weekend update


One impressive rally this week! The week started off at SPX 1887. After a notable pullback to SPX 1882 the market rallied straight up to 1949 by Wednesday. Then after a pullback to SPX 1927 on Wednesday, the market rallied to 1965 to end the week. For the week the SPX/DOW gained 3.35%, the NDX/NAZ gained 5.60%, and the DJ World index gained 3.10%. On the economic front things were not as rosy, as positive reports nudged out negative ones. On the uptick: existing home sales, the CPI, the FHFA index and leading indicators. On the downtick: new home sales, the WLEI, plus weekly jobless claims rose. Next week is FOMC week! Plus we get reports on Q3 GDP, the PCE and the Chicago PMI.

LONG TERM: bull market

The five Primary wave Cycle wave [1] bull market continues to unfold. We continue to count: Primary waves I and II ending in 2011, Primary III ending in September with Primary IV underway since then. After the SPX 2019 high five weeks ago Friday, the market started to work its way lower for about one week and a half. After that, and since then, it has become quite volatile. With the DOW moving triple digits nearly every day. This type of volatility usually occurs only in corrections.


When reviewing the Primary II correction in 2011 one should notice that it unfolded in a five wave elongated flat: abA-B-C. Using alternation as a guide we have been expecting a simple zigzag for Primary IV. Basically, the first three waves of Primary II should suffice for a Primary IV correction. After this weeks strong rally we took a closer look at those three waves back in 2011.

The first wave down, labeled Int. a, took several weeks as the market lost 8.2%. The RSI got quite oversold, and then the market started to rally in Int. b. During the rally, which took a few weeks, the market had one week in which it surged +5.2%. The market then went sideways before dropping in Int. wave c. The total decline for Primary II was 22%. During Primary IV were are observing similar activity. The first decline took several weeks as the market lost 9.8%. After getting quite oversold, the market started to rally in a b wave. This week the market surged 4.1% during this rally. They certainly look quite similar.

MEDIUM TERM: Major B uptrend awaiting confirmation

After Primary wave III topped at SPX 2019 we observed an Int. wave a down to SPX 1926. Then we had an Int. wave b rally to SPX 1978. After that the market got quite volatile. After a drop to SPX 1925, the market rallied in one day to SPX 1970. The next day it totally reversed, giving back nearly all of that gain. After that the market went down, in a series of corrective waves, until it reached SPX 1821. At that point Int. c was a near perfect 1.618 relationship to Int. a.


With the market then quite oversold it started to rally. After the first day we noted the characteristics of the market had changed, and suggested Major wave B was underway. We also suggested the OEW 1973 pivot range would probably be the upside target. However, we expected the advance to be quite choppy. The rally started off choppy, SPX 1821-1898, but then took off to the upside after a pullback to SPX 1878. At first we thought the uptrend would be three Int. waves subdividing into three Minor waves. When the market cleared the 1956 pivot on Friday we updated the charts to display Int. A at SPX 1898, Int. B at 1878, and Int. C underway. When this last rally concludes, Major wave B should conclude, and a potentially nasty Major wave C downtrend should follow. Medium term support is at the 1956 and 1929 pivots, with resistance a the 1973 and 2019 pivots.


During the Major wave A downtrend we noted the decline was occurring in a series of seven waves sets. The market was quite volatile and making notable waves several times a day. The last decline was also seven waves into the SPX 1821 low. And then suddenly the market changed its characteristics. As the rally progressed from the low it was quite volatile, but after several days it started to settle down. At the peak of the volatility, into the low and coming out of it, we counted ten waves on each of those two days.


We noted during the week that we have been observing seven wave patterns again on the way up during this uptrend. These patterns have been much larger than during the decline. The first rally, Int. A, unfolded: 1869-1835-1868-1852-1876-1857-1898. Then after an Int. wave B pullback to 1878, Int. C has unfolded as follows: 1892-1882-1949-1927-1962-1946-1965+. Two sets of seven wave patterns, with the second set yet to complete. Our upside target has been the OEW 1973 pivot range, so we expect this last rally to top within the 1966-1980 range. Of note, Int. wave B of Major wave A ended at SPX 1978. Short term support is at the 1956 and 1929 pivots, with resistance at the 1973 and 2019 pivots. Short term momentum continues to form a negative divergence as the market has worked its way higher. The first 10 point reversal off of any high could suggest the top has been achieved. Best to your trading!


The Asian markets were nearly all higher and gained a net 1.8% on the week.

The European markets were all higher gaining 3.2% on the week.

The Commodity equity group were mixed and lost 2.7% on the week.

The DJ World index gained 3.1% on the week.


Bonds continue to uptrend but lost 0.5% on the week.

Crude remains in a downtrend and lost 2.0% on the week.

Gold is trying to uptrend, but lost 0.6% on the week.

The USD looks like it is heading into a downtrend, but gained 0.6% on the week.


Monday: Pending home sales at 10am. Tuesday: Durable goods orders, Case-Shiller and Consumer confidence. Wednesday: FOMC statement at 2pm. Thursday: weekly Jobless claims and Q3 GDP (est. +2.65). Friday: Personal income/spending, the PCE, the Chicago PMI, and Consumer sentiment. This certainly looks like it could be quite a wild week. Best to your weekend and week!

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

About tony caldaro

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317 Responses to weekend update

  1. perversionofthemean says:

    EEM has had the most feeble of B-wave advances. Historically, does that make it the best short for a C wave, or does an extended B-wave like SPX has had offer greater potential?

  2. cmucha68 says:

    What a boring market. Someone any idea how we close today ?

  3. This is how the volatility gets sucked out of the market – DJ-30 has a 107 point range, and it feels like it flatlined. Pre-fed wake already?

  4. fishonhook says:

    Short term MACD drifting down despite not much of a drop in the S and P. Worth watching

  5. ragnar5 says:

    I’m looking at the hanging man candlestick pattern on RUT, as is
    xscaler92646, who asks:
    October 27, 2014 at 12:16 pm
    The Russell is in a very interesting position as of today. Outside the wedge, but a hangman/hammer. What will it do next???

    Before I take action, I always look at Bulkowsi’s pattern site to learn the odds of a pattern’s success:


  6. “The few who understand the system, will either be so interested from it’s profits or so dependant on it’s favors, that there will be no opposition from that class.” — Rothschild Brothers of London, 1863

    “Give me control of a nation’s money and I care not who makes it’s laws” — Mayer Amschel Bauer Rothschild

    • sibyn says:

      Market has a holy grail mathematically… find it. then you can count on it:-)
      But do not talk about it to anyone.

    • John B says:

      And your point is?We are mostly tech traders over here,who dont give a damn who controls who and what,what matters is what is PRICE telling you.I strongly suggest you learn the techs and learn from Tony if you really want to become a trader.

      • cmucha68 says:

        That was a joke John. Not offensive. I am trading for 20 years and made enough money to live from that. I’m living for 12 years in a Hyatt hotel long stay apartment, have a Ferrari F12 Berlinetta and had almost every fancy car in the world except a Bugatti. I’m not rich like the well known fund managers but I have a good live. So at least I have some little knowledge. Not as good as Tony or many of you here. But I give always my best to become better.

      • John B says:

        lol cmucha68,that was not directed at you,it was directed at the one-dimensional ,biased Newbie

      • cmucha68 says:

        No problem. Good trading to you !

  7. HI Tony,

    With the historical chart pattern analogy of B of P2, today is like either 5/7/2011 or 5/8/2011…5/7 looks more similar…so we might go up tag the 78% retrace at 1978 the next couple days..before a of C begins…if B has topped on Friday, then looks like a 61% retrace of a of C will bring us to 1875 ish (1869 pivot?) of intA of C target over the next week or two…



  8. xscaler92646 says:

    The Russell is in a very interesting position as of today. Outside the wedge, but a hangman/hammer. What will it do next???


  9. selhai says:


    FTSE traded down 108 pts today, from the 6444 high, for a bearish reversal signal. Closed down 80 pts from the high. Pointing the way??


  10. gtoptions says:

    Thanks Tony
    SPY ~ WPP @ 193.66 ~ WR1 @ 196.88
    ED wave ‘e’ to complete shortly possible near WR1.

  11. lunker1 says:


  12. sibyn says:

    RCH goal now 1935 short term.

  13. soulsurfer says:

    today is the last day to produce a zweig breadth thrust event, and unless the market stages a big rally from here on, it won’t happen (ZB is now at 53.70, but needs to close today above 61.5). despite the best week since 2009 (if I get that correctly) last week, no ZBT… that’s troublesome IMHO…

  14. bhtrade says:

    Bulls no longer blatantly outnumbered, but still the minority. Although given the F/G data, seems both camps worried about downside risks.


  15. mjtplayer says:

    This a.m. rally has closed the gaps on all 3 major indices from this mornings’ open; time to head lower? I still think the market will hold-up till Wednesday’s Fed meeting.

    Mid-term election 1 week from tomorrow, one wonders what effect that will have, how about uncertainty?? Odds are the (R) will take the Senate, but we may not know Wed Nov 5th. 2 races (GA & LA) require the winner to have 50%+ of the vote, which they won’t according to the polls; both look to go to run-offs. On Wed Nov 5th, we could have 50 seats (R), 48 (D) with GA & LA going to run-offs.

    GA is a toss-up, but LA should go to the (R), giving them 51 seats and the Senate if the polls hold true. So, (R) should take the Senate, but there’s a good chance that won’t be confirmed till the Dec 6th run-off in LA (the GA run-off is Jan 6th). Uncertainty till early Dec?

    • joecthetruthteller says:


      R are definitely going to win the Senate IMO. But what difference will it make? Both parties are one and the same – check their voting records, and NOT what they say on TV ( as great actors ) In any case, how can mid term elections possibly affect the Markets? ONLY the FED can.

      Btw there is always uncertainty in the markets from the beginning of time.

  16. hi tony,
    i am not well versed with ew. i was looking at your long term gold and silver charts for investment purposes. i find lines which drawn horizantally at 680 in gold and 8.4 in silver wave 4. do the lines denote probable targets of gold & silver over next few months

  17. FiveStars says:

    Since Goldman downgraded oil today, I am buying oil etf ERX (tripling my profit), last time Goldman downgraded oil or any commodity it has doubled, tripled. I am expecting oil to hit $100 by Jan 2015. 🙂

  18. mjtplayer says:

    Looking at the POMO schedule, today is the last day of POMO – could it be true? Typical 10am POMO rally today for old time sake?

    • pimacanyon says:

      could it be true? I think we’ll all have to see it to believe it. Maybe we should have an office pool to guess how many months (weeks?) will go by before QE4.

    • chrisk44342 says:

      It will be interesting to see if the transmission vehicle via the primary BDs is the same by rolling over parts of its existing assets vs. POMO.

  19. Looks okay as a full count at 16729/1951. Lets see how back the rally goes. DAX fell 260 points top to bottom. Made it back 60 so far.

  20. “The first 10 point reversal off of any high could suggest the top has been achieved.” Bring on the killer C wave!

  21. selhai says:

    This is what Tony said on Saturday:

    The first 10 point reversal off of any high could suggest the top has been achieved. Best to your trading!

  22. mjtplayer says:

    Don’t think you’ll see a big down move today/tomorrow as we head into Wednesday’s Fed meeting – IMO. Perhaps some profit taking after the big run, maybe the market could be down marginally but all eyes on the Fed Wed, with the end of QE and any changes in language.

    • blackjak100 says:

      It’s possible this is a minute wave 4 before one final high above 1965 as Nate Kautz suggests. However, today is a major phi mate turn date so you never know

      • blackjak100 says:

        Where did you get I was bullish at 1965 pilgrim? You wouldn’t catch me buying anything right here – not even oil.

        Wasn’t it last week I was reading how sorry people felt for you because you were a wise pilgrim posting your trades and losing on everyone? Be careful what you post here…pilgrim!

  23. John B says:

    Thank you Tony,and for the week ahead

  24. vivelaamo says:

    Hi Tony. Would you expect a C wave to consist of 5 waves?

  25. mjtplayer says:

    Tony – terrible news for the Cards. Oscar Taveras dies in car crash in the Dominican, a young man just 22yrs old with a potentially very bright future, terrible tragedy.

    Hear about this? Very sad…

  26. Sumit Jain says:

    Namaste Tony,

    SPX future is off by 10 points from its high .. can we say that its a start of nasty C

  27. selhai says:

    It’s felt a bit like a repeat of Sept. 19 in London this morning. Then, FTSE opened with a relief spike on the Scottish NO vote and sold off. Today, a similar relief opening spike, following the bank stress test results, again sold off. Close to 1 1/2% so far.

    I’m watching now to see how the SPX/DOW prepare, wavewise, for Wednesday’s FOMC.

  28. I dont know why this surge takes people by surprise…..B waves are suppose to get people to think bullish……this blog again is biased in one sense due to OEW and count…..the perception is not the same on other forums…….this looks like a typical V-bounce that has happened over and over……time will tell if there is a change this time instead of besting ATH’s

  29. kvilia says:

    Thank you so much for changing the count short term. I definitely started feeling different from the initial layout. I went short again two days ago and did not change anything just letting the markets sort it out. Learning point: stick with major trend, dont worry about minor waves unless day trading.
    Thank you for another great update.

  30. rabbittrader1 says:

    gmchd: Your calculation is probably correct.. It is called the squaring of Price and Time

  31. Pingback: 10/26/2014 | fpharryc

  32. rabbittrader1 says:

    ANONYMOUS: AND sO Shall the Drop from the September 2014 High ( at 2019) related ;to the June 2017 LOW ; provide an exact statistical ,And Fibbonacci ,relationship to the October 1929 high to the Summer 1932 low. IMVHO

    • gmchd says:

      May I add something of possible interest? Closing low on 3/09/2009 to closing high on 9/18/2014 is 2019 days. The following day, ath 2019, the s&p gives a message? If my calculations are not correct, please post.

    • blackjak100 says:

      It may not mean anything, but it’s interesting the last POMO date is tomorrow which is a major phi mate turn date.

      I think it’s a no brainer the fed will not delay the end of QE. Things would have to get really bad before they come back and we’re no where near that pt.

  33. Tony, in your opinion,DJUSBK looks corrective or impulsive since 2009 botton ?thanks


  34. uncle10 says:

    Thanks Tony.
    Btw, back in early July, just before the dollar took off on the big move up, I asked you what you thought about the dollar and you said bullish and forecasted a big trend up. Great call Tony!!

    • tony caldaro says:

      USD bull until 2018

      • uncle10 says:

        Thx. Tony. Prolly so. My target for USD/JPY is 200. trading about 108 now.

      • tony caldaro says:

        have not seen that level since 1986
        they certainly would be celebrating in Japan

      • uncle10 says:

        hehe. may take a while to get there. They have been trying their best to get the yen weak for years. I have a feeling it may turn out to be one of those cases of beware what you wish for type deals. Im thinking 130-40 is fair value based on any logic or reason, but it always way over shoots— hence 200. 😉
        looking forward to Fed week.in the markets- should be exciting–just what we need right??

      • omahared says:

        I totally agree Tony on the USD bull into 2017-19. I also think that means there is a rush to safety in the dollar at some point that is triggered by a foreign collapse of some sort.

      • joecthetruthteller says:

        Agree Tony. With Euro going into the dumps, $$ has to go somewhere right? So where else but the USD.

    • joecthetruthteller says:

      Cmucha, good to know.

      Sam Cooke A Change Is Gonna Come lyrics

  35. jeffbalin says:

    Interesting. Went back and did a quick review of blog posts and comments around the week before and after the September 19 Primary 4 top. Its a good idea to have a diary with your own thoughts to review later but also built into this blog is a diary of everyone elses thinking which I have just ‘discovered’. Very educational and fun. A few of my favorite highlights.
    In the Sep 18 Thursday update Ryan Parker waving big caution flags and the reasons why, one day before the eventual Primary 3 top…..
    In the Sep 20 weekend update, while in what we presumed to be minor 3 inside of int 5 (of Maj 5, of Primary 3), mjt player offered a couple alternate bearish counts which most of us probably ignored, but the one that had the top of Primary 3 already in at 2019 probably sounded a little crazy at the time, but was dead on.
    Apparently Bud Fox posted a sell on his BoYu daily indicator and maybe he got the weekly and monthy too later before the Primary 3 top. But of course, the market climbed a bit after his posts and someone posted a jab making fun of his call just before the eventual 2019 top.
    Just a quick sample, lots more to see. I think going back and studying posts from before and during Primary 2 will be educational too. It’s all right there, on the right side of this blog. 9 years of journals. Study the thoughts, comments and observations of all of us for any period in the last 9 years. Check it out.
    Incredible amount of great quality information here on the #1 EW blog as rated by Google. Wish I had more extra time. Thank you Tony.

    • jparkins10 says:

      Nicely put, and so true!

      • jparkins10 says:

        About a year ago, I spent a whole weekend going through every blog post TC had made, was time well spent….didn’t dedicate time to the comments though, that would have been a monumental task!

    • jeffbalin says:

      It can be a long process I guess, but pretty easy to skim through the comments and get at what is really important to you.

    • jeffbalin says:

      Here are the Ryan Parker posts,. Actually he posted these caution warnings the exact day of the primary 4 top. I love this! Very educational. But for me, it isn’t about calling a top or the great timing or whatever, it’s just about his thinking process and observations, what he’s seeing that worries him.

    • jeffbalin says:

      Posted the day of the Primary 4 top:

      Ryan Parker says:
      September 19, 2014 at 12:57 pm
      Maybe its just me but something doesn’t feel quite right here. Investor’s Intelligence bull/bear ratio is still near record levels. Public seems totally enamored with Alibaba and the Dow/SPX/Nasdaq hitting new highs. The $NASI and !MCSUMRTOT are both on sell signals and have been for about 2 weeks. The ratio of 52 week highs to lows on the Nasdaq and Wilshire 5000 isn’t looking very good. Plus the horrible relative performance of small and microcaps relative to large caps just seem like a huge red flag to me. Plus momentum stocks have really taken it on the chin this week. Interesting article below from Bloomberg last weekend.

      Ryan Parker says:
      September 19, 2014 at 1:31 pm
      Caution. Something just doesn’t feel right. Somewhat reminiscent of the top in 2007. Small and microcaps topped in June of that year. Then the rest of the market peaked in October. This year microcaps topped in March, small caps topped in March or July depending on which index you are looking at. When momentum stocks perform poorly that generally is a red flag as well. The internals of the Dow and SPX look ok for the most part. However, once you get out of those two indexes the advance is pretty narrow. More tech/small cap stocks have declined more than 20% from their bull market highs than we saw at the October 2007 peak (see bloomberg link above). Not saying we are going to see a repeat of 2007-2009 but something just doesn’t feel right. I have some long positions but to offset some of my risk I took a pretty nice weighting in the TWM last week at $45.00. Not seeing a whole lot that makes me just want to pounce all over this market and go wildly bullish.

      Ryan Parker says:
      September 19, 2014 at 1:33 pm
      September/October has also marked a key turning point for the market in 13 of the past 17 years. Just sayin’. If we see a blast off day with solid breadth I will change my tune but this just feels a bit fishy. Maybe its the BABA IPO. Dunno. I just see a lot of caution flags here. Just my opinion.

      • perversionofthemean says:

        So, basically Ryan used technicals and other observations to help his timing? Well done!

        We had a few similar situations earlier in the year, and TWM was quite rewarding for those disciplined enough to trade it. I wasn’t.
        I sold my big position Q’s the week prior to the top, for the same reasons, but was again too chicken to pick up TWM or VXX. Then, I held some individual stocks that eventually gave up the ghost. They needed hard stops, not mental ones, which attests to the idea that I was resistant to thinking a significant decline could unfold. (I did make some ES $$$ short, however, but TWM/VXX are the ) Now, like Tony, I would like to see one more up to 1970 to fill in some puzzle pieces, but my own technicals are now showing the “hook” snap-back near complete, and we’re testing the underside of nasty broken momentum trends. For my work, crashes often unfold from such configurations. A gap-down this a.m. doesn’t help me to get short (chicken!). I need to see a gap-fill failure first.

  36. airran23 says:

    I’m in the bearish camp but what makes me very uneasy reading all the comments is that it seems everyone’s count is calling for a market drop next week or two. It seems tilted on the short side in Tony’s blog comments and can it be that everyone’s going to hit the jackpot?? Just my curious observation.

    • pimacanyon says:

      Feel the same way, everyone here is looking for the big C wave, and lots of non-OEW folks are looking for “a retest of the lows” (nevermind that we haven’t had a retest of correction lows since 2011).

      Also, as bullish as this short run has been, I’m wondering what’s going to change that powerful momentum to the upside?

    • I agree. Don’t have time to ready many blogs, would be curious if others are as drop-expectant as here.

      • People here are more bearish than average I think. Been reading blogs/columns/papers today and most of them seem to say up we go, or neutral. I think it’s selection bias that makes this blog more bearish than most places right now because Tony’s count is calling for a move down as the most likely possibility, and we are hear to read Tony’s blog, so it’s a self-selected group.

      • Thanks Two, well said, that was my sense as well, will be interesting to see how it plays out, should know soon.

    • Tony’s usually spot-on so some sort of pullback here wouldn’t surprise me, but I’ve found that two of the highest-odds bets are end-of-year (holiday) rally and betting the opposite of the majority.

    • uncle10 says:

      There are a few people here that are good traders and right more often than not, who are long/bullish. So not everyone here is on the short side. I have a small short via Nov. puts but there is not very much telling/showing me that it is a great short or long currently. gl

      • Hey unc! Vast majority expecting pullback here at the very least. Market usually does the opposite. Best to you and the rest of us. Expecting FOMC to be pivotal, causing second half of the week to reverse the direction of the first half; if I had to guess I’d say up then down.

  37. Hi,
    DJU did new high this week(possible wedge),and DJT correction has been below expectations,thanks


  38. Lee X says:

    Thanks Tony

  39. JW says:

    Following up on Tony’s comparison to 2011, I examined the weekly $NYMO chart from 2011 to this past Friday’s close to see if there were any similarities. Lo and behold, as in 2011, this week’s $NYMO closed above the upper BB, which is a very infrequent event. In fact, since 2011, there had been zero instances up until this past Friday. After the weekly close above the BB in 2011, and a few weeks of treading water, the market took a plunge. Hmmm.


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