weekend update

REVIEW

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.

NASDAQ

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.

NAZweekly

SEASONALS

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.

SPXweekly

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.

NYAweekly

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.

SPXdaily

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

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.

SPXhourly

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!

FOREIGN MARKETS

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.

COMMODITIES

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.

NEXT 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

Investor
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143 Responses to weekend update

    • tommyboys says:

      Yeah this is the kinda paranoia you find at tops – NOT – not even close. You will LOVE the Fed at the top. How long from now might that be? Wait for euphoria and mania maybe a couple years from now. Way over – out.

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  1. tommyboys says:

    ISM beat…
    “The Institute for Supply Management said its services sector index rose to 55.2 in April from 53.1 in March, topping expectations for a read of 54.1. The data provides further evidence that economic activity is regaining momentum after lagging through much of the winter, a lull largely blamed on harsh weather.”

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  2. so far 1866 support per my chart has held… now question is will we top out at 1896 (TED) or head straight to 1921 (ED)….You don’t have to like the pattern nor chart only pay attention to price targets and right now they both look promising.

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    • tony caldaro says:

      1869 pivot held
      should be

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    • same thoughts JK (and sadly enough this is only the 2nd true technical non-opinionated post after scrolling down from the last one posted so far…)

      micro a: 1880 (11 points)
      micro b: 1886
      micro c: 1868 (18 points, which is 1.6x a and which equals pretty perfect in my book.)

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  3. tommyboys says:

    Insiders been buying the past several weeks of this rotation…

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  4. makiori says:

    102 $\¥ is key. If broken on a close basis indexes will find it hard to rally. A significant move away from it on each direction is a green light for indexes, below 102 stocks go down , above we go up.

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  5. thanks for the update tony! I am late to the party, since I had my own this weekend :-), but reading unfortunately a lot of bashful, inknowbetter, posts which tells me nothing has changed. Sticking to your count and the weekly AI which gave a buy-signal earlier this week is as usual most profitable IT to LT. Can’t be bothered with ST. Of note is that the daily AI may have produced a sell-signal Friday, but SPX need a sustained trade/close below 1850s to void the weekly buy.

    One word of advice to many; please don’t infer the markets’ overall bearishness or bullishness from this blog. Cause it ain’t the market, neither are ALL the other blogs, sites, etc you may read. The market is the entire world. It are millions and millions of people from all over the world that make the (U.S.) market. We will therefore never understand the combined market psychology, but we can track it counting the waves.

    GL!!

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  6. Kevin M says:

    The overall equity market will not get a sustainable rally over 1900 without additional money flow. And the partly amount being printed by the fed now is just a drop in the bucket. So where will it come from? Money market accounts? Nope, adding now at recent highs is not very constructive. Furthermore it’s not the beginning to a seasonally bullish time for the market and fund managers know this. Asset allocation? Well, if you would have asked me this two month ago I would have said yes. However, we know buy the bi-polar Nasdaq/small cap stocks that this option has already taken place. Ok where else? The bond market is the next viable option. Unfortunately The bond market is now seeing inflows and with a confirmed uptrend in place, this option is a no go for inflows to equities. So expecting a rally from here is absolutely crazy and irresponsible, given what we know now.

    I was a bull last year into the first part of this year however one must respect market seasonals and money inflows to get a bigger picture of what will happen next. Again the market is not making all times highs here. There is stiff resistance everytime it happens intra-day. The writing is on the wall. Once we get to the end of the quarter and things are where we are now then I will turn very bullish, until then it’s choppy to down. imho the spx will be down atleast 5% by the end of May and the naz/small caps will lose another 8-10%.

    Good luck mates and think for yourselves

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    • tommyboys says:

      This “seasonal bias” is way overplayed…everyone calling for this. The May-October period has been a net positive 59% of the time since 1950 – look it up. I’d call that a neutral to positive. Secondly the AD made yet ANOTHER new high this past week. It wouldn’t be impossible, but a decent struggle for markets to plunge 10% over the coming months with this kind of breadth showing. When markets turned south in 2000 the AD had already been negatively diverging for nearly 2 years – it topped in ’98! Thirdly sentiment right now is no where near where it needs to be for an important top. Lots of bears everywhere and most bulls are skeptical at best. Fourth, cash hoards on the sidelines are still high and hedgies have fallen only further behind. I’d say it’s more like 2013 gains are about done being digested and we’re ready for the next leg higher. Time will tell but internals argue for the ongoing bull to continue – potentially with gusto.

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      • Kevin M says:

        The $nyad is not a guarantee + it has a bond market component in it and many high yielding funds. We know by previous times in the past i.e 2011. All time highs right before the drop. 2010 the same thing. I could go on and on. You gotta get out of you mind the sentiment issue. I could show you several sentiment indicators that are opposites but many people claim them as gold. They are not perfect. Also you gotta get out of your mind that we are entering a bear market like 2000. I;m not suggesting this.. I’m suggesting a simple correction of frustration into the end of June and then possibly the fall. If we rally into May and June like most here suggest, it would be highly unusual.

        BTW, I don’t expect you to do this, but look up the years 2010, 2006,2002,1998 and 1994. 20 years of mid-term action that was almost spot on from May 1st until July/August. Everyone of those years represented a good sized correction after the previous strong % basis post election year. odds are going against you.

        Good luck,

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      • tommyboys says:

        Could be but i’m long for 4 years and don’t trade. Lots putting their stock
        In the presidential cycle -thats fine. I adjusted a bit a month ago anticipating some volatility and have already seen my micros pullback 30-50%. I have added back on these dips and gotten some unreal bargains. If they want to take’em down another 25% great I’ll be adding again and what the market offers over the next month or two – IF it happens – will payoff numerously again over the next two years. GL

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