weekend update


Exciting week? Not quite. The market started the week at SPX 1978, dropped 12 points below that on Monday, rallied to 13 points above that by Thursday, then ended the week where it started: SPX 1978. For the week the SPX/DOW were -0.4%, the NDX/NAZ were +0.5%, and the DJ World index was +0.3%. Economic reports came in mostly positive. On the uptick: the CPI, the FHFA, existing homes sales, durable goods orders, the monetary base, and weekly jobless claims hit an eight year low. On the downtick: new home sales. Next week is FOMC week with a plethora of economic reports. Q2 GDP, monthly Payrolls and PCE prices to note a few. Should be a wild week.

LONG TERM: bull market

We continue to count this bull market as Cycle wave [1] of Super cycle 3. Both the Cycle wave and Super cycle wave began at the March 2009 low of SPX 667. Cycle wave bull markets unfold in five Primary waves. An historical reference can be found in the DOW between 1932 and 1937. In this Cycle [1] Primary waves I and II completed in 2011. Primary wave III has been underway since then, but should be nearing conclusion in the next few months. Primary I had a subdividing Major wave 1 and simple Major waves 3 and 5. Primary III has done just the opposite: a simple Major wave 1 and subdividing Major waves 3 and 5. Major waves 1 and 2, of Primary III, completed in late 2011. Major waves 3 and 4 completed in early 2014. Major wave 5 has been underway since the February low at SPX 1738.


This year Major wave 5 has been subdividing into five Intermediate waves. Intermediate wave i completed at SPX 1884 (1897) in March, and Intermediate ii at SPX 1814 in April. Intermediate wave iii has been underway since that low. Once it concludes we should see an Intermediate wave iv downtrend/correction, then an Intermediate wave v uptrend to new highs. When this last wave concludes the market should experience its largest correction since 2011, as Primary III ends and Primary IV gets underway. After that the market should make new highs again in a Primary wave V.

MEDIUM TERM: uptrend

This Intermediate wave iii uptrend was difficult to track when it got going in April, and difficult to track as it nears its end. In the middle it just trended and was quite easy to follow. We had been counting the early July high at SPX 1986 as the end of the uptrend and Intermediate wave iii. While the market did go sideways to lower for about two weeks after that high it did not break down into a confirmed downtrend. It only pulled back. When the SPX hit 1986 again, recently, we assumed the uptrend was resuming and adjusted the labeling accordingly. The market did make marginal new highs, as did the DOW and NDX, but the NAZ only matched its uptrend high. The wave pattern since the SPX 1986 high, however, has been quite choppy in both directions. Despite the new highs. After Friday’s larger then desired pullback the market as created a couple potential scenarios from that SPX 1986 high.


One. Minor wave 5 remains underway as labeled, but it is now starting to subdivide. Minute waves i and ii, SPX 1980 and 1966, then Micro waves 1 and 2, SPX 1991 and 1974 so far. This would suggest this uptrend will go much above SPX 2000. Possibly to the 2019 pivot and beyond.

Two. Minor wave 4 ended at SPX 1953, right after the 1986 high, and all the activity since then has been an unfolding diagonal triangle Minor wave 5. This scenario we have posted on the hourly chart in the short term section below. One of the reasons this particular scenario takes precedence over a few others is the unusual number of opening gaps this month. During June there were only three gap openings as the market was trending higher. During July there have been 13 gap openings in only 19 trading days. The first two took the market to the SPX 1986 high, from 1960 in just three days. The last 11, over the next 15 trading days, has kept the market in a 38 point trading range: 1953-1991. This type of activity is more indicative of the choppy action in a triangle than an impulse wave. We’ll keep both scenarios in mind as the market heads into next week. Medium term support remains at the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots.


Short term support is at the 1973 and 1956 pivots, with resistance at SPX 1986 and SPX 2000. Short term momentum ended the week just above oversold. The short term OEW charts ended the week negative with the reversal level now at SPX 1982.


As noted above this uptrend was quite tricky when it first started, trended, and now is again tricky as it nears its end. Minor wave 5 can continue to move higher, and subdivide, with the next resistance levels at SPX 2000 and the OEW 2019 pivot. Or it could terminate soon with the diagonal triangle Minor wave 5 currently being presented. Should this scenario unfold the likely uptrend high is but a few points above the recent SPX 1991 high. In fact, from a Minor 4 low at SPX 1953, Minor 5 will equal 0.618 Minor 1 at SPX 1997. A few points shy of SPX 2000. We should be able to determine which scenario is underway during the first few days of next week.


The Asian markets were mostly higher for a net gain of 1.6% on the week.

The European markets were also mostly higher for a net gain of 1.4% on the week.

The Commodity equity group were mixed but gained 0.1% on the week.

The DJ World index continues to uptrend and gained 0.3% on the week.


Bonds continue to uptrend but finished flat on the week.

Crude is trying to uptrend again and gained 0.4% on the week.

Gold is uptrending but lost 0.6% on the week.

The USD remains in an uptrend, and gained 0.7% on the week.


Monday: Pending homes sales at 10am. Tuesday: Case-Shiller and Consumer confidence. Wednesday: Q2 GDP (est. +3.4%), the ADP, and the FOMC statement. Thursday: weekly Jobless claims, and the Chicago PMI. Friday: monthly Payrolls (est. 235k), the Unemployment rate, Personal income/spending, PCE prices, Consumer sentiment, ISM manufacturing, Construction spending, and monthly Auto sales. Best to your weekend and week!

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

About tony caldaro

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109 Responses to weekend update

  1. Ryan Parker says:

    Tony, have you heard of this trader named Mark Cook? He’s expecting a greater than 20% decline in the market sometime in the next 12 months. Wouldn’t surprise me too much.


  2. Tony, is it possible for SPX Minor 4 to have bottom at 1956 (this is where you have labeled wave b of wedge) in lieu of at 1953? The reason I ask is because ES actually made a lower low on July 17th (1942.5) vs July 10th (1945.25), which leads me to believe that SPX Minor 4 bottom on July 17th (1956) as well.


  3. Wave 5 was over rather quickly early in the session (10.12am New York time). Certainly the shortest of the 3 descending waves in terms of time by a long chalk. That makes my count a of C of Minor 4 concluded. Switching to long for b of C of Minor 4. I have Wave 1 (99 DOW points), Wave 3 (158 DOW points) and Wave 5 (DOW 101 points). As you can see its a textbook decline where Wave 1 = Wave 5 and where Wave 3 = Wave 1 x 1.6 and also where Wave 3 = Wave 5 x 1.6. Total decline measures 254 DOW points. A 38.2% fib retracement measures 97 DOW points to 16971 and a 61.8% retracement measures 157 DOW points to 17031. The rally will ascend in 5 waves up, 3 waves down and 5 waves back up to conclude b of C of Minor 4.


  4. went long ES @ 1964 with Stop at 1959….let’s see what comes of it


  5. blackjak100 says:

    Clear 5 waves down IMO and still no +div – ED dead. Still think 1973 pivot holds the decline, but it could also hold the upcoming retrace before iii/c.


    • manunidhi21 says:

      Thanks BJ..yesterday update was very nice and clear about Ed..
      As per your count we are in Int iv… can you plz suggest how are you counting iii/c ?


      • blackjak100 says:

        Yes, minor 4 triangle that ended at 1956 followed by 5 wave impulse to 1991 (minor 5). The 1956-1991 can be counted as a 3 or 5. Here it must be a 5.


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