weekend update


The market started the holiday shortened week at SPX 2097. It made a new high on Tuesday, pulled back some, then another new high on Thursday, pulled back on options expiration Friday, then ended the week at new highs. For the week the SPX/DOW were +0.65%, the NDX/NAZ were +1.85%, and the DJ World index was +0.85%. On the economic front reports again came in biased to the downside. On the uptick: industrial production, building permits, leading indicators and weekly jobless claims improved. On the downtick: the NY/Philly FED, the NAHB, housing starts, the PPI, capacity utilization, and the monetary base. Next week we get reports on Q4 GDP, the CPI and more housing.

LONG TERM: bull market

We continue to label this six year bull market as a five Primary wave Cycle wave [1]. Primary waves I and II completed in 2011, and Primary III has been underway ever since. The five Major waves that created Primary I had a subdividing Major 1 and simple Major waves 3 and 5. The five Major waves that are creating Primary III appear to be alternating with that pattern. Thus far we have a simple Major 1, a subdividing Major 3, and potentially a subdividing Major 5 underway. When Primary III does conclude we should see a steep correction for Primary IV, then another advance to new highs for Primary V. This suggests this bull market still has a ways to go in time and price.


During the October 2014 10% correction the OEW group had a lengthy discussion on the wave pattern for Primary III. There have been so many waves (trends) during this 3+ year advance that the pattern offered several possibilities. We arrived at three potential counts, posted them on the SPX/DOW/NAZ charts, and gave them a probability of 70%, 20% and 10% respectively. With the recent new all time highs in 2015, the latter two counts were eliminated. The past couple of weeks, however, the OEW group has arrived at another alternate count. This is count suggests the October correction was the end of Major 4, and Major 5 began then. It is posted on the DOW charts.


The long awaited new all time highs in the DOW was finally achieved on Friday. This is the last index, of the four major US indices, to hit all time highs in 2015. As promised we are now posting our next long term target for this bull market: SPX 2530 to SPX 2630 by Q1/Q2 2016. This target will be posted on the SPX weekly chart, like the ones in the past that have been achieved.

MEDIUM TERM: uptrend

After what appears to be an irregular Major wave 4 flat, between early-December and early-February, the market kicked off an uptrend from the SPX 1981 low. We had observed an impulse wave in its early stages, first one this year, and the market triggered a WROC uptrend signal. Since that low the market has advanced about 6.5% in just two weeks.


Our preferred count, posted above, suggests the market is currently in Major wave 5 of Primary III. When the current uptrend concludes it may be all of Major wave 5, or as we suspect just Intermediate wave one of Major 5. The reason we believe Major wave 5 will subdivide is twofold. First, this would create an alternate pattern for the Major waves of Primary waves III and I. Second, the ECB’s EQE program, which begins next month, should last until at least September 2016. During this entire bull market the only time we had a Primary wave correction was when there wasn’t a QE program ongoing, or even considered. Nevertheless, let’s see how the market acts after the EQE program starts. Medium term support is at the 2085 and 2070 pivots, with resistance at the 2131 and 2198 pivots.


We were counting the impulsive advance from the recent SPX 2042 low as it unfolded. Friday, however, the market pulled back a bit more than expected for that short term count, even thought it held the 2085 pivot and then rallied to new highs. As a result we must now count four completed waves, with the fifth underway, from the downtrend low at SPX 1981. Unfortunately there are three possible ways of counting this pattern. First, this fifth wave up will end this uptrend. Second, this fifth wave up will complete Minor wave 1 of this uptrend. Third, this fifth wave up is actually Minute wave iii of Minor 3 for this uptrend.


The first possibility suggests the maximum this uptrend could reach is SPX 2145. The fifth wave (2085-2145) can not be longer than the third (2042-2102), when the third is shorter than the first (1981-2072). We give this count a 10% probability, as it appears too short, overall, for Intermediate wave one of Major 5.

The second possibility we give a 30% probability. Should Greece fail to deliver a letter on Monday that falls within the expected guidelines, the EU could put a halt to Friday’s drafted four month loan extension. The market would likely then selloff dramatically, retracing Friday’s entire rally. The third possibility we give a 60% probability. It suggests SPX 2072 and SPX 2042 completed Minor waves 1 and 2. Then SPX 2102 and SPX 2085 completed Minute waves i and ii, and Minute wave iii is currently underway. Whatever happens on Monday will likely determine which of these two short term counts are in play. Short term support is at the 2085 and 2070 pivots, with resistance at SPX 2111 and the 2131 pivot. Short term momentum rose to overbought on Friday and ended there.


Asian markets were all higher on the week for a net gain of 0.7%.

European markets were mostly higher for a net gain of 0.9%.

The Commodity equity group were mixed and finished mixed on the week.

The DJ World index is in an uptrend and gained 0.85% on the week.


Bonds look like they are in a downtrend and they lost 0.5% on the week.

Crude looks like it is in an uptrend, but lost 3.5% on the week.

Gold look like it is in a downtrend and it lost 1.9% on the week.

The USD remains in a weakening uptrend and gained 0.2% on the week.


Monday: Existing home sales at 10am. Tuesday: Case-Shiller, Consumer confidence, and FED chair Yellen testifies before the Senate with the semiannual report to Congress. Wednesday: New home sales, and FED chair Yellen testifies before Congress. Thursday: weekly Jobless claims, the CPI, Durable goods orders, and the FHFA housing index. Friday: Q4 GDP (est. +2.1%), the Chicago PMI, Consumer sentiment, Pending home sales, and FED vice chair Fischer gives a speech. Best to your weekend and week!

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


About tony caldaro

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141 Responses to weekend update

  1. fotis2 says:

    Thanks Tony no firecrackers today poor range for the daytrader how does it go?Please be carefull when trading futures you may find yourself living in a van by the river..hahaha.Will patiently wait for the morrow and the Scarlet letter. GL all and B carefull.. 🙂

  2. Hello Tony and OEW team,
    I have read from your analysis where you are looking since P1 had an extended Wave 1 and simple 3 and 5 for its completion for P3 to alternate and have an extended Wave 3 and Wave 5 (which we are in now)…. May I ask what determines this alternation thinking? Was curious why we could not have Wave 3 be an extension for P3 only and Wave 5 be more simple? Would that classify as alternation? Then for P5 we have a simple 1,3 and an extending 5.

    I have read that a few times about alternating why P1 and P3 deterministically has alternation that way. What would P5 then bring?

    I do realize you are looking at ECB QE as you noted. I was just curious if this has been discussed and dismissed (the alternating aspect)?

    Thank you – I still hate this world but am addicted to learning it now that I am poor from it again. Projections of 1570 area to 2070 and now 2500+ all for P3.

  3. Kisshu2 says:

    old news on greece today
    “The list of reforms will be sent to the finance ministers of the Eurogroup on Tuesday morning, while a teleconference will take place in the afternoon,” the official said.

  4. fotis2 says:

    So far so good looks like Tony’s no3 scenario strong contender only glitch apparently the Greek Letter will be a day late.What are they using the old runner with the forked stick method??Geez but they a bunch of clowns..

  5. robnaardin says:

    I get the feeling looking at what aapl is doing to the adx and upper 200 bb that aapl is going to have it’s best uptrend since 2011-2012 and aapl is going to drag the spx along with it.


  6. mjtplayer says:

    Waiting for Yellen tomorrow is an understatement, another day of crazy low volume; on pace for lightest volume day of 2015 in the SPY. Good volume Friday, only b/c of opex, other than Friday the SPY hasn’t had 100m+ shares traded in 2 weeks and hasn’t had 150m+ shares traded in 3 weeks! ZZZzzzz……

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