weekend update


For a four day trading week the market did fairly well. It opened at new all time highs on Tuesday. Then made higher highs, with small pullbacks along the way, every day this week. For the week the SPX/DOW were +0.95%, the NDX/NAZ were +1.50%, and the DJ World gained 0.75%. On the economic front reports continue to come in higher. On the uptick: durable goods, FHFA housing, consumer confidence/sentiment, pending home sales, personal income, the PCE, Chicago PMI, the WLEI, the monetary base, and weekly jobless claims improved. On the downtick: personal spending, Case-Shiller and Q1 GDP. Next week we get the ISM indices, monthly Payrolls and the FED’s Beige book.

LONG TERM: bull market

We are now 62 months from the March 2009 bear market low, and this market is still making new all time highs. During this period the SPX has gained 188%. Quite impressive. Despite this tremendous gain we do not see the bull market nearing an end just yet. There are still several trends that need to unfold, and a possibly very steep correction soon.


We continue to count this bull market as Cycle wave [1], consisting of five Primary waves. Primary waves I and II completed in 2011, and Primary wave III has been underway since then. Primary I divided into five Major waves with a subdividing Major 1. Primary III is also dividing into five Major waves, but now Major waves 3 and 5 are subdividing. Major waves 1 and 2 completed in late 2011, and Major waves 3 and 4 completed in early 2014. Major wave 5 has been underway since February.

When Major 5 concludes it should end Primary wave III. Then a potentially steep, multi-month, correction will follow for Primary IV. Typically, during bull markets, Primary waves II and IV are similar in depth and duration. Primary II took five months to unfold, and the market lost 22% during the decline. We are expecting Primary IV to last about three months with a market loss of 15+%. Then Primary V should take the market to new highs to conclude the bull market. Thus far we are maintaining our bull market target range of SPX 1970 to 2070 by Q3/Q4.

MEDIUM TERM: uptrend

For the past several weeks we have been providing technical evidence why the steep correction in the NDX/NAZ, the choppiness in the SPX/DOW, and seasonality factors would not stop the market from making all time new highs soon. Obviously our work has paid off. Our work in the NDX/NAZ was clearly the key to this conclusion.

Now that both indices are in confirmed uptrends, we still expect the NAZ to make new bull market highs before its uptrend ends. The NDX already accomplished that goal this week. Currently, the NAZ is still 2.8% below its previous high. This suggests, even if the NAZ outpaces the SPX 2 to 1, in percentage terms, the SPX should hit the OEW 1956 pivot.


After reviewing the internal counts within all four major indices uptrends. We found the SPX/NDX/NAZ appear to be all similar. All three appear to be in Minute iii of Minor 3 of their respective uptrends. The DOW, however, looks to be quite different. It continues to act like it is in some sort of diagonal triangle pattern from its Major wave 4 low in February. While this is not a problem for the general market. It does help to confirm that the other three indices are in a Major wave 5 topping pattern. Medium term support is at the 1901 and 1869 pivots, with resistance at the 1929 and 1956 pivots.



Short term support is at the 1901 pivot and SPX 1891, with resistance at the 1929 and 1956 pivots. Short term momentum ended the week with a negative divergence. The short term OEW charts remains positive from SPX 1877, with the reversal level now 1918.


Minor 1 rose from SPX 1814-1885 (71 pts.). With Minor 3 reaching SPX 1924 on Friday, it is currently only a couple of points longer than Minor 1: SPX 1851-1924 (73 pts.). If this one to one relationship is to remain. Then the OEW 1929 pivot should offer some serious resistance for much of next week. This would allow time for the smaller waves, yet to unfold, to complete. Adding to this possibility is the series of negative divergences on the hourly chart, and the fact that the market has not had one notable pullback in seven trading days. Next week could be quite choppy. Best to your trading!


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

The European markets were mostly higher for a net gain of 1.8%.

The Commodity equity group were all lower losing 1.8%.

The DJ World index continues to uptrend and gained 0.8%.


Bonds continue to uptrend and gained 0.4% on the week.

Crude remains choppy losing 1.5% on the week.

Gold broke down through $1260 support, remains in a downtrend, and lost 3.3% on the week.

The USD appears to be in an uptrend but ended flat on the week. Both the EUR and CHF are quite oversold and due for at least a bounce.


Monday: ISM manufacturing and Construction spending at 10am. Tuesday: Factory orders and Auto sales. Wednesday: the ADP index, Trade deficit, ISM services and the FED’s beige book. Thursday: weekly Jobless claims. Friday: the Payrolls report, the Unemployment rate, and Consumer credit. The ECB meets on Thursday, and FED governor Powell gives a speech on Friday. Best to your weekend and week!

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

About tony caldaro

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163 Responses to weekend update

  1. tommyboys says:

    Just received this email regarding yet another doomer book at #1…Could the doomer author’s be this prescient calling the top? Doesn’t generally work this way FWIW…

    David Skarica’s New Book Hit Top Seller List!
    David Skarica’s new stock market book titled Collapse!

    At this moment this morning it is selling as the number one ebook on Amazon for stock investing.
    You can see the sales rank here and a review someone already posted for the book:


  2. uncle10 says:

    There has been some discussion about if reported economic data has any value in determining whether stock markets are going to go up or down.
    Through my study I see they give no insight at all. The reports can be great and we might just be starting a bear market with a 50% decline or they may be bad and we are just starting a bull increasing 50%, and all in between…… I can’t figure out why anyone pays attention to any of the reports??


    • tony caldaro says:

      each report matters some, but as a whole they matter


      • rc1269 says:

        yes, what Tony says.
        to say the data itself is meaningless would be like saying the condition underlying the data – ie, the economy at large – is meaningless. even if you’re stricklya chartist and believe there is a complete disconnect between price and fundamentals, you have to at least believe in capital flows. since that ultimately moves prices. and the state of the economy impacts capital flows.


      • uncle10 says:

        So if as a whole they are good ie ism above 50, 200,000 + job growth, etc.. then good economy and good for stocks? and vice versa? thanks


        • tony caldaro says:

          It’s all about expectations.
          In bull markets good news, and sometimes bad news is good for stocks.
          In bear markets bad news, and sometimes good news is bad for stocks.
          In this QE bull market, good news is sometimes sold (less QE) and bad news bought (more QE).


      • lunker1 says:

        The good numbers are good until the market sells the news and then everything is bad lol.

        To me it seems there is a cycle:
        Bad numbers are good
        Good numbers are good
        Good numbers are bad
        Bad numbers are bad


      • JK1987 says:

        It really matters.
        There were 11 PMI contractions, always followed with bear market of some kind.
        Without PMI contraction below 50, bull market still is ongoing, no exception.


      • rc1269 says:

        absolutely agree with Lunker, re the cycle


      • uncle10 says:

        lol, I agree with lunker 2!!! in other words sometimes good numbers are bad and bad are good……. so they………….


    • The market’s reaction to econ reports reveals something about the underlying psychology of market players. It depends a lot on the context of all the factors. If the market has been down 56%, like in 2009, but it doesn’t want to go down more in spite of worsening econ data, that implies that that stock prices have discounted the unfolding bad news already.


      • uncle10 says:

        Agree George. The econ reports don’t tell you much……….don’t pay them any attention.
        The market tells you all you NEED to no. The rest is noise and usually harmful to the investor/trader. Well past my 3. good day and gl . Thanks.


  3. thanks for the update tony, a much appreciated read as always!

    Did the market just experience micro 4 of minute iii of minor 3 etc. Largest pull back (10 points) since Wednesday May 21.


    • tony caldaro says:

      may be finishing Minute iii soon … yes


      • Ooops, I think I got my wave degree off by 1 degree.

        micro 1 from 1862 to 1886 (24 points)
        micro 2 down to 1868
        now in micro 3, which is already 2.33x 1. May therefore seek the 2.618x extension (1931ish). Assume micro 4=2, then micro 4 should get SPX back down to upper range of 1901 pivot (1910ish).
        Assume micro 5=1, then micro 5 should get SPX back up to the upper range of the 1929 pivot (1934ish).
        That will then end minute iii. In that case, iii will be ~2.38x minute i (1850-1891). Nice fib relation. This will then also in line with “The OEW 1929 pivot should offer some serious resistance for much of next [this] week”

        Will have to await minute iv before minute v (minor 3) can be predicted.


  4. rc1269 says:

    ISM second correction. now 55.4. from 56. from 53.2
    they’ve got a crack team of summer interns working on this one
    well we should be pretty confident the number is somewhere between 50-60


  5. The day is not over, obviously, but RUSSELL is forming a hammer candlestick right off the 200MA with a MACD positive cross-over (still not over the zero line yet) which occurred in May. One gap up day and price jumps out of its downtrend. The bulls definitely want to keep price above the 200MA and looks like they are winning the battle so far.


  6. blackjak100 says:

    I’m inclined to think we just saw a fourth wave correction and are in the final impulsive wave (5 of c of V) of this ED targeting 1933 at a minimum but as high as 1950ish.

    I may be wrong but it’s how I see it as of now

    I could


    • blackjak100 says:

      Or the fourth wave correction is forming an expanded flat targeting 1910ish which will complete tomorrow?


  7. rc1269 says:

    ISM revised to 56. the ol’ intraday pumpfake


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