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.


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