weekend update


After closing within three points of the all time high last week, the market went into a choppy pullback mode this week. For the week the SPX/DOW were -1.0%, the NDX/NAZ were -0.4%, and the DJ World index was -1.4%. On the economic front, reports came in mostly to the positive. On the uptick: consumer credit, retail sales, wholesale/business inventories, import prices, consumer sentiment, and the budget deficit improved. On the downtick: export prices, the WLEI and weekly jobless claims increased. Next week is FOMC week, and we get reports on Industrial production and Housing.

LONG TERM: bull market

Here we are 66 months into this bull market and we are still trying to identify the top of Primary III, in a five primary wave bull market. The western central banks have been propping up liquidity since the bull market began. The FED with QE’s 1, 2, 3 and Operation Twist. The ECB with LTRO’s 1 and 2, and now ABS. During this period the SPX has tripled, and is more than 25% above its 2007 all time high. Germany’s DAX has nearly tripled as well, and is more than 23% above its all time high. With the ECB just starting ABS another liquidity injection is thrown into the count.

Thus far we have counted Primary waves I and II completing in 2011. Primary III could have topped in 2013, but extended into 2014. The current uptrend has the potential to end Primary III, as we can count five Intermediate waves up from the Major wave 4 low in February at SPX 1738. However, there are two problems with this count, one in the DOW and the other in the NDX/NAZ. We detailed these problems in the last weekend update, and the one two weeks before that. Currently we think the probabilities of Primary III ending with this uptrend, or extending into next year, are equal.


The key levels to watch are first SPX 1905. If the market revisits this level Primary III probably ended at SPX 2011. Second SPX 2011. If the market rises above this level the uptrend is probably extending. Third SPX 1991. Should the uptrend extend it has to rise high enough to avoid overlapping the high of the previous uptrend. Since we are in pullback mode now, SPX 1905 and 2011 are the current levels to watch.

MEDIUM TERM: uptrend

From the early August low of SPX 1905 we have counted five waves up into 2011 a week ago. Since this was a five wave pattern and the market made new all time highs it could have completed the uptrend, and with it Primary III. The expected pullback to medium term support at the 1973 or 1956 pivots just occurred on friday. As the SPX hit the upper range of the 1973 pivot. At friday’s low the market was sufficiently oversold if this uptrend is going to extend. But we think there maybe one more wave down.


If the uptrend does extend the five wave sequence up to SPX 2011 would be counted as Minor wave 1 of the Intermediate wave v uptrend. And SPX 1980, or lower, would be Minor wave 2. Minor wave 3 would then be getting underway. The rally to follow would take the market to the OEW 2070 pivot, or even higher, to complete Minor waves 3, 4 and 5. Currently the market remains in between the SPX 2011 uptrend high and the 1980 recent low. We can not confirm a Minor wave 3 rally until the market starts making new highs. Medium term support remains at the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots.


The five waves up during this uptrend were as follows. Waves 1 and 2 SPX 1945 and 1928. Wave 3 subdivided into five waves: SPX 1964-1942-1995-1985-2005. Wave 4 declined to SPX 1991, and wave 5 completed in a diagonal triangle: 2006-1995-2009-1998-2011. After that high we had a choppy pullback to SPX 1980. We have counted a simple wave ‘a’ at SPX 1990, wave ‘b’ at 2008, then a wave ‘c’ 1991-2000-1983-1997-1986-1998-1980.


If we count 1991-2000-1983 as wave a of ‘c’, 1997-1986-1998 as wave b of ‘c’, and 1980 as the beginning of another three wave sequence for wave c of ‘c’. We should see a small rally early next week, then another decline to lower lows. Since wave ‘a’ was 21 points (2011-1990), a wave ‘c’ of 34 points should bottom at SPX 1974. Also since wave ‘a’ of c was 25 points, another decline of 25 points from SPX 1998 suggests 1973. So the OEW 1973 pivot appears to be the Fibonacci fit on both the larger and smaller waves of this pullback. Short term support is at the 1973 and 1956 pivots, with resistance at SPX 2011 and the 2019 pivot. Short term momentum ended the week just under neutral.


Asian markets were mostly lower for a net loss of 0.5%.

European markets were mostly lower and lost 1.3%.

The Commodity equity group were all lower losing 3.4%.

The DJ World index lost 1.4%.


Bonds confirmed a downtrend this week, -0.9%, as yields have again began to rise.

Crude remains in a downtrend losing 1.2%.

Gold continues to downtrend losing 3.0% on the week.

The USD uptrend continues gaining 0.5%.


Monday: the NY FED at 8:30, then Industrial production at 9:15. Tuesday: the PPI, and senate testimony from FED director Hunter. Wednesday: the CPI, the NAHB, and the FOMC statment. Thursday: weekly Jobless claims, Housing starts, Building permits, the Philly FED, and a speech from FED chair Yellen. Friday: Leading indicators and Options expiration. By the looks of things next week could be quite volatile. Best to your weekend and week!

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

About tony caldaro

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255 Responses to weekend update

  1. New to the board so I’m not sure if anyone has posted this..The weekly RSI (14) hasn’t printed below the 50 line in over 20 months..I looked back 30 years..this is the longest stretch .
    Tony..great work..been following you since the start of the year.Thanx

  2. mrgreen2010 says:

    Except for some puts out 2-3 months (4 270’s NFLX, 2 850’s PCLN and a decent laddered amount of MU 17-26 strikes puts)..now flatter than a pancake. Just feels like chop until later this week. PCLN looks good for a bounce soon and since it seems to lead, along with AAPL I closed all my Q’s puts. But also long 2 VIX 17 Oct calls…just in case…🙂

  3. berniebaruch says:

    Most closes have been had an upward bias recently, I think we may get the opposite today.

  4. torehund says:

    compl 3, or abcde Complete from the 2 week long correction on the rut.

  5. Tony

    If SPX in the coming days cant hold 1973 pivot – do you think the P4 scenario increases or you need to see SPX below 1929 pivot first ?

    I know you talked about 1905 – but it seems a little too much to wait for a move down there before you sell your long holdings.

    • tony caldaro says:

      On paper 1905 is the key.
      But there will be clues along the way.
      SPX 1973 or 1956 would be fine.
      Anything more would not, especially if Tech leads

      • I understand and also know your explanation when you say ‘ on paper ‘ but for most traders like we all are , we will try to make positions before it all gets confirmed.

        Thank you for your answer , next few days will be interesting and likely tell us the story moving forward.

  6. lunker1 says:

    small pos D at 1978

  7. magicianme says:

    On my tick charts I see an IHS formed in the first hour of the day … and failed.
    The rest of the day formed another IHS and it appears that’s failing as well.
    Doesn’t seem to bode well for the bulls as things stand at present.

  8. Kevin M says:

    $trin numbers are a screaming sell today. In fact one could say the imbalance is excessively to the bullish side. Very hard to see this going up much more than today. http://stockcharts.com/h-sc/ui?s=$TRIN&p=D&b=5&g=0&id=p60383471617

    • uncle10 says:

      Thx. Kevin. added to my shorts on that pop. You been pretty good using that trin chart.

      • 16golfer says:

        Another Code 66 for pcskier. $BPSPX hit 66 on 4/14

      • Kevin M says:

        Yeah thanks Uncle! It has a batting average close to 80%. It’s hard to deny this indicator. late August was a miss but before that it was spot on. On the other hand a buy signal when noted by the $trin numbers, has a 100% batting average this year.

        Typically a sell signal like today would indicate a possible few more days of small buying or chop then it will go down.

        good luck,

      • uncle10 says:

        Thanks Kevin. those are pretty good percentages! hope u will continue to post. thx and gl

    • mrgreen2010 says:

      NDX TRIN has moved but still not extreme

    • alexhartley1 says:

      Look for the 19th to stop any move higher. I believe the 19-22nd will see the market turn down and possibly quite sharply. I am exiting all trading longs by end of Tuesday or Thursday depending on action.

  9. Libor Val says:

    Hi Tony, is this chop in the markets a distribution or a correction throughout time before a new push up

  10. ok, this is playing out the way I envisioned it would before a huge market dump.

  11. H D says:

    the cycle… watch AAPL, Watch NQ, watch DOW, wait for news, oh SPX doesn’t care and isn’t doing any of those? exactly. traders index and she’s all coiled up right now. GL

  12. mrgreen2010 says:

    Sector distribution rotation. Seen it before. Tech and $RUT wacked for a few days then broad market joins while tech is flat is best bearish case. Bullish…not so sure. Volume and direction will be key in last hour today. Was expecting more chop for the next 1-3 days but I will take it….close 1/2 short term MU puts for free + weekly trade. Holding longer term puts for… 50DMA target 26-27. QQQ puts are a hold till EOD unless I see a move above 98.65.

  13. Tony

    According to your labels it seems like DAX made wave B top in Primary IV correction. This means C down might have started with FOMC and Independence vote this week.

    I guess this week will be telling for us all where we are heading next from here.

  14. Hi Tony

    I might be wrong but looking at your 60min chart on SPX it looks like 5 waves completed. With DAX already in Primary wave III would it not make sense that 2011 was also Primary III high ?

    I know that you need confirmation below 1905 before – but that would make more sense that they follow each other right ?

    Thank you Tony

  15. sunset2014 says:

    Namaste Tony,

    Under OEW can the B wave up of P4 exceed SPX2011?



  16. buddyglove says:

    Bear Trap here on Nasdaq ready to snap shut imho.
    Nasdaq fut hourly

    • buddyglove says:

      Can’t resist a small long here @4027…looks ripe and ready for a snapback Aimho.

      • perversionofthemean says:

        I see your point, and can envision a bounce at any time. Bigger picture though, I’m thinking 3980 to 4000. Hourly RSI’s aren’t really back to great levels, and there’s a measured-move down to 4000, a gap needing to be filled or at least tested, and a rising momentum line will come up to provide support at that level. Glad I puked QQQ at 99.30, even though I had dry heaves when it went back over 100. Now feeling smug, so I *know* I better not get too complacent about a bounce.

    • hrmny358 says:


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