weekend update


Another week of all time new highs in the US indices. The week started off quietly from SPX 2018. Hit SPX 2024 on Monday, made its first lower daily low of the entire uptrend on Tuesday, then hit 2034 on Friday. For the week the SPX/DOW were +0.90%, the NDX/NAZ were +0.05%, and the DJ World index was -0.20%. Economics reports for the week were mixed. On the uptick: ISM manufacturing, the ADP, consumer credit, plus weekly jobless claims and the unemployment rate improved. On the downtick: construction spending, factory orders, ISM services, monthly payrolls, the WLEI, plus the trade deficit increased. Next week we get wholesale/business inventories, export/import prices and retail sales.

LONG TERM: bull market

In the three plus decades we have been applying OEW, the market has experienced five bull markets and four bear markets. Most would even count the 1987-2000 bull market with three bull phases and two bear phases. If we include these three bull phases we are now referencing seven bull markets, with today’s bull market being the seventh. During five of these bull markets the most obvious count, as OEW was quantifying the trends, was the correct count. None of these five bull markets hardly required any labeling revisions at all. One bull market, however, was quite difficult to track: 1990-1998. There were so many wave subdivisions during that advance, that it took several labeling revisions as it progressed.

What sets it apart from the other five is that it took eight years to unfold while the others were 2, 3 or 5 years. Our current bull market is now in its 68th month. In the entire modern history of the US stock market, 1921-2014, there have only been five bull markets that have lasted five calendar years or longer. And, two of those lasted exactly 60 months, or just under. We are currently experiencing the third longest bull market in nearly 100 years. This is obviously quite rare.

The two previous longest bull markets each had a catalyst. During the 1921-1929 bull market it was the introduction and expansion of consumer credit. During the 1987-2000 bull market it was the introduction and expansion of the worldwide web. This bull market has also had a catalyst: Central Bank asset purchasing programs, commonly known as QE. Each of the previous two bull markets ended in a speculative bubble, when short term rates rose beyond what the economy could manage. In 1921-1929 the bubble was the entire stock market, and in 1987-2000 the bubble was formed mostly in the Growth sector.


The reason for these bull market comparisons, in OEW terms, is that this market is currently doing something it has not done since it began in March 2009. It is making new bull market highs without a FED liquidity program underway, announced, or even suggested. In fact, not only has the last QE program ended. But plans are to start raising interest rates next year. This suggests, after 67 months of FED liquidity, the market has reached its most significant inflection point to date. This bull market may be shifting from a liquidity driven market into a more normalized economic cycle. Should the market continue to make new highs into next year, its sixth, this should seriously be considered.

MEDIUM TERM: uptrend

After the September high at SPX 2019 we expected the market to enter a Primary IV correction. We had conservatively counted five waves from October 2011 and surmised that was the high of Primary III. The market then declined 9.8%, in an a-b-c pattern, into a SPX 1821 low in October. Then after a day or so of high volatility, it started the current uptrend. The uptrend, as noted quite early on, was stronger than expected. In fact, the market made new all time highs this week. As we explained in the last weekend update, the correction appeared to be too small to consider it all of Primary IV. Therefore, it was either just Major A of Primary IV or Primary III was extending.

The rationale for this position is quite simple. Second and fourth waves of bull markets are generally similar in the percentage of market decline. In the previous six bull markets from 1982, noted earlier, the differences in the percentage of decline between the second and fourth waves ranged from 0.2% to 6.8%, with just a 2% mean. Therefore, suggesting a 9.8% correction and a 21.6% correction, a difference of 11.8%, were both primary waves would be well beyond the norm for the past 30+ years. Not impossible, but certainly not probable. With this in mind we offered an extending Primary III alternate count that fits all four major indices.


With this week’s rally to new highs, and an uptrend displaying fives waves up thus far, we increased the probability of the alternate count from 50%/50% to 55%/45%. Remaining objective, we will not know for certain if Primary III is extending, or this uptrend is part of a complex Primary IV, until it ends. If it ends with an impulsive five wave structure, an extension is underway. If the uptrend ends with a corrective seven wave structure, we would consider it an irregular B wave with a C wave down to follow. The key is the internal structure of this uptrend. As a result we will maintain both counts until this issue is resolved. For now, the trend is still rising from the recent SPX 1821 low. Medium term support is at the 2019 and 1973 pivots, with resistance at the 2070 and 2085 pivots.


The uptrend from the recent SPX 1821 low now appears to have five waves up: 1898-1878-2024-2001-2034. Since the uptrend has not completed yet we do not know if it will end impulsively, or not. Since we are now giving the extending Primary III a 55%/45% advantage we can label these five waves as Minor waves 1-2-3-4-5. Oddly enough, when we do some Fibonacci projections on this uptrend using the Primary III extending count we arrive at a similar target using the Major wave B Primary IV count.


If this uptrend unfolds in a Major B wave corrective pattern, the maximum upside target would be 1.382 times wave A. This produces a maximum upside target of SPX 2095. If the uptrend unfolds in an impulsive Intermediate wave v pattern, we arrive at several potential Fibonacci targets just under SPX 2095. Minor 5 = Minor 1 @ SPX 2078, Int. v = Int. i @ SPX 2084, and even Major 3 = 4.236 Major 1 @ SPX 2082. Quite an interesting setup no matter how the uptrend unfolds. The weakest Fibonacci relationship is Minor 5 = 0.618 Minor 1 @ SPX 2049. However, this does not fall into the SPX 2078-2084 cluster.

Short term support is at the 2019 pivot and SPX 2000, with resistance at the 2070 and 2085 pivot. Short term momentum ended with a negative divergence on Friday.


Asian markets were mixed on the week for a net loss of 0.3%.

European markets were nearly all lower for a loss of 1.3%.

The Commodity equity group were mostly lower for a loss of 3.0%.

The DJ World index lost 0.2%.


Bonds gained 0.3% on the week but remain in a downtrend.

Crude lost 2.5% on the week and continues to downtrend.

Gold lost 0.3% on the week, thanks to Friday’s surge, but remains in a downtrend.

The USD gained 0.8% on the week and remains in an uptrend.


Wednesday: Wholesale inventories. Thursday: weekly Jobless claims, the Treasury budget, and a speech from FED chair Yellen. Friday: Retail sales, Export/Import prices, Consumer sentiment, Business inventories, and a speech from FED governor Powell. Best to your weekend and week!

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


About tony caldaro

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229 Responses to weekend update

  1. scottycj1 says:

    Time for some Stones

  2. Walter Crane says:

    Sticking a sharp knife into this tomorrow morning. Course they will create a top on veterans day, just another way of diminishing the greatest country on the earth. Tommorow, TVIX load up. Was off by a few days on the last top, seems the same way again, but tomorrow is the definitive top. And those elite put holders who bought large at much lower prices wipe up again in the last week of November. Rinse and Repeat.

  3. bhtrade says:

    Bloggers = more bears than bulls again. Not good for those hoping for a major top anytime soon

  4. Walter Crane says:

    Want to hear from a bear. We are at a huge top here folks. Scaling into biggest TVIX position ever. Stick a knfe and fork into this, its a BALLOON. Look at PZG at .65 cents. Lets see how that does over the next week or so as well. On AMEX.

  5. Nothing will happen this week, there is G20 meeting this week. Sunday is finance minister meeting. One single statement from any member supporting QE, or “Green shoots” or “economy growing” or “economy at escape velocity” will send futures higher. I think till 16th Nov, nothing happens

  6. Looks like the top is in S&P, i can clearly count an impulse from the last low this week around 2000 and i am pretty sure not a lot of bears are left. Count invalidated above ~2060, so a pretty good risk/reward short possible now.

  7. Wave 1 : 667 to 1371 ( 704 points)
    Wave 2 : 1371 to 1075 ( 296 points)
    how about Wave 3 : 1075 to 2047 (1.382*704 = 972 points)
    12% rally from 1821 with out a dip. that is something.
    Soul had a big write up on 2047 .check his blog from about 4 weeks ago.

    • soulsurfer says:

      thanks pra! Slight update to my “2 numbers to rule them all” essay from august:
      S&P 500 bottom was, rounded the whole number, 667 and not 666 so:
      667+667+667+38= 2039

      1821->1869 = 38, 2001+ 38 = 2039

      If 2039 gets broken to the upside then 2049 is next: it’s very close to the 1.382x extension of PI, from PII -as you calculated- but which is rounded to the nearest number 2048.

  8. John B says:

    One step at a time,we got 36,next target i have is 40-41,then 49 area if bulls feel like it

  9. cmucha68 says:

    What a silence from the bears on the board. Where are the 2036 Top people ?

  10. scottycj1 says:

    Looks like the mkt will change trend when the Moon opposes Mars….11-11

  11. uncle10 says:

    Thanks Tony.
    Vol getting smashed. UVXY new low. you can always buy it cheaper 🙂

    • klopharmd says:

      Stopped out uncle?

      • uncle10 says:

        yes. was hoping for more weakness on Friday. closed half of it at the close. the rest this morning. keep losses small. trade it again when I see a good set-up.
        I see a lot of posts and blogs say you can’t or shouldn’t try to make money shorting in a bull market and I agree if you can’t watch it and trade/manage it —if in bull market you have to take profits when you have them short and vice vers in bear…. But if you know what you are doing then there is no reason IMO you shouldn’t trade both long and short in ANY market and make money with good money management. gl

  12. H D says:

    GM all, one adjustment would be W1 218 points (Oct’11), that’s 2039 for symmetry in 5.

  13. I am inclined to open SHORT at 2037.6, but I think it is still not done.

  14. John B says:

    hmm bulls know where they going and that is…… by ……

  15. gtoptions says:

    Thanks Tony
    Consolidating Pivot Range
    SPY ~ WPP @ 202.42 ~ WR1 @ 203.86 ~ WS1 @ 200.97
    GL All

  16. fionamargaret says:

  17. Hi,Shangai composite reached the trendline,log scale,if it breaks we can project a target of 2900/3000,based on the congestion/rectangle in blue


  18. mjtplayer says:

    Back to being a low volatility, extremely boring market….

  19. Thanks, Tony, for your outstanding weekend commentary. 🙂

  20. The USD might have completed a 5 wave move last Friday. Conversely the Euro & a host of other currencies look as though they might have finished a 5 in the opposite direction. Same possibility for gold & crude not to mention the commodity sector in general and even $INDU:$GOLD. I’m not suggesting the USD has topped out. In fact, I don’t think it has. But a correction looks on the cards with implications across the board. The 1820.66 low on the SPX occurred on 15 Oct. Guess what, the October low on the USD (84.53) happened on the same day before a powerful rally took it to as high as 88.32 last Friday. The correlation between the USD and INDU/SPX is not always strong, but it has been very recently. The action in gold stocks has been quite volatile in this critically oversold sector. After collapsing the previous week the $XAU/$HUI/GDX gold seniors indices made it halfway back with a move up from Wednesday’s lows measuring 12% to 13% on very large volume. Similar story with the gold juniors (GDXJ). Their rally off Wednesday’s low was 16%. Also noteworthy is the volume on GDXJ in the first week on November which was an incredible 30 times higher than the first full week in Nov. 2013. A tradeable low perhaps and we might find a Primary A marking on TC’s gold chart soon. But I don’t think it’s THE bottom in this sector for a number of reasons including a USD comeback. At the real bottom I would also expect even greater volatility. The move off the Oct. 2008 lows after gold had fallen from $1033 to $681 saw $XAU/$HUI/GDX rise 25% over a 2 day period. Now that’s a bottom!

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  22. torehund says:


    Shanghai looks good long term. Maybe it will top out With Tonys dollar proj top in 2018. Understandably the Chines authorities prints money to buy own stuff on the cheap, who would not ?
    And a rising market underpins the real estate market by pushing up commodities (sooner or later) and loosens Pockets of homeowners.

  23. infantguru says:

    With Nov and Dec being historically strong for stocks, I can’t see B as a possibility now.
    I rather see spy 214 being hit in this time frame.
    My 2 cents.

  24. bhupal777 says:

    Re: Shanghai Composite Index

    Regular visitors of this blog know that, I have been pounding the table that Shanghai composite index price action looking really strong for the past 2 months. After today’s intraday move around 2444, it still has 8% more upside left around 2650 to encounter the next major resistance. So with stop loss below 2400 which is around 2% I can shoot for 6 to 8% gain in coming 2 to 3 weeks.
    EW traders I really want to learn from you in EW wave terms, do you see the trade setup exist on a daily chart? If yes how do you define the risk and manage this trade. Please don’t take it in negative fashion I really want to learn from other EW traders because I never succeeded trading EW counts. Thanks in advance.

    BTW last 4 days of action looks like a bull flag after 4 days of major upside move. For newbies refer Edwards and Magee book for bull flags and consolidation patterns.

    Also if it takes out 2650 resistance with a major move I really think that, it is going to be big blow to who are calling or looking for market top and they may have to do some serious introspection.

    • torehund says:

      Agree Bhupal, the churn in the bottom was protracted but we knew it was coming strong. Now the weekly macd is a bit overbought, but as it is strongly on the positive side its maybe the best option to sit long and do nuttin…Bullish cross a possibility on the weekly. I dont trade short term so my thinking is more skewed 3 years Ahead. A strong dollar gives lots of Chinese stuff to Uncle Sam, and lots of Yuans in the Pockets of the Chinese. A win-win.

      • bhupal777 says:

        Torehund, Agree on long term. When it takes out 2650 with strong action I will be going long in my long term portfolio that plays only weekly charts. For now I will take profits at 2650 or stop out below 2400 using daily charts.

    • tony caldaro says:

      Just broke thru the down trend line of a multi-year base, and confirmed a long term uptrend. But it took a six month uptrend and 25% move to do it.

      • bhupal777 says:

        Yes Tony. That is true if one draws the trend line connecting highs. Which is a confirmation that uptrend is intact. But I took the parallel line from bottoms connecting and lay over on the top points. Kind of channel. That is projecting around 2650 as a major resistance.

    • chrisk44342 says:

      If you’re a fan of measured moves, the declining wedge suggests a target of roughly 3250

  25. Soulsurfer: Here’s an excerpt from your Saturday night post:

    Now let’s look at zweig breadth. Even though we didn’t get a zweig breadth thrust, which IMHO rimes with the fact that this is a 5th wave and not a kick-off wave (as in a 1st wave), ZB closed >62 last Friday (October 31) –but, as mentioned, no Thrust event- This close >62 has only occurred 4 times over the past 24 months, and coincided with:

    Actually, a Zweig breadth thrust is 61.5 % or higher, so >62 readings would indeed have been Zweig breadth thrusts. But the values you referred to were in fact 60%+ readings, a little below the 61.5% threshold. As I mentioned previously the term breadth “kick-off” can mean the initial thrust of any intermediate-term rally, not just a 1st wave rally. Of course the wave number is subject to modification by it’s degree. Every 5th wave has a 1st wave of lower degree. Which goes to show that you can’t define a breadth impluse by a wave number.

    • soulsurfer says:

      george, with all due respect, but you are incorrect, and I don’t get what you are trying to proof or disproof.

      Namely, no ZBT occurred off the 1821 low: a ZBT is defined as “ZB has to rise from 61.5 within 10 trading days”, please look it up. ZB failed to close above 61.5% within 10 trading days: it closed 61.5 by EOD 10/27. It failed to do that: no ZBT! However, it closed above 62 in about 13-14 trading days or so. But, just because ZB is above 61.5 does not mean there is a ZBT; see the definition. Sorry, I know you constantly try to proof me wrong for what ever reason, but neither this time.

      I simple looked at ZB readings >62 over the past 2 years. I didn’t say I was looking at ZBT events. But, one of those readings was a true ZBT (october 2013). I excluded that one from my study. Since the March 2009 low there have only been 3 ZBT events. Dan Eric has a nice plot of them for if you want a visual:

      Of these three events, two occurred during major 1 waves; the 3rd ZBT event was during a 3rd wave. Therefore and in addition, I simply did not define a wave degree by a kick-off wave.

      • The Zweig breadth thrust signal must rise from .40 to .615 within 10 trading days. You did not mention 10 trading days to the .62 signal but I assumed that that was what you referred to. I should have checked with you first to make sure that is what you meant. I have numerous times praised your posts but we tend only to remember the times when a corrective statement has been suggested. I could just as easily have said you were trying to find fault with me by your contradiction of my use of the term “kickoff impulse”. You did not explicitly refer to me but I am the only one on this blog who has used that term. But rather than take it as a personal rebuke, I simply gave an explanation for why I thought my use of the term was valid.
        I always read your posts with interest, and it is usually those I find most valuable which I try to help improve by pointing out possible errors. I think you should actually encourage people to make their criticisms on Tony’s blog, whether they turn out to be true or false. That way you will have a better chance of arriving at the best possible version when you post your analysis on your own site, where I know you are trying to sell subscriptions. I have never posted any criticisms on your personal blog for that reason.

      • The first sentence of my above post was poorly stated:

        “The Zweig breadth thrust signal must rise from .40 to .615 within 10 trading days.”

        I should have said the 10-day MA of the ratio of advancing issues to total issues must rise from .40 to .615 within 10 trading days to generate a Zweig breadth thrust signal.

        Also I think you have come close to requiring a “kick–off” thrust or impulse to be a 1st wave because you have implicitly stated that I was using the term incorrectly in this statement:

        “Now let’s look at zweig breadth. Even though we didn’t get a zweig breadth thrust, which IMHO rimes with the fact that this is a 5th wave and not a kick-off wave (as in a 1st wave),”

    • joecthetruthteller says:


      Some people will never admit when they are flat out wrong, but will instead change the counts to fit the picture or insert some mumbo jumbo to cover up their tracks – and any criticisms no matter how constructive they maybe is simply aberrant to them.

  26. wavecounter says:

    I think everyone needs to watch the Nasdaq for direction from here. If you look at Tony’s COMPQ daily chart it looks like either an Island Top or some sort of pause for breath before going higher. A gap down opening leaving the island “abandoned” and floating in the air would be very bearish. Likewise a rally up out of the congestion area would be very bullish. Not EW but simple Technical Analysis.

  27. Everyone in predicting down for SPX. This is the clear example of how I lead this world. I have been saying DOWN since my birth. All of you are behind me!!!

  28. fotis2 says:

    Seems quite a few analysts from the different trading blogs,sites are expecting a pullback,waveC,wave 2 etc. within next couple days this time round i will wait for confirmed change of dirrection before jumping on ive gotten burned once too many trying to outguess this market.

  29. fionamargaret says:

    Thanks Tony, and all the thoughtful contributors.

    Cicely/Alaska you mentioned “down not yet”, and you know I appreciate your work – what do the cycles/phases tell you??

    • fionamargaret says:

      …..also Gerald (astrofibo) – your thoughts…
      Thanks xx

      • cicelyalaska says:

        Indecisive right now, everyone keeps pulling QE rabbits out of their hats. Maybe that is done now.

        Sticking strictly to the facts my four signals are all long now. Oil should remain cheap thanks to the Saudi’s helping to counter the Russian and ISIS oil economies. The Fed has every intention of using any means necessary to keep improving the appearance of the economy.

        The issue I am seeing is the small caps failing to perform on par with SPX. Who knows how long that will go though. On the opinion side, I’m holding a very small amount of SPX shorts for fun money right now and I’m in cash otherwise. Long is the trend, but I’m waiting a little longer to obligate, we are at a specific time period where we could still go either way over the next week or two.

      • tony caldaro says:

        the QE rabbit keeps chasing the bears to the sidelines

      • fionamargaret says:

        Thanks Cicely – indecisive sums it up for me too.

    • Fat Pitch always has a stimulating array of facts and analyses, but there are a couple of items that need questioning:

      “Slowing growth expectations are also reflected in earnings guidance. 89% of the SPX has reported their 3Q sales and EPS. For 4Q14, sales growth is expected to fall by nearly half, to 2.2% yoy. Expected earnings growth of 9.6% in September fell to 4.5% this week. The culprits are a booming dollar and plummeting oil prices.”

      Actually, with 89% of S&P 500 companies reporting, earning growth has been +7.9% for the quarter ending Sept. 30, exceeding expectations of 4.5% earnings growth by 3.4 absolute percentage points or 75.5 % greater per cent gain than expected. Additionally, many retail analysts expect an appreciable growth for XMAS sales, making 4Q yoy change positive not -2.2%.

  30. blackjak100 says:

    Minneapolis Nate Kautz thinks we need one more higher high above 2034 for completion. Either way we are very close to the top of this rally. The VIX chart below also supports this and should be watched carefully early next week for clues IMO. If it closes below 13, that would be an initial warning sign rally is going higher towards TC’s target. Of course the $64K question is how far do we retrace or do we make a lower low below 1821?

    My five wave count with subdivisions checked on 5 min chart has been 1869 – 1835.02 – 1961.95 -1957.79 (shallow triangle) – 2034.26. This count contains an extended third and fifth wave with amazing fib ratios as shown below….

    wave iii = (2.618 * wave i = 126.55) + 1835.02 = 1961.57 (.38 short of fib perfection)
    wave v = (1.618 * wave i = 78.21) + 1957.79 = 2036.00 (1.74 short of fib perfection)

    GL and Cheers!

    • blackjak100 says:

      I will also add Ghostine tweeted a lot this weekend as to why he thinks there’s a tad more upside left in the SPX, RUT, QQQ, and NAZ. I’m still not a big Ghostine fan, but he has a lot of nice charts using harmonic patterns and they all align toward a tad more upside before a sharp reversal. Simply go to his Twitter feed and check out if interested. His SPX target is approx 2040 which may correspond to Nate Kautz’s count above.

  31. JW says:

    Interesting analysis on zen trader.ca analyzing options profitability that suggests we may have just finished the rebound before a much larger move down. Of particular note is his comments on stealth distribution, which is supported by the massive SOS that we have seen over the last week.


    • blackjak100 says:

      great article which I don’t completely understand, but I understand what he’s trying to convey. He seems very well educated on the market and options so I’m sure he knows what he’s talking about.

      • JW says:

        Yes, I agree. We are starting to see a number of independent (non Elliott wave) analyses pointing to a significant move down in the near term.

  32. Hi,i believe that while IR is below inflation stock market tends to go up,at the moment IR is simbolic


  33. Caldaro I think with your daily updates you need to put a Yogi Berra quote.

    I never blame myself when I’m not hitting. I just blame the bat and if it keeps up, I change bats. After all, if I know it isn’t my fault that I’m not hitting, how can I get mad at myself?

  34. cmucha68 says:

    A,B,C or 1,2,3, truncated, voilated, extended, exhausted, continuation or reversal, impulsive or corrective, elongated or flat, up or down or sideways or perhaps the biggest down day in stock market history or simply new highs ???

    Al lot of guessing on this board these days. Well, that’s the market made by humans.

    • joecthetruthteller says:


      LOL! Too funny! Yep, everyone is trying to play the Guess the Market game with xyzzzzzzzz’s and what not. And let’s not forget the confusion on the blog.

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