weekend update


February kicks off with a strong week. The market started the week at SPX 1995. Despite a gap up opening on Monday the market quickly dropped to SPX 1981 in the first half hour of trading. That was the low for the week. After a choppy beginning off that low, the market rallied to SPX 2072 by Friday with only two sizeable pullbacks along the way. Then, late afternoon Friday, it had its biggest pullback since that low. For the week the SPX/DOW gained 3.40%, the NDX/NAZ gained 2.15%, and the DJ World index gained 2.30%. On the economic front negative reports outpaced positive reports. On the uptick: personal income, construction spending, consumer credit, auto sales, ISM services, monthly payrolls and the WLEI. On the downtick: personal spending, ISM manufacturing, factory orders, the ADP, the MMIS, the monetary base, plus weekly jobless claims and the trade deficit increased. Next week’s reports are highlighted by Retail sales, Export/Import prices and Business inventories.

LONG TERM: bull market

We continue to label this market as a Cycle [1] five Primary wave bull market. Primary waves I and II completed in 2011, and Primary wave III appears to be still underway. Primary I divided into five Major waves with a subdividing Major 1, and simple Major waves 3 and 5. Primary III appears to be following an alternate path. Thus far it has a simple Major wave 1, and a very extended/subdividing Major wave 3. Should our count be correct: Major wave 3 completed in early-December, Major wave 4 may have just completed in early-February, and a potential subdividing Major wave 5 has just begun.


We had noted last week that our long term indicators were not displaying any signs of a Primary III high as of yet. But we have been offering that 20% probability count on the DOW charts. Should Primary III continue to extend, a 70% probability, we could see it continue until mid-2016. Then a quite steep Primary IV should follow, before the market launches Primary V to new highs some time in 2017. This is the potential scenario we have been considering since the fall of 2014. However, we are still awaiting new all time highs in 2015 before making any price projections going forward.

MEDIUM TERM: uptrend

After hitting an all time high in late-December, the market went into a choppy sideways correction in January. Since that uptrend did not take much more than just one week, and the NDX failed to confirm an uptrend, we labeled that high an Int. wave b of a larger Major wave 4 correction. This suggests the SPX 2079 high in early-December would be considered the Major wave 3 high. Then the SPX 1973 low in mid-December Int. wave a, the SPX 2094 high in late-December Int. b, and the recent SPX 1981 low Int. wave c.


This count would suggest Major wave 4 ended with an irregular failed flat in the SPX/NAZ, and just an irregular flat in the DOW/NDX since they both made lower lows. Under this scenario the rally that started this week would be the beginning of Major wave 5. There is also another possibility. Major wave 4 could be forming a triangle. Under this scenario the waves remain the same, but the current rally is Int. wave d, and the market should soon decline to complete Int. wave e ending the triangle around SPX 2000. This is illustrated below in the NDX chart.


Fortunately we can put some probabilities on these two scenarios as well. This week the market generated a WROC signal. This signal usually precedes an uptrend confirmation. Over the past 50+ years its success rate has been 96%. While we are still awaiting the uptrend confirmation we can also place a probability on whether or not it will be a D wave. Historically this has only occurred 11% of the time. Therefore the WROC suggests the market has a 96% probability of being in an uptrend, and the uptrend only has an 11% probability of being a D wave of a triangular Major wave 4. Medium term support is at the 2019 and 1973 pivots, with resistance at the 2070 and 2085 pivots.


If we go with the most probable count: Major wave 4 ended in an irregular failed complex flat at SPX 1981 on Monday. We can then start to track this potential uptrend as a impulse wave starting, probably, Int. wave i of Major wave 5. The first thing we were looking for this week was a five wave advance off the low. This would suggest the market is impulsing rather than just rallying in a corrective wave. We did observe five waves up from SPX 1981: 2010-1991-2040-2028-2050.


The next thing we were looking for, on a larger time frame, is of course five waves again. Thus far we have seen four waves: 2010-1991-2072-2050. To get the fifth wave the should now rally to SPX 2072 or higher, and then have a larger pullback. Should this occur we would label it Minor wave 1 of an Intermediate wave i uptrend. This would also fit with the hourly chart posted above. Should the market fail to reach, or exceed, SPX 2072 during the next rally, then it may still be a wave d despite the probabilities. However, the probabilities do favor an impulsive uptrend underway with new all time highs soon. Short term support is at SPX 2037 and SPX 2028, with resistance at the 2070 and 2085 pivots. Short term momentum ended the week oversold after hitting extremely overbought on Friday.


Asian markets were quite mixed on the week for a gain of 0.2%.

European markets continued to advance gaining 2.9% on the week.

The Commodity equity group were all higher and soared 6.4% on the week.

The DJ World index gained 2.3% and is in an uptrend.


Bonds have been in an uptrend, but that might have ended as they declined 2.0% this week.

Crude has been in a downtrend, but this week’s surge of 8.0% suggests an uptrend may be underway.

Gold also appears to be in a transition, (uptrend to downtrend?) as it lost 3.8% on the week.

The USD continues to uptrend despite losing 0.2% on the week.


Monday: speech from FED governor Powell at 4pm. Tuesday: Wholesale inventories and Senate testimony from FED director Hunter. Wednesday: the Budget deficit. Thursday: weekly Jobless claims, Retail sales and Business inventories. Friday: Export/Import prices and Consumer sentiment.

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


About tony caldaro

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171 Responses to weekend update

  1. CB says:

    nice + div on your 60 min chart, thanks Tony.

  2. johnnymagicmoney says:

    personally I find it amazing that Chinese imports can drop 20% and Greece be threatening to exit and US data to be deteriorating every day and this market to hardly be down today near its highs. People may see making a little here or there on the long side but what’s the point? The real money is to be made when the kool aid drinking ceases and people wake up and this thing finally corrects. Thats when you get gains of a year in a few months. GOing long here? Dont get you folks. Risk isnt worth it

    • simpleiam says:

      okay, so you’re not making any money, don’t take it out on us on this site. BYE!

    • Not really amazing, Just that the markets have an Alfred E Newman attitude. (What me worry) Lots of things to be concerned about for sure. But if Greece goes its own way and Spain and Portugal all follow, its in the billions, not trillions. So the ECB adds another trillion to QE, no biggy. If US gets in trouble, we will not raise interest rates and if that doesn’t work, we do QE4. No worries. World needs markets higher. That being said , Im in the camp we hit 1956 in the next 7 days and will see were we go from there. Not even a correction of more then 5 percent in years. The CB will screw this all up, just when is the million dollar question.

      • berniebaruch says:

        “The world needs higher markets” is the bottom line to all of the pushing and pulling for the last 2-3 years. Higher markets maintain consumer spending, high pension underfunding issues and stave off deflation. Lower markets could provide a snowball effect downward.

        I long for the day when markets are not manipulated as some trusted tools have not worked well. Until then, nothing is certain.

      • spindoc73 says:

        In the fractional currency system, a contagious European default would run in the trillions. Greek alone without secondary effects is already 1/3 of a trillion.

        A big move seems to be coming in either direction, just depends on whether you see the Oct-Dec as a kick-off or terminus.

  3. mjtplayer says:

    Just like Friday, another day of super light volume today. Why the dry-up in volume recently – what’s going on??

    • tommyboys says:

      Bullish. Real moves are made on volume. Volume waiting on launch of next rally leg. This week or next.

  4. fotis2 says:

    Not much thus far altough it can still suprise near the close it does look like trying to double bottom at these levels.

  5. Tran confirmed downtrend shall resume….. let hope this time we see 1956 pivot

    • gtoptions says:

      Thx Lee, you must be a subscriber to read that article.

    • Thanks Lee – it is a good article. And sad. For me the sad place is 86 Trinity Place. The life that is no more – the coldness of pushing a mouse and clicking buttons. Dangit Lee – you ruined me for the day ;( But thank you for sharing – it IS a good article. And sad.

      • Lee X says:

        You’re welcome and I certainly feel your pain.
        I’ll always miss entering the building and getting my salt stained trading jacket from the crazy gals who worked in the coat rooms and entering the trading floor early in the morning before any of the pits were open listening to the click clacking of the time stamp machines and that buzzer they broadcasted for the changing of the time brackets. But most of all I miss the people and the money and the parties and the money and the long lunches. 😉

    • CB says:

      Really interesting. Thanks Lee. Great thoughts as always.
      Didn’t realize that some pit traders were quitting because of Sept 11 – sorry to hear that.

      “Of course, the markets came back like they always do.” – gee, did she really say that? I like her 🙂

  6. buddyglove says:

    Thanks Tony and good morning/afternoon to all.
    For my own trading purposes here is my current strategy which maybe of interest to others.
    Looking for a move down to 2020/30 (Dow 17600) area, and for a long set-up structure to occur around this level. No change of opinion, and I am expecting this to be the last swing/dip before new highs and a global multi month rally. I am also seeing bottoming pattern right across hard coms including gold and am expecting this sector to join the party as well.
    Aimho and good health/trading to all.
    S&P hourly-

  7. GYN LAB says:

    Good morning!
    Bounced off the support on hourly chart just before open on ES 2039, looks like this could extend the rally towards the channel top this week (2080+)

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