weekend update


The week started at SPX 1931. After a gap down opening on Monday the market came within five points of retesting its August SPX 1867 low on Tuesday. Then the market gapped up Wednesday and Thursday hitting SPX 1927. On Friday the market gapped down to SPX 1894, then made a strong recovery and ended the week at 1951. For the week the SPX/DOW gained 1.00%, the NDX/NAZ gained 0.75%, and the DJ World index gained 0.70%. Economic reports for the week were mixed. On the uptick: the PCE, consumer confidence, personal income/spending, the ADP index, construction spending and the WLEI. On the downtick: pending home sales, the Chicago PMI, ISM manufacturing, factory orders, GDPn, monthly payrolls, plus weekly claims rose. Next week we get reports on the FOMC minutes and ISM services.

LONG TERM: bull market

Last weekend we discussed three potential market scenarios for the next several weeks/months. First: Primary IV ends in September. Second: Primary IV ended in August. Third: Primary IV will end in a few months. Details are in last weekend’s update.

This week the market completed five waves down from SPX 2021. However, the decline ended five points short of the August SPX 1867 low. When the market confirmed an uptrend shortly thereafter scenario #1 was eliminated. The uptrend confirmation suggested Primary IV had ended in August at SPX 1867. We are not completely convinced of this as the rally off the September SPX 1872 low has been kind of choppy. Therefore both scenarios remain in play until either the uptrend starts impulsing in earnest, or the choppiness continues.


Longer term we are still tracking this bull market as a five Primary wave Cycle wave [1]. Primary waves I and II completed in 2011, and Primary III completed in mid-2015. Whether or not Primary IV has already completed, we are expecting Primary V and all time new highs before the bull market ends. The price targets posted on the weekly chart are relative to a SPX 1867 Primary IV low.

MEDIUM TERM: uptrend

The market confirmed an uptrend this week about 2% off the recent SPX 1872 low. This suggests that the August SPX 1867 low ended Primary IV, and Primary V has been underway since then. If you review the hourly chart, in the short term section, you will see a potential wave count for that scenario: Major 1 SPX 1993, Major 2 SPX 1872 (an irregular zigzag). This suggests that Major wave 3 is underway.


This is kind of wave activity is an odd beginning to an uptrend, as it looks quite choppy. With this in mind, we have reason to believe a more complex Primary IV is still possible. The daily chart above displays that possibility, as we have updated the count to display a Major wave A at SPX 1867, and Major wave B underway. Should this be correct we would expect the entire Primary IV correction to take about six months and form a double three: zigzag-flat. The downside targets would still be between the OEW 1828 and 1869 pivots. Medium term support is at the 1929 and 1901 pivots, with resistance at the 1956 and 1973 pivots.


If we count Primary IV ending in August at SPX 1867, we have the beginning of Primary V posted on the hourly chart below. Off the recent SPX 1872 low we now have a similar type of irregular pattern as Major waves 1 and 2. We have a rally to SPX 1917 for the first wave, then an irregular second wave: 1897-1927-1894. Another odd pattern, or just more choppy market activity. The rally off Friday’s SPX 1894 low was quite impressive as the market hit 1951 at the close. Best rally in a couple of weeks. However, we would have preferred seeing a clear five waves up before any sizeable correction. Not this choppy activity.


Under the extending Primary IV scenario we can see the current rally ending at either the 1956 or 1973 pivot ranges. Then another sizeable pullback. Should the market clear the 2019 pivot without any sizeable pullbacks, then Primary V is probably underway. Short term support is at the 1929 and 1901 pivots with resistance at the 1956 and 1973 pivots. Short term momentum ended the week quite overbought.


The Asian markets were quite mixed on the week and ended flat.

The European markets were also mixed but lost 0.8%.

The Commodity equity group were also mixed but gained 0.6%.

The DJ world index has not confirmed an uptrend yet but gained 0.7% on the week.


Last week’s odd situation all ended positive.

Bonds are in an uptrend and gained 1.2% on the week.

Crude is also in an uptrend and gained 0.4%.

Gold is in an uptrend too but lost 0.8%.

The USD is also in an uptrend but lost 0.3%.


Monday: ISM services at 10am. Tuesday: the Trade deficit. Wednesday: Consumer credit. Thursday: weekly Jobless claims and the FOMC minutes. Friday: Export/Import prices and Wholesale inventories. Best to your weekend and week!

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

About tony caldaro

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226 Responses to weekend update

  1. buddyglove says:

    Strategically I’m looking to see this bullish excitement roll over into global mkts overnight and translate into a nice gap up in the US mkts Tues morning, what happens next is key imho.
    Japan, asia/pac, emerging mkts, uk and europe also look “set-up” for strong “Bear Culling” rallies.
    Aimho and glta.

  2. rc1269 says:

    happy monday all. just sold 1/2 my trading long from ~100 pts or so ago (sorry forget the exact entry level but it’s on this blog somewhere from 9/29 i think, maybe in the 1880s). this 1984-2000 area looks ripe for a little blip, perhaps tomorrow. will prob add back on a litle 20-25pt give back, depending on the structure/circumstances of course. cheers

    • EL MATADOR says:

      Would be nice to get 1990-1993 before that blip 😉

      • rc1269 says:

        day’s not over yet! maybe we’ll get to 1990s and put in a -div on 60min. who knows. this mkt moves fast these days so i don’t squabble over 5-8 points anymore. i’d rather lock in 100 than risk losing 50 on hopes to get 105. cheers!

  3. Page says:

    Tomorrow pullback begins for SPX and Gold/Miners. Extremely Overbought.

  4. ariez5 says:

    Am I seeing right that SPY volume is only 85 million at nearly 3:00?

  5. Anyone looking for a reversal this afternoon? 1936 +\- 3pts on the S&P? If you thought it likely, what would you do RIGHT NOW to maximize the trade?

    • scottycj1 says:

      There is no doubt……most would be taken by surprise !

    • fionamargaret says:

      buy UVXY

    • From the low on Fri a.m. to the high this afternoon is a huge move…clearly “risk on” based on bad news = good news, if I buy medias’ explanation. The move from last Monday through today and the consecutive string of up-days, clearly technicals driven as underlying fundamentals have not improved (likely deteriorated further). So what’s next? I’m no expert, as my long position in UPRO confirms, but I expect that this nonsense continues up towards 2019 pivot and then it’s game over. If we get there, I’m cashing out of UPRO and going all-in SPXU!

  6. mjtplayer says:

    The bears need the SPX 1,984 – 1,988 area to hold. With 1,984 being minor C = 1.618 of A and 1,988 being the .786 retracement from the 2,020 to 1,871 drop. Also, the downtrend line for the SPY lies at $198.30 – which is about SPX 1,985/6.

    • Today’s action also passes for 3 of 3 from 1894. If so, the pullback will only go to 1970-1973 for 4 of 3. If 1970-1973 doesn’t crack market is going materially higher. Oxygen levels low up here though. Daily RSI 5 highest since 2132 and hourly MACD highest in the last 4 months.

  7. wavediver says:

    From 1872, up to 1927 (55 pts), down to 1894 (34 pts), up to 1983 (89 pts).

  8. jeffbalin says:

    Would it be acceptable to call the end of primary 4 at 1872? If I figure it that way, then everything seems to make sense to me.

  9. Looked at some research for Octobers past.When launching higher in the first couple three days, some Octobers settled up about 4% max.Last year was 11% up on a V bottom….exception to the rule.Others around 1% up.I ll take profits at this level every day of the week.Good luck all.

    • Plus…there ARE turnaround Tuesdays to the downside as well.Guess we ll find out the last hour today if they sell em into the close.Biotechs down 11/2% percent…interesting and foreboding

  10. sure looks like one of those days where we sit at this level drop 2 or 3 points before it breaks out. may take 10 trys, but sure looks like it wants to

  11. For the Fibonacci minded the 1.618 relationship target for the INDU for waves A and C (or waves 1 and 3 if your more bullish) off last week’s low comes in at 16671.39. Daily high-to-date is 16672.04. But before you start getting too beared up the same target for SPX is 1983.22. I like it best as a 5 up here from 1894 up but another HH wouldn’t surprise one bit (nothing would surprise actually because there are a host of other ways to count it as well). When the pullback does arrive and its a 5 waver off 1871.91 the pullback shouldn’t really break below 1947 as the 4th wave with 1939 the real line in the sand. Below 1939 and the 5 wave possibility is buried.

    • Gold miners up 20+% last 4 days. This is not unusual as they’re very volatile at the best of times and they’ve been bouncing around the bottom for about 11 weeks now. But unless we have the low already in place in general stocks, precious metals and commodities then it’s difficult to see all these asset classes dump to fresh lows simultaneously without something coming from left field. Wonder what it will be?

    • blackjak100 says:

      Agree, this has major 1 of P5 feel/look. Still think we get a HH above 1978 to complete 3 followed by 30-35 wave 4 pullback. For now, it’s still a 3 wave advance until we get confirmation.

  12. kvilia says:

    Out of UPRO and XIV with a 12% profit, technical indicators are pretty high up on hourly and smaller foot print, can run higher but pullback can occur at any time.

  13. cicelyalaska says:

    No surprises here. Max B is way up at 2077. Everybody should be happily on the PV bandwagon by then.

  14. Cashing in EOD…going back to 0% equities from 25%.GDX staying at 20%.If we get above 2000, I ll re-evaluate.

  15. mjtplayer says:

    With the gap-up open this a.m., both the SPX & DOW are sporting massive daily -div’s. The SPX lower daily RSI was when the SPX tagged 2,020 on Fed day – 50pts higher than where we are now.

    The downtrend line from the beginning of the plunge comes-in at 1,974 today.


    • ariez5 says:

      MJT, I’m not following you. How can you have a negative divergence if the SPX has not yet exceeded the close of Sept 17?
      Agree on the downtrend.

      • mjtplayer says:

        Price lower than 9/17, but daily RSI higher = -div

        • ariez5 says:

          Hey MJT, thanks for the explanation, but I am still confused. Why would you call this a negative divergence? It would seem to mean prices are lower but momentum is accelerating. Don’t you see this coming out of every downturn?
          Don’t get me wrong, I think we reverse here for a bit because we are hitting the 1973 pivot and downtrend line, I’m still seeing corrective waves, and a gap higher after a reversal day has bad odds. I just don’t follow your logic.

          • mjtplayer says:

            RSI is a measure of momentum in determining overbought/oversold conditions. On a daily basis, the SPX & DOW are more overbought now than they were on Sept 17th, when the SPX was 45pts higher. That’s -div

        • ABchart says:

          In this cas, it is a hidden negative divergence.

    • llerias7 says:

      Mkt more 1% higher to 1990´s (?tomorrow) and that is it…will complete minute (ii) of minor 5 of an A down wave…bear flags all over…the rallys are always frenetic in bear markets! An eye on Gold…might breakout this time going to 1200´s…

    • rc1269 says:

      positive looking move on the daily MACD though, fwiw

  16. reddragonleo says:

    ES Morning Update (with SPY target) October 5th, 2015 – http://screencast.com/t/7U6eitk9eK

  17. buddyglove says:

    Sentiment still greatly favoring the bulls imo, and as can be seen in the chart that the last time sentiment was this extreme was in mid October last year, just before the S&P embarked on a 250 point almost non-stop rally. The charts are a little muddy, but on balance I think important lows are now in, I’m going with Tonys PV. Staying positioned long for now, but trailing up. Aimho and Good health/wealth to all.

  18. patterntrading says:

    #Nikkei225 Chart Update : It closed at resistance line


  19. torehund says:


    ..just something for the remaining Oil-bugs, it appears that no-one has taken into the account the ongoing turmoil in the middle east and what it may imply for the pricing. Looking at the grand scale of the count, the drop from 140 to 40 during the financial crisis could be an A-wave, all the ruggedness thereafter an X-wave and C would take us to 160-180 faster than anyone would think is possible.
    Yes I know its a wild count, but its still possible making a Cycle top “when and where no-one expect it “.

    • There s your recession kicker.The question is, even with war, can the markets be manipulated to stay low enough to ward off oil price hyperinflation? Another black swan event.

    • Dex T says:

      Wild indeed.

      The Middle East has been unstable for years and oil has only seen the $150 area for a short period of time.

      While some sources may be thrown into disarray- other sources (Like Iran) are going to come into play helping keep the price of oil down.

      Oil also has the issue that increased technological development will make clean energy sources more cost effective. The western world is slowly but steadily weaning itself off oil in several areas. It will take some time but is going to happen.

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