weekend update


The US markets spent the entire week in a narrow range of SPX 1860 to 1889, which occurred between 10am Wednesday and noon Thursday. The low, in fact, was hit just before FED chair Yellen addressed Congress, and the high occurred right after she addressed the Senate. For the week the SPX/DOW were mixed, the NDX/NAZ were -1.1%, and the DJ World was -0.3%. Economic reports for the week were all positive: ISM services, consumer credit, wholesale inventories, the WLEI, the M1-multiplier, plus the trade deficit and weekly jobless claims improved. Next week we get Retail sales, the CPI/PPI, and the NY/Philly FED.

LONG TERM: bull market

Project, monitor and adjust has been our mantra with OEW. Using the quantitative feature of OEW we can identify the significant waves, during bull and bear markets, quite easily. The more difficult part is, in some bull/bear markets, projecting the proper wave sequence as these waves unfold. This is where the monitor and adjust, when necessary, portion comes into play. Thus far we see no change in our long term count.


We continue to expect this bull market to be Cycle wave [1], with five Primary waves. Primary waves I and II completed in 2011. Notice how the topping pattern for Primary I took about five months: February to July. Then Primary II corrected with a 22% market decline. Currently, having completed Major waves 1-2-3-4, we are again in the topping process but of Primary wave III. This too should take several months to unfold. Our wave counts, for all four major indices, suggests it will also take two more uptrends. At the moment, only the DOW has confirmed the first of these two uptrends.

MEDIUM TERM: uptrend probable

The current potential SPX uptrend from the 1814 early April low rose to 1885, then pulled back to 1851. Since then it has become somewhat choppy as it has traded in a 1860 to 1891 range for about two weeks. This market is having a difficult time breaking SPX 1900. Once it clears that level we should see quite an impulsive move higher.


The key for us not becoming bearish too early is obviously the NDX/NAZ count, and the broader NYSE count. Both are suggesting two more uptrends before a Primary wave III high. While we have been waiting for the NDX/NAZ to start impulsing. The NYSE, like the DOW, has already confirmed a new uptrend. Naturally, an impulsing NDX/NAZ would certainly create breakouts for both the NYSE, DOW, and the SPX.


In the meantime we continue to track the SPX while it works its way higher from the April 1814 low. This far we have counted a Minor wave 1 at SPX 1885, and Minor 2 at 1851. Minor wave 3 should be underway, but it is certainly taking its time getting going. Medium term support is at the 1869 and 1841 pivots, with resistance at the 1901 and 1929 pivots.



Short term support is at the 1869 pivot and SPX 1851, with resistance at SPX 1889/1891 and the 1901 pivot. Short term momentum ended the week above neutral. The short term OEW charts are slightly positive, with the reversal level now SPX 1877.


As noted above we have counted the first two waves of this potential uptrend as Minor waves 1 and 2, at SPX 1885 and 1851. The next rally we counted as Minute wave i at SPX 1891, and possibly a Minute ii low at SPX 1860. Since an expected Minute iii has yet to kick in, it is possible Minute ii is still ongoing. We have been stuck in a day traders market for nearly three weeks. If SPX 1860 was the low, once the market clears 1889/1891 Minute iii should make its presence known. Best to your trading!


Asian markets were mostly mixed on the week for a net loss of 0.2%.

European markets were also mixed for a net loss of 0.3%.

The Commodity equity group were mostly higher for a net gain of 2.0%.

The DJ World index continues to uptrend with a net loss of 0.3% on the week.


Bonds remain in an uptrend and gained 0.3% on the week.

Crude is still downtrending but gained 0.2% on the week.

Gold is having a difficult time getting an uptrend going and lost 0.9% this week.

The USD had a good two day rally off this week’s DXY 78.93 low and gained 0.5% on the week.


Monday: Budget deficit at 2pm. Tuesday: Retail sales, Export/Import prices and Business inventories. Wednesday: the PPI. Thursday: weekly Jobless claims, the CPI, NY/Philly FED, Industrial production (est. -0.1%), and the NAHB housing index. Friday: Housing starts, Building permits, Consumer confidence, and Options expiration. A busy week. On Thursday we also have a speech from FED chair Yellen. Best to your weekend and week!

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

About tony caldaro

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119 Responses to weekend update

  1. RDC says:

    Dennis Gartman will be on CNBC today at 5pm. Here is my trade from tomorrow:
    1) Go short if he is pleasantly bullish
    2) Go long if he is pleasantly bearish
    Easy Trade!

  2. thanx sir for reply, In india many analyst considering this rally as 3rd wave with target of at least 7500 in nifty betting on formation of new development pro goverment
    again sir thanx to answering my query during ur market hour

  3. thanx sir for reply, It means if sensex crosses 26400 then count have to be changed

  4. Tony sir,
    thanx for reply, Above what level this rally consider bull rally not bear rally.
    Can Maj C= Maj A, if this possible then we have sensex rally upto 28700 Is it true ?

  5. llerias7 says:

    Tony, did the mkt done enough to consider that minute (iii) is underway?

  6. Microsoft insider Mr. Gates only holds $12 billion worth of shares as today. Monitoring his selling its amazing how the stock is still holding up. Analysts have $41 price target which is only $1.00 away.

    Mrs. Barnhardt is amazing person, she’s making solid case, in her analysis. Worth studying.


    Conclusion: Interesting times…

  7. tony, is there a certain level on the DOW above which the alternate ED count can be eliminated? Or is it not price related?

  8. winslow80 says:

    Naz held the 2012-2013 uptrend line on Wednesday and Friday and has gapped up into the 50 day ema. NDX has a coiling pattern with a double top at 3613 and the .618 retracement at 3614. If the market hurdles those levels, visions of a head and shoulders top will start to fade. Conversely, if Friday’s lows are violated then something is amiss.

    Thursday’s big reversal high in the Euro occurred on a 169 trading day cycle that has produced big turns. It coincided with DX running the stops of the past seven months.

  9. RDC says:

    If SPX crosses 1900 then closes below 1900 then Run for the Hills.

  10. I have a guy I know, he is in his 13th year of college- he has only achieved an associates thus far, he advised me that he just bought his first block of shares (spy) and is expecting 7-9% yearly return on his investment. LOL .. Good Luck Bulls.

    • tommyboys says:

      Sounds like a great cliché you’re in there…

    • Ryan Parker says:

      I was just on a week long cruise through the Caribbean and when the topic came up I didn’t meet a single person that had any concern about the stock market. They are in it for “the long term”. Regardless, I still think this market has an upward bias into July, followed by a good sized move on the downside into October. Looking at the market from a fresh perspective yesterday it appears to me as though Friday was likely an important bottom. Let’s see if today’s move holds up into the close.

      • tommyboys says:

        Agree with this. See absolutely no euphoria. Don’t see much gloom either for that matter – less the doomers posting here. For the most part most seem indifferent. Most investors have seen such implosions over the past decade they are pretty much desensitized and almost expect these now as routine and it wouldn’t surprise many if it happens.

      • tommyboy, u don’t see euphoria? Do you see complacency. Ryans post describing peoples lack of concern with market definitely shows at the very least many are complacent. To say market is not in euphoria, well 666- 1900 on spx I guess is just normal.

        • tony caldaro says:

          Euphoria occurs when the public is over 75% invested in equities, i.e. 1999
          Even extreme bullishness occurs when the public is over 70% invested in equities, i.e. 2005
          Neither were tops, btw.
          The highest we have seen in this bull market is 68.3% in 2013.

  11. tommyboys says:

    RUT busted right up through its 200 after spending 4 closes below it. Also busted right through it’s down sloping tops line. I would never pretend to know what the future holds but if it can close above that 200 it’s an awfully bullish posture…

    • torehund says:

      hahaha come to daddy..market maker has no more fuel, no more sellers left in many smallcaps, huge spreads, just SOME volume players and it goes skywards.

      • tommyboys says:

        Yes some of my micros have been absolutely annihilated – and based on my screening process I only choose strong Rev & EPS growth in strong secular growth spaces at cheap valuations – baby went out with the bathwater. Many of these received 40% haircuts reporting Q1 records and guiding strong…go figure? Was forced to add on extreme dips! Time will tell…

      • torehund says:

        Tommy, I have been there over and over again too. But at some stage( like today I get that feel of the grand elevation waiting around the corner). I feel its just on time, total Death of optimism +(irrational valuations) = the advent of a monster-rally.

  12. Kevin M says:

    The Market TOPS today or sometime this week. Odds are very high this is the last gasp here.

    Hold on and buy some bonds and short the Russell

  13. alexhartley1 says:

    Morning Tony, Do you think there’s a good chance we may have bottomed on the USD with the reversal late last week? Looks like it’s a distinct possibility. Thanks, Alex

  14. JK1987 says:

    Thanks for the new label of ii.
    SPX still in downtrend with only 5 points from record high?

  15. magicianme says:

    A good time to go short for the day.

  16. Will the Russell change course here? Looking like a high probability. Will wait for the confirmation before going long on any small caps.

  17. blackjak100 says:

    VIX under 12??? Didn’t think we would see that again

    • rc1269 says:

      looks pretty capitulatory. personally don’t like to look at the vix on a daily basis as any kind of reliable indicator, but that sure looks like a throwing in of the towel

  18. rc1269 says:

    morning Tony, looking good so far for a blast off monday. let’s see if this baby has some legs this time
    as much as i enjoy following the mkts i’d rather still be hiking the Na Pali coast. *sigh* back to reality…
    cheers amigo, and thx for the wknd update!

  19. Short Term Trade Set Up: Starbucks Inc. Both Time Segmented Volume and Money Stream indicators are turning higher, most likely, if I get filled today, Starbucks is my day trade. Observing options $72.50 strike is where the most open interest starts on call side of equation. So, at current price as of Friday close $70.34 its fair low odds play. GL

  20. Namaste Tony sir,

    How do u view BSE sensex rally in its C wave?
    How do u view Nifty will rally in its wave & why nifty chart removed from ur stockchart?

    • tony caldaro says:

      The Sensex offers more precise chart patterns than the Nifty.
      The BSE is also still displaying overlapping waves since 2011.
      This is indicative of a B wave rally, and not a true bull market.

  21. Sven mentioned in response to my “low volume” comment the formation of a possible ascending triangle on the DOW. I thought it be good to show it: http://soulsurferusa.wordpress.com/2014/05/11/indu-ascending-triangle-pattern-break-out-suggests-target-at-2x-extension-of-major-1/

    Note that a break out would target exactly the 2.0 extension of major 1, which is often a typical extension for major 5, and since the market is now likely in major 5, that would make sense.


  22. opader says:

    Thx Tony …. My thoughts: SPX Is Ready To Jump

  23. fionamargaret says:


    Thanks Tony…..and all.
    Love to all the Mums – treasure them for life is fleeting.

    • Kevin M says:

      excellent charts esvxm! The NAZ chart is exactly why I believe the market is about to top. That NAZ chart needs more of a correction, since the recent top was very important in relation to the resistance of the year 2000.


  24. Joel Wenger says:

    Reblogged this on The Safe Investing Blog and commented:
    Per Investors.com (IBD), the general markets remained in a correction. Elliot Wave continues to show uptrends across the board (short, mid, and long term).

  25. Thursday Sentiment reading moved higher to 55.80


    Readings above 55.00 often are not times to be buying, reading of 35.00 much safer.

    • tommyboys says:

      Based on your attached chart it’s been above 55 almost the entire bull market – all the way up…

      • From 2009 low, first time it moved above 55.00 was in April of 2010.

        What happen then?

        Market sold off…

        Last Thursday, sentiment poll moved above 55.00

        Along with $CPCE moving above its 3 point trend line. Which often is confirmation of topping signal.

        My current Elliott Wave count is from 2009 low to current highs. An A-B-C-D pattern.

        Wave E potential in progress.

        I don’t agree with, wave 4 can enter wave 1 zone.

        So, by deduction, most logical Elliott Wave count, has to be ABCD pattern.

        Sentiment chart has not been above 55.00 for the entire bull/bear market.


      • tommyboys says:

        According to your chart it spent all of Nov, Dec 2010 and into Jan ’11 well above 55. The market appears to have paused and then kept right on moving higher. No one can time corrections as they can come out of no where, but indicators I watch continue to argue for an ongoing bull so I remain long term long and will add on pullbacks. GL

  26. Kevin; I’m fully aware the $CPCE currently rising at 72 might move higher. Thanks for the advice.

    Here is copy of my stock trade on Pixelworks
    security Description: PIXELWORKS INC NEW
    Action: SOLD $5.58
    Security No./CUSIP: block out
    Type: Cash
    Trade Date: 05/09/14
    Settle Date: 05/14/14

    Regarding the theory with $CPCE, often when large amount of traders get on board, the wheels tend to fall off. Taken, high reading of 72 and Thursday Sentiment reading of 55.80 another component of complex mixture of factors. Those of us who currently, trade on hourly time frame.

    Tuesday will be 21 trading days from pivot low, which within my trading system, often sets up potential profitable time period, which to enter into trade.

    Currently, I have no clue, which direction the markets will move. I’m neutral.

    Friday, only one stock, Gap Inc. GPS symbol, was the only stock who opened higher with gap opening. Which within my trading system, I often, trade the gap stock plays. I’m not currently trying to hit the ball out the park, my trading system is just to catch $145 profit per trade.

    GL, Kevin

  27. This hesitant and choppy market certainly is creating a wall of uncertainty and worry. The accum/distrib indicator for the Dow, SPX, NASDAQ, and IWM all have bullish charts. Although IWM (R2K) had a sharp 5-wave decline and is well below it’s previous high, it rose steeply from it’s low and is now in a “line or flat-top” consolidation. The NASDAQ indicator evinced a similar pattern, but with a shallower decline. The mystery indicator for all of these indexes is rising steadily in a line-like graph, although there was a noticeable, but not severe dip for the NASDAQ. There was a comment on the Friday blog that gives a clue to the identity of this indicator, but through a negative reference. This indicator and it’s underlying rationale are much-despised, but it has tracked this bull market very accurately. It’s steadiness and symmetry has imbued it with forecasting value.

    • pimacanyon says:

      The decline in the IWM on the daily chart does not look impulsive to me. I count 11 waves down, but lots of overlap between the waves. Doesn’t have the look of a 5 wave impulse or even a 9 wave impulse. Triple zigzag?

      • I was talking about 5 waves down in the accum/distrib indicator which you can find on Stockcharts.com Sharp charts under Indicators. Now that you have mentioned it, I will look more closely at the IWM chart itself to find the features you have mentioned. When I describe 5 waves down, I am including the b & d upwaves in that count, but I believe that is the standard protocol for counting waves.

  28. Ra Sura says:

    wonder if this get any airtime Monday?
    China to avoid big economic stimulus: central bank chief

    • torehund says:

      Ra: POINT is they are GOING to stimulate, fits With that long awaited Bounce from 2000 to 4000 in the Scomp. YEEEES.

      • torehund says:

        ….sure they see the index bottoming out and bu their own Companies back before anyone else does. Wonder if the fled Russian Money will be running back to Russia for a commodity rally ! Exciting times, more than ever in amrkets now.

  29. bouraq says:

    Weekend charts
    #spx #djia #ndx #audusd #eurusd #gbpusd #oil #coffee http://www.tradingchannels.co.uk/2014/05/weekend-charts_10.html

  30. Pingback: USD/CHF Elliott Wave Analysis – Action Forex | WEB FOREX

  31. winslow80 says:

    tommyboys says:
    May 8, 2014 at 9:07 am

    “Hi Winslow would you be able to elaborate a bit on the 242 trading day trend in recent years?”

    The nominal 50 week cycle originated 8/13/2004, the 22nd anniversary of the initial upthrust in 1982. It has occurred at the following intervals: 245/240/249/252/247/248/242/243/242 and now 242. The previous average has been 245. I am interpreting this revolution as being 242 trading days because of technical readings consistent with the prior changes in trend produced by this cycle.

    Many of the cycle reversals have produced big moves, which would be consistent with an impending 3/3 and an initial upside objective of 1947.

    The action in BKX is interesting: a third recent low which reached the 200 day sma with an .801 retracement (nominal .764) accompanied by double positive divergence on the hourly chart. If the financials kick into gear, SPX will start impulsing higher.

    On Friday SPX retraced .753 of the rally from the cycle low, which is typical retest action. If SPX decisively violates 1859.79, it will be time to reevaluate the short term bullish scenario.

  32. thanks for the update Tony and keeping sanity in this chop-chop-city market as of late. For once my personal schedule allows me to sit down in peace and quiet on a saturday morning to digest charts. Mainly because there ain’t no baseball this weekend for my kids. Hhhhaaaaa, so nice.

    The AI gave a buy signal yesterday and hopefully we’ll get (finally) some follow through next week:

    Re: volume as an argument (for the bear case.) Volume has been pretty much similar on both buy and sell days this year and the years before that, with neither side sticking out in particular. In addition, what is meant with volume being (relative) low. Low compared to what and relative compared to what I must add?. Hence, and no offense, but I find volume a none-argument which bears have been tossing around for years now. Price will tell us more than volume. Don’t read into it too much.


    • Hi Soul!
      Volume can also be helpful in a present bullcase.
      If we look at Dow as an ascending triangle since new year, then we are getting close to an upward outbreak. Volume should be low just before the outbreak and decrease as the triangle develops.
      Perhaps this is what we see now. Low volume Before upward outbreak.
      Best wishes Sverker

      • Hi Sven, I agree with the description of how volume behaves in an ascending triangle. That said, please see my new post here where I show the ascending triangle on the DOW you described and what it targets.


    • magicianme says:

      [quote]Volume has been pretty much similar on both buy and sell days this year and the years before that, with neither side sticking out in particular[/quote]
      If memory serves me right, none of the best known volume theorists – from Wycoff to Tom Williams – ever suggested that comparing volume on up days with volume on low days is indicative of anything. In fact, given that price goes “up the steps and down the elevator” such a comparison would be highly misleading. The last four “up days” had 5.6 million contracts on the S&P futures for a price increase of 8 points. The down days in early April (just four of them) boast a volume of 8.3 million contracts and a price decline of 60 points.

      Even the most famous volume related quote about volume increasing before price …. is, IMHO, often misunderstood. It’s not an observation that a steady increase in volume precedes an increase in price, but that it potentially signals an impending big move (in either direction).

      Volume is best analysed relative to other signals in the market so, for example, to confirm a H&S … or to indicate a high churn bar (small range, high volume) turning point.

      • [Quote] Volume is best analysed relative to other signals in the market so, for example, to confirm a H&S … or to indicate a high churn bar (small range, high volume) turning point. [quote].

        I agree with your statement here. Nothing should be analyzed/used in a vacuum. Always use multiple techniques and TIs together. Hence, why only describing volume to make a/the bear case is not appropriate and doomed to fail (today pretty much confirms this…). The same goes of course for if one would make a bull case.

  33. mharrison60 says:

    Please can you comment on the status of the FTSE chart pattern. To me it looks no more than 50-100 points from reaching the top of the upper border for e and end of major 5 unless there is an overthrow.

    Much appreciated

  34. Libor Val says:

    Hi Tony, cant be the topping process be here from December – January SPX was 1850 then. I still think that the diminishing QE has caused the market to stall. what will be the catalyst for int. iii over 1900. we have moved for 4 months 30 points on SPX and now we should go up 70-100 points with QE only 45 B. last year we made 25 points a month now for 4 months. so maybe in August we will be 1900

  35. gtoptions says:

    Thanks Tony ~ Great to hear we’re still on the same path.
    Enjoying the perfect Midwest weather. Happy Mother’s Day to everyone at the OEW.

  36. John Arella says:

    Something interesting is happening in Canada, the employment numbers have been flat this year so my though is that interest rates will fall this year in Canada as in the EU which would bold well for a stimulus for the Us to go higher on anticipation of the additional stimulus. I don’t believe that rates will go higher in the US no matter how the numbers look this year. Also the US and Canadian markets usually go up together so the fundamentals are pointing to higher valuations for the stock market in the second half of this year. The Toronto market looks like its heading for a primary 3rd wave on the upside so it will line up with an explosive 3rd wave on the Dow as the chart seems to indicate below.

    If the support channel is broken however it will be just as powerful on the downside probably hitting 13,000- 14,0000 on the Dow very quickly but I doubt that will happen because the Macd is already about to turn on the Dow. It will be an interesting summer either way.

  37. blackjak100 says:

    Thanks Tony! Good stuff to always think about and formulate a trading plan for next week. I believe we will see all indices positive next week and I’m long SPY & IWM calls. I hope I’m seeing it clearly.

    I found a short summary with charts (credit goes to TheWaveTrading) that sums up my outlook perfectly. We have an identical short & medium term outlook despite what JK thinks. By the way, I think JK and Daneric must have a secret affair since he likes to mention him so much. The major wild card is if this will end P3 or a cycle Wave B as the TheWaveTrading thinks? Good thing we don’t have to worry about it anytime soon since we have a nice 15-20% correction on the horizon IMO.


  38. simpleiam says:

    Thank you, Tony! Love the WU w/coffee (w/expresso powder sprinkled on top). I echo Jedi w/concern on the anemic volume and think it’s to remain this way until after Memorial Day WE; hope not, but think it might.

    HAPPY MOTHER’S DAY, MOMS! Guys, don’t forget Mom. Remember, she brought you into the world, and she can take you out of it! Be good to Mom.


  39. 16golfer says:

    Thanks for all you do Tony! Still trying to sort it all out and right now my brain seems to be in a fog. Might just need more java and come back later. No grass to cut, so think I’ll go hit the little white ball.

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  41. llerias7 says:

    Tony, thanks for your daily work providing us with insight view over this complex market moves.
    Strictly on EW count, as far I understood, we are about to see a minute (iii) of minor 3 of intermediate III of Major 5 of Primary III…is that it?

  42. torehund says:

    TONY I think its on track. Positives like the pigs back walking if not running, China ready to rumble and Greece starting wave 3 after a torturous wave 2 (like for our own indexes). Well Greece IS shipping so…Maybe rally into July mid with expected improved earnings.

  43. Thanks, Tony. Another intelligent analysis for all to ponder. As Sverkerericsson noted yesterday, volume is anemic. What is also troubling for the bulls is that we have had a lot of positive economic news with no market follow-through. Keeping an open mind. Have a very nice weekend to you and to all! Happy Mother’s Day to all the moms on the blog!

  44. rolandu11 says:

    In the Dow again a tight all-time closing high. While the indicators do not look bad, yet the bulls should increase slightly

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