weekend update


After hitting an all time high right at the OEW 1956 pivot at noon Monday, the market went into pullback mode for the rest of the week. For the week the SPX/DOW were -0.8%, the NDX/NAZ were -0.4%, and the DJ World index lost 0.3%. On the economic front, positive reports edged out negative ones for the week. On the uptick: business/wholesale inventories, retail sales, export prices, the monetary base, plus the budget deficit improved. On the downtick: the PPI, the WLEI, consumer sentiment, plus weekly jobless claims rose. Next week should be a busy one. Besides the FOMC meeting Tues/Wed, we have Options expiration Friday, plus reports on Capacity utilization and Housing. Best to your week!

LONG TERM: bull market

Five years ago, hardly anyone thought we were starting a bull market. Three years ago, most thought the bull market ended in the spring of 2011. Two years ago, hardly anyone was expecting new all time highs. Last year, nearly everyone turned bullish at new all time highs. This year, the market is still adding to those highs. It has been quite a five year run.


We continue to count this bull market as Cycle wave [1] of a new multi-decade Super cycle bull market. Cycle wave bull markets unfold in 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 wave 1. Primary III has divided into five Major waves too. But it has had a simple Major wave 1, and subdividing Major waves 3 and 5. Thus far it continues to look like we are currently in an Intermediate wave iii uptrend, of Major wave 5. When this uptrend concludes we should have a downtrend/correction for Int. wave iv. Then an uptrend, to new highs, for Int. wave v. These last waves should then complete Primary III. Our upside target remains SPX 1970-2070 by Q3/Q4 2014.

MEDIUM TERM: uptrend

This Int. wave iii uptrend began in mid-April at SPX 1814. Thus far, it looks like we have completed Minor waves 1 and 2 at SPX 1885 and 1851. Then Minute waves i-ii-iii-and possibly iv at SPX 1891-1862-1956-1926. The next rally to new highs should complete Minute wave v, and Minor wave 3. Then after a Minor wave 4 pullback, another series of new highs should complete Minor wave 5 and the uptrend.


While the SPX/NDX/NAZ indices continue to unfold in impulsive uptrends. The DOW continues to look choppy, like it did during its last uptrend. Notice that the DOW is only about 1% above its April uptrend high. Even after a two month uptrend. The SPX, in comparison, is currently about 2% higher. Also the DOW continues to look like it is forming a diagonal triangle Major wave 5. Notice how the price action fits within a rising wedge. This pattern can not be applied to the SPX. Despite the negative implications of this pattern. The DOW should follow the same trend/wave scenario, noted above, to complete Major wave 5. Only it will probably continue to underperform.


Medium term support for the SPX is at the 1929 and 1901 pivots, with resistance at the 1956 and 1973 pivots.


Short term support is at the 1929 pivot and SPX 1916-1919, with resistance at the 1956 and 1973 pivots. Short term momentum ended the week above neutral. The short term OEW charts are positive with the reversal level now SPX 1935.


We had been expecting Minute wave iii to reach the OEW 1956 pivot range. We were quite surprised to see it end right at SPX 1956 on Monday. The 30 point pullback that followed to Thursday’s low of SPX 1926, was the largest pullback since Minute wave ii declined 31 points. Since we were looking for Minute wave iv support in the OEW 1929 pivot range, we believe the pullback ended there. Off that low the SPX rallied to 1937 on Friday. This was the largest rally by far, since the SPX 1956-1926 decline began. Previous rallies were only 6 points, at best. Once the market clears SPX 1937, which was hit twice on Friday, Minute v should be underway to new highs.

With all the economic activity next week we would not be surprised to see lots of volatility. In fact, Minor 3/Minute v could end just before or right after the FOMC statement on Wednesday. Then Friday’s Option expiration could set up another swift move down for Minor wave 4 into the following week. With the Iraq situation in the forefront, and the Ukraine situation in the back ground, it could be a volatile mid to end of June. We are still expecting the OEW 1973 pivot to be hit before this uptrend ends.


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

The European markets were mostly lower losing 0.7%.

The Commodity equity group were all higher gaining 1.8%.

The DJ World index continues to uptrend but lost 0.3%.


Bond prices confirmed a downtrend this week losing 0.7%.

Crude confirmed an uptrend this week gaining 4.0%.

Gold again is in rally mode, gaining 1.7%, but no uptrend confirmation yet.

The USD continues to uptrend and gained 0.2%.


Monday: NY FED at 8:30, Industrial production at 9:15, and NAHB housing at 10am. Tuesday: Housing starts, Building permits, and the CPI. Wednesday: FOMC statement. Thursday: weekly Jobless claims, the Philly FED, and Leading indicators. Friday: Options expiration. Best to your weekend and week!

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

About tony caldaro

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127 Responses to weekend update

  1. Using my proprietary moving average crosses, I just got a “buy” on SDS (using 2-hour chart). This is a SHORT-TERM trade for now. Trade at your own caution, of course — just sayin’ what my indicators flashed.

  2. torehund says:

    Food is cheap. For you ETF users take a look at DAG, double exposed agri. Testing bottom here..

    • tommyboys says:

      Don’t know about cheap but for all the talk of drought out west last year and the suffering of the cattle herds steak is priced lower now than it has been in years around me. Maybe its just a regional thing but I am very surprised at this.

      • Lee X says:

        Hey T Boys

        Mos def regional IMO as prices are silly my way . Maybe they’re raising cattle in the Detroit city limits now as well as farming ?

      • tommyboys says:

        Unlike fuel Beef is elastic – supply and demand. They raise fuel prices we must pay. They raise Beef prices we can substitute or stop buying all together. I think that’s what has occurred near here. Might be a Beef glut soon even at lower prices if the masses “perceive” them higher based on hype alone. Once my mind is made up that something is too expensive I stop even looking at it. I miss great deals often because of this 😦

      • rc1269 says:

        beef jerky is less elastic

  3. manunidhi21 says:

    Namaste Tony !

    how much will be the decline for correction for Int. wave iv after wave iii top btwn 1956-76(if so)..a 30-40 points ?

  4. Ryan Parker says:

    Quick thoughts from my end. Just wanted to see how my thinking is going along with your count of the US market. At this point it is expected that the Fed will end QE by either October or December. Maybe we get a bit more color on Wednesday. US market tends to top in anticipation of QE ending and I’m personally not sure that the economy can stand on its own two feet without QE. I’m even more concerned about the reaction of the equity market as QE is clearly driving the market, and not economic fundamentals/valuations. If we get a 10-15% correction into say October 2014 then begin to bounce I could see primary V ending earlier. However, it would seem that if the market corrected 20-25% in primary IV the Fed would immediately panic and go back to QE or implement some other policy to prop up the market. From there this bull market could have a manic stage that lasts longer than normal and draws the bull market out both in terms of time and price. Are you thinking along these lines? Essentially if the market weakens too much they will jump back to QE and they essentially can’t stop without a substantial correction in the equity market. I know you have mentioned a managed market/economy but it would seem to me that with QE already experiencing the law of diminished returns, at some point it just isn’t going to work anymore. Valuations will get too high or the public will begin to lose faith in QE and the Fed to prop up the stock market. Are these thoughts along your lines of thinking of how primary IV, V, and cycle wave 2 plays out? Essentially it depends how deep primary IV is, if the Fed reacts, and that it will either be stratospheric valuations or a loss in the confidence of the Fed to levitate the market that leads to cycle wave 2? Apologize for the long and loaded question. Gracias in advance.

  5. no concern in US markets about Iraq. we just march in place higher

  6. Dear sir,
    last so many days go for indian market (SENSEX / NIFTY ).your last update on International equity markets has going t take many time… in this update u say thay ” It looks like the bear market rally from 2011 ended.
    Expecting, over the next year or so, a retest of those lows or lower ” and also update in public chart update chart say that ts bear market rally….. But now snesex is run all time high …
    So now what his bear market rally target or we r going in bull market ?
    please give some “roadmap ” on indian market

  7. Especially good board this weekend, thanks to everyone who has commented & Happy Father’s Day to all the dads here.

    Tony, you replied below that P5 could last for 3 years, after a 1-year P4, putting the big (50%) expected decline in 2018 – is that correct? I thought you were thinking more like P5 ends in 2015. Thanks for all your hard work and willingness to share – you’ve called this market nicely.

  8. Paul L says:

    One thing that makes me think this five year old bull market is coming to an end is the steadily declining volume seen in the Industrials, Transports, S&P 500, and NYSE over the last five years. Number two, the small caps and Nasdaq has not confirmed the highs of the S&P. And finally, if you draw a trendline connecting the highs of 2000 and 2007, there is major major resistance at right about now.

    • Ryan Parker says:


      I personally believe the declining volume is related to 3 factors. Low volatility/bull market, splitting stocks isn’t nearly as popular as it used to be, and companies have been buying shares back hand over fist for at least 2-3 years now which leads to a reduced float of stock available for trading. With high priced stocks, traders tend to stay away from them and obviously it takes a lot more $$ to move AAPL at $600 than it did when it was $100 or $200. Note that since AAPL bottomed in 2009 the volume has steadily been declining as price has been rising.

      I would note that volume has been exceptionally slow since we got into May and that could be looked upon as a lack of conviction. But I guarantee that if the market began to correct in the not too distant future the volume would come right back.

  9. ipman1893 says:

    Hello Tony, I have started accumulating shorts on HSI.

    According to the chart provided, is the similar topping pattern suggesting a 30% +/- plunge sooner or later?

    My view is the plunge should all come in full circle when US markets wave 4 starts.

    Thank you.
    Hope you have a good weekend~

  10. ocaj2000 says:


  11. blackjak100 says:

    Thx tony! I think it’s become a lot more clear. A lower low probably on mon suggests 5 waves down from 1955 and Friday was a fourth wave correction. A break of 1944 probably on mon suggests a fourth wave is in. Cheers!

  12. M1 says:

    Thanks, Tony.
    ..and after several weeks the NAZ is back to its long term resistance once again. This is not what I was expecting but it was a possibility. (The count on the spx and dji is still confusing).
    Was this a NAZ new uptrend ? or a B wave ?
    Sure NDX may look like in a new uptrend. But I am still counting a B wave on the NAZ.
    I see quite difficult for this index surpassing its long term resistance without a more important pullback.
    Have the same old NAZ scenarios:
    1. We may be watching only the major wave 2 of primary wave III of cycle wave 3.
    2. Cycle wave 4 may have already started.

  13. mjtplayer says:

    “think Gold eventually goes to the 2008 low”

    Really Tony?

    I’m targeting the $1,030 – $1,050 area (about $100 on the GLD). But if that gives way, then the low $900’s as a worse case scenario.

    The 2008 lows were sub $700, that would be a disaster to many mining companies and most of the junior miners would not survive.

    • GDXJ had its highest volume ever on Thursday. There has been an explosion in volume since February as GDXJ has completed the base of an IHS. So who is buying all those shares down here? COT statistics suggest that the general public is selling gold.

      Over the last few months, there has been a massive redistribution of ownership in junior gold stocks. It is either smart money selling to dumb money at the lowest levels since 2009, or vice versa.

      You make the call.

    • torehund says:

      MJT: gold coud do a lure and just move from here. If China decides to run, and gold acts as a commodity, it can run alongside porkbellies, wheat and coal.

  14. The strength of the $RUT has increased relative to the $SPX since it pushed above the RS downtrend line. If the $RUT had maintained the same rate of change relationship to the $SPX that applied when the downtrend line was created, it would have declined to 1144 when the $SPX declined to1928 this past week. Instead it only declined to 1154.33. It could be that the decline was only wave a of minute 4, with wave c to come after a b upwave completes. Often the severity of a decline in small-cap or speculative indexes intensifies during the c wave. Thus the RS of $RUT vs $SPX could yet decline towards the previously upwardly pierced downtrend line, and the $RUT could fall to 1143 or lower (depending on how far the $SPX falls).


    Not being a paid member of Stockcharts.com, I can’t draw the downtrend line so you must use an envelope to approximate the line. However, if anyone can do that and cares to post the above chart with the downtrend line drawn in, feel free to do so. It would definitely be helpful. I believe I did have to create the chart myself by typing the parameters in at “Gallery View”.

    • Factual correction to this line: “it would have declined to 1144 when the $SPX declined to1928 this past week.”
      The $SPX actually declined to 1926 and the corresponding $RUT price at the RS downtrend line would have been 1143.

  15. alexh110 says:

    Tony, could you explain your FTSE chart to me.
    Am I right in thinking you’ve got the year 2000 as the SC1 peak, 2000-2003 as Cycle A, 2003-2014 as Cycle B, to be followed by Cycle C which will complete SC2?
    If so, what would be the expected duration and target price of Cycle C?

  16. soulsurfer says:

    Thanks for a neutral and factual update tony. that’s what we need.

    looking at the individual wave lengths within this intermediate iii wave we get the following (rounded to nearest whole point):
    minor 1: 70 points
    minor 2: 34 points
    minute i: 40 points
    minute ii: 31 points
    minute iii: 93 points
    minute iv: likely 31 points.

    this means that minute iii was 1.33x minor 1 (93/70). This is a classic (1.382x fib-extension is text-book) extension for a 3rd of a 3rd wave. (iii of 3), and suggest that minor 3 will be ~1.62x minor 1: 113 points. That would target 1963-ish. right at the upper limit of the 1956 pivot and close to the lower 1973 pivot.

    Interestingly, minor 2 and minute ii were of almost equal length. In addition, if minute iv is done it equaled minute ii in length. This suggests that minor 4 will be equal to minor 2: ~34 points. This should bring the SPX right back to the 1929 pivot (backing and filling as they say). Minor 2 was a zigzag, so 4 will likely alternate: an (irregular) flat?

    Minor 5 should then launch the SPX to the 2.0x extension of minor 1: low 1990s. Then 5=1 (1920s+70). Perfect relationship as well. This will then end intermediate iii.

    From an intermediate wave-length perspective we then see
    int. med. i: 145 points
    int. med ii: 69 points (1814)
    If minor 5 ends at 1990ish then iii will be around 180 points, and will be 180/145 = 1.24x int. med. i, which is perfectly close to a 1.236x fib-extension.

    Dare we do a int. med iv and v prediction? Sure, why not: likely int. med. iv will equal int. med ii. Around 70 points. This will retrace all of minor 5, which is typical for a 4th wave of one higher degree. Again the 1929 pivot will be on tab. 🙂 Since ii was an irregular flat, iv should alternate and create a zigzag. Then minor 4 and int. med. iv also alternate, perfect!

    If int. med. v=i, as with minor 5 and 1 of int. med. iii, then the SPX should launch one more time to 2075 +/- 10. Right on target! 🙂

    That’s the game plan.


    • tony caldaro says:

      excellent work and good luck!

    • lunker1 says:

      Looks good but then all those 4’s never seem to line up like we’d like eh? Wonder which ones will be shallow vs deep. if minute 4 isn’t done would add to the ED drama so to me seems more likely

    • Libor Val says:

      this looks good. only one problem QE is ending and getting over 2000 will be difficult. last year it took 85 B a month to get 25 pts. now we got 120B left so max 50 pts. so unless the QE doesnt end the upside is limited, barring a front running QE 4 which wont be around unless the market falls apart so at least 1 month after QE3 ends and the market corrects 15-20% like in 2011 (17% in 1 month – PIV?)

      • soulsurfer says:

        Thanks Libor! However, I don’t see QE as doing anything directly to the market other than affect traders’ psychology. Namely, in a market that deals with Trillions per day $85B per month really is carrying water to the ocean.

        Also considering the 80/20 “rule” I can see primary V go to SPX 2200s since it traded through 1800s. Just like I said a while back that a trade through SPX 1880s would mean the 1920s were next. It took some time but here we are! Same with 2200. Will take some time, but!?

        Math behind it: Say P III to 2000, then IV to 1800-1700 (10-15% haircut), with a V= 0.62x I relationship P-V will already be very close to SPX 2200.

      • What do you mean by “now we got 120B left” ? Are you adding up the monthly amounts of QE for June through October?

      • Libor Val says:

        to soul. It sound about right but I think only with QE 4 or QE from ECB

      • Libor Val says:

        to george. yes from June to October 120 B of QE

    • 16golfer says:

      Soul…this is so well written. Can you put the words to a picture/chart?

    • Thanks for the meticulous EW analysis. I know you must have put a good deal of work into it. I do have a question, however, about your reply to Libor. Does “trading through” mean anything special other than the price of an item moving through a particular price range as in:
      “Also considering the 80/20 “rule” I can see primary V go to SPX 2200s since it traded through 1800s. Just like I said a while back that a trade through SPX 1880s would mean the 1920s were next.”

      • soulsurfer says:

        Thanks george. Trading through means a close in/above that range. so say a stock goes from $7 to $8 and closes one day at $8.10, it will then most likely go to $12 (that doesn’t mean at once or in a straight line, but by now we should all know the market is none-linear/stochastic 😉 ). If it would hit $8.10 intra-day and close at $7.90 one day and never close higher than, then that’s not “trading through” and $12 will likely not be hit.

      • Soulsurf: Thanks for the explanation of “trading through”.

  17. pas1968 says:

    HI Tony,
    You said; ‘Our upside target remains SPX 1970-2070 by Q3/Q4 2014’
    Is this for P3 (or P5 and end of this bull market)?

  18. mike7x says:

    Thanks Tony! Civil wars in Iraq and Ukraine. Rising oil (and gasoline) prices. Seasonally strong beginning in July…gold (and silver) should begin uptrending very soon, if not already. $1500+ by year-end. Oil uptrending, worst case to $150+. Gas $5+? Will the Fed be able to continue to “taper”, never mind end QE3? And, P3 ends in July?

    • tony caldaro says:

      Crude $150, Gold $1500? doubt it
      A few drones can end the civil war in Iraq in a week.
      Ukraine, now that’s a different matter.
      Fits better with PRI IV

      • I don’t think Al-Queda in Iraq will be that easy to dispose of, especially if the Sunnis in general see them as a standard bearer for their cause. The Sunni Arab tribal leaders turned against Al-Queda in 2008, but they may feel they are losing so much ground now to Shiite Arabs and Sunni Kurds that they make a deal with them again, as they did from 2003-2008.

      • By “Sunnis in general” I meant Sunni Arabs. The Sunni Kurds are a different ethnic group related to the Iranians but, unlike the Iranians, are not Shiite.

  19. vivian8 says:

    Dearest Tony,

    Thank you for life-changing help. Your brilliant analysis has kept me long since 2011 thru all the Greek crises and Cyprus crises and Japanese tsunamis and Hindenburgs and debt ceilings and fiscal cliffs and shutdowns and everything else. Just watch the technicals. Now, I am concerned. It seems your upside potential is quite limited, and the news is of a different sort. President Obama has not opposed the jihadis in Libya, Egypt, Syria, Palestine, Lebanon, or Iran. I find it hard to believe he will stand up to them in Iraq, which means something will finally happen that the Fed can’t help offset, which is skyrocketing oil prices. Isn’t the risk and reward ratio pretty bad now?

    • tony caldaro says:

      Kudos to your investing.
      Agree, risk/reward is increasing every day we get closer to ending QE 3.

    • torehund says:

      Vivian, its always when you have struggeled getting nowhere in Your pursuits, that you are lifted by that Magic feather…Thats the process, nature fixes it, and reverts the countries back to where they came from Islamism. They are getting their Identity back….religion and land. Same in “fixing the economy”; its enough to nearly give up, and it fixes itself….I always have my best surf sessions when almost giving up, just going to the water playing as one doesnt expect to Catch anyting. Then the Waves come to you…
      I think the global strugle nd adversity has peaked for now. Market has currently a bottom up in the skies 🙂

      • torehund says:

        ..never FORCE Peace upon others, never FORCE the economy to perform, and never more create a neurotic society that needs extermal fear to survive on its own. Amen.

  20. pooch77 says:

    Tony any idea how long Primary iv would last and what price projections would be

  21. Happy Father’s Day tomorrow! 🙂

  22. RDC says:

    Thank you, Tony!

  23. Joel Wenger says:

    Reblogged this on The Safe Investing Blog and commented:
    Market Outlook for the Week of June 16th = Uptrend with Volatility

  24. torehund says:

    Concerning Money flow:

    1) Best time of year for the dollar is when oil is peaking normally in July.

    2) Neg interest rates in Europe would tend to drift money into the spot With the most Growth, US ?
    Thats also where interest rates should be the most favorable.
    3) Tumults worldwide ( if they escalate) will strenthen the dollar.

  25. mjtplayer says:

    Lots of chatter in the blogosphere regarding gold and its recent bounce. I say bounce and not rally with intention, so far volume has been weak and we’re moving towards overbought conditions on the Oscillators and daily RSI as we approach the $1,280 – $1,290 prior breakdown area.

    So far, this has all the hallmarks of an oversold bounce. The gold VIX closed yesterday at 14, about 1 point from a 52-week low. There is no fear in the gold market, none, but lots of complacency. When gold made a low 2 weeks ago, the gold VIX was only reading high 16’s – hardly panic or capitulation.

    The GDX is overbought, but hasn’t been able to make a higher-high ($24.67). Same story there, weak volume on the rally compared to when we sold-off in March/April, looks like an oversold bounce more than anything.

    Stay short gold, lower-lows ahead below $1,240


    • torehund says:

      On a grand scale gold could be at a wave 2 bottom, a wave 4 bottom, making a large scale B up, making a reversed 2 for a slightly lower high or be in a decade long bearmarket. If it is a final bear most small miners will go BK and some of the bigger ones too.
      I Think the Waves will make it to where its on the brink of going into a bear, that Calls for gld going to 1100-1080, and thats where I think the final Battle will be fought as depicted in my chart analysis. I am therefore neutral, and small b Waves up like now arent so interesting.

  26. budfox9450 says:

    It minght be nice to know. That the price
    differential, in the 2007 P3 high, and 2007
    P5 – was only 20 SP points, might what
    to keep that in mind….

  27. Thanks, Tony, for another fine weekend update! Enjoy your weekend, all!

    -OEW Coffee Club Member

  28. bouraq says:

    Weekend charts:
    $SPX $DOW $RUT $NDX $FTSE $COFFEE $SUGAR $EURUSD $AUDUSD $GOLD $OIL http://www.tradingchannels.co.uk/2014/06/weekend-charts_14.html

  29. chrisk44342 says:

    Tony thanks as usual for the great effort. 2 questions: What do you think will happen to interest rates during the primary 4 and 5, and then cycle wave 2 down? Do you chart them? Secondly, a while back someone asked about the size of the wave 2 down correction and you stated that it would be around 1000, My question is why? Why wouldn’t wave 2 correct 50-61% of 1 (e.g. 666-2000) rather than 50% of the entire market?

    Thanks again.

  30. lunker1 says:

    Tony typo in Medium term section 1981 v 1881

  31. pooch77 says:

    Thanks much Tony your fantastic,minute v to end Wed afternoon target 1973 pivot?

  32. torehund says:

    Not surprising that there is some hessitant behaviour swirling around SPX 1929 🙂
    Good update as always Tony.

    • torehund says:

      From the small-cap sphere: Still very small volumes, if it hadnt been for the days when Market maker drives in fake volume wasboarding the Stocks. I think there is accumulation going on, actually I havent experienced such prolonged harvesting where mostly every possible seller is shaken out.
      Its apparent; they want ABSOLUTELY no sellers left when decide to run it. Funny how the mass media With increasing loudness tries to scare the heck out of investors, look at Seeking alpha concerning the Stock DNDN.

      • pooch77 says:

        Run iwm up to new highs next week?1973 snp =120 iwm?Seems extreem for iwm but who knows?

      • torehund says:

        Pooch, 3 years ago IWM almost touched 90, its 115 today, thats no more than 8 percent a year. I sit on Stocks that have declined relentlessly for 3 years, sure if there is internal rotation index doesnt have to og that far, but its difficult to imagine the decline in certain Stocks may last forever. But I am biased and taks of individual Stock mostly. High flyers on the rut are normally to be avoided…

  33. llerias7 says:

    Tony, once again thank you for the “roadmap”. About the greek market, the correction in ATG should be seen as minute 2? Or minor 2?

  34. rolandu11 says:

    The decline may have been a test of the May highs (or the old logarithmic trend line). The bulls then need to show strength now.

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