weekend update


The week started off at SPX 2071 and rallied to 2083 on Monday. Then a Tuesday gap down opening carried the SPX to 2040 by Wednesday. Thursday’s gap up opening and rally to SPX 2066, was nearly completely reversed on Friday’s gap down opening. A choppy week. For the week the SPX/DOW lost 0.75%, the NDX/NAZ lost 1.40%, and the DJ World index lost 1.40%. On the economic front reports came in mixed. On the uptick: wholesale inventories, export prices, the WLEI, plus weekly jobless claims and the treasury deficit improved. On the downtick: retail sales, the PPI, import prices, consumer sentiment, and the MMIS. Next week is the FOMC meeting, plus Industrial production, reports on Housing, and Options expiration.

LONG TERM: bull market

The bull market had its sixth year anniversary this week, the third longest in US history. While it has risen from SPX 667 to 2120, we have been labeling the advance as a Cycle wave [1] of a new Super cycle 3 multi-generational bull market. This Cycle wave is unfolding in five Primary waves. Primary waves I and II completed in 2011, and Primary wave III has been underway since then. When it concludes, which we expect to be in 2016, there will be a steep Primary IV correction, and then a Primary V to new highs in 2017.


On January 24th 2015 the ECB officially announced EQE: 60bn Euros per month until at least September 2016. Quantitative easing programs, as most know, have been quite positive for equity markets worldwide since 2009. The EQE program actually started this week. At the time of the announcement the DAX had closed at 10,436. It has risen 14% since then, as of Friday’s close. In the US, however, something else has transpired.

Since the ECB EQE announcement the SPX has completed a downtrend at 1981, started a new uptrend to 2120, and has now pulled back to 2040 this week. At the time of the announcement the SPX had closed at 2063. So the US is oddly down about 1/2% during the same period. What has benefitted from the EQE announcement, and a potential rate hike in June, is the USD. It has risen 6% since January 24th.

In February individual investors reported a 9% portfolio reallocation out of equities into bonds and cash. This is the largest one month decline, since a 7% stock reallocation in August 2011. And, that was during a Primary II selloff. In addition, earnings forecasts for Q1 have declined from flat to -4+% in the past several weeks. Probably due to the weather and the rising USD. All in all, it appears investors have turned defensive with earnings expected to decline and a rising USD, which is expected to get stronger if the FED does increase rates in Q2. Normally, when people get bearish/defensive in a bull market it begins to recover and start rising again.

MEDIUM TERM: uptrend

After the SPX hit 2079 in early December, it corrected 1973, advanced to 2094, then corrected to 1981 by early February. We counted that entire correction as an irregular Major wave 4 flat. After that low the SPX advanced, in five waves, to a new high at 2120 by late-February. Then for the past two weeks the market has been in pullback mode.


During the five wave advance (2072-2042-2102-2085-2120) the fifth wave was the weakest wave, so we expected wave pattern support between SPX 2042 and 2072. The low so far is SPX 2040. Currently the market has retraced between 50% and 61.8% of the uptrend. We had calculated a 50% retracement at SPX 2051, and 61.8% at 2034. Thus far the pullback has fit within the parameters of what was expected. Yet it has been quite a complex pattern with 5 larger waves, and 13 smaller waves. Possibly the next push lower could end it. Medium term support is at the 2019 and 1973 pivots, with resistance at the 2070 and 2085 pivots.


On Thursday we observed a 2.0 relationship between the first decline Minute a (2120-2088) and the second decline Minute c (2104-2040). This appeared to be enough for a potential low, and we labeled the SPX hourly chart with a tentative Minor wave 2. On Friday, however, Thursday’s rally was nearly fully retraced leaving the option open for a continuation of the pullback. Should it continue lower the 61.8% retracement level at SPX 2034 would be next, followed by a 2.618 relationship between Minute waves c and a at 2020.


Short term support is at SPX 2051 and SPX 2034, with resistance at the 2070 and 2085 pivots. Short term momentum ended the week around neutral. Suggest keeping an eye on the USD. Its ten month uptrend appears to have kept this market within a SPX 2000 to 2100 range for months. Any correction in the USD would probably lead to an extension of the current uptrend. Best to your trading!


The Asian markets were mostly lower losing 0.7% on the week.

The European markets were mixed but also lost 0.7%.

The Commodity equity group were all lower losing 4.0%.

The DJ World index lost 1.40%.


Bonds continue to downtrend but gained 0.3% on the week.

Crude lost 9.9% on the week as its downtrend continues.

Gold lost 1.4% on the week as it continues to downtrend.

The USD rallied 1.8% on the as its uptrend continues to extend.


Monday: the NY FED at 8:30, Industrial production (est. +0.15%) at 9:15, and the NAHB at 10am. Tuesday: Building permits and Housing starts. Wednesday: the FOMC meeting concludes. Thursday: weekly Jobless claims, the Philly FED, Leading indicators and Senate testimony from FED governor Tarullo. Friday: Options expiration. Best to your weekend and week!

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


About tony caldaro

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275 Responses to weekend update

  1. fotis2 says:

    Well done to all the bulls there was quite a few this time round.Looks like Tony’s no.3 on the way

  2. CB says:

    test of broken support … http://screencast.com/t/exR0mpQntz
    sorry the fork is not precise, but you guys get the idea…

    • simpleiam says:

      ty! sure hope it breaks up through.

    • buddyglove says:

      That fork is invalid imho.

      • CB says:

        buddy, can you draw yours so we can see where the difference is.
        The main point is, we’re in the process of testing broken support/potential resistance now Whether it’s here or a few points higher (as overbought as we are intraday) one needs to pay attention to potential resistance here. You can also draw a simple TL connecting the Feb/March lows which we’re very close to. Bottom line, you get a chance to buy them again on a pullback. No need to hold OB stuff in this market. Plus the bottom at 2039 is tentative yet.

  3. buddyglove says:

    Smaller falling megaphone inside larger falling megaphone…BULLISH.
    Aimho and good health/wealth to all.
    S&P 4 hour continuous Fut.

  4. Page says:

    I think Oil is about to rally hard as early as tomorrow.

  5. scottycj1 says:

    Have a CIT due tomorrow 3-17—–happy St Pattys

  6. fishonhook says:

    Well this sure feels like Tony’s third wave. The power of free money – this time from the ECB.

  7. llerias7 says:

    spx 2200´s in sight!

    • ashram says:

      There is a confluence of major Fibonacci projections at 2140. For anyone currently calculating risk/reward, precedent suggests that level will be a formidable hurdle.

  8. Market will go up forever, we are in a full blown recovery the numbers say so. Just please Don’t look around you at all the people reliant on the government for food, housing and medical- no problem we will print money forever and raise the deb limit forever- there will never be any consequences. Everything is rosey keep buying, take out a home equity line of credit on your home, tell all your friends to invest- every one can be rich. We don’t have many good paying jobs left, we don’t need them because everyone can just be a stock investor/trader… just whatever you do don’t audit the fed. LOL

  9. mjtplayer says:

    Oil looks dreadful, on the long-term chart oil has broken below the uptrend line connecting the 1999, 2002 & 2009 bottoms; that line stands at about WTI $45 now. In Jan we briefly dipped below that line, but quickly popped back above it. Now we are $2 below that line and the longer we stay under $45 the more likely we’re heading lower. If oil can’t rally now, then there’s some support at $41.15 and $39.99 (Oct 1990 and Feb 2003 highs, respectively) no major support till the Jan 2009 lows at $33.20

    What’s curious is that int 5 = int 1 at $33.24 – almost exactly the 2009 low.


  10. fotis2 says:

    Can’t work out the waves but looks like DB target 2093 and gap at 2099 with daily close above 2080?

  11. nardobeme says:

    $RUT really giving me heartburn today… It’s met with resistance and lack of motivation perhaps? Next short signal is coming up a little after 10,00.

    Needs a quick swift kick in the pants…

  12. rc1269 says:

    closing half of my long DAX / short EUR trade here, for anybody who cares to keep track

  13. ariez5 says:

    Anyone else notice that breadth is horrible, VIX does not have a lower low, JNK is not confirming?

  14. ko68 says:

    Triple bottom at 2040?

  15. CB says:

    The previous rally stopped at RSI(14) 50. Right now we’re getting close to it again..Be careful guys..

  16. scottycj1 says:


  17. Lee X says:

    Thanks Tony
    ye ole pivot time, once again
    Lots of comments this weekend eh ?

  18. CB says:

    Gap from march 10 filled. GL everyone.

    • 2070 pivot down 2085 pivot coming right up

    • Lee X says:

      Thanks C B
      Ur posts are a nice mixture of market value , humor with restraint and grace towards others here who may not agree with you at a certain moment.
      Very well done

      That’s #4 so ur only getting a “deuce” out me the rest of the week 😉

      • CB says:

        Mmm, I like warm fuzzies on Monday morning like this 🙂 AND I need to get me a personal jibber jabber meter, I think 😉
        We miss you a lot here, Lee. You feel you’re “retired-too-much” maybe?

  19. rc1269 says:

    still feeling weak in credit land, same as it has the last couple weeks. all rallies being sold

  20. mjtplayer says:

    Short covering rally ahead of the Fed, -div on the DOW hourly.

    All eyes on Yellen Wed, until then nothing else matters…

  21. fishonhook says:

    Well it looks like blackjack;s number one rated forecaster who called for a drop straight out of the gate today was wrong. Rabbitt was right on the market and wrong on Oil (big time).

    Tough this forecasting business- and the more emphatic it is the more likely to be wrong.

    • buddyglove says:

      I like you Fish, and i think it’s not a bad thing sometimes to “mark a blogger to market”, especially the loud ones.

    • blackjak100 says:

      Yep, he was dead wrong. I was just sharing the article so not sure why you attach me to it. It didn’t necessarily reflect my views.

      • simpleiam says:

        Thanks for sharing it blackjak. Easily picked up on your intent as stated, and had it been correct, I would have subscribed too! 😉

        • blackjak100 says:

          This may be the start of blowoff top to my ideal target in 2-3 weeks….2191 which I’ve mentioned a couple of times. However for such a long wave and in duration, I would give 2% on either side of that # as acceptable fib ratio to 1.618 * P1.

  22. gtoptions says:

    Thanks Tony
    SPY ~ Above WPP @ 206.34 ~ next WR1/R2 @ 208.02/209.5
    note to self, when the bears are jabbering stay long. 😉

  23. filipozze says:

    next rally will tell us the truth..if we broke 2145 ending diagonal pattern will fail, and we can have an extension above 2200 in 5 wave, if we’ll have a marginal nwe highs below 2145 ending diagonal will be confirmed. since 4 months USD and YEN is moving sideways, so yen is getting stronger..think about it maybe a correction is very close

  24. gasman88 says:

    $DAX up another 1.2%, chart starts to resemble parabolic move in NASDAQ 2000. The power of QE is amazing, we are not dealing with normal mom and pop market.

  25. Tony

    It looks like oil prices is having 5 waves down from top , where this move is probably the last and 5th down. Question is how low it goes – maybe 40$

  26. Also another question is the dollar.

    You mentioned the USD has started a new bull market – how many years do you expect the USD to last before a top ?

    Thank you Tony

  27. Tony

    Some longer term cycles argues for 2015 to be bad year for US stock markets.

    From Global Depression lows 1932 stock market rallied for 40 years to 1972 – 2 years after the stock market was in bear market and lost around -50% into 1974.

    Since 1974 stock market is now up again to 2014- could it be that 2015 and 2016 we see another -50% sell off from the highs before we resume bull market?

    What do you think about this cycle ?

  28. Hi Tony

    What level on SPX do you think we ended 5 waves up and a correction has started – is it below 2020 level ?

    Thank you

  29. NJ says:

    Hi Tony, at what level would you consider current pullback is over.

  30. sibyn says:

    Regards Sibyn

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