weekend update


Summer holiday traders returned this week in the sell mode. Every new high, tuesday-thursday, was sold within the first hour and a half, or less, of trading. But the market managed to turn the tide on friday. For the week the SPX/DOW were +0.20%, the NDX/NAZ were +0.15%, and the DJ World index was +0.20%. On the economic front, positive and negative reports came in about even. On the uptick: ISM manufacturing/services, construction spending, factory orders, the unemployment rate, and the trade deficit improved. On the downtick: the ADP, payrolls, the WLEI, the monetary base, and weekly jobless claims rose. Next week we get a look at Consumer credit, Retail sales and Business inventories.

LONG TERM: bull market

For the past several months we have been tracking a subdividing Major wave 5 in the SPX. We had counted four Intermediate waves up into the recent early August low, and expected the next uptrend to conclude Intermediate wave v, Major 5 and Primary III. When the uptrend was confirmed we noticed two things about the correction that caught our attention. We posted these observations two weeks ago in the weekend update.

An exerpt: While we are maintaining our primary counts … We have noticed some deviations from what was expected during these past few months … The problems we are seeing are in the NAZ and the DOW. Since these two indices are key to our market observations, these deviations are worth noting.

You can read the entire posting, titled; “Potential Alternate Count” at the end of that weekend update: https://caldaro.wordpress.com/2014/08/23/weekend-update-462/.

This week Europe’s ECB announced their first QE program, naming it ABS. While the details were not released, we gathered from several sources that the program could be as large as $1.0 tn. This would be quite similar in size to the FED’s QE programs. As you know, the liquity of these programs has been the driving force that has taken the SPX/DOW to all time new highs. It is also a bit odd that the ECB is starting ABS, just when the FED is ending QE 3.


When we consider the recent patterns in the NAZ and DOW, and now the ECB’s QE. We have the ingredients for a potentially extending Primary wave III. The chart above displays the count we have been tracking for months, suggesting a Primary wave III high is near. The chart below is the count we offered two weeks ago, suggesting another extension for Primary wave III. Right now we give them equal weight.


The key to this inflection point is the wave pattern. Since both patterns start from a Major wave 4 low in February, and have risen five waves up since then. The key level to watch is the August low at SPX 1905. Should the market fall below that low, Primary IV is underway. Should the market remain above that low, especially during the next correction, Primary III is extending. Therefore, the risk of remaining fully invested at this point is about 5% on the downside.

MEDIUM TERM: uptrend

The current uptrend began at SPX 1905 in early August. Thus far the market has rallied to SPX 2011 on thursday, and ended the week at 2008. While the four week rally has had a steep rise, similar to the February uptrend, it has run into some resistance lately. As of thursday we had counted five waves up from that low: 1945-1928-2005-1991-2011. The first wave was simple, the third divided into five waves, and the fifth was a diagonal triangle. At the high we had negative divergences on all time frames.


The market then pulled back to SPX 1990 on friday, the second largest pullback of the uptrend. But surprisingly rallied all the way back to SPX 2008 by the close. We believe the five waves up ended an impulse pattern of some degree. There is room, however, for a slightly higher high to complete this pattern with a slightly different short term count. In either case we would expect the OEW 2019 pivot to limit any further upside before the largest pullback of this uptrend unfolds.

If SPX 2011 was the high we would expect a pullback to either the OEW 1973 pivot, or the 1956 pivot. The first is a 38.2% retracement, the second a 50.0%. When we reach those levels the market will then have to decide if Primary III is over, or is extending. A larger pullback, especially below that rising trend line from 2012, would suggest Primary IV is underway. Holding one of those two pivots would suggest Primary III is extending. Medium term support is at the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots.


Short term support is at SPX 1990 and the 1973 pivot, with resistance at SPX 2011 and the 2019 pivot. Short term momentum ended the week overbought.


The short term wave pattern defined above is easily seem in the above chart. We labeled the recent high with a 5 to indicate that five waves had completed from SPX 1905. Since we are not completely sure what degree it was we will leave that labeling for now until the inflection point clears. Recent corrections, during Jan/Feb and July/Aug, have corrected about 50% of the previous uptrend. If they were a series of 1-2’s, as the alternate count suggests, then a 50% pullback of the recent SPX 1905-2011 rally would be quite normal. Another interesting juncture in this relentless bull market. Best to your trading!


Asian markets were mostly higher for a net gain of 1.4%.

European markets were all higher for a gain of 2.8%.

The Commodity equity group were mostly higher gaining 1.7%.

The DJ World index is uptrending and gained 0.2%.


Bonds continue to uptrend but lost 0.6% on the week.

Crude has been quite volatile this week, remains in a downtrend and lost 2.7%.

Gold is still downtrending losing 1.6% on the week.

The USD uptrend continues and it gained 1.3% on the week.


Monday: Consumer credit at 3pm. Tuesday: Senate testimony by FED governor Tarullo. Wednesday: Wholesale inventories. Thursday: weekly Jobless claims and the Budget deficit. Friday: Retail sales, Export/Import prices, Consumer sentiment, and Business inventories. Best to your weekend and week!

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


About tony caldaro

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214 Responses to weekend update

  1. pcskier says:

    All the major indexes are posed to go higher except high yield. Will high yield pull em down tomorrow or everything else pull pull high yield up. I am bearish but I am always bearish. Machines and smart money will be watching jnk tomorrow. $vix still has its footing, key.

  2. Hi Tony and everyone,
    I see a completed ABC down in IWM going back to last Wednesday, but the move back up on Friday into today also appears to be following an ABC pattern. Right now it seems to be starting c of c to the upside, which would be the last move up to suck in the last bulls before the breakdown happens for real. Anyhow, that’s what I see. Best wishes!

    • radrian6 says:

      2-side … I like your thinking here and I certainly acknowledge the possible ‘b’ wave but I am going to offer another possibility. If the downward a-b-c completed at RUT 1160.02 was a minor 4, then minor 5 is now underway, possibly with minute i and ii already complete. If we are in minor 5, RUT may extend up to fill the open gap near 1187 and may stretch into the low 1190s to complete the inverse H&S target from the 1107 bottom. Completing minor 5 would take some time — maybe into September expiration.

      As for the bigger picture, I can acknowledge that we are in a wave 5 uptrend of some degree — this uptrend is weaker than the previous two uptrends of 2014 which suggests that it is indeed a wave 5. However, we are fast approaching mid-term elections and the holiday season, both of which tend to bring bullishness to the equity markets. I don’t think there’s enough time to complete a primary correction between the top of this uptrend and mid-term elections but we’ll have to wait and see.

      • radrian6 says:

        I think it’s also worth noting that the growth indexes are leading higher right now, the daily price changes in the indexes are small, and volatility is absent — it just doesn’t “feel” like we are on the verge of a significant correction.

      • Looks like we get our answer tomorrow.

      • radrian6 says:

        It may take a while to clear up the bigger picture but for the short term, RUT moving above 1183.29 should confirm a wave 5 and a move below 1160.02 should confirm an ongoing correction. If the RUT stays in between, the fog remains thick.

    • wildmick says:

      hi radrian6. I tend to lean toward minor 4 in spx as well as rut. think there’s more than ample time to get a primary degree correction. imo

      • radrian6 says:

        Hi Wild,
        Primary II in the RUT was about 30% so I would assume the Primary IV correction would be at least half of that. If the correction gets started by September OpEx, it could bottom before the elections.

  3. pcskier says:

    $nyse is getting hammered.

  4. Let me say you, if SCOTS vote for independence, it will wreak havoc on people who are known to have following thinking;

    “Why do it today when we can do it after a year” AND
    “Why work if we can live on benefits”

    Now, you know who I am referring to…

  5. selhai says:

    This is a little sensitive, but the internal 54/46 poll this morning is an internal SNP poll! They have been extremely reliable recently. It won’t take long for an independent polling company to produce similar results, with more selling/turmoil in the markets, IMO.

  6. pcskier says:

    $vix regained its footing, my guess is the code will close the $vix out today at 12.94. Right on the razors edge.

  7. If you rearrange the letters in the name Vladimir Vladimirovitj Putin, you get the word illuminati.

  8. berniebaruch says:

    Another SSS
    “Sachs Stick Save”

  9. magicianme says:

    While the NAS is rushing away, the S&P is really struggling to keep up. And at these circa SPX2005 levels there’s hardly any buying interest with only a few contracts being exchanged and with way below average trade size (few contracts per trade).

    It looks like a trip south today once the big boys let the S&P play out its feeble attempts to catch other indices.

    • pcskier says:

      It’s all about the QQQ today, it will be all about high yield tomorrow 🙂

      • pcskier says:

        QQQ will determine what machines do next. Risk or no risk. I ran into a retired bond trader at the club this morning he congratulated me on a tlt call. I promptly gave him my take on the big picture. He asked me why today on the QQQ determining the top. I gave him no answer for why except just trust me. I told another lady today I am becoming a believer in OEW, maybe it is in the code.

      • pcskier says:

        He told me he was worried about 9/11 anniversary I told him I was worried about 10\6

      • pcskier says:

        In two days after the market makes its move the media will blame new Russian sanctions and Scotland. News has nothing to do with it. the coming sell is because the QQQ did not make a new high today. But the media will spin it to the events.

      • tony caldaro says:

        odd the NDX made a new high

      • pcskier says:

        Algo trade etf not index

      • pcskier says:

        Beginning and end of day etf are most liquid. During middle when etf trades at premium bullish opposite bearish. Big banks don’t want to risk capital for parity. Machines make money trading spreads.

    • magicianme says:

      I’ve closed my day trade short as the strength in the bear move seems to have dissipated. There’s a good chance of a small rally from around these levels, though I can’t see the S&P recovering all today’s losses too quickly.

      So far there’s been no volume buying at these levels. This time the smart money seems to be holding out for some reason…. what happened to BTFD?

  10. manunidhi21 says:

    Namaste Tony !

    First news in the morning..

  11. hkloon says:

    1) Hi Tony, what does the statement here mean “Therefore, the risk of remaining fully invested at this point is about 5% on the downside.”?
    2) For alternate count (if it does come true), just need to get further clarification (a bit confused now :)):-
    a) SPX – major 4 ended at Feb 2014, the entire uptrend from then till now is only intermediate i of major 5?
    b) Dow – major 4 ended Feb 2014, now could be minor 3 of intermediate 3 of major 5?
    c) NAZ – could still be in int v of major 3?
    It took me many readings of the few weekend updates to really understand the alternate count possibility….
    Hope you can rectify if there’s any mistake, many thanks.

  12. rabbittrader1 says:

    Rabbit is a MacLeod on my mothers side. My great great,great grandfather. Murdoch MacLeod and his two brothers,Jacob and William MacLeod came to America in 1776 to fight with the British in the Revolution (they were conscripted). They all stayed in America after the war. That is how my mother got here. The vote for Independencece means a lot to me ,(on Sept 18th),I think it goes for Independence.. My cousin is Chief of the MacLeod Clan and lives in Dunvegan Castle on the Isle of Skye. Dunvegan was built in 1237. As to the S&P Index: There is only ONE TRUTH. There can be many speculations, but only ONE TRUTH. THE ALL KNOWING MIND OF GOD GUIDES ME TO RIGHT ACTION. I KNOW WHAT TO DO , AND I DO IT. I am long SPXS,. also long SPXU Oct 18, .$44 call options.I believe we are in Primary IV. Get the DVD(movie) “EXPELLED” and watch it.

    • My inter-voice tells me you will be correct. I’m listening to it… I see a move down to 1950 SPX area this week (Thursday or Friday) to retest the rising trendline of support on the weekly chart that started at 1074.77 (master numbers of “eleven” very obvious there).

      Then we should bounce from there into the FOMC meeting next week. I suspect that will be the final top before a move down to your 23.6% Fib level at 1688 as well as the exact percentage drop of 16% from the 1929 chart. It also will hit the lower trendline on a rising channel on the monthly chart. Lots of reasons to bounce from there that others might not see.

      The bounce up from 1929 was about 10%, so that would be around 1856 “if” it follows the same pattern? That final top should happen during this meeting (http://www.legatusmagazine.org/conferences/)… as it has done many other times in the past.

      I’ll be looking for ritual numbers to show up in the price around 10-22-2014 just like they did on 10-22-1929, just before the cliff dive move started. Then it was an interday high of 333.00 and low of 322.00 (on the DOW), and then we seen it again on the SPX on August 24th, 1987 with an interday low of 333.33… which was the high for the year.

      Of course the 666 low in 2009 was very obvious to everyone. Why do I suspect we’ll see a similar number (possibly 1666?) somewhere in the price on the final day before the waterfall move down starts…

      • selhai says:

        Thanks for those, Rabbit and Red Dragon. Yes, I have had 1666 in mind for a month or two – the market both likes to send ‘messages’ and has a sense of humour, IMO.

        Poor start in London this morning, RBS and Lloyds Bank – both domiciled in Scotland and at risk of losing their lender of last resort (BoE) – both under selling pressure. I got out of them months ago!

        There’s a sort of sense of ‘Oh dear, it’s September/October again’ out there.

      • tony caldaro says:

        Interesting Leo,
        what rituals are you referring to?

      • Rituals in the “numbers” Tony. “They” (the one’s who run the stock market) use numerology all the time. The number “11” is a powerful number and neither good nor bad in of itself. But it is used a lot in the market to indicate to the insiders the turning points.

        Other number are used too, like 9… which means “completion”. Multiples of 9 or 11 are seen all the time, such as 22, 33, 44, 55, etc… all called master numbers as they are dividable by 11. Unless you are an “insider” and can read the code (which I’m not) you just have to guess at the meaning of them.

        Sometimes you add up all the digits to equal a master number, or the number 9. Sometimes you just use the numbers in the cents column. I look for it in the date too, not just the price level of the ETF. I guess at most as I don’t know the code but sometimes they are very easy to figure out.

        Like the May 22nd, 2013 high was easy to spot and I posted several months in advance that we’d have a top there. It wasn’t the top for the year but it was an important turning point. I get most calls wrong as I don’t fully understand the code but that one was too easy.

        You see it was what I call a “double eleven” day, which seems to be more important. The date of the month was the 22nd, and 22 is a master number of eleven so there’s one of the 11’s. The other eleven is when you add up all the digits in total. The month was the 5th month and the year equaled a 6 (2+0+1+3=6), so those two added together equal 11 and then you add the 22 from the date (note: master numbers are not broken down and kept whole, so 22 stays as “twenty two” and not 4 [2+2=4], but it would have still had the same result), and you get 33.

        That’s a powerful number to them as it is used as an important level with the Free Masons…. like a 33rd. Then there was the fact that “they” were holding a Legatus meeting that very same time period too… which meant it had even higher odds of being an important turn.

        You’ll have to read more about Legatus from Reinhardt on Enterprise Corruption as he’s the one that figured out that the timing of turns in the market matched up a lot around Legatus events where “they” meet to decide on where to take the market too next. (Not that it hasn’t already been decided years in advance as it has, but they like their “get to together’s”).

        I could go much deeper down the rabbit hole here but I’ll simply stop there. Just know that “they” time events (False Flags) around market turns and use ritual numbers in the dates and the price levels… and also seem to be at Legatus meetings for the most important ones.

      • tony caldaro says:

        So I take it you think they are still in control

      • tony caldaro says:

        Catholic CEO’s and Executives?

      • va89blog says:

        Reminds me of the Simpson’s episode which shows the secret group (the Masons perhaps?) who run Springfield.

      • Yes Tony, “they” are still in control. They have been for many thousands of years I suspect. But I wouldn’t call them Catholic’s. That’s just somewhere to hide. They hide in the Free Masons too, but I wouldn’t call them that either. I’d simply call them “Satanists” as they worship him.

        In the movie “Expelled” that RT requested everyone watch (I just watched it today) you’ll see how they promote “Darwinism” to us sheep (Useless Eaters) while they secretly know for a fact that God does exist because they obey Satan. It’s all right in front of you but few see it.

        They spend Billions of dollars to keep us sheep believing in the lie as they can’t have us learning the truth. That documentary film speaks of words like “Reptiles”, “Useless Eaters”, “Eugenics”, “Think of people in economic terms”… all the while keeping your attention on the debate of “intelligent design”.

        The narrator Ben Stein obviously believes in God as he goes about interviewing various people that have been fired for speaking against Darwinism. For me I think one would have to been pretty naive to think there isn’t some higher being or power that created us. So obviously I don’t believe in Darwinism.

        In the film Ben interviews several people that converted from believing in God to not believing after they studied Darwinism. Seems to me like “Darwinism” is a cult as they use Science (I should say they twist science) trick you into thinking we humans just evolved by natural selection.

        Of course I think that’s just total nonsense. But again they use their control of the propaganda media (movies, television, radio, etc..) to mislead the sheep again. They keep you all focused on the “human being” part, which they can “try” to explain with science… but they never discuss the “spirit” part, or “soul” that we all have inside us.

        I look at myself as an immortal being (or soul) that was created by God and just lives inside this human body. Think of the body like a car or truck. You (the immortal spirit) is the driver and the human body is the automobile.

        They don’t want you to know that you are an immortal soul created by God so they distract you by getting you to focus on the car you drive (the human body). We are all equal in the “soul” but they don’t want us to know that. They must keep up the illusion that there is no God while they know there is one.

        The whole world is just the opposite of what you see and think it is. The movie “The Matrix” explains it well but most people don’t see it. It easier to believe the lie if you’ve been told it your whole life then to wake up and see the truth.

        The stock market was and still is created and used to steal money from the sheep. It’s controlled 100% by a super computer and programmed months and years in advance. I was told back in November of 2012 by a friend of mine who’s contact told him that there would be a crash in the end of 2014.

        It was already planned back then and they already know the date as they are the one’s setting it. Nothing in the world of any real importance happens by chance. It’s all planned by those that rule it. But as it says in the Bible… “they” lose in the end times, and I do believe we are in the end times now. It’s just not the end times for us sheep but instead the end times for the wolves. That again is the “mis-direction” they tell you.

      • tony caldaro says:

        Do I know of you by chance?
        Are you of Italian heritage?

      • No Tony I don’t think we know each other… at least not in this life, maybe a past one? I’m a simple country man born in August, 1964 in West Virginia. I moved to Florida in 1989 and have lived there until the present. However I’m now back in WV and have been since March of this year.

        I still have a place in FL but some how God must have known how weak my aunt is and wanted me back home to hopefully save her. I don’t know if I can or not but if he allows me to make the correct moves in the market over the next few months he knows I’ll spend the money to fly my aunt to the Bio Care hospital in Mexico (http://biocarehospital.com) where I think they can help her.

        Doctors here in America are only concerned about profit as I’m sure you know. But this hospital is supposed to be one of the best in the true care and treatment of people using methods that are mostly natural and therefore shunned and/or outlawed here in America.

        So while I really don’t care about making a ton of money in this coming crash it will be needed to help her get the care she needs. She’s only 80 pounds now and just melting away it seems. But my inter-voice tells me she’ll be ok as I’ll be able to fly her there soon.

        Family is more important to me now then money as it’s just a piece of meaningless paper. I didn’t know why I needed to come back home until I was here. So now I wait patiently for this market to make it’s move and allow me the chance to help those in need.

      • tony caldaro says:

        Best of luck with your Aunt Leo.
        Too many topics covered.
        Let’s keep it market related.

      • Red Dragon, do you ever read TheYenGuy? If not, you should. He sees things the way you do quite a lot.

      • tony caldaro says:

        You may email me directly if you wish

  13. SCOTLAND- 51 YES and 49 NO as per latest. Fortnight bfore, it was 56 NO and 39 YES, rest undecided

    Cable 1.6180

    • torehund says:

      It will not be easy for the politicians, as the movement of Independence and revolts start to take hold in Europe to. Spring is all around us, and if something wasnt severely rotten beforehand,, it would still have been Autumn prevailing everywhere.

    • selhai says:

      Just been informed of an internal Scottish poll showing 54 Yes 46 No, on a much larger sample. Not yet in the media, I’m being told.

  14. torehund says:

    ..for the bears 🙂

  15. soulsurfer says:

    Thanks Tony for another excellent weekend update. From when I started to follow you in early 2012 (yes I know, I am a newbie compared to many others), your weekend updates (and daily for that matter too) have never disappointed.

    Now we have several short term and longer term levels to watch that should make trading (relatively) easy:

    1) trade above SPX 2011 and minor 5 continuous
    2) trade below SPX 1990 and top is in, with top being either Primary III or a wave 1
    3) trade to SPX 1970-1950 and then new highs means P-III extending
    4) trade below SPX 1950 and especially SPX 1905 and P-III is in, and P-IV is underway.

    Assuming the first case, and Friday certainly looked impulsive off the SPX 1990 low (no overlap), then let us say SPX 2008 was minute i: 18 points. Minute ii down 50%: 9 points: SPX 2000. Since 5th waves tend to ideally extend 2.0x wave 1, from wave 2, we can then set a potential minor 5 target at:

    2000 + 2.0x 18 = 2036.

    Again 2036… where have we seen that number before 😉 ??? Oh yes, my “two numbers to rule them all essay”: http://soulsurferusa.wordpress.com/2014/08/25/spx-two-numbers-to-rule-them-all-yes-you-may-need-only-2-numbers-to-predict-the-coming-market-top-the-subsequent-market-correction-and-the-following-new-high/

    That said, below a link to my count for the NYSE. Also here we can see that it counts well as having completed 5 (major) waves off the 2011 low.


    But, like Tony said, the last wave up can very well be a first wave of a subdividing wave. We’ll know soon enough! 😉 And we’ll be ready because we know what levels to look for. 🙂 Forewarned is forearmed!

    In the case of Tony’s extension, lets assume for rounded numbers’ sake that minute i goes from SPX 1905 to 2035: 130 points, and minute ii hits SPX 1950. Then intermediate iii should hit ideally: 2130-2160. WOWSERS.

    But, please remember that the 1.38x extension of Primary I, from P-II, is at SPX 2044, and the 1.38x Fib-extension is a common extension for a 3rd wave. The 1.62x extension is also a common extension for a 3rd wave, which is at SPX 2214. IMHO, this extension would go well with the proposed possible extension for P-III, especially given that intermediate iii could hit SPX 2130-2160.

    P-III extension or P-IV drop. Either way, there’s money to be made! That’s what matters!

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