weekend update


The market made some progress this week. Thanks to the two gap up openings early in the week, and no surprises from the FED or Q1 GDP. For the week the SPX/DOW were +0.95%, the NDX/NAZ were +1.35%, and the DJ World index was +1.10%. Economic reports for the week remained positive. On the uptick: pending homes sales, ADP, Chicago PMI, personal income/spending, PCE, ISM manufacturing, construction spending, auto sales, Payrolls, factory orders, and the WLEI. On the downtick: Case-Shiller, Q1 GDP, the monetary base, and weekly jobless claims rose. Next week we get reports on ISM services and Consumer credit, plus Congressional testimony from FED chair Yellen on Wednesday.


There are lots of counts being kicked around on the SPX/DOW. The NDX/NAZ, however, continues to display no signs of shifting from its count. While it has been pressuring the general market, it still has two more uptrends before ending Primary III. After reviewing the wave characteristics of its entire bull market we arrived at the following:

Major 3 high July 4420

Major 4 low August

Major 5 high Sept 4470

This fits with the SPX/DOW i-ii-iii-iv-v count for Major 5, and with the QE 3 ending target around SPX 2070. One last thing. The last time the NAZ dropped 400 points during a correction was the spring of 2012. Its next uptrend was quite choppy in the beginning, as you can see, until it finally kicked in. Quite similar to what it is doing now.



In the early part of this bull market it experienced a spring swoon. Then when everyone noticed it, it began to lessen.

2009 June high-July low-then uptrend until January.

2010 April high-July low-then uptrend until February.

2011 May high-then no low until October.

2012 April high-June low-then uptrend until September.

2013 May high-June low- then uptrend until August.

2014 April high-April low ?- then uptrend until …

Notice how the selloffs started in the spring, kept increasing in duration until 2011. Then started lessening in duration and impact into 2014.


LONG TERM: bull market

This Cycle wave [1] bull market continues to unfold from the Super Cycle wave 2 low in March 2009. Rising Cycle wave bull markets unfold in five Primary waves. Primary waves I and II completed in 2011, and Primary wave III had been underway since then. When Primary III concludes, possibly by this summer, a steep Primary IV correction will follow. Then Primary wave V should take the market to new highs.

Each rising Primary wave unfolds in five Major waves, as you can observe during Primary wave I. Primary wave III was a bit tricky as it unfolded. As Major wave 3 apparently just kept extending. Nevertheless we have labeled the February 2014 low as the end of Major wave 4, and we are currently in a subdividing Major wave 5. This suggests, both the SPX and DOW, have two more uptrends before a Major wave 5 top, and the end of Primary III. This count fits with the count being carried in the NDX/NAZ. So it does appear we are in sync with the four major indices.

MEDIUM TERM: SPX uptrend probable, DOW in uptrend

As noted above we are expecting five waves (trends) from the Major wave 4 low in February before Major wave 5 concludes. The first uptrend rallied from SPX 1738 to 1897 in early April. Then we had a correction down to SPX 1814 by mid-April. Now we are only points away from confirming the third wave from that low. The DOW, and the NYSE for that matter, has already confirmed an uptrend. The NYSE is also on the same count.


The recent correction in the DOW (16,662 to 16,015) was only 3.7%. Its smallest correction of the entire bull market. Should the SPX also confirm an uptrend it too would have had it smallest correction of the bull market as well at 4.4%. This is not a sign of general weakness, but of strength. Keep in mind, while these small corrections were unfolding in the SPX/DOW, the NDX/NAZ were correcting 8.7% and 9.7% respectively. Also, if we count the internal structure of the DOW during its February to April uptrend we observe an orthodox high in early March, then an irregular flat into the mid-April low. Irregular flats may look like head and shoulders tops, but are actually quite bullish.


With the NDX/NAZ still about 6% to 7% below their all time highs, and our projected initial target. The SPX should at least reach the lower end of the Primary III projected target at 1970 to 2070. After that concludes a Major wave 5 diagonal triangle can still form, in the both the SPX and DOW. But not like the one being currently carried on the DOW charts. It would be shifted one degree further out. For now, let’s just track this uptrend and see what unfolds. Medium term support at the 1869 and 1841 pivots, with resistance at the 1901 and 1929 pivots.


Short term support is at the 1869 and 1841 pivots, with resistance at the 1901 and 1929 pivots. Short term momentum ended the week heading lower after a negative divergence. The short term OEW charts remain positive with the reversal level now SPX 1879.

From the recent potential downtrend low at SPX 1814 we counted five waves up to 1885, and labeled that Minor wave 1. Then after a complex double three pullback to SPX 1851, which we labeled Minor 2, the market has rallied to a higher high at SPX 1891. This recent rally also looks like five waves up, but of a smaller degree (Minute wave). We counted the advance from SPX 1851: 1880-1871-1889-1880-1891.


After that high, around 10:30 Friday, the market pulled back to SPX 1879. Notice it found support around the 4th wave (1880). Also note, the shortest wave during this last rally was the fifth wave. When this occurs sometimes the market pulls back to the previous second wave (1871). So a continued pullback to the OEW 1869 pivot would not be anything unusual. For now, we are labeling the SPX 1891 high as Minute wave one of Minor 3, and will wait to see where Minute wave two bottoms. Until SPX 1891 is exceeded we can not be certain that Minute two has ended. Best to your trading!


The Asian markets were mostly lower on the week for a new loss of 0.60%.

The European markets were mostly higher for a net gain of 1.30%.

The Commodity equity group were mostly higher for a net gain of 1.70%.

The DJ World index remains in an uptrend and gained 1.10% on the week.


Bonds have confirmed an uptrend gaining 0.5% on the week.

Crude remains in a downtrend losing 0.9% on the week.

Gold is trying to establish an uptrend but lost 0.1% on the week.

The USD remains in a downtrend losing 0.3% on the week.


Monday: ISM services at 10am. Tuesday: the Trade deficit. Wednesday: Consumer credit. Thursday: weekly Jobless claims. Friday: Wholesale inventories. The FED has a busy week. Tuesday: a speech from FED governor Stein in the evening. Wednesday: Congressional testimony from FED chair Yellen. Thursday: a speech from FED governor Tarullo. Best to your weekend and week!

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

About tony caldaro

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143 Responses to weekend update

  1. shadow305 says:


    Long-time lurker, first-time poster from British Columbia. I am seeking clarification on your SPX 1970 – 2070 projection for q3/q4 of 2014. Is that target for Primary III or Primary V?

    If it is Primary V, at what level do you see Primary III topping out & roughly what time frame?

    I suspect that the sell in May crowd may wish they hung until July this year.



    • llerias7 says:

      I think 2100´s will final top for this bull, i.e. top of P V. Right now P III is toping and the risk/reward is not favorable to a long position. I am now mostly in cash and waiting what ever it takes to get short for a medium term position (1-2 months).


      • shadow305 says:

        What are you looking at for Primary IV? Some suggest it could be 1646ish, the level at which this ending diagonal started.


    • tony caldaro says:

      Welcome Shadow
      Currently that range is for PRI III.
      But could be both.
      Too early to tell.


      • shadow305 says:

        Thanks, Tony. That is kind of what I thought, depending on the severity of Primary IV.


  2. Why would mr. market push up through 1900 if they know everyones gonna go short up there? It seems they have enough shorts here already.


    • when I say here, I don’t mean shorts on this board, I mean shorts in the market.


      • torehund says:

        Shorts will be cying and fighting this market until their juice is thoroughly drenched, we are far from that situation yet. Shorting is the most difficult art in stocktrading, closest I have been to nailing it was 2 weeks before gold descended. And when it so did I couldnt stand even thinking of shorting it anymore…and then if fell further. Good lesson for me.


    • Kevin M says:

      Excellent point newbie……It’s valid and btw I’m new here so I had no idea that the board here has always been bullish. It must have sucked for them in 2010 and 2011….Yikes…Anyway, I see your point and yes the sentiment here means nada lol

      When the music stops…and it will stop….I just hope tony gets the waves right. He is their guru no doubt lol…..Tony I love ya. You know it….In good fun in good fun


  3. RDC says:

    Dennis Gartman will be on CNBC at 5pm. My trade for tomorrow:
    If he says he is pleasantly bullish then I will take short position and
    If he says he is pleasantly bearish then I will take long position.
    Easy Trade.


  4. I have not followed the RUT much nor done a wave count but from a glance, that wave count appears to be shaping into a triple zigzag. If correct, that would lead to a retest of the 102.26 April 28th low….also friday’s shooting star tells me that there is further selling to go on RUT….


  5. Not sure whether today’s down can be considered as touching 50dma as I said on Friday. I am more inclined to believe that market will go down in next day or two and touch 50dma. Action at 50dma is going to be interesting ONLY SHORT TERM. Looking at SHARP rally (which are typical in abundant liquidity but no economic growth etc etc) today, I am inclined to believe that if market touches 50dma, there will be SHARP rally taking it to 1920. But MARKET will sink about 8% after that.

    Unfortunately, for BEARS, that will not be top for the year. Given abundant liquidity, people will buy as if no tomorrow (when SPX falls about 8%). And thats the time multi year top will be made.



  6. Kevin M says:

    The correction into June has officially started. It will accelerate into the last week of May and then make a final low near the end of the quarter.

    Be prepared, buy bonds(they are on sale today)or short the IWM.

    Take care and good luck


    • correction has started at 1882? what am i missing Kevin please help me here.


      • Kevin M says:

        Truth-BTW I like your name…Anyway yes in relation to time, the correction has started. There should be alittle more downside this week, followed by a brief rally next week. But after next week it’s down until the end of June.

        Folks remember I’m a bull and I believe this market goes to a mania phase however this year forget about it.

        O please pull my quote out June 1st. SPX down atleast 5% from 1890 by the end of May or June and no bull phase up like Tony is saying. Tony will simply change his waves.

        Take care….


    • jeffbalin says:

      Thanks for wishing us good luck! We are really going to need it if we are going to go short during a med term bull market!
      Be careful what you say…. JK’s gonna pull your post today out of his hat June 1!
      As a bear at heart I’ll be the first to go short with excitement when the time comes, but right now Tony’s wave map looks good to me. You’ve been pointing out some great warning signs, but it doesn’t mean the med or long term bull ends tomorrow, next week, next month or in several months. When the charts show bear it will be time to change but not until then and it looks like your warning is a little early.


      • IF ( Im saying IF……) market crashes and you are not holding short, u will lose twice, your long will be crushed and you miss the giant Drop. Upside vs downside? 5 year bull run, Fed Printing, War, Seasonality, Downturning economy facing struggles, bloated government, the list goes on. Why not be short???? Best of Luck to all.


      • tommyboys says:

        lol newbie…you’re kill’in me!


      • simpleiam says:

        Yo JK! Pull the post! Going short in a bull market with no confirmed downtrend… Yeah, right. Good Grief!


  7. Very hard to find a bearish case here. seems to be 2013 playbood of buying the dips. market does not seem concerned about much at this point.


    • Truth the market never seems concerned near tops.


      • imanewbietrader I have to tell you that you are by far one of my favorite contributors to this blog and I enjoy reading your comments. But you are never right. Bears have had their chance my friend. I was one to say that it would take a MAJOR event to send this market down but now I have my doubts. I dont see anything that would cause a panic


    • Kevin M says:

      Truthtrader-How long have you been trading? Sounds like you are a newbie. The Market never ever shows you 100% whats going to happen next, despite the pundits here. Usually it gives you clues. Always remember hindsight is everybody’s best friend when forecasting. Changes wave count mid-way is the name of the game. It’s all relative to the observer.

      BTW the ultra bullish nature on this board is also a very good indicator where things will go from here.


      • Sir at my age I do not forcast trends. I look out the window in the morning in order to decide how to get dressed. incremential changes have to take place in order for the Market to correct. I just do not see it.


      • Kevin, Im bearish, but I can tell you this board has been bullish pretty much the entire Bull run. That being said, it would be hard to conclude their bullishness is any insight to the future.


      • Both Kevin and Iamnewbie I do no think the economy warrants stocks at these prices. But the stock market is not the economy. growth is slowing inflation is rising just ask anybody who drives to work and eats everyday. But this market has underlying strength and support of the Fed to fall. Put to call ratio at a joke level. there is nobody buying protection and nobody seems to care to


      • tommyboys says:

        Truth this is then EXACTLY when selling occurs – during complacency. What part of that do you not comprehend? Bubble talk picking up steam amongst pros…


      • tommybody is it me or does it seem no matter I say you and I never see it the same? I am starting to take it personal. LOL


      • iamnewby wrote “Kevin, Im bearish, but I can tell you this board has been bullish pretty much the entire Bull run. That being said, it would be hard to conclude their bullishness is any insight to the future.” Hmmm, that’s an illogical conclusion. (if this board’s bullishness was mostly right over the entire bull run of the past few years, why then does that mean this board is now all of a sudden wrong about the future?)


      • Soul,
        I wrote “Kevin, Im bearish, but I can tell you this board has been bullish pretty much the entire Bull run. That being said, it would be hard to conclude their bullishness is any insight to the future.”

        Soul says: Hmmm, that’s an illogical conclusion. (if this board’s bullishness was mostly right over the entire bull run of the past few years, why then does that mean this board is now all of a sudden wrong about the future?)

        My reply: I never said the board is right or wrong about the future. I was simply replying to Kevins comment, Kevin said “BTW the ultra bullish nature on this board is also a very good indicator where things will go from here.

        In conclusion : Kevin implied market should be going down soon due to the ultra bullish sentiment on this board. I replied to Kevin, Im bearish, but I can tell you this board has been bullish pretty much the entire Bull run. That being said, it would be hard to conclude their bullishness is any insight to the future.”

        Translated in easy terms , This means this boards sentiment is usually always bullish therefore their sentiment doesn’t mean the market will go up or down.


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