weekend update


The week started off at SPX 2127. After a rally to SPX 2133 on Monday, completing eight straight days of higher highs/lows, the market headed lower for the rest of the week, with four straight days of lower highs/lows. For the week the SPX/DOW were -2.55%, the NDX/NAZ were -2.25%, and the DJ World index was down 2.0%. On the economic front positive reports edged out negative reports in a quiet week. On the uptick: existing home sales, the FHFA, leading indicators and weekly jobless claims improved. On the downtick: new home sales and the WLEI. Next week will be highlighted by the FOMC meeting, the first look at Q2 GDP, and the Chicago PMI.

LONG TERM: bull market

The five primary wave, Cycle wave [1], bull market from 2009 continues. This week, however, it has reached another inflection point in the Primary wave III pattern. Primary waves I and II completed in 2011, and Primary wave III has been underway since the October 2011 Primary II low. Primary I divided into five Major waves, with a subdividing Major wave 1 and simple Major waves 3 and 5. Primary III has alternated, with a simple Major wave 1, a quite extensive subdividing Major wave 3, and an anticipated subdividing Major wave 5. SPXweekly This week’s market activity, however, suggests another inflection point has arrived in the four year long Primary III. More on this in the next section. When Primary III does conclude, the market should experience its largest correction since 2011 for Primary IV. Then after that wave ends, Primary V should take the market to all time new highs.

MEDIUM TERM: uptrend under pressure

After the downtrend low on July 8th at SPX 2045, the market rallied as expected and approached all time new highs on Monday. After completing three waves up to SPX 2133 on Monday, we expected a small pullback (20+ pts.) and then a resumption of the uptrend. By Wednesday, when the SPX made a double bottom at 2110, we thought it should move higher. By late Thursday morning, however, that support level was broken and the SPX continued its pullback. We noted the pullback was already larger than what was expected in the Thursday update. On Friday the market broke through SPX 2100 and continued even lower. This is not what was expected at all, since the uptrend from SPX 2045 – 2133 had only displayed three quantified waves: 2074-2051-2133. Should the pullback continue and the SPX drop below 2074, then we would have another corrective uptrend, and this does not fit with our subdividing Major wave 5 scenario. The DOW, which has been leading lower, has already overlapped its first wave of three waves. SPXdaily As a result of this week’s activity we took a good look at our charts and indicators. We had been expecting Major wave 5 to subdivide into five Intermediate waves for two basic reasons. First, the ongoing EQE in Europe. Second Primary waves in extended bull markets have always unfolded in Fibonacci years. While the sample is relatively small for 135 years of data, this suggested a Primary III top in 2016. Which still may occur. After reviewing the charts, however, we observed several negatives in some technical indicators and various indices. Our long term indicators are again displaying four negative divergences, which is what occurred at the 2011 Primary I high. We recently had four negatives, but one which was resolved positive has been now been replaced by another negative. Market breadth, as measured by the NYAD, has not confirmed the new uptrend and is nearly making lower lows from the April high. The SPX/DOW monthly MACDs remain on sell signals like they had in 2011. The Transports have not made a new high since 2014, may have ended their Primary III in December, and have been in a steady downtrend since February. The decline in US oil production has certainly had an impact on this index. The NYSE has not confirmed a new uptrend, and could have ended Primary III with a five wave ending diagonal in May. The DOW did not confirm a new uptrend either, and has nearly retraced its entire July rally as it has led the market lower this week. All three of these indices not confirming uptrends during the recent rally is definitely worth noting. During the recent rally the NDX/NAZ rose to new bull market highs, which is somewhat unusual if the general market is indeed in Primary wave IV. We can, however, observe a similar occurrence in 2011 at least in the NDX. It made new highs then while the general market was in Primary II. Overall we can now conclude the diagonal triangle in the SPX could have been an ending diagonal for Major 5, and not a leading diagonal for Intermediate wave i of Major 5. An ending diagonal would be the most conservative count. Then if we can discount the potential positive impact of the ECB’s EQE, since the SPX has hardly responded to it after six months. And, consider the Fibonacci years relationship as too small a sample compared to the current technical damage in the general market. We could conclude Primary IV is underway. While the market is currently about 2+% from its all time high, it is probably a good time to get defensive until this inflection point clears. Medium term support is at the 2070 and 2019 pivots, with resistance at the 2085 and 2131 pivots.


After an eight day rally from the SPX 2045 downtrend low the market had advanced in three waves to SPX 2133. This week, however, the market has declined to SPX 2077, with only one notable bounce along the way. Should the market drop below SPX 2074, then we have the potential for another corrective uptrend. This would not be good for the market medium term. Should the market then drop down to SPX 2044, the entire uptrend would have been corrective and fully retraced. Another negative. The second scenario would suggest Primary wave IV is probably underway. For the market to confirm that scenario a further drop to SPX 1981 would be required. SPXhourly As a result of this week’s market activity we are again forced to carry two counts. The count we have been tracking for quite a while will remain on the SPX hourly chart, and the alternate Primary IV scenario will be posted on the SPX daily chart. Short term support is now at the 2070 pivot and SPX 2044, with resistance at the 2085 and 2131 pivots. Short term momentum ended the week extremely oversold.


Asian markets were all lower for the week losing 1.1%.

European markets were all lower as well losing 1.8%.

The Commodity equity group were all lower losing 4.9%.

The DJ World index is still in a downtrend and lost 2.0%


Bonds are trying to confirm an uptrend and gained 0.5%.

Crude remains in a downtrend losing 5.2.%.

Gold is still in a downtrend and lost 4.1%.

The USD is in an uptrend but lost 0.6%.


Monday: Durable goods at 8:30. Tuesday: Case-Shiller and Consumer confidence. Wednesday: Pending home sales and the FOMC ends. Thursday: weekly Jobless claims and Q2 GDP (est. +2.0%). Friday: the Chicago PMI and Consumer sentiment. Best to your weekend and week!

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

About tony caldaro

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239 Responses to weekend update

  1. fionamargaret says:

    ..maybe weekend analysis will be correct – suggested 2064, and if that goes 2020….

    Thanks everyone – good good stuff.

  2. manunidhi21 says:

    Namaste Tony!
    Is this the maximum ovesold RSI on SPX 60 min charts ever ?

  3. zepfan123 says:

    So I see they are still teasing both bulls and bears here teh last few hours keeping the SPX just above or below the constantly returned to number of SPX 2070.- The Transports and COMP indexes staying above 8000 and 5000 respectively will be important to the bull case holding water here I think. Whatever happens this week, I’ll bet we don’t see new Dow and SPX all time highs for quite a while.
    But I guess we’re all back to betting on whether we go north of SPX 2100 or south of SPX 2040 first.

  4. Hi Tony,

    Looking ahead, assuming P4 in in progress this summer 2015, P2 in summer 2011 was a 20% move down in Aug followed by a sideways B wave, before final lows in Sept. Would it wise to expect P4 to be similar ABC or would it be a more complex wave?

    Also it’s not clear to me from the daily chart if we have already complete major a & major b of P4 as labelled and we are in a 5 wave C down already?

    Thx Tony…Much appreciated.

  5. Hi Toni ,

    Haven’t posted here in a while. Kudos on your continuing spectacular analysis. I got my head handed to me last October when we were trading the 1820 bounce as a B wave of PIV with C down yet to come. I am in the PIV camp here…but ofcourse waiting on confirmation below major-4 lows.

    This PIV if it comes, will it be a 20-22% correction again or are you expecting more like 10-15%?



  6. blackjak100 says:

    Today will mark 7th consecutive negative reading on NYAD. Last time we had 8 was fall of 2008.

  7. MR C if you have a second.., just theoretically if we dropped 10 % from 2133 would that be a 100% criteria for P4 or are there exceptions that would allow for P3 to still be viable? Thanks.

    you know what that means..lol(48hr window).

  9. All of a sudden the markets are behaving like the world is coming to an end. Buyers nowhere to be seen. What a game. The market still appears to be mesmerized under the spell of a fishing line “3”. My guess is 5 of 5 of a larger “3” in progress. If correct the larger “4” bounce not far away but we have to finish the “3” first which has been going on for an age so it seems. The 4 earlier that made the session highs looks more like 4 of 5 of “3”. The market may wish to go back near the session highs at 17500/2077 and put in a double top but its not necessary. A clean breach of 17500/2077 will be the larger “4” for a nice rally.

    • NEWBIE says:

      This market has barely corrected, it has been well behaved wait till we see the 300-400 point down days.

      • Gary Lewis says:

        No Newbie, the fireworks won’t begin until the market drops 400-500 points, a Fed president says something but the market falls again the next day. That’s when the fun will begin. Kind of like “China.” Just a matter of time I think. Always be prepared because it will come without warning.

      • reddragonleo says:

        Staying short for the month of August and exiting in September seems to be the best option I see. Then long around the first of October into the end of the year. September should be a daytraders dream as I expect it to look similar to September 2011.

  10. sibyn says:

    a new formation =2248 on SPX

    • kvilia says:

      sibun, what does that mean? Still reaching 2248 before resuming downtrend? NSBAT?

    • tommyboys says:

      What? Last night you’re calling for SP 1820 based on Bart Simpson and CwH and 10 hours later you’re calling for 2248 based on a new “formation”? What happens if a new formation happens at 3pm?

  11. stormchaser80 says:

    Since ECB QE started on March 9 (through last week):

    * CAC up a whopping 2.4%
    * DAX DOWN 2%
    * FTSE DOWN 4.3%

    You tell me if those were the results you were looking for through July 23rd??

  12. argento1 says:

    Just a correction from my end…especially to Sibyn, posted charts last week with downside targets which I questioned but breadth very much confirming his views, good calls!

    Looks like Primary IV is taking shape..emerging markets also taking bad hits with more downside to come!Have a cycle low early Oct so let’s see if she can push down until then!

  13. Bounce is looking like a 4th wave of an impulse down

  14. @Tony,

    SPX and Dow’s current low matching with ‘ii’.(Hourly and Daily RSI in OS zone and ready fly)

    What is your opinion??



  15. H D says:

    is there POMO today? news? DOW did LL- SPX not. rare clean fib retrace for DOW .382 from major 4

  16. stmro says:

    Wow so much weaker than I expected. China down 8% and another 5% AH, Germany over 2% and US working on a 5th down day in a row.

    Small short term long here on extreme oversold readings. Target 2100.

  17. NEWBIE says:

    We are going to nose dive at 2080 if we get there, last chance to jump ship before this pig gets slaughtered

  18. The SPX bounced off of the 200 SMA on the daily charts. This is the same area as the bottom of the 2070 pivot. If violated we could make a very quick move to the bottom Bollinger Band which is at 2040. Amazing how Tony’s pivot levels line up with other concepts of technical analysis.

  19. rc1269 says:

    those pesky and seemingly ubiquitously known fundamentals still having their way with the market

    Uncle- let me know when we’ve dropped enough that we can then say i mentioned it well in advance of the drop. not sure what is officially enough to be recognized as a legitimate fair warning. 3% 5% 10%?

    • uncle10 says:

      i want out of this discussion. if the market goes down you were right and it was because of the funymentals, if the market goes up it is just ignoring the funnymentals and will eventually go down because of the funnymentals. tails you win- heads you are early and will win…. no thanks 🙂
      btw, I respect your opinion that you think this drop is because of the funnymentals, I think it is because China ( a big country) is crashing.

      • rc1269 says:

        “i want out of this discussion”

        you’re out, my man! 🙂 haha yes, let’s move on to more fun things…

        like how dominant the seahawks are going to be this year

  20. GYN LAB says:

    Minute a of Minor C done at 2064?
    .500 = 2098 // .618 = 2106 though could be good to get up to 2110 area for a perfect flat c=a at 2040. Anyway long at 2067 with stop just below LOD looking for 2100+ in b-wave rally

  21. Gary Lewis says:

    Added some Sep SPY calls here as my 212 and 210 puts are doing nicely, but don’t want to give them up. A little spooked by the potential reverse head and shoulders possible formation on the hourly chart. Either way, as long as the market continues to get more volatile, think I’ll make out fine here. A couple of weeks ago, I was ready to concede that the market might go up into next year. But intrinsically, I will always be bearish in this Fed-manipulated market. (but trying to be flexible 😉

  22. mjtplayer says:

    Extremely oversold on the hourly RSI & DOW just broke July lows. I think the market holds here in SPX 2,060’s and bounces for a couple days, into the Fed meeting. Perhaps we can get back to 2,085 – 2,090 in a minute “b” wave?

    Selling weekly calls on my VXX longs right here…


    • Page says:

      SPX 2090+ then re-visit 2040.

    • Watch the volume.If we re at a +200m pace on SPY its a shortterm bottom and maybe even a trip above the 50d.HK will p r o b a b l y bounce tonight-which should help.But no sure thing over there anymore.Dax not budging yet from -280.If they don t rally…we won t either.I ll watch the volume til about 230pm and maybe add to equities at that point based on volume.Good luck all.

      • The first half hour we had 20m..the next half hour 10 m.Thats 185 m pace.If it slows down the next few hours to less than 20 m an hour…I wouldn t buy yet.Our two best short term bottoms the last 5 months were on +200 to 225 m shares.Good luck.

  23. blackjak100 says:

    The correction from 1991-1905 saw 7 consecutive days with NYAD negative and it looks like we will match that today. Going to get extremely oversold on Hourly RSI(5) and may even see a print in the 2’s just like in March of this year

    • blackjak100 says:

      Forgot to mention I will be buying sub 2070.

      • manunidhi21 says:

        Thnx BJ
        Target ?

        • blackjak100 says:

          2160-2190 if ED is playing out – decline halted right at 78.6% retrace.

          • manunidhi21 says:

            are you counting a DZZ in ED or some other count ?
            I think Dow making a lower low invalidated the extended ED scenario..

          • blackjak100 says:

            DOW making lower low is troublesome but not deal breaker because that’s too obvious. I’m counting. Yes, DZZ complete from 2133-2064. ED is finally completely out of play with LL than 2064 IMO.

  24. rc1269 says:

    Thanks Tony

    “More than 100 percent of this year’s increase in the Standard & Poor’s 500 Index is attributable to two sectors, health-care and retail. That’s the tightest clustering for an advancing year since at least 2000, data compiled by Bloomberg show.”


  25. zepfan123 says:

    Looking more and more like SPX 2130.82 is going to stay the closing ATH on the SPX for a while. Maybe quite a while if we plow down south of SPX 2040 early this week.- SPX 2070 looks like it’s going to be breached easily this morning.- Big week coming up for the market no doubt.

  26. sibyn says:

    DAX RCH short term handle up to 11466 now,
    Then Goal 10585

  27. GYN LAB says:

    Good morning Mr T and all!
    How about int ii still ongoing as a flat? 2045 Minor A, 2133 B and now down to Minor C support 2040 area. With EQE in force I can’t see US already entering P4 while DAX marching ahead in P3 still…

  28. HI tony – thanks for a great w/e update.
    Your closing para ; “Should the market drop below SPX 2074, then we have the potential for another corrective uptrend.”

    as i write, we dipped to below 2074 in the futures. Does that count? or should it be after the opening bell below 2074?

    many thanks

  29. opader says:

    Thank you Tony.

    I think Major 5 failed and we are in Primary 4. My thoughts: http://balancetrading.blogspot.com/


  30. sibyn says:

    SPX 2038 maybe today and DAX 11104

  31. sibyn says:

    sibyn says: Reminder
    July 22, 2015 at 10:01 pm
    This is a BART pattern, begining of that pattern is at left1820 12 tops an then down to 1820 again. Dow has the same pattern.
    EW is old and computers are calculating diffrent.

    DAX, Big RCH.

    • hooloo1957 says:

      hi there sir,, can you tell us more about this Bart pattern? Or where we can go to find out about it? Thanks

  32. I love the fact that the people at soh blogs and forum keep trying to call the top, and then get roasted weeks later. Tony has it right again, this is a STILL a bull market. And we are STILL in the midst of a tech boom!

    I think people trying to call a top are going to lose money for the next 1 or 2 years. If they have any money left I might add. More pain? we shall see.

    I do like some charts also and are good to take a look at like GARMIN, on the monthly, that looks good. http://www.bit.ly/1fMcakI

  33. Here are some continued thoughts …

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