weekend update


The market started the week at SPX 1958. After a short-lived gap up opening on Monday to SPX 1980 the market headed lower into Thursday when hitting SPX 1909. Then after a morning low the market rallied into Thursday’s close and gapped up on Friday to hit SPX 1953. If that wasn’t enough, the market then dropped to SPX 1922 before rallying to close the week at 1932. For the week the SPX/DOW were -0.9%, the NDX/NAZ were -2.6%, and the DJ World index was -2.3%. On the economic front, reports for the week were mixed. On the uptick: Q2 GDP, consumer sentiment, the WLEI, new home sales and the FHFA. On the downtick: GDPN, durable goods, existing home sales and weekly jobless claims were higher. Next week, a busy schedule, will be highlighted by monthly Payrolls, the PCE and the Chicago PMI.

LONG TERM: bull market

Typically, during a bull market, the significant second and fourth waves, along with many others, alternate in wave structure. Alternation can occur between simple flats and zigzags, and even triangles and complex corrections. While this bull market has had many waves, what has been lacking to a great degree is alternation between those waves. This has added to making this bull market somewhat difficult to track, especially during Primary wave III.

Historically there has always been alternation between the significant second and fourth waves of a bull market. In the current bull market there should be alternation at least between Primary II and Primary IV. There was alternation between Major waves 2 and 4 of both Primary I and Primary III. In Primary I they were complex and simple, and in Primary III it was a zigzag and a flat. With this in mind Primary IV should alternate with the elongated flat of Primary II.

In recent history elongated flats have occurred twice before: in 1987 and 1998. The 1987 flat alternated with the complex double flat of 1984. The 1998 flat alternated with the simple zigzag of 1990. Since the current Primary IV correction has already had a significant decline in the DOW/NAZ/NDX we have been favoring a simple zigzag scenario. This is one of the main reasons we have been expecting Primary IV to end, with a slightly lower low, this month. A simple zigzag is already present with three major waves: A 2044, B 2133 and C 1867. Should the market not make a lower low this month we are left with two options. First, Primary IV will continue for several more months to complete a more complex correction, i.e. a double three with a zigzag and flat. Second, Primary IV already completed at the August SPX 1867 low despite the choppy advance since that low.


While the current situation is being worked out by the market we continue to see this bull market as a Cycle wave [1] consisting of five primary waves. Primary waves I and II completed in 2011, Primary III completed in mid-2015 and Primary IV either completed or is still underway. Eventually, Primary V will kick in to the upside carrying the market to all time new highs. We worked out some potential targets using SPX 1867 as the low, and have had then posted on the weekly chart above.

MEDIUM TERM: Primary IV reaches inflection point

As noted above, if the downtrend does not end this month it has; (1) already ended or (2) Primary IV will be more complex than originally anticipated. Let’s cover the three options.


First, downtrend ends this month. This is has been our ongoing preferred scenario. With Major waves A (2044) and B (2133) already completed we have been waiting for Major C to complete. Thus far we have had Intermediate waves A and B end by mid-August with Intermediate C underway. Minor A was the drop to SPX 1867, and Minor B the rally to SPX 2021. To complete this pattern we have been expecting an impulse wave down to the 1869 pivot range or slightly lower. Thus far it looks like the market has completed Minute waves i-ii-iii-iv with Minute v now underway. This decline from [2021] counts as follows: 1953-1980-1909-1953-1922 thus far. Since Minute iii (1980-1909) is larger than Minute i (2021-1953), Minute v can be any length.

Second, the downtrend already ended at SPX 1867. Bill C in our OEW group has been tracking a count that suggests the market is already in Primary V. If we count the SPX 1867 low as the end of Primary IV. We can count the rally to SPX 1993 as Major wave 1, then the recent decline to SPX 1909 as the end of an irregular Major wave 2 failed flat: 1903-2021-1911. Then Thursday’s/Friday’s rally to SPX 1953 would be the first wave of Major wave 3.

Third, Primary IV will extend for a few more months. If the downtrend does not end this month, (just three days to go), and August’s SPX 1867 was not the final low, then to maintain the alternation concept the correction will need to stretch out a few more months and become a complex three. Medium term support is at the 1929 and 1901 pivots, with resistance at the 1956 and 1973 pivots.


In an attempt to clarify the three potential scenarios, this week the market set up some nice parameters. The market appears to be impulsing to the downside from SPX 2021: 1953-1980-1909-1953-1922 so far. Four waves complete and the fifth wave underway from SPX 1953: 1922-1935. To keep the impulse wave going the market can not rally back to SPX 1953. If it does this would turn the SPX 2021-1909 decline into an a-b-c, which would likely support the more bullish Major 1 – 2 scenario #2 noted above. Should the market not impulse lower and enter another period of choppy activity, then scenario #3 would likely be underway. So the key level going forward is simply SPX 1953. Impulse lower, breakout above it, or go into chop mode.


Short term support is at the 1929 and 1901 pivots, with resistance at the 1956 and 1973 pivots. Short term momentum ended the week below neutral.


The Asian markets were all lower for a net loss of 2.2%.

The European markets were mostly lower for a net loss of 1.8%.

The Commodity equity group were all lower for a loss of 3.9%.

The DJ World index is still in a downtrend and lost 2.3%.


Bonds are trying to establish an uptrend but lost 0.1% on the week.

Crude is trying to establish an uptrend and gained 0.8% on the week.

Gold is also trying to establish an uptrend and gained 0.6% on the week.

The USD is trying to establish an uptrend too, this must mean something, and gained 1.4% on the week.


Monday: FED governor Tarullo gives a speech at 5:15AM, Personal income/spending and PCE prices at 8:30, then Pending home sales at 10am. Tuesday: Case-Shiller and Consumer confidence. Wednesday: the ADP, Chicago PMI, and a speech from FED chair Yellen and FED governor Brainard. Thursday: weekly Jobless claims, ISM manufacturing, Construction spending and Auto sales. Friday: monthly Payrolls, Factory orders, and a speech from FED vice chair Fischer. Best to your weekend and week!

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

About tony caldaro

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299 Responses to weekend update

  1. john b says:

    ok up it seems guys,ive had enough of this sideways \down nonsense

  2. cicelyalaska says:

    Indicators are still to short, but back to cash for me, no reason to be greedy. Happy with the day. Will sit it out and see what happens now, probably 1700 now that I’m out.

  3. rc1269 says:

    if we close at 1867, do we go up or down tomorrow…?

  4. Sept 1st…mentioned after Aug losses of 6%, Sept avg loss is 5.8% or 114pts from 1970=1856.Largest loss 8%, best was up 1.8%.I had no doubt, even as early Sept rallied, that we d sell.Amazing how it works time after time.

  5. Here is some intraday analysis in the context of the ES 30-min futures – and still all in the context of minute iii on cash. The futures suggest that since minuet (iii) is longer than 100% x minuet (i), that a 1.618 extension of minuet (iii) is ‘possible’ to 1955, ES. May not happen today. May be part of tomorrow morning’s wave. Cheers and enjoy the chart.

    ESZ15 - Half Hourly - Sep-28 1338 PM (30 min)

  6. If Institutions are rebalancing their portfolios to be net bearish (not saying they are, just suggesting it as a possibility), could EOM market selloffs serve as “window dressing” that we’ve become accustomed to as a rising tide at EOMs during this long bull market? Thoughts anyone?

  7. johnnymagicmoney says:

    Tony – I know your more detailed posts are limited to the weekend and anything you share with us is most appreciated but curious if you would be open to a more detailed analysis for the updates this week as well. If this is Primary 4 and the correction ends soon then your prefered count makes further anaylsis worth little. But what if this is a bear already and many are making the mistake of calling it a 4? After an unprecedented price rise built on QEForever this truly is an unprecedented inflection point that I think behooves extra attention. Misreading this inflection point would really be treacherous. The Oct 14 movement of last year was difficult to read (partly due to CB’s) yet there isnt a lot of doubt about this being read wrong. All the probabilities are 4 completes this week, 4 has already completed, or 4 completes in the next few months. There are some on here discussing a bear but that discussion seems to be an outlier. Why is that?? Maybe the white elephant is an angry bear.

  8. mjtplayer says:

    SPX just tagged 1,883 – the first of 3 targets. Selling VXX longs right here.

    C = .618 of A @ 1,883
    Aug 24th cash low of 1,867
    C = A @ 1,840

  9. uncle10 says:

    Thanks Tony.
    Its all the fed fault. 😉 hehehe

    • tony caldaro says:

      Many find the FED easy to blame.
      They have short memories

      • uncle10 says:

        maybe they should do an emergency rate hike? 😉 haha

        imo, they deserve some blame for the big mess we are in, but I think they know some stuff most of us don’t and they have been/are unable to raise rates. The idea that we solve a problem of too much debt and leverage with ever more debt and leverage will be proven to not work. 😦

        • tony caldaro says:

          Dudley came out to day, and said they will likely raise this year.
          October is my guess

        • fishonhook says:

          The fed has consistently mismanaged and messed up.

          remember old Greenspan lobbying for less Wall Street regulation? remember Bernanke saying there aint no housing bubble and WS is sound?

          then Q1, 2 and 3 to repair a bubble that apparently didn’t exist.

          A computer program would do better than these bozos. We will raise , yes…no…maybe..later…never…. sheesh!

  10. Sandra Dons says:

    Sorry Mr Caldaro so if we get 1867 near 30 of Sept then we could entering in P5 lást leg with NEW highs ?

    Isn’t it ?

    But if we go lower?

    Thank you

  11. fotis2 says:

    Long 1890 for 1910 like the 30 min hammer stop 1880

  12. Since the market has decided to tank and I am done with day trades for the day I thought it would be fun to tell you kind folks a little about myself. I grew up in the deep south in the 50’s Most of my dads family were true blur blood rednecks so I thought it would be nice to share some of the items that they were most proud to own. My Dad’s 1st power mower


  13. lunker1 says:

    per prior bottoms watching 60min RSI5 for climax flush down to a 3-5 reading

  14. kvilia says:

    Dipped the toes – UPRO@50.6. Indicators are ligning up for a bottom, temporary or not we will see.

  15. update: no swing trade setup yet expect we are headed south per Tony’s update

  16. I guess the only question now is…turnaround Tuesday? Wouldn t surprise me.

    • Dex T says:

      Even with a bounce is there any doubt that we’ll soon be retesting the 1867 lows?

      • We re in the process now.I mentioned early Saturday that the weekly Spx showed the lower trendline of the blue pitchfork rising to 1890ish.I threw out the idea that at least on this attempt, we DON T go all the way to 1867.That we stay inside it this time.Maybe we rally from here and the nexy selloff test 1867 and below.Just an idea.

  17. Based on the lengths of the waves, the fourth wave triangle location, positions of the gaps, market internals, and the SP500 15-minute Elliott Wave Oscillator, with 120 – 160 candles on the chart, this count appears to be correct, and makes some predictions. Since wave minute ii (circle ii) was only a 38.2% retrace, that suggests …

    SPX - Intraday - Sep-28 1113 AM (15 min)

    …that minute i is the ‘extended’ wave in the sequence. Minute iii now has an Elliott Wave Oscillator which clearly has lower lows than the prior interior third wave. The chart in no way implies that minute iii of minor 5 is done. It can grind on to be ‘almost’ as long as minute i, but should not exceed it in length if the first wave is the extended wave. Then, minute v would likely be shorter than minute iii.

    Clearly the weekend video said that minute ii ‘could’ go on to make a 50 – 62% retracement, but we could see how it could have ended at the high. The fact that it did end at the high – of only 38.2% – tells us something significant : that the first wave, minute i, is likely the extended wave in the five-wave sequence to minor 5.

    (Nothing here is trading or investment advice).

  18. ariez5 says:

    Anyone else see a bullish falling wedge?

    • I see nothing but Big Downs wherever I look, ariez. Classic trend day today – opened at the HOD and below last week’s close, and bulls failed at Friday’s low. $SPX should close at or near the eventual low of TODAY. Any positive close from where we are now today and I’d have to put one arm in my bull suit. Otherwise, I would bet we close low today. Very, very low.

      • Hey CN, thanks for your post, wish you would do so more often, always of interest. Ignore the nuts, there’ll always be a few on the internet. GL

      • ariez5 says:

        Thanks, CN. I am, to my GREAT SHAME as a bear, flat SPX today. I do see a falling wedge on the 1 min chart, but I am not too attached to it.
        More importantly, I think last Thursday was a Big Up daily setup. It was certainly not the most orthodox of setups, but it roughly qualified. It was triggered Friday, but it was not confirmed (weak close).
        This morning I went back and looked at 2007-2009 and all the times that a Big Up Daily setup failed to confirm. Many times the low of the Big Up day was undercut. However, a short at the close of the day on which the Big Up was undercut rarely worked out over several days. It was almost always followed by whipsaw.
        What that tells me is, having missed this shorting opportunity, I will not chase. I am pretty confident that any bounce today or tomorrow will not be the end of this selloff.

        • I can see why you might look at Thursday as having BU potential, ariez. However, considering Thursday as a BUD set up one has to consider the negative close, and more importantly the close below that day’s open. Then, of course, is the context of two BDW’s, and the busted 2/B consolidation that, because busted, must be, imo, a “B” wave making this downward push a “C” wave. That leads me to see a retest of August’s low as higher probability than a bullish reversal prior to such a test. Nothing is certain and anything can happen, of course. Also, if you keep trading off of a one minute $SPX chart someone else is going to end up with your money 😦

          Daily and weekly charts govern BU’s and BD’s. For day trading, either find a range chart that fits your eye, or the trusty ol’ 5 minute chart, which is king of the day trade charts, imo. But good work going back and testing your hypothesis – just make sure you have rigorously defined the terms you are testing, and then go back to 1967 🙂

          • ariez5 says:

            Hey CN,
            1. Not trading off 1 min charts. Just looking at them.
            2. For looking at BU and BD, I find looking at SPY better than SPX, since no one can buy the index. SPY closed higher than open last Thursday.
            3. None that negates the fact I should have shorted the wazoo out of Friday’s close.

          • hkloon says:

            Sorry CN, what is BU, BD and BUD mean? thx…

        • chrisk44342 says:

          cash is a position, don’t ever forget that

      • uncle10 says:

        Hey CN, We all appreciate you sharing your thoughts. Thanks!

  19. H D says:

    Kudos Tony, not only did OEW shine but 2019P and 1956P were perfect.

    Should quiet the “infinitely better” guys.

    Using ur B looks 5=1 1885 SPX

  20. reddragonleo says:

    It feels like it wants to flush out today. But right now it’s in between an 1870 SPX double bottom level to go long at for a decent multi-day rally, and a small 20-30 rally up then a drop to 1870 area. Either one is possible, but flushing out first… down to the 1870 area would probably hurt the most traders, and SkyNet loves to do that you know.

  21. Coincidence or not…Santelli on CNBC just had a report on HYG.Caught the last part on Sirius.He made the connection that drops in HYG may have people selling SPY futures to cover losses.I think it was his 1145 report.I never made THAT close of a correlation…

  22. johnnymagicmoney says:

    I do believe the Russell just undercut the August lows. The financials are there right now. Biotech obviously has undercut with conviction yet the VIX has much room to grow. A chunk of the market is already being pulled down like a magnet to the October 14 lows. You also finally have stupid valuations like Amazon and Facebook finally showing relative weakness

  23. Jerry, your second support level of 1897.50 has arrived, let us know if any update…

  24. johnnymagicmoney says:

    Tony great Tony……….

    The following question was raised earlier and i read your respone but do not understand it. Any clarification on this would be helpful.

    “why limit the correction low to September and what if she rolls over and put in the low first week of October (as my indicators points to) and then rally back up for Primary V”

    tony caldaro says:

    September 28, 2015 at 5:29 am


    • tony caldaro says:

      Historically there has always been alternation between the significant second and fourth waves of a bull market. In the current bull market there should be alternation at least between Primary II and Primary IV. There was alternation between Major waves 2 and 4 of both Primary I and Primary III. In Primary I they were complex and simple, and in Primary III it was a zigzag and a flat. With this in mind Primary IV should alternate with the elongated flat of Primary II.

  25. buddyglove says:

    Got stopped out on my last long attempt, but trying again here @ 1906. Still expecting sharp swing to upside. Gl to all.

  26. rc1269 says:

    good morning. i noticed some people have been talking about HYG and JNK a little bit today. i just wanted to mention that i wouldn’t put too much stock into the actual price level of HYG. yes it should trade directionally in sync with SPX for the most part, but i don’t think it’s appropriate to compare price changes with price changes (HYG vs SPX).
    HYG, like its underlying bonds, have a limited range in which price can exist, unlike equities which theoretically have no upper bound. so while directionally they should be consistent i dont think you should try to make correlations like X% change in HYG = Y% change in SPX.
    the bulk of the value in HYG is in distributions, not price appreciation. for instance, in January 2010 HYG was at $90 and the SPX was at ~1130. Three months ago the HYG was at… $90, still, and the SPX was at ~2120. that’s not very good price/price correlation in my book. fwiw. cheers

  27. reddragonleo says:

    SPX Morning Update September 28th, 2015 – http://screencast.com/t/iDCzwkVQKx5

  28. fotis2 says:

    Kudos Tony !

  29. mjtplayer says:

    SPX 1,908 has been taken-out. From 2,020:

    A = 1,908
    B = 1,952

    C = .618 of A @ 1,883
    SPX Cash low on Aug 24th = 1,867
    C = A @ 1,840

    Would expect int A of major C to bottom somewhere between SPX 1,840 – 1,883


  30. Gap down, and lower trend line break per the weekend video, seems like minute iii of minor 5 is in progress, minute ii up ending on Friday. Trading below 1903.07, the last lowest possible X wave low of W-X-Y, up to 4 would seal the deal.

  31. Hahahaha, still standing in front of a mirror, eh? Hang in there ma, behave yourself but don’t take things too seriously in any case. Best wishes.

  32. ariez5 says:

    I cannot put my finger on why I am neutral on the SPX. Maybe it is just that I was shaken out of my shorts towards the end of last week and am trying to make myself feel better.
    Crude, however, really looks like it is going to break. It has been triangulating for a month, while high-yield bonds have lead the way down. It is very unusual for HYG to lose as much or more than SPY. Today HYG is way out of the Bollinger Band and probably needs to consolidate, so I wouldn’t put a short on just now. But crude does look like a short will pay off – shortly.

  33. fishonhook says:

    Looking at HYG and JNK it seems like the next big thing will be below investment grade defaults. The problem is so many companies used low rates and yield hungry investors to release their crap paper often just to buy their own stock, which of course rewards insiders with options. Now these foolhardy actions are coning home to roost

    • HYG leading down.Now close to 52 week low.If anyone did not see it, Fiona had a P&F chart showing a potential drop to 73 on HYG.Correlate another 15% down in stocks to that occurrance.

  34. That s it Mr C keep things with some decorum…100% agree.

  35. jeffbalin says:

    As I see it, if still in pri 4, got about 50 points to go to match 1867. However I believe the naz must drop almost 400 to match it’s end of aug low. Either the naz rips down way faster then spx ( I guess like Friday), or Spx may drop a decent chunk below 1867?

    Very helpful wknd update, thank you Tony

  36. reddragonleo says:

    ES Futures Morning Update September 28th, 2015 – http://screencast.com/t/a0olKps1F

  37. mjtplayer says:

    Full moon and lunar eclipse last night/today. It seems this is the trigger, today, to begin a run down to test the 1,867 area in the days ahead. By my count, this drop would be minor C to complete int A of major C.


    Testing and holding the 1,867 area to complete int A would set-up an int B rally. The bulls will be out in force claiming the lows were tested and it’s off to the races; the bears will be covering shorts. But this will eventually lead to an int C of major C drop to complete P4 below 1,867, crushing the bulls on last time.

  38. Update from sunday post. 15 min 60 min dec es. 15 min low breached no conformation on counter trend rally no long position setups yet

    • Thanks Jerry, keep us posted. Have you loaded the Dax into your system ? as very nice setup there imo, I think it will be the first to break hard to the upside and set the SPX in motion, for the face ripping rally. GL.

      • Yeah Jerry, let us know if/when you pull the trigger. I try to do so within 10-15 minutes of trade filling but know that’s not always possible. I also like to indicate when my finger’s on the buy or sell button so they can get prepared to trade if they so desire to join me, like I did with Thursday’s buy and Friday’s sell. GL and keep up the good work.

  39. argento1 says:

    Hi Tony,
    Thanks for an excellent weekend review!
    Just a quick question, why limit the correction low to September and what if she rolls over and put in the low first week of October (as my indicators points to) and then rally back up for Primary V?
    Thanks in advance

  40. Midnight…futures were down 80 Dow points….3am up 60 dow points.PPT will try to save the monthly charts it looks like, as of now.Europe down .3% after futes showed 1% down earlier.I wondered if this might happen.By 9:30 we ll probably be up 150…

    • …and now 20 minutes later, a 50 pt drop in the Dax has pulled our futures down to even.Pretty wild moves for the overnight hours.Time for a little shuteye.Good luck all on the week.

    • Lol. I think it was obvious to (almost) everyone on Friday that we would drop today. Gold also down big; I was selling on Friday, wish you had waited to buy, hate to see anyone lose money (even you, lol). GL

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