weekend update


The market started the week opening higher, but then took on the character that had started on expiration Friday: sell growth stocks after the opening. During the week the market had three gap up openings, no gap downs, and still ended the week lower. For the week the SPX/DOW were mixed, the NDX/NAZ lost 2.5%, and the DJ World index rose 0.8%. Economic reports for the week remained positive. On the uptick: Q4 GDP, FHFA housing prices, consumer confidence/sentiment, durable goods orders, personal income/spending, PCE prices, the WLEI and weekly jobless claims improved. On the downtick: Case-Shiller, new/pending home sales and the M1-multiplier. Next week we get a look at the monthly Payrolls, ISM and Auto sales. Best to your week!

LONG TERM: bull market

We continue to count this five year bull market as Cycle wave [1] of the next Super cycle bull market. Cycle wave bull markets unfold in five Primary waves. Primary waves I and II completed in 2011. Primary wave III has been underway since then. Primary wave I divided into five Major waves with a subdividing Major wave 1. Primary III is also naturally rising in five Major waves, but both Major waves 1 and 3 subdivided. Currently it appears Major wave 5 is also subdividing into five Intermediate waves. Not at all unusual for a third wave.


Major waves 1 and 2 of Primary III completed by mid-2012, and Major waves 3 and 4 by mid-2013. Major wave 5 has been underway since then. When Major wave 5 does complete, some time this year, Primary III will end. This should be followed by a substantial correction for Primary IV, probably coinciding with the 4 year Presidential cycle low scheduled for this year. This cycle typically bottoms in July or October. Then when Primary IV ends the market will rise again to new highs in a Primary wave V.

MEDIUM TERM: uptrend weakening

We have reached an interesting juncture in this bull market. As reported in recent weeks the cyclical/growth sectors have been out of sync for a number of months. This week it appeared they are trying to realign again. This would be good news for those who follow OEW analysis. When the four major indices are in sync, it is so much easier to track even the smallest of waves.

Currently we see three potential scenarios, in order of preference, short term. One: the NDX/NAZ confirm a downtrend next week, bottom within a few days, then all four major indices are aligned for the next wave up. Two: the NDX/NAZ is currently bottoming, with no downtrend confirmation, and all four major indices remain out of sync for the next wave up. Three: the situation in Ukraine/Russia worsens resulting in a panic selloff in equity markets, and all four major indices realign at the early February lows. Since we are basically of the “glass is half full mindset”, we will detail the implications of scenario number one.


As noted in recent weeks the DOW and the NDX/NAZ have been the drivers of this bull market. The SPX is the traders preferred index, but it is basically a hybrid of growth and cyclical issues. The NDX/NAZ as represented by the NAZ chart above, still needs two more uptrends before it can complete Primary wave III. The high at NAZ 4372 in early March appears to be the end of its Intermediate wave iii. An Intermediate wave iv downtrend appears to be underway, and could bottom as early as next week. Should this occur, then the NDX/NAZ need to complete two more uptrends (Major 3 and Major 5) to complete Primary III.


Should the SPX/DOW not confirm a downtrend while this is occurring. Then they too would only need to complete two more uptrends (Int. iii and Int. v) to complete Primary III. Then all four major indices should remained aligned for the duration of this bull market. Quite an interesting time. If we rule out the sort of ‘black swan’ Ukraine/Russia scenario, we have two scenarios suggesting the market is quite close to an important low. Major wave 3 in the NDX/NAZ, and Int. wave iii in the SPX/DOW could be quite powerful. Our attention will continue to be on the NDX/NAZ next week. Medium term support is at the 1841 and 1828 pivots, with resistance at the 1869 and 1901 pivots.


Short term support is at the 1841 and 1828 pivots, with resistance at the 1869 pivot and SPX 1884. Short term momentum ended this volatile week at neutral. The short term OEW charts are negative with the reversal level at SPX 1860.

During the week we spent most of the time elaborating on what was going on in this choppy market rather than detailing the waves. We noted the four consecutive days of higher openings, then growth stock selling within/after the first hour of trading. This started last Friday and continued until this Friday. From the early March highs the NDX/NAZ have dropped about 5.5%, while the SPX/DOW have declined only about 2.5%. While this was all transpiring we were doing some research and reviewing the charts.


Friday we updated the SPX hourly/daily charts to display a five wave Minor wave 1 high at SPX 1884. What followed appears to be an ongoing Minor wave 2 flat: 1840-1884-1842 so far. When we first started counting this uptrend we counted the pullback (1788-1777) as a wave. Then we got off it because it did not meet some parameters, and the market was quite choppy. After further review it appears the first impression was the correct one. This count suggests a flat is unfolding between the Minute iv low (1834) and the Minute v high (1884). Exactly what one would expect if a market is basing before moving higher, after a very strong and quick beginning.


The Asian markets were mostly higher on the week for a net gain of 1.8%.

The European markets were mostly higher for a net gain of 1.7%.

The Commodity equity group were also mostly higher for a net gain of 3.0%.

The DJ World index is still uptrending and gained 0.8%


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

Crude is still in an uptrend and gained 2.1% on the week.

Gold has yet to confirm a downtrend and lost 3.0% on the week.

The USD is trying to uptrend and gained 0.1% on the week.


Monday: Chicago PMI at 9:45 and a speech from FED chair Yellen at 9:55. Tuesday: ISM manufacturing, Construction spending and Auto sales. Wednesday: the ADP index and Factory orders. Thursday: weekly Jobless claims, the Trade deficit, and ISM services. Friday: the Payrolls report. Best to your weekend and week!

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

About tony caldaro

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146 Responses to weekend update

  1. bobhopium says:

    Adding to longs here…could easily get another overnight ramp followed by another breakaway/runaway gap up and away from the congestion area tomorrow. Aimho GL.


  2. JK1987 says:

    Thanks for the newly updated label of Minor 2 at 1842.11. 🙂 🙂 🙂


  3. Breaking News! WAR just broke out…


    March 31 to April 13 Free Coffee.. In the morning..


  4. Tony, last but not least, now it is my turn to thank you for a wonderful and comprehensive weekend update. It’s updates like these; objective, holistic, and integrative that makes OEW all the worth and why I joined. No focus on just one index to try to unravel the entire market’s intentions, which is impossible. Instead, a beautiful analyses across the board: “Just the facts ma’am!”

    Statements like “we are basically of the “glass is half full mindset” (positive thinking! I like that and essential for successful trading IMHO), “exactly what one would expect if a market is basing before moving higher, after a very strong and quick beginning.” (great technical non-EWT observation; one has to use all tools available), “When the four major indices are in sync, it is so much easier to track even the smallest of waves.”, (Ah, yes, it would be so nice to not have to micro count to figure it all out, but to just follow the trend), and “Major wave 3 in the NDX/NAZ, and Int. wave iii in the SPX/DOW could be quite powerful. (Music to my ears 🙂 )” are very useful!

    Anyway, I haven’t had time to look much at all to price-charts this weekend, but as I mentioned in my Friday post: “[Buy-signal on the NYA today, almost buy-signal on the SPX (will give a buy when monday is green too). No signal on INDU (neither sell not buy).]”. Today (monday) this buy-signal is confirmed on the SPX and INDU both on the daily AND weekly time-frame. That’s a very strong signal IMHO (e.g. during the February low @ SPX 1740 the weekly buy-signal followed the daily bu-signal 2-3 days later; and the market went up 110 points… now both weekly and daily fire a buy on the same day…) Hence, I added heavily to my SSO position at the open this morning and bought more of many the heavily OS growth stocks. Should all pay off handsomely in the months to come ;-). Wheeeehhh!!!



    • tony caldaro says:

      TY SSU
      We have spent the entire month in the 1834-1884 range.
      After, as you noted, an explosive 1738-1868 rally in the month of February.
      The cyclicals appear to have been consolidating while the growth stocks were sold.
      A reversal of the recent, “higher open – sell growth” appears underway.


      • thanks tony! February was for sure a swing traders’ paradise, and as you mentioned march was a day traders’ paradise. Now back to a trend-followers’ paradise? Something for everybody! (no child left behind 😉 )

        I am simply following the “Buy when there’s blood on the street.” mantra. Hasn’t hurt any long(er) term investor last I checked 😉


      • JK1987 says:

        soul Kudos
        You are an excellent trend trader. 🙂 🙂 🙂
        I did very well for the entire March trading both longs and shorts, only one loss trade of 9 SPX points with UPRO.


    • thanks JK! I am moving away from short term trading to longer term holding (from swing trading to trend following one could say) . Adding to positions instead of trying to nail the exact bottom; which is very stressful IMHO. Doesn’t mean I don’t follow the daily ticks, simply means I am less concerned about a few down days/weeks. Keeping an eye on the bigger picture instead of on the micro-count, the latter can be so confusing.


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