weekend update


The market started the week at SPX 2068, gapped down to 2050 on Monday, then made higher highs for the rest of the week. For the week the SPX/DOW gained 0.55%, the NDX/NAZ lost 0.40%, and the DJ World index lost 0.25%. Economic reports on the week were mixed. On the uptick: construction spending, ISM services, non-farm payrolls, long term investing, plus weekly jobless claims improved. On the downtick: ISM manufacturing, consumer credit, the WLEI, the ADP index, and the trade deficit. Next week we get Retail sales, Export/Import prices and the PPI.

LONG TERM: bull market

Last weekend we discussed, and posted in the public charts, three potential bull market counts being considered in the OEW camp. We assigned a 40% probability to the count posted on the SPX charts, and a 30% probability to each of the counts posted on the DOW and NAZ charts. This week nothing occurred in the market to change that view.

What did change, however, is that the bull market extended into its 69th month with new highs in the SPX/DOW indices. This is important, and going mostly unnoticed. While OEW quantifies the medium term trends, (weeks to months), it also quantifies the long term trends, (months to years). During the entire 130 years of US stock market data, (February 16, 1885), there have been only five long term uptrends that have lasted five years or longer. One lasted 13 years, (1987-2000), one lasted 8 years, (1921-1929), and three have lasted 5 years, (1932-1937), (2002-2007), (2009-2014 so far). The 1932-1937 bull market was actually 56 months, and the 2002-2007 bull market was 60 months. This places our current bull market as the third longest in modern history. What may have been already observed by Fibonacci fans, is that each of the four completed bull markets ended in Fibonacci years: 5, 8 or 13. This suggests, should our bull market make new highs next month, its sixth calendar year. It is likely to continue into 2017, its eight calendar year. No guarantees. But stock market history suggests it is certainly possible.


Our long term OEW count continues to suggest this bull market is still in Primary wave III of a five primary wave bull market. As you can see on the chart above, Primary waves I and II ended back in 2011. And, a continually extending, and subdividing, Primary III has been underway since then. This 3+year rise has been difficult to track at times because of all the subdivisions. Twice we had potentially completed counts for Primary III. And, twice the market corrected only a small amount, and then rallied to new highs. When the current uptrend ends, the next correction, (be it 5%, 10% or 20%), should help resolve the current three count inflection point.

MEDIUM TERM: uptrend

The current uptrend, which we are labeling Intermediate wave v of Major 3, began in mid-October at SPX 1821. Completing the first week of December, the uptrend has rallied to SPX 2079 or 14%. The advance started quite rapidly, rising nearly 11% in just over two weeks. Since then, five weeks later, it has only gained another 3%. We have been counting this uptrend with five Minor waves: 1898-1878-2046-2030-2079 so far. Minor wave 3 divided into five Minute waves: 2024-2001-2041-2032-2046. Minor wave 5, however, has been choppy and appears to be forming a complex diagonal triangle.


Thus far from the Minor 4 SPX 2030 low, every pullback has overlapped the preceding advance: 2056-2040-2076-2050-2076-2062-2077-2066-2079 so far. Should this pattern conclude as a diagonal triangle, the high should mark the high of this uptrend. Then a correction should follow lasting for at least several weeks. Currently there are negative RSI divergences on the SPX/DOW daily charts, and negative crosses on the daily MACD for all four major indices. Also this week, the NDX/NAZ have lagged the SPX/DOW failing to make new bull market highs. This suggests the uptrend could rollover soon, or require higher highs in the NDX/NAZ first to set up negative divergences there as well. Medium term support is at the 2070 and 2019 pivots, with resistance at the 2085 and 2131 pivots.


While Minor wave 5 has certainly been choppy, we just noticed another potential count: Minute i 2056, Minute ii 2040, Minute iii 2076, Minute iv triangle (2050-2076-2062-2077-2066), Minute v 2079 so far. This count would suggest that Minute wave v has been underway since Thursday’s SPX 2066 low. Since Minute iii was longer than Minute i, Minute v could continue higher until it completes. This count would favor the higher highs in the NDX/NAZ scenario before this uptrend ends.


While the market did clear the OEW 2070 pivot on Friday. It took six attempts over the past 2+ weeks to do so. It dipped back within the range, however, after the SPX 2079 new high. Overhead resistance remains between the SPX 2078-2084 Fibonacci cluster zone, and then the OEW 2085 pivot range. So it does appear the market will continue to struggle to make higher highs. Short term support is at the 2070 pivot and SPX 2050, with resistance at the 2085 and 2131 pivots. We continue to see SPX 2050 as key support for this uptrend. Short term momentum ended the week at neutral after establishing another negative divergence at new highs.



Asian markets were mostly higher on the week for a net gain of 1.5%.

European markets were all higher on the week for a net gain of 1.6%.

The Commodity equity group were all lower for a net loss of 4.5%.

The DJ World index remains in an uptrend but lost 0.25% on the week.


Bonds remain in a downtrend and lost 1.0% on the week.

Crude remains in a downtrend and lost 0.2% on the week.

Gold is in an uptrend and gained 2.3% on the week.

The USD is still in an uptrend and gained 1.1% on the week.


Tuesday: Wholesale inventories, and an open FED meeting. Wednesday: the Budget deficit. Thursday: weekly Jobless claims, Retail sales, Export/Import prices, and Business inventories. Friday: the PPI and Consumer sentiment. Best to your weekend and week!

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


About tony caldaro

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242 Responses to weekend update

  1. rabbittrader1 says:

    YES drwarmington I did think ,back then ,( and so did TONY C.)’ That we were possibly in a B wave of Primary IV .. However the , wave extended , and I do believe we completed primary III last week ,so let us see how the market acts tomorrow. R.

  2. rabbittrader1 says:

    I expect MAJOR trading on the GLOBEX and OVERSEAS markets tonight and after hours , (on the SHORT or SELL SIDE) I expect a possible GAP DOWN Tuesday AM. as overseas markets react to today’s trading in New York. R.

  3. rabbittrader1 says:

    Rocky Major bottom due in 2017 (IMVHO) If we do not get a test of 2050 today, it should come tomorrow This Primary IV should be FAST and SHORT , R.

  4. rabbittrader1 says:

    I would expect the 2050 level to be tested today and possibly broken in the next hour Thiswould mean that (to me) , we . . are in wave A down of Primary IV My target for bottom of waveC of Primary IV remains approx 1694 on Dec.24th. Going out to replenish my Vodka. Best R.

  5. H D says:

    just look at last Monday, symmetry is a big deal for SPX. That’s near 10 handles from LOD, Muscle memory. See ya next Monday :mrgreen:

  6. liborval says:

    will we close green?

  7. Hi Tony,

    Posting after a long time. Hope all is well.

    Question regarding this comment from u below “Alex,
    Secular cycles last 16 – 20 years. This one should bottom between 2016 and 2020.
    When it does it will end deflation.”.

    Is this bottom going to be like a 50-62% correction of the absolute top (end of P5) or are you expecting this to be lower than 666 to end deflation?

    Sounds like we are expecting another 2008 type crash for a bottom to end deflation…

    Do u have a chart somewhere that I can follow regarding the cyclical bull within a secular bear?

    Muchas Gracias Senor !!!



    • tony caldaro says:

      Hi Rocky,
      We are expecting a 45% to 50% market loss during the next bear market.
      At current levels that is only back to the 2011 low, not 2009.
      Do a search on Secular cycles, you may find something posted a few years back.

      • Thanks Tony…

        Ok..that’s what I thought. Thanks for clarifying. So after the 50% crash to about 2011 lows (1100-1200) we should get into the next Secular bull for over 16-20 years…well into our retirements 🙂 That sounds like very good news to me.

        It sounds like point-wise, this market loss will be bigger than the 900 points lost during the 2007-2008 bear…but would be a buyable low for buy n hold into retirement.



      • tony caldaro says:

        We may be a lot higher before that unfolds.
        Nevertheless, when it does, that will end Cycle [2].
        Then a 30+ year Cycle [3], with its own bull and smaller bear markets should follow.

      • Yes..thanks Tony….A lot higher seems about right…like 2200+ for P3, and 2500 ish for P5 by 2017 doesn’t seem out of rech.

        The 30+ cycle should be something to ride on i suppose.

        Thanks again!!

  8. CB says:

    spy has first TL resists around 208 …daily .. if anyone likes to play with fire ;). GL all.

  9. ZH yet again, Predicted bottom in SPX correctly..Lolz


    It is important site!!!

  10. The best fact about the Canadian market . The most amazing stat that none of you have ever heard.
    HELOC debt ( Actually drawn ) has grown 800% since 2000. 3 X the USA peak in relative terms.
    This is just the start ( bmo, td, ry ) and will have an impact here.

  11. We are at a X-roads

    Either 2079 is the top or we are witnessing an Irregular Flat Micro 2 of Minute 5.

  12. fotis2 says:

    Rabbit Rabbit where art thou Rabbit??

  13. John Arella says:

    Shorting now, all indexes hit top channel and are falling

    dow target 18000, top 17991 – target meet – hit top channel since 2009
    spx target 2080, top 2079 – target meet – hit top channel since 2009
    nasdaq target 4800 – top 4811 minimum target meet, hit top channel since 2009

    Target for Dow 15,500

  14. BMO, TD, RY ( canadian major bks ) getting hit. At this rate , the US will be buying Canada for the same price they purchased LOUISIANA.

  15. uncle10 says:

    Say Tony reckon if Yellen is going to get the usual first year crisis for new fed chair?
    btw, I took a peek at our cnn fg index it was 68= greed. 😉 hehehe

  16. fotis2 says:

    This looks like wave c down

  17. scottycj1 says:

    If the 2060 area gives way we are likely done on the upside for awhile

  18. uncle10 says:

    plenty of warning signs out there. small short wanting to go big short but scared. 😉
    gl and good day all.

  19. lunker1 says:

    2074 is the 127.2 extension of 2019 to 1821. The daily candles don’t like it.

  20. 7dayyss says:

    Wow, the dry shippers are just getting annihilated, quality at that. BDI capesize down substantially. DSX, BALT, SB, SBLK, ISH, DRYS, etc. Seems like there’s going to be some bankruptcies from oversupply of capesize and lower prices overall. These will be “penny stocks” before it’s time to jump back in!

  21. I made this offering last week . Canada and Austrailia soon to be disaster, 67-72 % issuance since 08 E&P,metals and mining. In the US THE EXECS are getting margined out on loans . THIS situation will drag mkt to 1983
    Darkness (@SirDarkness) says:
    December 4, 2014 at 10:27 am
    To all the people thinking they are buying a low in energy names. WAIT or short.
    The second dip buyers are the weakest.
    Just wait..tax loss selling in energy. Here is the key *******The hi yld energy bids will start to evaporate /really pissing off accounts ******. Same old crap
    You know firms won’t want to bid these bonds( they dont want them on their books either into yearend)…only knocking them down further adding to lower equity. Things like $xle have another 10% down ..micro -mid cap names 20-30%. Thing like SLCA , i have been short from 61- to easy to cover . The small names still have much further to go. They are only in the PR stage of thinks are ok.Then you will hear about the margin calls from execs…it’s so easy yet , hard to do because they are down. I guess that would spill over to spx , maybe 1983 –
    Wall st never changes

  22. Communique from the Russian Front … Moscow running regular Current Account Surpluses since 1995 … Russki “Rainy Day Fund” valued at US$470,000,000,000 and separate to forex reserves … Debt to GDP 14% … Flat income tax rate 13% … Crude priced in roubles barely moving.

  23. FTSE switched to SELL on my model. FTSE has been switching BUY/SELL almost everyday in last 7 trading days. I think this time, it wont be saved. Any 20 point rise from present level (6672), should be SELL with stop loss 6780.

    • buddyglove says:

      …”FTSE has been switching BUY/SELL almost everyday in last 7 trading days”…Yeah I you might wanna re-think that system…

      • BuddyGlove, Good comment. Even if model shows BUY or SELL, have I said before that take action?

        It is now that I am saying “….Any 20 point rise from present level (6672), should be SELL….”

      • uncle10 says:

        hey buddy, think you like gold short. Ive been bearish myself, but GLD over 116 for more than a spike-including closing above– gets me long. gl

  24. 100 years since the creation of the Federal Reserve, it is absolutely imperative that we get the American people to understand that the Fed is at the very heart of our economic problems. It is a system of money that was created by the bankers and that operates for the benefit of the bankers. The American people like to think that we have a “democratic system”, but there is nothing “democratic” about the Federal Reserve. Unelected, unaccountable central planners from a private central bank run our financial system and manage our economy. There is a reason why financial markets respond with a yawn when Barack Obama says something about the economy, but they swing wildly whenever Federal Reserve Chairman Ben Bernanke opens his mouth. The Federal Reserve has far more power over the U.S. economy than anyone else does by a huge margin. The Fed is the biggest Ponzi scheme in the history of the world, and if the American people truly understood how it really works, they would be screaming for it to be abolished immediately. The following are 25 fast facts about the Federal Reserve that everyone should know…


    • buddyglove says:

      Newb…Two choices. A:-Raise an army against the Usa, take power and change things (good luck with that) or B:- Go with the flow and make some money.

      • Buddy, I’m not trying to raise up or fight against anyone. I’m just sharing an article to those who are not familiar with the federal reserve; its powers and its history. I do think this crazy printing and the precious metal manipulation will backfire on us and our currency and way of life may be affected in the future.

      • tommyboys says:

        I appreciate and thank God for the Fed. We have a system in place to help repair damage caused by the greed of a few. Consider economies of countries without a CB – maybe consider moving to one of them?

      • tony caldaro says:

        Prior to the FED economic expansions were inflationary, and contractions deflationary.
        The FED was formed to help even out the biz cycles, not eliminate them.

      • uncle10 says:

        I think the Fed helped save the system which imo was a good thing to do.
        While I think it has helped the market I don’t give it nearly as much credit as many do. When the market has its next bear everyone will be wondering where the fed is and y they aren’t helping.
        They do have too much power and I think relying on a few people with that power is dangerous and doesn’t seem to be prudent.

    • scottycj1 says:

      Janet Yellen is chairman of the fed

    • kjb0 says:

      The FED is the worst entity ever created. It is slowly destroying our way of life and answers to “nobody”. This is a FACT. If you want to make a difference, then you will need to vote for politicians who know the dangers and will abolish the FED. The problem is that most politicians will not rock the “Big Establishment”. The ones that do are considered loose cannons, such as Mike Huckabee or Rand Paul. Most people don’t know anything about the FED and just want to stay in their 9 to 5 comfort zones and not think about it. They are all sheep and will follow the herd. Until we the people are smart enough to vote in politicians that will make a difference instead of popularity contest winners or people who can buy an election, nothing will change. Considering half the population does not know who their Congressman or Senator is, we could be in for a long wait.

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