weekend update


The market started the week at SPX 2089. After hitting an all time high at SPX 2094 by noon Monday, the market traded lower for the rest of the week. For the week the SPX/DOW lost 1.35%, the NDX/NAZ lost 1.80%, and the DJ World index dropped 1.30%. Economics reports for the holiday week were sparse, and biased to the downside. On the downtick: construction spending, the Chicago PMI, ISM manufacturing and the WLEI. On the uptick: consumer confidence and the monetary base. Next week’s report will be highlighted by the FOMC minutes and the Payrolls report.

LONG TERM: bull market

As we enter 2015 we are maintaining the same long term count as we have for past few years: a five primary wave Cycle wave [1] bull market underway. While this bull market has lasted longer than nearly everyone expected. It has maintained a reasonable OEW pattern, even through this very extended Primary wave. To recap: Primary waves I and II completed in 2011 and a quite complex Primary III has been underway since then. Primary I divided into five Major waves, with a subdividing Major wave 1 and simple Major waves 3 and 5. Primary wave III appears to be doing just the opposite with its five Major waves. Major wave 1 was simple, and Major wave 3 has thus far subdivided quite a bit. In fact, we are counting the recent activity from the October 2014 Intermediate wave iv low as Int. v of Major wave 3. And it appears to be subdividing into five Minor waves.


Should the count be correct, we would expect the current uptrend to reach around SPX 2214. Then after a correction of about 5%, the market should then make new highs to complete Major wave 3. Then after a correction of about 10% for Major wave 4, Major wave 5 should take the market even higher. It would appear this bull market still has plenty of uptrends, and time, before it concludes.

MEDIUM TERM: uptrend

After completing Intermediate wave iv in October at SPX 1821, the market rallied to SPX 2079 by early December. Then after a 5% correction into mid-December to SPX 1973, the market rallied to new highs just before year’s end. We have labeled the SPX 2079 high as Minor wave 1, and the 1973 low as Minor 2 of Intermediate wave v. The current uptrend from that low thus far is only part of Minor wave 3.


When one reviews the RSI on the daily chart they will note that uptrends get, and stay, quite overbought for quite some time before they top out. This one just barely hit overbought before declining to below neutral this week. It still appears to have plenty of upside left based on this indicator alone. Medium term support is at the 2019 and 1973 pivots, with resistance at the 2070 and 2085 pivots.


From the Minor wave 2 SPX 1973 low we have counted four waves up to Friday’s SPX 2046 low: 2012-1992-2094-2046 thus far. Our preference remains to count these four waves as Micro waves 1-2-3-4 of Minute wave one of Minor 3. However, the recent pullback of 48 points (2094-2046) was a lot larger than expected, and larger than that wave 2 pullback of 20 points (2012-1992). With this in mind, it is possible that Minute wave one ended at SPX 2094 and the recent pullback is Minute wave two.


Nevertheless, we are maintaining the Micro 1-2-3-4 count because of the Fibonacci relationships that have unfolded. Micro wave 1 (1973-2012) rose 39 points, Micro 2 retraced 50% of that advance to SPX 1992. Micro wave 3 rose 102 points, or an exact 2.618 relationship to Micro 1. Thus far, Micro wave 4 has retraced nearly 50% (2043) of that advance at Friday’s 2046 low. Should the market continue its pullback early next week, dropping below SPX 2040, then we would consider this pullback Minute wave two. Should the market rally beyond the OEW 2070 pivot, then we would consider Micro wave 5 underway. So the parameters for next week are below SPX 2040, and above SPX 2070. The first suggests a test of the 2019 pivot range, the second new highs are next. Short term support is at SPX 2058 and SPX 2046, with resistance at the 2070 and 2085 pivots. Short term momentum ended the week with a positive divergence.


The Asian markets were mostly higher on the week gaining 0.8%.

The European markets were all lower on the week losing 1.2%.

The Commodity equity group was mixed and lost 2.3%.

The DJ World index lost 1.3% on the week.


Bonds continue to downtrend but gained 1.0% on the week.

Crude is still in a downtrend and lost 4.4% on the week.

Gold remains in an uptrend but lost 0.8% on the week.

The USD is still in an uptrend and gained 1.2% on the week.


Monday: Auto sales. Tuesday: Factory orders and ISM services. Wednesday: the ADP, Trade deficit and the FOMC minutes. Thursday: the ECB meets, weekly Jobless claims and Consumer credit. Friday: Payrolls (est. +245K) and Wholesale inventories. Best to your weekend, week, and new year!

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


About tony caldaro

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223 Responses to weekend update

  1. I just noticed that the monthly S&P MACD histogram is the lowest (weakest) it has been in three years (tail end of P2). That means MACD is getting ready to “left hand crossover”. Something has changed.

    Market could bounce of the 2019 old highs, sure.

    But if you’re looking to bottom fish, you better have sharp hooks, good bait and a good boat. Just saying.


  2. simpleiam says:

    Anyone think we’re seeing a ST bottom in WTI/Brent? Sure looks like a flush, and think markets will accept WTI below $50 sooner rather than later (just as they seem to have been doing at other levels).

  3. fotis2 says:

    Well the gap has oficially closed lets see where to from here wait for mama Yellen and papa Draghi and the big bad Fed..Think the poor performance of the $ gave the bear a free porridge

  4. Hi Tony,

    Wondering what the chances are that we could have started Primary 4 here? And, if not yet, what would have to occur to lead us to that conclusion?

  5. torehund says:

    Gold is firming up, think its the Greece uncertainty about the euro driving it, if I was living there holding it I would flee into something else, Drachma was a nightmare and Will continue to be week if it is to be issued.

  6. reddragonleo says:

    Well, we have the ol’ “Turn-around Tuesday” tomorrow. So what will it be? Will we gap down, fill the gaps on the various ETF’s from December 18th and then rally up the rest of the day? Or will we gap up and crap the rest of Tuesday and continue going down (past that 18th gap fill) into a suspected Thursday/Friday low?

  7. scottycj1 says:

    We are going to go thru 2019 like a hot knife thru butter

  8. bounce underway and it will be just that a bounce ….. daily chart TA indicator say this downtrend is not over

  9. H D says:

    Gotta tell u all, It feels great to be looking at charts again. Think we get a banner year,,,, again. SPX looks like 34 point hit today right on pivot. GL

  10. afarsid says:

    Is anyone familiar with inverted cup and handle setups? The SPX looks like a perfectly rounded inverted cup on the 30min timescale possibly targeting 1973 for support… I’m not familiar at all with this chart pattern, but looking for guidance from someone who does.

  11. Tony must be sharpening his pencil and looking at potential alt counts, because I have a chart that has yet to post here because it has been awaiting moderation for about four hours lol 😉

  12. H D says:

    so what’s he theory/ news for this hit? looked like all systems go for 2015? just like 2014….

  13. pooch77 says:

    Small capds now joining the party

  14. uncle10 says:

    Thanks Tony. Afternoon all.
    lost on my first trade of the year :((. but almost even for the year given my short in Copper is working good. gl

  15. blackjak100 says:

    Sorry Fiona, this doesn’t have the makings of an ED. This looks like a third wave down either within a
    Larger C wave or something more targeting sub 2000

    • Yep, no ED….just look at the TA similarities between the wave a (2079 to 1972) and this ongoing wave c (2093 to TBD) and as expected the c wave is stronger and faster then the a wave. Also note that both the a and c wave have that topping doji star

      • mjtplayer says:

        I agree that the volume and breadth are not consistent with an ED wave 4, this is much stronger. However, it is consistent with a completed ED and new downtrend. Just take Fiona’s chart and move the waves 1-2 to Sept & Oct, waves 3-4 where she has waves 1-2 and wave 5 just ended Dec 29th completing the ED. This is my alt count, but my issue is how it would fit into the larger wave count. A break below the SPX 2,012 area and certainly below 2,000 would have this scenario come to life.

        Tomorrow is key, potential day 7 in the VIX rally and potential test of SPX 2,012 area would provide a nice bottom tomorrow; we’ll see….

  16. mjtplayer says:

    Open gap on the SPX at 2,012.89 from Dec 17th. Also, the uptrend line connecting the Oct & Dec lows is right around SPX 2,012 +/- and it’s the bottom of the 2,019 pivot – possible bottoming area??

    If both the uptrend line and the 2,019 pivot area give way then something else is going on and the pullback will be much larger. My alt count is that an ED has already completed:

    Sept highs = wave 1
    Oct lows = wave 2
    Nov/Dec highs = wave 3
    Mid Dec lows = wave 4
    Late Dec high = wave 5 and completed ED

  17. Tony we hit your 2019 pivot , could this be potential bottom before next wave 5 up to new highs ?

    Thank you

  18. ariez , below is my SPX count as requested. Not my different than Tony’s count other than the fact I think we are witnessing an irregular flat Major 4 wave in lieu of a subdividing Inter 5 wave. WS and media pundits has everyone singing the “Bullish Years Ending in 5’s Pattern.” if I recall 2005 was not so great and neither was 1895 nor 1875. Here is one fun fact to ponder on, this year’s grudge match is the “Bullish Years Ending in 5’s Pattern vs “As Goes the January Effect so Goes the Year Pattern.” IMO it’s going to be a wild and interesting year and if my preferred count pans out we could see Primary 4 and Primary 5 happen all in 2015.


  19. CL finally prints the 49 handle – took about two weeks longer than I had expected. Looking for the 20’s by Memorial Day 🙂

  20. rc1269 says:

    Lee, any thoughts here on crude?
    or any crude thoughts?
    either one would be entertaining. 😉

    • mjtplayer says:

      $50 will provide some psychological support, but will eventually break and LL’s ahead. Oil should test the 2008 lows in the low $30’s before bottoming…

    • Lee X says:

      Hey R C

      As far as CL there’s plenty of chefs talking about it here and elsewhere so I’ll pass amigo unless you’re in tight spot then I’ll give you my best guess ST
      I will say this….the word “noise” is the most overused word on the blog lately giving serious competition to ” Like I said “.

      • rc1269 says:

        no worries senor. just curious since you nailed it pretty well on the first leg.
        i try to avoid tight spots, at least those pertaining to investments. 😉
        hope you’ve evaded the midwest arctic blast. i’m enjoying my balmy 46 degrees in the PNW
        like i said, plaid and handlebars aren’t just for hipsters anymore

  21. gtoptions says:

    USO hits my Fibonacci Fan and 161.8% extension target, this is the target my Brother said was not possible. He is still long! I’m not laughing at him, but with him. Maybe he’ll listen next time. 😉


  22. IWM hourly looking a lot better than the rest of the market. IWM looks like the bottom is in for the decline already.

  23. llerias7 says:

    Like I said last Friday: minute wave 2 down to OEW2019…but not so fast!?

  24. lunker1 says:

    watching 2019 pivot (2026/2012) INDU Weekly 13EMA 17565, INDU +D 60min

  25. Page says:

    Market is extremely oversold, this could turn around as early as this afternoon or tomorrow.

  26. gasman88 says:

    SPX has never been down 4 days in a row entire 2014. Today is day #4. Big come back in the afternoon? If not odds are high that tomorrow will be an up day.

  27. gtoptions says:

    Thanks Tony
    SPX ~ WS3 @ 2018 ~ 61.8% @ 2019
    Both levels at breakaway Gap support. GL

  28. purplember says:

    looks like we’re at the 50% retrace at 2034 for min wave 2 ?? min wave 1 1974 to 2094

    • bhuggs52 says:

      We got to the 50% retrace fast, but then corrective moves lately have been fast and snappy. It’s like a market on steroids, up and down.

  29. Who’s ready for a cup?

  30. perversionofthemean says:

    Friday’s B wave up on SPX retraced to test the 25% (quartile) level of the move up from 12/16 to the ATH. Today’s low tested the 50% level. While many use traditional fib levels, I find that 25%, 50%, 100% are more common.
    Now, if I could just trade them in real-time!

  31. scottycj1 says:

    C of 4 Underway ? Came within 1.5 points of the 1.382 expansion.

    Nobodys ready for it.

  32. Walter Crane says:

    How many days early was I this time before being right? Two or three? Someone should track it…. Its uncanny, I even tried to be late a bit this time. Anyways, winning again. But not before a few days on angst….

  33. mjtplayer says:

    So far, so good; everything going as expected and day 6 of the VIX rally today. Still expecting the VIX to top/market to bottom sometime between tomorrow – Thursday near the SPX 2,019 pivot area; probably closer to the former.

    Once we make a low this week (which I think is wave 4 of a potential ED) we should rally to one more HH (probably into MLK weekend next week or early the following week for another “holiday high”) to complete wave 5.

    The fly in the ointment of course is Greece elections on Jan 25th. The market could just sell-off into the 25th (or Friday the 23rd); if elections are favorable – we rally from there. If elections are not favorable to the market and continued bailouts, we may continue lower yet in a correction of larger degree into Feb. Also, ECB meeting on the 22nd – so all eyes on Europe over the next 2 weeks.

  34. sibyn says:

    CH handle done 2035. Now goal 2188

  35. H D says:

    2028 ES is C=A, IMO if this hit is 4th then no reason 1972.56 couldn’t have been 4th

  36. elmer510 says:

    SPX down 21 points, definitely not a micro-wave any more.
    The negative technical signals proved right.
    So now we go for a minute wave 2 of minor 3, which soon is finished ?
    And a long minute 3 to follow ?

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