weekend update


The recently awaited downtrend kicked in this week after the SPX made a fifth wave failure at 1985 on Tuesday. After that the rest of the week was downhill with the SPX hitting 1916 on Friday. For the week the SPX/DOW were -2.75%, the NDX/NAZ were -2.20%, and the DJ World index was -2.35%. Economic reports were also biased to the negative. On the uptick: Consumer confidence/sentiment, Q2 GDP, personal income/spending, PCE prices, ISM manufacturing and auto sales. On the downtick: construction spending, the WLEI, pending home sales, Case-Shiller index, ADP, the Chicago PMI, monthly Payrolls, and both the unemployment rate and weekly jobless claims were higher. Next week, economically a much quieter one, we get reports on ISM services, Consumer credit and Wholesale inventories. Best to your week!

LONG TERM: bull market

The March 2009 continues to unfold as labeled. Primary waves I and II completed in 2011 and Primary wave III has been underway since then. While Primary I had a subdividing Major wave 1 and simple Major waves 3 and 5. Primary III has alternated with a simple Major wave 1 and subdividing Major waves 3 and 5. Major waves 1 and 2 ended in late 2011, and Major waves 3 and 4 ended in early 2014. Major wave 5 has been underway since that February low.


During Major wave 5, Intermediate waves i and ii ended in March and April. Intermediate wave iii recently peaked at SPX 1991/1985, and Intermediate wave iv is underway now. When it concludes we should get an Intermediate wave v uptrend to new highs. This will complete Major wave 5 and Primary wave III. Then we should see the largest correction since 2011 for Primary wave IV. After it concludes we still have Primary wave V to take the market to new highs again. Choppy year so far, but the bull market is still making progress.

MEDIUM TERM: downtrend

The topping process for the Intermediate wave iii uptrend was somewhat complex, and somewhat similar to the last two uptrend highs: a peak, some consolidation, then another peak to end the uptrend. The downtrends following those uptrends also look quite similar: after the final peak a sharp selloff. We experienced the selloff after the Int. iii uptrend peak this week. And, the SPX/DOW/NAZ all confirmed downtrends. So where are we now?


Since the recent Int. wave ii downtrend was only a 4.4% decline, we are not expecting a large decline for Int. wave iv either. One reason is that a large decline would probably overlap the Int. wave i highs at 1884/1897. Since we are counting Major 5 as an impulse pattern we are not expecting an overlap. Another reason is that waves of similar degree tend to have similar declines. So something in the neighborhood of a 4.0% to 4.5% decline would fit; i.e. SPX 1901 to SPX 1911. A Fibonacci 50% retracement of the entire uptrend (SPX 1814 to 1991) equals SPX 1903. These are the reasons we have been expecting a downtrend to find support between the 1901 and 1929 pivots. Friday’s low was SPX 1916.

The weekly chart displays an RSI that is currently about oversold as it was during Int. wave ii. The daily chart displays an RSI that has not been this oversold since Major wave 4 in February. Plus the daily MACD is also more oversold than it was during the Int. wave ii downtrend. This market has already hit some momentum extremes in only its first week of real selling. As a result we estimate we either made the downtrend low on Friday, or completed wave A of a three wave decline that should end next week. Medium term support is at the 1901 and 1869 pivots, with resistance at the 1929 and 1956 pivots.


Short term support is at SPX 1916 and the 1901 pivot, with resistance at the 1929 and 1956 pivots. Short term momentum ended the week just below neutral. The short term OEW charts remain negative with the reversal level now SPX 1935.

We are counting the uptrend as having topped with a fifth wave failure at SPX 1985. Just below the actual SPX 1991 top. We have counted a three wave decline to SPX 1962 (1970-1979-1962) and labeled that A. Then a B wave rally to SPX 1976. This was followed by a three wave decline to SPX 1916 (1925-1937-1916). At SPX 1916 this second three wave decline was exactly a Fibonacci 2.618 times the first. Also at SPX 1916, as we noted on Friday, it was the June print low and it displayed a double bottom in ES right at the S1 support pivot. After the market hit that level it had its best rally since the decline from SPX 1985 began.


The last two downtrends spent a few days retesting the low before the next uptrend finally took off. Review the daily chart above. With this in mind we feel either the low is in for Intermediate wave iv, or possibly a push down to the 1901 pivot range should end it. A rally into the 1956 pivot range would currently suggest SPX 1916 was the downtrend low. Best to trading!


The Asian markets were mixed for a net gain of 0.4%.

The European markets were all lower for a net loss of 3.2%.

The Commodity equity group were mixed for a net loss of 1.2%.

The DJ World index may have ended its Primary III and lost 2.35%.


Bonds continue to uptrend but finished about flat on the week.

Crude remains in a downtrend and lost 3.9% on the week.

Gold is close to confirming a downtrend and lost 1.1% on the week.

The USD remains in an uptrend and gained 0.4% on the week.


Tuesday: Factory orders and ISM services. Wednesday: the Trade deficit. Thursday: weekly Jobless claims and Consumer credit. Friday: Wholesale inventories. Nothing scheduled with the FED. Best to your weekend and week!

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

About tony caldaro

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218 Responses to weekend update

  1. valunvstr says:

    Volume is a joke and everything says relief rally ONLY but that bullish hammer on IWM doesn’t dit well.

  2. This is a relief rally and many will be burned, greed and unawareness of what is really happening will soon be obvious. There is always an up move before a massive drop, the last 75 points was a warm up this is a relief rally followed by MAX Pain.

  3. oneandonlyuniverse says:

    Violin Concerto in D Major Op.35

    ” Greed/Fear Index©, which is rumored to have been credited by Paul Tudor Jones as the primary factor in his spectacular investment success”.

    CNN greed /fear – PTJ same sentence – very funny !

  4. soulsurfer says:

    Lunker1: unless things change dramatically over the next 70min, looks like
    the $NYMO will close inside the lower BB
    the $VIX inside the upper BB.
    Possible the SPX may close also inside the lower BB.

    3 buys signals based on the chart you provided earlier!

  5. blackjak100 says:

    This looks like a classic zigzag from 1916 for 4 of C. 2 of C was an expanded flat so showing perfect alternation. Target = a=c = 1937-1938 which represents about a 33% retracement of 3 of C. Sustained trade above 1942 would change my view.

    • BJ – I agree that so far this bounce has the look of a corrective wave. However I think this appears to be the abc of minute a of minor b with minute b and c yet to come. I also think that Minor B will top out near the 55 DMA (currently at 1948 and rising); hence, leading to back testing of the broken 5th Feb low with the 15th April low trend line (previous pointed out by magicianme last Thursday) near the 1956 SPX pivot. Would you agree that is could be a good possibility?

      • blackjak100 says:

        I think your talking OEW and I’m talking EW. I favor the wave from 1991 as being a 5 wave impulse. Therefore, we are completing 4 of C and need 5 of C to make a lower low than 1916. Soul has recently suggested bottom may be in at 1916 and this is possible. I would need to see 1956 pivot cleared to have confirmation.

      • blackjak100 says:

        1942.5 is 38.2% retrace of the third wave so sustained trade (3-4 hrs) above that would have me concerned bottom is in at 1916,

  6. Violin Concerto in D Major Op.35 says:

    Another good call by Maestro Caldaro, who recently has been hotter than Kate Upton dancing the Cat Daddy. If the market closes strong, it appears there will be VIX and NYMO daily buy signals. If it closes substantially higher, there will also be a MACD histogram daily buy signal. Greed/Fear Index = 7 (Agonized Suicidal Depression), so sentiment is supportive of a rally.

    • uncle10 says:

      I see more talk about our beloved CNN greed/fear index. haha. Already 7 ( depression) and we only off a few percent from all time highs in dow and S&P. Reckon what it will be when we go down 20 or 50% down? can it go negative?

      • Violin Concerto in D Major Op.35 says:

        The market is likely to decline along a slope of hope, not extreme pessimism. The proverbial wall of worry usually produces higher prices, which is the premise behind contrarian analysis. Therefore, when the market does begin a major decline, sentiment indicators should register irrational optimism accompanying the lower prices.

        I am surprised that you were unaware of the concept of contrary opinion, uncle. You have always seemed to be so wise, in addition – of course – to being so avuncular.

        An encouraging aspect of the Greed/Fear Index is that it has been working beautifully this year while becoming an object of increasing scorn. Gann was wrong – you really don’t have to camouflage successful methodology behind cryptic references. You can publicly advertise techniques that work without worrying about the skeptics being converted by positive results. Peter Eliades had that experience with the exponential TRIN – it worked for many years with the naysayers deriding it every step of the way. Then the NYSE changed its statistical calculations and ~ FLUSH ~ game over. The same will doubtlessly happen to the rc1269 Greed/Fear Index ©, at which point we can return to using the eternally trustworthy Oujia board.

      • uncle10 says:

        Haha. Thanks for the nice compliments.
        I am well aware of the concept of contrary opinion.
        I think I agree with you– It will work/help until it doesn’t.
        Btw-I hope it works again because Im long the market. did take off 1/2 just now to book some profit and reduce risk. good trading my friend.

    • rc1269 says:

      awesome, i get my own greed/fear index named after me! i’m so honored
      “An encouraging aspect of the Greed/Fear Index is that it has been working beautifully this year while becoming an object of increasing scorn.”
      absolutely, just as long as you convert it’s continuum of readings into binary ‘buy’ and ‘sell’ decisions after the fact, it’s been near perfect. otherwise we can get rallies when it’s at 10, 40, 60 and 90 and selloffs when it’s at… 10, 40, 60 and 90. just depends on your timeframe and how perfectly one aligns it after the fact.
      easy cheesy. TM. 🙂

      • uncle10 says:

        haha. I was going to write something similar but decided to save the time typing it. Also I wouldn’t hold your breath that when the market is down 10% headed down 20% or 50% that it will show lots of optimism ( your so called slope of hope). My guess is it will bounce around with a fear reading most of the way down. But no need to fret about what it will be in the future, lets just worry about the next day or week. At least that’s what I do as a shorter term/swing trader. cheers mates.

      • uncle10 says:

        Easy cheesy!!! classic there RC. Thanks for the laugh. 🙂
        Im way over my limit. have a good one all.

    • tony caldaro says:

      Do you have a video of that 😉

  7. Gann theory anyone? Between it and EW, I don’t know how anyone says this stuff doesn’t work…


  8. Ryan Parker says:

    Where can I find the holdings of the ETF with ticker CAF (Morgan Stanley China A Shares)? Yahoo doesn’t list the holdings and I also did a google search and no bueno. Chart looks good and Shanghai is looking up but I’d like to know what I’m buying.

  9. rc1269 says:

    it is intriguing that we’re not able to garner much of a bounce, on a Monday, with no new bad news, and daily RSI at 13 on SPX.

  10. mjtplayer says:

    Gold and silver nearing important support, gold needs to hold the $1,270 – $1,280 area and silver needs to hold $20 – $20.25. A break below these levels and it could be lights-out. The absolute must-hold level for gold is around $1,260 (and rising at $10/mo.); the bottom of the triangle that’s been forming for over a year.

    The bounce from $1,240 to $1,340 looks to be over and a potential “E” wave to complete a huge wave 4 triangle. Wave 5 to new lows ahead, downside target around $1,050+/- gold in the months ahead (GLD target of about $100).

    Daneric has the same count I do, with the added downtrending channel to boot. Stay short gold and GDX, nothing has changed in the big picture….


  11. Starbucks SBUX $76.67 to $76.58 support level, nice upward move today, looking fir it gain traction in the coming days ahead, $79.16 target.. GL

  12. gtoptions says:

    Thanks Tony
    SPY ~ WPP @ 194.17 & WS1 @ 191.55 (Near Da Lows) for my Chicago friends! 😉

  13. uncle10 says:

    Thanks Tony.
    Trying to make a few bucks on the long side. Not risking very much. gl

  14. pcskier says:

    I AM ALL OUT BEARISH, but I am buying GNW for a bounce, the support line is holding for now, waiting for confirmation for the upside move to pile in more.

  15. buddyglove says:

    I Still think thin summer trading conditions and other technicals are a potential for a Flash Crash.
    (Not a permabear or scared easily by mkts) Leveraged dip buying with long stops not advisable IMHO. Gl to all.

  16. blackjak100 says:

    Looks like classic 5-3-5 forming from 1916 low glancing at 5 min chart. This would be wave 4 targeting 1937-1938.

  17. With the DOW approaching its lows from Friday we’re starting the bottom of the ninth. The current score looks to be 3 of 3 of 5. Get the keys to the F500 and we’ll see if we nail the bottom.

  18. ZH could have earned me few thousands today..ASA, news appeared about Russia drill on ZH was about to short, missed by 0.3 points. Bad luck..See you SPX at 1904

  19. cmucha68 says:

    Maybe I’m fully wrong but I have the feeling the market spx will not test the lows. But for a test of 1956 pivot it has some work to do.

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