weekend update


Gap openings continued to be the theme for January with four more this week, and 15 in 20 trading days. The market started the week at SPX 2052, bounced to 2058 on Monday, declined by Thursday to 1989, bounced, and then ended the week at 1995. For the week the SPX/DOW were -2.85%, the NDX/NAZ were -2.90%, and the DJ World index was -1.65%. On the economic front reports came in even. On the uptick: consumer confidence, new home sales, the Chicago PMI, the WLEI, and weekly jobless claims improved. On the downtick: durable goods, Case-Shiller, pending home sales, consumer sentiment and the GDP declined. Next week’s economic reports will be highlighted by Payrolls, ISM and the PCE.

LONG TERM: bull market

It has been one week since the ECB announced their 1.14tn euro EQE program, and apparently the market has responded with: “buy the rumor-sell the news”. With the exception of last week, the US market has been down every week this month. Despite a four of five week decline, the market has only lost 4.5% since the last week of December.


With the month of January now in the books, and no new highs, our next long term price projection remains on hold. While our long term indicators suggest we have not even reached a Primary wave III high for this market, let alone a bull market high. We think it is prudent to at least entertain the Primary III count. History has shown that no indicators are perfect, and this market has been full of surprises since it began in 2009. With this in mind we have updated the DOW charts to display a potential Primary III completed at the early December high. Then we have a Major wave a down into the mid-December low, followed by an irregular Major wave b into the late-December high, with now Major c underway. Should this count prove to be correct, which we give a 20% probability, we would expect this downtrend to take the DOW to at the least the October low at 15,855.


Our main count, with a 70% probability, is still carried on the SPX/NDX charts. This count suggests Primary III is still unfolding, and the market is currently downtrending in Major wave 4. When the downtrend concludes, a simple or subdividing Major wave 5 should take the market to all time new highs. Then after a Primary III high, a Primary IV correction will occur before Primary V takes the market yet again to new highs. This count also suggests this market has much further to go on the upside before the bull market concludes.

MEDIUM TERM: downtrend

For the past few weeks we waited patiently while this market decided to continue the recent uptrend, or stall and confirm a downtrend. As the market traded between SPX 1988 and 2065 during the month, we had determined 2029 would be the deciding level. Holding above it would suggest the uptrend would continue. A drop below, a downtrend has been underway. On Tuesday of this week the SPX traded down to 2020 in the first hour of trading, suggesting a downtrend has been underway. After the low the market rallied to SPX 2043, before retesting its month long support around 1988/1992 on Thursday/Friday.


We are now counting all the activity from the early December SPX 2079 high as part of Major wave 4. With the NDX has remaining in a downtrend since that point in time, this count looks the most probable. We have been carrying this count on the SPX daily chart. This suggests the mid-December decline to SPX 1973 was Int. wave a, the rally to new highs by late-December was Int. b, and Int. wave c has been underway since then. Intermediate wave a was a simple double zigzag and it declined 106 points (2079-1973). After the Intermediate wave b uptrend, the initial decline of Intermediate wave c was also 106 points (2094-1988). We have labeled that Minor wave a, of a three Minor wave Intermediate c. The rally that followed to SPX 2065 we have labeled Minor wave b. And, the current decline from that level is an ongoing Minor wave c. When it concludes, possibly this week, Major wave 4 should end and Major wave 5 to new highs should begin. Medium term support is at the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots.


Major wave corrections, and Intermediate waves for that matter, have declined about 10% during this bull market. A normal 10% correction would suggest a low around the OEW 1869 pivot. This is easy to spot in the weekly chart above. Since this is an irregular correction we are suggesting it may deviate from this norm, while allowing for alternation with the zigzag of Major wave 2. With Int. wave A declining 106 points, and Minor a of Int. wave C also declining 106 points we have some Fibonacci relationships worth watching.


If Major 4 is forming an irregular flat it should find support around the 1973 pivot. If it is forming a more complex three wave pattern we can next look for support around the 1956 pivot, where Minor c equals Minor a. A more complex Int. wave C would suggest support around the 1929 pivot, where Int. C equals 1.618 Int. A. So we have the next three pivots: 1973, 1956 and 1929, with a worse case 1869 pivot concluding some time in February. Our initial thoughts would be for a 1973 or 1956 pivot low some time next week. Should the market reach one of those levels and is sufficiently oversold. We would then expect a five wave rally off that low to suggest a new uptrend is underway. Short term support is at SPX 1988/1993 and the 1973 pivot, with resistance at the 2019 pivot and SPX 2042/2043. Short term momentum ended the week oversold.


The Asian markets were mixed on the week for a net 0.5% loss.

The European markets were mostly lower for a net 2.0% loss.

The Commodity equity group were all lower for a net 5.1% loss.

The DJ World index lost 1.7% on the week.


Bonds remain in an uptrend and gained 0.9% on the week.

Crude is still in a downtrend but gained 6.5% on the week.

Gold is still in an uptrend but lost 1.2% on the week.

The USD is still in an uptrend but lost 0.3% on the week.


Busy week ahead. Monday: Personal income/spending and PCE prices at 8:30, then ISM manufacturing and Construction spending at 10am. Tuesday: Factory orders and Auto sales. Wednesday: the ADP index, ISM services and a speech from FED governor Powell. Thursday: weekly Jobless claims and the Trade deficit. Friday: Payrolls and Consumer credit.

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


About tony caldaro

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232 Responses to weekend update

  1. llerias7 says:

    Impulsive action? The bottom is in?

  2. fotis2 says:

    Could be wrong I think IHS on 5min target 2013

  3. uncle10 says:

    Companies borrowing billions and billions for very little and then buy back stock and or dividend. Pretty good gig

  4. H D says:

    20 down, 30 up, and 20 down again….. Paradise, Dream day for us SPX guys. Don’t forget to tip the waitress. ES stuck the triangle AC TL and SPX got the overthrow. good stuff! The battle for the Doji right here HWB 1995

  5. ABchart says:

    Thanks Tony. Thanks to everyone.

    My latest update SPX, DAX and CAC: http://abchart.org/2015/02/02/spx-dax-cac/

  6. fotis2 says:

    $/yen based on price action is pointing to support at 116.000 if it breaks instead of bouncing opens up 109.000 downside target of the descending triangle for the bears.The momentum indicator on the weekly strengthens this view.It gave a small breakout short at the open but not much follow through.Lets see.

  7. NG (Natgas futures) has been all about HS patterns for the last 4-5 years. The next potential bullish IHS pattern is setting itself up right now and this IHS has the potential to be far more bullish than most traders are going to anticipate. The mulit-HS pattern tend to be very strong reversal patterns


  8. lunker1 says:

    Hi Tony, reached 1973 pivot but per your WE is the market “sufficiently oversold”? TY

  9. buddyglove says:

    Yep….Happy to be leveraged long. Lots of bullish technicals( too many to mention), and global mkts also have made very bullish structures. Hong Kong, Ftse-100 and Italy mib 40 all worth a look imho. Still don’t see anything to be bearish about fundamentally or tech, and expect “exuberance” on a global scale into spring/early summer.
    Good health and fortune to all.

    • johnnymagicmoney says:

      bg – I can agree with you that the chart is the chart is the chart but you don’t see anything bearish fundamentally? So you see no global recessionary forces or deflationary forces anywhere and you didnt read the big GDP miss here and you didnt see consumer spending drop off, and you didnt see a bad ISM, and you didnt see a bad durable goods, and you havent seen corporate profits come in at flat to 1% q over q so far??? Is this true? You are as blind fundamentally as the rest of the longs? I mean at least tell me you see weakness but you still love the chart………….at least I then know you have not drank the kool aid too.

  10. jeffbalin says:

    Pos divergences on 60min s&p RSI-macd, and boom up we go. Pretty cool how that works. More then a quick bounce? Not buying it yet, but interesting views to consider here.

    • uncle10 says:

      G after n. Thanks Mr. T.
      still thinking this area is a better buy than short, but it is certainly not clear to me either way. Gl

  11. spindoc73 says:

    Today’s action reminds me a lot of Friday – cyclical purging of the shorts and levering in by longs. With margin debt smashing the record books, certainly no shortage of fuel.

    • mjtplayer says:

      Intra-day rally is exact .618 retrace from Friday’s high in the DOW, up to 17,267. 2/3 retrace in the SPX from Friday’s high.

      Bulls need to get the rally going more than this, if the bounce fails here and turns back lower we’re going to break down. Hourly RSI now at 48, daily at 38; not even close to being oversold. Today’s bounce is relieving the oversold conditions, possibly making room for the next leg down? Important juncture here….

      • spindoc73 says:

        agreed mjt, so far fitting the model of a first countertrend in a higher degree move lower. each cycle seems to give less of a surge – short sellers who are being cyclically converted to buyers look too weak at this point to drive the indices higher. expect the unexpected type of market though…

    • tommyboys says:

      Love all the references to “record margin” debt over past months. What you don’t here is how much larger markets are now than at previous peaks so % are less. Its comparing apples to oranges.

  12. filipozze says:

    “Every breaking wave on the shore
    Tells the next one “there’ll be one more”
    Every gambler knows that to lose
    Is what you’re really there for”

    is it Bono Vox from U2 a trader? as well wave short breaking…we go up to 2150, bullish triangle in place

  13. blackjak100 says:

    All I can say is it looks like pretzel nailed it again calling for 1973-1981 before rally to 2065ish. My int count is still valid and we should finally be in i of c of double (zigzag x flat) to complete wave 2 from 2093. Third wave plunge to follow which should be 163 pts at minimum.

  14. stephenk1980 says:

    Long and very very hard on DJIA. Missed the boat a bit on the SPX, but think the low is in – made a new support channel on the daily – a three touch (not two) line (connect the 16th Dec low to 16th Jan and) and so I think that should hold… for now. Especially as it’s coupled with the DJIA completing it’s second large triangle (finsing support around 17035 for the second time).

  15. llerias7 says:

    SPX 1980 (oew1973) should be a short term bottom at least…another bounce to 1940´s?
    $CPC at extreme…

  16. mjtplayer says:

    HH on the VIX today, day 5 of the VIX rally

  17. Thanks Tony – great report as always 😉

    My latest on gold is below:



  18. blackjak100 says:

    IF and it’s a BIG IF we are starting iii of c to finish up a wave 2 double (zigzag x flat) targeting 2065-2070, then it’s possible we witnessed a completed zigzag retracing 97% of wave i. On Friday I suggested it was flat, but it looks more like a 5-3-5 from 2024. Flats are not very common in the wave ii position and it moved farther below 2000 than what I would call acceptable for the very short timeframe.

    This deep second retrace actually fits nicely in the big picture as wave iii now targets 2050ish, wave iv = 2035ish, and wave v = 2065-2070. Trade below Friday’s LOD invalidates and would like to see a big green close today for confirmation. Maybe oil will help push the SPX up with it if only in the short term. Cheers and GL!

    • buddyglove says:

      Thanks BJ….Your count fits with my own line of thinking and over night futs look like an attempt to flush was made, but this was well bid. Imho an important low is in or very close, although I have been caught out in the past looking for “just one more low”.
      A time for careful watching imo should get rewarded. GL.

  19. student8888 says:

    patriots win so bears win! any correlation?

    • torehund says:

      Student life isnt all about winning or loosing, its like playng the ferris-weel, its about being right, and then harvesting what was Yours in the first palce, at the expence of others, their interests and their misfortune.

  20. zvyezda says:

    Just want to mention what could possibly be the market stick save du jour – whenever TPTB decide that it is.

    An administration spokesman advanced the foreign earnings repatriation ploy again, this time supposedly to pay for a six-year infrastructure overhaul. Previous earnings would be taxed at 14% instead of 28%. I think that they really want a stockpile – but for different reasons.

    Republicans shot it down but I am sure both sides would compromise on the rates at some point and those corporate interests in favor of the repatriation would then show their $gratitude$ to those involved. Corporate interests might want the compromise at this time if they fear continued Euro weakness.

    If it has any legs watch AAPL tomorrow.

    • torehund says:

      No, there Arent any magic bullets, Europe is infested with all sorts of problems, the US is not. The relative strength Will continue forquite some time,

  21. mike7x says:

    Half-time question Tony. Not about SuperB. If the SPX declines to a 1973 or 1956 pivot low and rallies to a new high, could/would that end Primary 3 and begin Primary 4? Now back to Katy…

  22. gtoptions says:

    Interesting piece below on the S&P 500 out yielding the 10 Year. I applaud this author’s opinion contradicting the data set presented.


    As with day trading, I like to place my Super Bowl bets after the coin toss. GL 😉

    • tony caldaro says:

      Like the chart that displays SPX yields well above Treasuries up until the 1950’s.
      While treasuries yields were low that is not the reason.
      In decades past stock holders were part owners in companies, not token dividend collectors like today. Companies then paid out most of their earnings to stock holders, some what like what we call MLPs today.

  23. fishonhook says:

    Well we have expended a lot of time and effort in trying to read the tea leaves and yet none of us has a clue whether the market will open up , down or flat!

    Such is the joy of technical analysis, it is about as accurate as sticking your wet finger up in the wind to try and gauge which way it is blowing. Once in a while it will be right and we get all excited and forget the last ten times it was wrong.

  24. Like I said … 🙂 lol

    I’ve always said I am not a wave guy, which is why I leave the complicated stuff to Tony. I do find that keeping it simple and counting from 1 to 5 and getting from A to B to C is often helpful to me. Here is the $RUT as I saw it back in October and as I see it now. On Nov. 4 I proposed a top between 1200 and 1213 for this index, and it went on to hit 1221, a miss of about 7/10ths of 1%. I was a bull from 2009 until the last two days of 2014. No matter what happens next, that wasn’t a bad place to book some long profits even if you don’t think it was an opportunity to go short. Since then, bulls are down almost 100 handles on the $SPX and 56 handles on the $RUT. Am I right? Time and the waves will tell. But in the meantime, why not just learn to stop worrying and love the bomb 🙂

    • torehund says:

      smallest 3 in the history of man, get Your proportions right.

    • torehund says:


      here you go CN, -as you can see you are counting a wave within a larger structure as it stands on its own resting on an unnaturally large 1-2 complex.
      Dimensions and subdivisions are the most important aspect in understanding EW, Tony was the one that introduced me to them, and on the larger (gross)Levels I think I have grasped something..The introduction of X-Waves is another confounding aspect of EW, these are the expert issues albeit Essentials.
      Phooo so much to learn and life is too short 🙂

      • See wasn’t that better. Now we can all see what you are seeing. I still see 5 perfectly fine waves up, and so I still hold my view. We’ll see how it looks 9 months from now 🙂

      • torehund says:

        An earned buck is an earned buck.
        However, having the privilege to be around Tony Caldaro and Martin Armstrong is much more than just getting Food on the table, its participating in the forefront of economical science, a science that is bound to converge towards physics and natural science in general. And the best thing, its relatively unexplored, as nobody as of yet can make predictable mathematical predictions around this apparent chaos..
        Walking the walk, I make sure to coin my observatons for the future “as I go”….bent Waves, Mirror inverted endings, 5 and complex 3 ambivalences etc, Expressions that may be commonplace among traders a decade from now.
        And CN- beeing wrong is always the only real Learning experience there is, it never brings you farther from the truth.. I have an acadmic interest in EW-theory, I am not offended if someone thinks I am a jerk, I just try dong my best at all times and I convey it to you 🙂

    • buddyglove says:

      C.N….For that outrageous movie reference, I shall now be calling you Dr Strangelove…

  25. bhupal777 says:

    Thanks Tony. Every week looks like a deciding week yet SPX still in choppy action. May be this would be the week bears have been waiting for years now. If bears can’t use this opportunity then lot of short covering could cause another V shape rally.

    Here is my bearish and bullish EW analysis on China market (Shanghai index and $FXI etf). Whatever the direction it choses I will be ready. Good Luck all.


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