to address this question.


Historically, important second and fourth wave corrections are usually similar in time and magnitude of market decline. With sometimes the fourth wave being the worse of the two. One does not have to go back too far historically to uncover this: 1982 and 2002, 1984 and 1987, 1990 and 1998, 2003 and 2004. All four pairs of second and fourth waves display corrections that were similar in time and depth of market decline. The big exception, of course, was 1987. If we then apply this observation to our current market. Keeping in mind Primary wave II took five months and the market declined 20%. A Primary wave IV decline should be expected to be somewhat similar. Let’s say a 15% to 20% decline, taking about 3 to 5 months. But what if Primary III has not ended yet?


If the current downtrend is only Intermediate wave ii of Major wave 5 we have different parameters to consider. Every Intermediate wave correction, during this bull market, and there have been six, have ranged between 4.6% and 10.4%. With the mean between 7.5% to 10.2%. And, they have all taken between one and two months to unfold. This would suggest a downtrend low into February/March in the neighborhood of the OEW 1680 and 1699 pivots. This, we would think would be the minimum for this correction.


When we apply these lighter parameters to the DOW we uncover something quite interesting. The SPX 1699 pivot is equivalent to about DOW 15,250. The 1680 pivot is equivalent to about DOW 15,100. Since the DOW rose, during its last uptrend, from 14,719 to 16,588, this is quite a steep correction. So steep in fact, that the DOW would come within 3% of retracing its entire uptrend. Confirming a Primary wave III high.

In summary, we would expect this downtrend/correction to last until at least February/March and the SPX to decline to the 1680 to 1699 pivots. Should it break the 1680 pivot range. There would then be a high probability Primary IV could last until April/May/June and hit the OEW 1499 pivot. 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 around neutral. The short term OEW charts remain negative with the reversal level now SPX 1793.


After the market started gathering some momentum to the downside a week ago Friday. We noticed there were three waves down into Monday’s SPX 1773 low. At first it looked like two sets of threes. But later revealed itself to be a 1-2-3 down. This was followed by a fourth wave triangle to SPX 1794 on Tuesday. Then a fifth wave diagonal triangle to SPX 1771 by Wednesday to end what appears wave A. Thursday’s gap up opening, and spike up rally, helped confirm that terminating diagonal. Friday’s gap down-then rally, looks similar to the market action right around the actual high. And notice Friday’s rally stopped at the triangular SPX 1794 before declining into the close. As a result we are labeling Thursday’s SPX 1799 high with a tentative B wave. This suggests a C wave is already underway. Quite a volatile market this week. Best to your trading in February!


The Asian markets were mostly lower for a net loss of 1.3%.

The European markets were also mostly lower for a net loss of 0.4%.

The Commodity equity group were all lower for a net loss of 1.7%.

The DJ World index lost 1.2%.


Bonds are up trending, as expected, and gained 0.7% on the week.

Crude is trying to confirm an uptrend, and gained 0.6% on the week.

Gold is up trending, but lost 1.9% on the week.

The USD is up trending and gained 1.0% on the week.


Monday: ISM manufacturing and Construction spending at 10am, also monthly Auto sales during the day. Tuesday: Factory orders. Wednesday: ADP index and ISM services. Thursday: weekly Jobless claims and the Trade deficit. Friday: monthly Payrolls and Consumer credit. As for the Bernanke-less FED. Tuesday: FED governor Tarullo gives Congressional testimony on the Volcker rule. Wednesday: FED governor Tarullo gives Senate testimony on Dodd-Frank. Should be an interesting defensive week.

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

About tony caldaro

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234 Responses to weekend update

  1. buddyglove says:

    Just Shakin’ the trees………

  2. torehund says:

    Dry-bulk may have reached an important bottom today..but if not, then a retest of the lows is to be expected. I sit with my box ships for now, but follow bulk on the sidelines.

  3. perversionofthemean says:

    That momentum channel line failure that I wrote about Wed(?) on RUT had the snapback Thu, but held firm, and started to pay off on Fri, but endured a gap-fill mid-day. Today, it’s obviously running away, and TWM is up 6%. To get the perversion-of-the-mean, it has further to go. My EW guess (I’m an EW newbie, and likely will always be!) is that this is a C wave where C is going to be a big multiple of A. No time to find the fib equivalent…

  4. ewtoriginal says:

    Consider this for very short term low on way to 1680 or 1650…. 1851-1576 (2007 peak)=275.
    .382=105; .618= 170. 1851-105= 1746…

  5. lunker1 says:

    Anything happen today?
    Nice job Tony.

  6. ewtoriginal says:

    My favorite fact you will not read anywhere other than from my hand. The Fed will NOT under any circumstance increase QE IN THE IMMEDIATE ERA. If they get scared they may stop tapering but will NOT increase.

  7. kvilia says:

    I cannot be happier with the choice of positions at the moment, and I did warn folks not to be a hero. Now, today’s drop is quite an intensive one. I’m waiting for 1699 pivot to take long positions with the P IV thought in the back of my mind – very tight stops will be required. I’m just curious whether we will be getting any meaningful bounces Before we get to 1699 or 1680 PP.
    Tony, you alternative count plays very well for me, very much leaning this is P IV.

  8. H D says:

    1738 is HWB W 5

  9. 1.382x extension of Major 1 @ SPX 1741. May provide support? SPX retraced now from between the 1.618x-1.764x extension of Major 1 (typical target area for a -in this case Major- 5th wave) measured from Major 2 to the 1.382x extension of Major 1; an >23.6% retrace of the entire move from Major 2 to the -most likely- Prim. III top.

  10. berniebaruch says:

    Ben left and took the helicopter with him.

  11. Major 4 from 1850 as we charted out. Dont over think it. 1713 first, then we have lower targets as well potentially… may be a few more weeks of fun here.

  12. Lee says:

    Jim Cramer said last week that this (downturn) was just futures traders manipulating the overnite sessions, and at todays low ,he’s not sure anymore .haaaa can’t make this stuff up

    C N ,

    Dude ur a market freak, to drive JK nuts all u have to do is ignore him.
    I think everyone has the right to reply to a comment but when they(internet tough guys) start rambling and using CAPS u know it’s time to just look the other way. 😛
    The market will humble them as it always does.


    • robnaardin says:


      Appears the low of the day is in and the retest is underway.

      • Lee says:

        Hey Rob
        I have no idea but it seems a lot of folks are rooting for one on the interweb..silly mkts
        thats #5 ltr all

    • rc1269 says:

      the only time i’ve ever respected cramer is when i got seated in the booth next to him at BLT Prime and he had two ridiculously hot women sitting on either side of him

      think that’s #3 or 4 for me so i’m out. i’m sure there’s somebody out there counting…

  13. 777daimon says:

    My humble opinion is that you should continue to be with us here and share your thoughts.
    Only one single person can upset you in such a way? C’mon…. you can do more than that!

    this dragon down wave will end in the 1680-1700 area with a special attention to the 1680-1688 area and 1692-1699 area.
    it should end today/Tuesday. . . fast, no short entries allowed and no mercy.

  14. 1744 – 1756, let the triangle begin.

  15. llerias7 says:

    A little help with the EW counts?

    Are we already in the major 1 of P IV down or is any chance of being a sort of wave 4 of major 5 (PIII)?

  16. 7dayyss says:

    Turn around Tuesday?, probably not. How about a one day bounce at least, more so on the Rut, big percentage day move!

  17. H D says:

    SPX -40 handles? C’mon man… Insert killer guitar ballad and turn the grumpies off.

  18. $SPX $TNA $NUGT $NFLX $TWTR, roadmap for this week: http://standardpoor.wordpress.com

  19. elmer510 says:

    Thanks for the update Tony.
    A profitable warning for all longers, if they did listen to The Man.
    In fact, today’s decline was stronger than i expected. Perhaps pointing towards the PRIM IV alternative.

  20. uncle10 says:

    Weak. market… Great looking top on GOOG. Stop at the high of today. Lots of down side.

  21. robnaardin says:

    Looks like the start of a v bottom.

    Out of curiousity, has anyone seen wave 5 of 5 down truncate?
    Seems impossible to me.

  22. Lee says:

    And this is one of the many reasons why I don’t post trades
    Cmon guys act like you’ve done it before
    Take it to Twitter and go #TimeStamp crazy 😉


    • CygnetNoir says:

      I think I’ve finally learned my less. Thanks Lee.

      • rc1269 says:

        CN, at least your trade posts come with some cogent insight, which is appreciated. even if you stop giving us your positions i hope you’ll continue to post your thoughts. i find them valuable, fwiw
        cheers mate

      • uncle10 says:

        CN, this is a public blog. There is always going to be someone that wants to cause trouble. If people would just ignore them, they leave. Yes, there will be another pop up again and again….. wash, rinse, repeat… I hope you will continue to share your thoughts with us. We all understand that you are not going to be right 100% of the time. You know the people here appreciate your view and thoughts and they do help us all. . Thank you!

      • jzq108 says:

        Cn, Please continue to be who you are, helpful and easy to understand. Thank you.

  23. JK1987 says:

    emotional day.
    CygnetNoir: 11 posts.
    JK:: 10 posts.
    surfingwavers: 9 posts
    And may are +5 posts.

    Long SPX 1753.
    Tony, sorry, Last post, done for the day.

    • Every one post of CygnetNoir is worth more than 1000 post of JK1987.

    • CygnetNoir says:

      But more than half of my posts are in response to you. You are right now the lone remaining “weak link” here. You’d be fine if you’d just grow up and peacefully co-exist with the rest of us. But you seem to have something to prove, and that makes you act like a little school yard bully.

      I keep thinking that if I stay away fro a few more weeks this time …

      But every time I come back there is at least one person who can’t just let us all trade through.

      • CN, you should ignore him. He couldn’t shut up last week about his winnings, and not his ego is hurt because he lost a trade… Believe me, I can be a much worse Bully, but out of respect to Tony and the rest of you guys, I am not, but if this kid wants to drive you away, THEN!!!

        Please ignore him and don’t go away, you are a big complement to Tony’s OEW. I wish Tony could add an ignore button, so Lee could ignore me, and we could ignore JK. 🙂

      • 16golfer says:

        Please don’t go CN! So you went into the woods….just show them a “Phil Mickelson” shot…except #16 at the Phoenix Open….lol.

      • zvyezda says:

        Oldest trick in the book. The youngest most inexperienced tries to stand up to one of the seasoned veterans in the vain hope that he will acquire the stature of the person he disparages. Of course it nevers happens.

        People were hoping that if he finally made some bucks, he might acquire some backbone and civil;ity as well – but that ain’t gonna’ happen either it seems.

        From now on, we all just do a mental ignore. If no attention, he goes and plays somewhere else.

    • Each correct post is worth its weight in whatever asset happens to be most valuable at the moment, no matter who the poster might be.

      Kling akhlami buhfik. Dif-tor heh smusma.

  24. mike7x says:

    Great Weekend Update Tony, thanks. So we could have a wild ride into Spring. Rumor has it Ben’s last comment to Janet was “I’m only a phone call away.”

  25. So far so good; yesterday I wrote “using a 1.764-2.000x extension of 1 for wave 5 of C target measured from 2, then we get a nice 1746-1752 target” Putting my money where my mouth is, I bought SDS @ $31.75 this morning and sold it just now for $32.75.


  26. budfox9450 says:

    Tony – good work on the XLY chart….

  27. CygnetNoir says:

    Big Drop Coming, methinks … this is last Feb in reverse … one of M’s first days here had same intraday pattern but bullish, today bearish.

    • H D says:

      1747 SPX has some fib confluence. IDK This is where it’s tuff to be in, either side

      • rc1269 says:

        i agree there. feels like a face ripping in either direction…

      • H D says:

        looks like 2 – 20 point hits today. bots tripping. so hard to predict anything at this stage. I would like a bounce to 1764SPX, was the oct-nov HDivot. If we spent some time trading around there it would help.

    • JK1987 says:

      Reverse “Big Up” course, and calling “Big Drop” at cash 1751.57, that’s interesting.

      • CygnetNoir says:

        Big Up died this morning. Intraday pattern says the market cannot stand a fourth push down without all H*** breaking loose.
        Not predicting, just describing what I am seeing.

      • JK1987 says:

        Still holding ES on Jan 28 night when ES was at 1798 (when your Big Up was issued)?
        Still Buying ES every point (you posted Jan 30)?
        Or cut loss?

      • CygnetNoir says:

        Big Up died this morning when cash couldn’t hold last week’s close.

      • CygnetNoir says:

        Not “calling” anything. At 1251 SPX has three good punches down – some would call it an ED. If it breaks below that 3rd push, the high odds outcome is a measured move down.

  28. rc1269 says:

    not tons of support down here is there

    • CygnetNoir says:

      rc, if the Dow can’t get buyers here at 465, I think we could see 200 more points down before the close.

  29. gtoptions says:

    Thanks Tony
    SPY ~ Next key Swing Point Support @ 174.76
    It also happens to be 50% fib level.

    • Lee says:

      Thanks gto

    • uncle10 says:

      Thanks Gto. You and your info have been good. As Lee would say, ” I read your stuff.” 🙂 Thanks.

      Surprised they let the longs out so easy today? Got me to get out a little quicker than I should have.:(. Would think that SPY 175-174.50 would be a good short term swing long? Tight stop. But I would be scared to hold long over night currently.

      • gtoptions says:

        If the SPY holds the 174.76 SP, I would expect a retest of the broken 177.76 SP. That is what I’m expecting anyway. The markets may have a different story. 😉

  30. H D says:

    GM Tony and all, “This suggests a C wave is already underway.” Excellent weekend update Tony. SEAHAWKS!

  31. CygnetNoir says:

    Buyers, Where Art Thou? lol

    • buddyglove says:

      CN…I think you were the last one 🙂

    • H D says:

      1772 SPX needed for overlap. otherwise chasing waterfalls. :mrgreen:

    • JK1987 says:

      Sure your arms are tired
      Buying ES every point since 1798 on Jan 28 night (ES were +10) with the “Big Ups” call.
      CygnetNoir says:
      January 30, 2014 at 2:43 pm
      SPX, NDX, RUT are on full blown Big Ups … only the Dow has yet to trigger.

      Still long since yesterday, and I’ve been buying ES every point up … it’s a wonderful life. Today. Tomorrow I could be in a living h***.
      CygnetNoir says:
      January 28, 2014 at 10:42 pm
      Big Ups set up across the board … need higher cash highs tomorrow, and as always would prefer a higher close in the upper half of the day’s range. Dow and S&P look like more bang for the buck than the naz this time around, but that can change on a dime, so to speak.

      SPX cash target is 1872.28
      joseph3000 says:
      January 28, 2014 at 6:07 pm
      SP futures are up 0.40%. Hope stays that way til tomorrow.
      lunker1 says:
      January 28, 2014 at 7:06 pm
      wow up 10 pts AH

    • “Burns like a red coal carpet,
      Mad bull lost its way”

    • robnaardin says:

      Hard to believe an a and b have occurred without seeing a noticeable blip on the daily chart.

      Hard to believe a5 down truncated. Still waiting for a v bottom.

      Bulls must be feeling locked out of heaven.

    • 16golfer says:

      Horns are starting to sprout on this bear. 🙂

  32. bobhopium says:

    Hit my target of Dow@1500 from last week but no sign of bottom yet, so trailing down and looking for 14425 next.
    Gl to us all.

  33. trondack says:

    Tony, Has a bear market ever started with the Fed in easing mode or bull market started with Fed in tightening mode? Thanks!

  34. blackjak100 says:

    1761 would be triangle target. I’m a buyer right now and nice +div on 60min.

  35. sethbru2 says:

    Hi Tony,
    I have in my notes that you said in recent weeks a fall below SPX 1768 would be a signal we are in Primary IV. Do you still hold that opinion? Does it need to be a closing or just an intraday fall below 1768 (which happened this morning). Thanks!

  36. mjtplayer says:

    Feb picking-up where Jan left-off: stocks down, bonds and gold up.

    Economic data this morning was dreadful, Jan ISM manufacturing and auto sales both a disater.

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