weekend update


A volatile and somewhat disappointing week for the bulls. The week started off with a gap down on Monday, followed by a tradable low at SPX 1837 on Tuesday. Then after a rally to SPX 1873 at Thursday’s open, the market sold off rapidly into Friday. For the week the SPX/DOW were -2.50%, the NDX/NAZ were -2.85%, and the DJ World index was -2.0%. Economic reports for the week, oddly enough, were all to the upside. On the uptick: consumer credit, wholesale inventories, export/import prices, the PPI, consumer sentiment, the WLEI, the M1-multiplier, plus the budget deficit and weekly jobless claims both improved. Next week we get reports on the FED’s beige book, Industrial production, the NY/Philly FED and Housing.

LONG TERM: bull market

This week’s market activity put a dent in our more bullish realignment scenario as the SPX/DOW/NDX/NAZ all confirmed downtrends. The realignment would have occurred if the SPX/DOW remained in uptrends, while the NDX/NAZ ended its downtrend. As a result of this week’s activity we have shifted the SPX count to match the DOW count, while our NDX/NAZ count remains unchanged. More on this later.

We continue to count this bull market as Cycle wave [1]. Primary waves I and II completed in 2011, and Primary wave III has been underway since then. While only one of Primary I’s five Major waves subdivided, all three rising Major waves of Primary III are subdividing. We have labeled Major waves 1 and 2 completing in mid-2012, and Major waves 3 and 4 completing in mid-2013. Major wave 5 has been underway since that low.


When Major wave 5 does conclude, it will end Primary III. Then we should see the largest correction since 2012 for Primary IV. After that Primary V should carry the market to new all time highs. Currently our bull market target is SPX 1970-2070 by Q3 2014.

MEDIUM TERM: downtrend

After an uptrend high in January, which we labeled Int. wave one, and a downtrend low in February. We expected the recent uptrend to be Int. wave three. This week, however, a new downtrend was confirmed ending what appears to be a three wave February to April uptrend. This uptrend aborted quite a bit below expectations, and it can not possibly be a wave three, as it has already overlapped the high of the previous uptrend. As a result of this market activity we have aligned the SPX count with the DOW count.


We have been counting the DOW as a potential Major wave 5 diagonal triangle. This pattern is considered a rising wedge a-b-c-d-e pattern that unfolds in higher highs and higher lows. But all uptrends are overlapped by the next downtrend. Under this scenario the NDX/NAZ can continue to complete their Primary III normally, while the SPX/DOW make marginal new highs in their Primary III. Then they will likely all realign again for Primary wave IV.


When reviewing the SPX chart under this scenario we observed Int. wave A topped in January, then had a 50% retracement for Int. wave B. With the recent uptrend, Int. C, topping in April another 50% retracement would find support around SPX 1814. If the retracement extends to 61.8%, which is acceptable in this pattern, the SPX should find support around 1800. If this level does not hold, and the downtrend creates more of a channel than a rising wedge. Then our alternate count, in green on the daily chart, would suggest a retest of SPX 1738. We are likely to find out which count is in play this week. Medium term support is at the SPX 1779 and 1699 pivots, with resistance at the 1828 and 1841 pivots.


Short term support is at SPX 1814, SPX 1800, with resistance at the 1828 and 1841 pivots. Short term momentum ended the week oversold, with a positive divergence. The short term OEW charts remain negative from SPX 1860, with the reversal level now 1846.

The February to April uptrend appears to have ended with three Minor waves: 1884-1842-1897. The downtrend from that high also appears to be unfolding in three Minor waves: 1837-1873-1814 thus far. When we reviewed the January to February downtrend we observed it had also declined in Minor three waves: 1770-1799-1738. This is typical wave activity in a diagonal triangle.


The a-b-c January to February downtrend unfolded as a 5-3-5 zigzag. Minor A was five waves down, Minor B a strong rally, then Minor C five waves down, in total: 80-30-60 points. This downtrend, from the April high, has already completed five waves down for Minor A, Minor B was a strong rally, Minor C appears in the process of doing five waves down, in total 60-35-60 points so far. Notice these two downtrends are thus far quite similar. If this Minor wave C ends with a small diagonal triangle it could bottom around SPX 1814. If it divides into five clean waves then SPX 1800 could provide support. Thus far we can count four waves down from the SPX 1873 Minor B wave high: 1820-1835-1814-1823. A diagonal triangle Minor C could be forming. If the market continues to fall to the 1779 pivot, then a retest of SPX 1738 is likely. Best to your trading!


The Asian markets were quite mixed ending -0.1%.

The European markets were all lower losing 3.7%.

The Commodity equity group was mixed for a loss of 0.6%.

The DJ World index is still uptrending but lost 2.0%.


Bonds are getting close to confirming an uptrend and gained 0.9% on the week.

Crude is still uptrending and gained 2.7% on the week.

Gold is trying to establish and uptrend and gained 1.3% on the week.

The USD appears to be downtrending again losing 1.2% on the week.


Monday: Retails sales at 8:30, then Business inventories at 10am. Tuesday: the CPI, NY FED and NAHB housing index. Wednesday: Housing starts, Building permits, Industrial production and the FED’s Beige book. Thursday: weekly Jobless claims and the Philly FED. The FED has several speeches scheduled this week. Sunday: FED governor Stein at 1:30. Tuesday: FED chair Yellen at 8:45. Wednesday: FED governor Stein at 8:15, and FED chair Yellen at 12:45. Best to your weekend and week!

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

About tony caldaro

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182 Responses to weekend update

  1. torehund says:

    ABC on NAZ 2 last days, the last ones ?, then heading for the promised land. MM did a good job concealing the NAZ weakness by holding DOW and SPX up.

  2. kvilia says:

    Surfingwaves – acknowledging your comment – hope you trade better than mean.

  3. lunker1 says:

    Today XLF .887 from Fri low.
    Friday’s FAS .887 still in play.

  4. Lee X says:

    I found a $5 bill once in a book that I borrowed out of the Toman library back in 1974, I literally went thru at least another thousand books the next few weeks looking for more $ but did not succeed until a few years later when I found a $10 bill at the neighborhood Standard gas station by the air pump pumping up my 10 speed.
    Just thought I’d share😉

  5. bobhopium says:

    Dow’s gonna Pop here IMHO…..happy to front run the turnaround tuesday and yellen wednesday crowd…..GL to all.

  6. uncle10 says:

    I am taking off some more of my short here, still keeping some. May re short around 1840-1850.gl

    • RDC says:

      Uncle (not your nephew) … you will get burned being short now … Yellen is watching

      • uncle10 says:

        Hey RDC. I shorted much higher and took more than half my trade off already. I will not get burned if it goes back up. gl

  7. llerias7 says:

    Yellen speaks wendsday… “probably” the wave 2 low – 1814 – is in..W3 of major 5 will follow, then…however seasonality does not help…Is there any record of a market rally in the month of May? Anyone?

  8. gary61b says:

    Rut, could be looking for the gap fill this morning before the push up. ( 1114.62)

  9. Out at 1833.8 (lost 1.5 handles), back in at 1827.9 small qty

  10. manunidhi21 says:

    Namaste Tony !
    Somebody asked me 2dy what after P5 when the bull market will end after reading your blog(I suggested)
    Please explain the next 4 years after it ends

  11. mjtplayer says:

    Not much of a drop in the VIX. Today’s stock rally is weak, good price gains but light volume and no real breakout yet – just short covering IMO. S&P needs to get through the 1,841 pivot area to create any real upside momentum. I think we rally for a couple days, back to the 1,841 pivot area, but it’s just a bounce and we reverse and head lower later in the week and into next week. Still looking for 1,780 – 1,800 and a VIX rally up to 20/21; nothing has changed.

  12. Two Stocks Better than Apple Inc. Today, both companies were upgraded. 4.00% gains.


  13. 4/14/14=14,,, 18(14) low for D(4)? 89 fib point hit, clear 3 waves…. slow down bears. Clear 1828 run for exit. http://t.co/bHzHKo6Vwp

  14. mjtplayer says:

    NAZ and RUT still very weak, high today at the open on goosed futures, only to be sold immediately. Still heading lower IMO: S&P 1,780 – 1,800.

    The VIX approached 18 on Friday, after we pause the next shot higher should get us into the 20/21 resistance area.

  15. Futures now up abt 10 on SPX.

    This is the path for SPX now, 1842, 1826, 1870, 1840 till May 1st.

    Next update a week after.

    Someone has put wave count showing 666-1221 as FIRST, 1221-1020 as second and 1020 to 1897 (1.6 times first), looks correct ATM,

    Focus is now on Draghi/Germany. Germany softening stand on QE is BIG NEGATIVE for BEARS. If it turns into reality, then SELL and FOLD for bears. Ukraine which was one of the hopes for BEARS, has also given up, with its interim president saying “Ok for federal states, and referendum..”

    I am not saying this because I am long.

  16. ariez5 says:

    Gold hit your target in the overnight futures. Do I understand you are waiting until 1300 to go long? I would guess it drops below 1278 on a “c” leg. Thanks.

  17. 777daimon says:

    dedicated to all bears ;)… a crash to the upside in the works now (today/tomorrow) …as far as I heard …🙂

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