weekend update


Another one of those choppy weeks. The market started the week at SPX 2108. Gapped up on Monday hitting SPX 2121, dropped to 2068 by Wednesday despite a gap up opening that day, then rallied to 2118 on Friday with also a gap up opening. Three gap up openings on the week, net gain 8 points. For the week the SPX/DOW were +0.65%, the NDX/NAZ were mixed, and the DJ World index was +0.30%. On the economic front reports continued to come in positive. On the uptick: factory orders, ISM services, consumer credit, monthly payrolls, wholesale inventories, the WLEI, and the unemployment rate improved. On the downtick: the ADP index, the MMIS, and both weekly jobless claims and the trade deficit increased. Next week is highlighted by Industrial production, Retail sales and the PPI.

LONG TERM: bull market

Last weekend we noted there was a potential Primary III five wave pattern from the SPX 1075 low in 2011 completing, and four of our long term indicators were displaying negative divergences. These divergences usually occur during these types of highs. This week one of the indicators got close to eliminating the negative divergence. But it did not happen. As a result, this potential count is still under consideration.


A more bullish count, which we prefer at the moment, suggests this choppy uptrend, from the early February Major 4 low, is forming an Intermediate wave one leading diagonal triangle. This suggests, when the diagonal concludes, a sharp selloff to the lower SPX 2040’s or the 2019 pivot range for Intermediate wave two should follow. Then a resumption of Primary III. There are a few in our OEW group that are seeing potential impulse waves during this uptrend, as a series of 1-2’s. Should the market clear the OEW 2131 pivot range that possibility would improve. Thus far, despite all the gyrations over the past two months, the SPX high is 2126.

We continue to count this bull market as a Cycle wave [1] consisting of five Primary waves. Primary waves I and II completed in 2011, and Primary wave III has been underway since then. When Primary III does conclude the market should experience its largest correction since 2011 for a Primary wave IV. Then when it concludes Primary V should take this market to all time new highs. We still expect a bull market high in the year 2017.

MEDIUM TERM: bungee uptrend continues

After reviewing the charts we observe a nice five wave advance in the NAZ from mid-January to the late-April high.


However, during this period we see one good impulsive rally in the SPX during the month of February, then lots of choppy activity into its 2126 high and thereafter.


The NDX/NAZ look like they have completed a nice impulse wave during their uptrend. While the SPX appears to be completing a leading diagonal triangle during its uptrend. Both wave patterns suggest a correction should, if not already, be underway soon. When we do get downtrend confirmations we expect support around the low 2040’s or possibly the 2019 pivot range for Intermediate wave ii. If the market breaks the 2019 pivot range, and then heads towards the 1973 pivot, Primary IV may be underway. Medium term support is at the 2085 and 2070 pivots, with resistance at the 2131 and 2198 pivots.


This week’s activity added to the probability of the diagonal triangle scenario, as the market sold off but quickly reversed yet again. We are counting the diagonal as follows: (a) 2120, (b) 2040, (c) 2126, (d) 2068, (e) underway. The rising wedge suggests the SPX could make a marginal new high before it completes. As noted last week, negative divergences remain on the weekly RSI and MACD. Plus there is a negative RSI divergence and a negative MACD crossover on the monthly chart.


Difficult, indecisive, market these past two months. Suggest a bit of caution going forward. Short term support is at the 2085 and 2070 pivots, with resistance at SPX 2121 and the 2131 pivot. Short term momentum ended the week quite overbought.


The Asian markets were mostly lower losing 1.4% on the week.

The European markets were all higher gaining 1.1% on the week.

The Commodity equity group were mixed gaining 1.0% on the week.

The DJ World index is still uptrending and gained 0.3%.


Bonds are downtrending but finished flat on the week.

Crude is still uptrending and gained 0.2% on the week.

Gold remains in a downtrend but gained 1.0% on the week.

The USD remains in a downtrend and lost 0.6% on the week.


Tuesday: the Treasury Budget. Wednesday: Retail sales, Export/Import prices and Business inventories. Thursday: weekly Jobless claims, and the PPI. Friday: the NY FED, Industrial production, Consumer sentiment and Options expiration. Best to your weekend and week! Best to your weekend and week!

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

About tony caldaro

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187 Responses to weekend update

  1. Rodneysussman says:

    Great she will be waiting for u. Please do not buy her any food. Tell her u have no money

    Sent from my iPad


  2. fotis2 says:

    Oh Yeah! T-bones all round guys and gals.

  3. fotis2 says:

    Rumble in the jungle now lets see who wins got my bet on the Bear.

  4. The weekly twin hammer doji trend reversal candle is not going down with out a fight.

    • JeffMilano says:

      Mat,the descent started from a high of 12 o-clock. Tomorrow I am looking for a reversal, meaning going down following the pattern from today. We will see how far it will go. Wed, is key for this trend.

    • torehund says:

      Yellens prayer of converting stockholder to bondholders doesn’t work🙂

      • Thx Jeff…..

        Torehund, the way my eyes have been reading the charts, I see mostly a distribution phase in lieu of an accumulation phase like most invertors are seeing it. I have asked repeated for someone to tell me where the rotation is. For weeks now we have been seeing sell offs in most assets class US and foreign (commodities, bonds, equities and even the U$D) and yet US equity markets have failed to rally. So where is all this money rotating to, to cash?

        • torehund says:

          Inflation hasn’t been biting in the US yet, as the oil decline + an elevated currency prevents it, maybe there is speculation of a rate hike firstly in Europe. That cools it off.
          Jeff I mostly sit in stocks that have been sold off continuously for nearly a decade, so my holdings aren’t representative for the many high-flyers out there.
          I don’t know how long time they need to unload these high flyers, shorting them at an anticipated top, and then hit right, is difficult (but possible).

  5. Small degree 4 working off some of the froth from the first 3 waves up last week, or “consolidation” using different nomenclature. This 4 could be over or could last up to 2 days depending on how complex it wants to get. Prior 4 support is not far away at 2107-08/18100-10. Aussie indexes toying with a larger degree 4th wave overlap, and thus no new post-2009 highs in store, by the skin of their teeth at the moment. If I have this right the SPASX200, currently at 5596 in the cash equivalent overnight market, needs to fall to at least 5574 with the 4th wave overlap (or stop) sitting just below at 5561 in the cash equivalent and at 5550 in the cash market. Thus the risk parameters in this index are quite confined. Upside for the 5th wave is somewhere north of 6000. If the Aussie indexes fail to avoid their 4th wave overlap it doesn’t necessarily mean other global indexes are doomed. As mentioned it is rather obvious the INDU, SPX and the Daffy DAX are currently chopping around in 4s and a 5th wave up in these indexes is coming. The next part of the puzzle will be resolved when the 5th wave is followed by (only) a 3 wave ABC correction of the whole advance from last week.

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