weekend update


The market started the week at SPX 2015. After a rally to SPX 2022 on Tuesday the market pulled back to 1991 by Wednesday. After that, helped by two gap openings, the market rallied Thursday/Friday to post new uptrend highs at SPX 2034. For the week the SPX/DOW gained 0.85%, the NDX/NAZ gained 1.40%, and the DJ World gained 0.50%. On the economic front reports continue to be mixed to negative. On the uptick: retail sales, consumer sentiment, plus weekly jobless claims improved. On the downtick: the CPI/PPI, NY/Philly FED, industrial production, capacity utilization, the WLEI and GDPn. Next week lots of Housing reports, Leading indicators, and the ECB meets.


With the stock charts monthly chart only going back to 1980 the labeling of the waves can be confusing for some, as one can see a Primary III lasting 18 years, (1982-2000), and now a Primary III lasting only four years, (2011-2015). One may think how is that possible? Actually, it is not only possible but somewhat expected when one reviews the last 100 years of stock market data rather than just 35 years.

26. DOWyearly

The chart above displays the market activity in the DOW from 1900-2008. During this period of time the stock market completed a bullish Grand super cycle in 1929, and a nearly 90% decline bearish Grand super cycle into 1932. From that 1932 low the next 200+ year bullish Grand super cycle began.

Grand super cycles divide into five Super cycle waves, with the three bullish waves (SC 1, SC 3 and SC 5) lasting about 70+ years. The bullish SC 1, noted by the Cycle wave [5] top in 2007, started in 1932, and lasted 75 years. This was followed by a bearish 50+% decline into 2009 for SC 2. After that low in March 2009 the market started its next 70+ year bullish SC 3. This is easily observed with the up-to-date monthly chart that follows.

A 70+ year bullish Super cycle unfolds in five Cycle waves. The three bullish Cycle waves (C 1, C 3, and C 5) can last from 5 years to 30+years. During the 1932-2007 SC 1, the Cycle waves were as follows: C [1] 1932-1937, C [2] 1937-1942, C [3] 1942-1973, C [4] 1973-1974, C [5] 1974-2007. Notice Cycle [1] only took 5 years, Cycle [3] 31 years, and Cycle [5] 33 years.


Each bullish Cycle wave divides into five Primary waves. Obviously a Cycle wave of only five years will have much shorter Primary waves than one of 30+ years. It is therefore very important to know where the market is in regard to the big picture, before trying to anticipate where it is now, where it is heading, and how it might get there.

With SC 1 as a template we have been expecting a relatively short Cycle wave [1] bull market from the March 2009 SC 2 low. At first we thought it might last five years, then eight years, now we would not be surprised if it ended 2015/2016. The important point is that we knew it would not last 30+ years. That is expected for Cycle wave [3]. After the current bull market tops, a one to two year Cycle wave [2] bear market will follow.

LONG TERM: bull market

We continue to track the wave formation of Cycle wave [1] of Super cycle wave 3. As noted above bullish Cycle waves unfold in five Primary waves. During this bull market Primary waves I and II completed in 2011, and Primary waves III and IV completed in 2015. Primary wave V, the fifth and final wave, is currently underway.


We are expecting Primary wave V to complete at one of the price targets posted on the weekly chart above. The most obvious target would be SPX 2214-2219, if it completes in one uptrend. When it does conclude a Cycle wave [2] bear market should then follow, with the market losing between 45% and 50% of its value. This is likely to take one to two years. After that a 30+ year Cycle wave [3] should get underway, with bull/bear markets along the way, carrying the markets to unbelievable heights. Exciting times ahead!

MEDIUM TERM: uptrend

After the Primary III high in May at SPX 2135 we observed a three trend a-b-c decline to 1867 by August. We then waited for a test of that low before firmly labeling Primary IV at that SPX 1867 low. The main thing we were watching was to observe alternation between the Primary II five trend elongated flat, and Primary IV. With Primary IV ending as a zigzag, alternation was achieved by the market.


Since impulsive primary waves unfold in five Major waves, we labeled the first rally off the SPX 1867 low to SPX 1993 as Major wave 1. Then Major wave 2 unfolded in an odd irregular zigzag ending at SPX 1872. After that low, right at the end of September, Major wave 3 kicked off to the upside. Should Major wave 3 travel 1.618 times Major 1, then its target would be SPX 2076. If 2.0 times Major 1, its target is SPX 2124. Medium term support is at the 2019 and 1973 pivots, with resistance at the 2070 and 2085 pivots.


For Major 1 we counted a simple five waves up from SPX 1867: 1915-1880-1990-1948-1993. For Major wave 3 we have counted nine waves up for just Intermediate wave i: 1917-1894-1992-1972-1999-1976-2020-2006-2022. Then after an Intermediate wave ii pullback to SPX 1991, we have counted just one wave up for Intermediate iii thus far: 2034. This one wave could have subdivided into five Minute waves: 2008-1997-2031-2020-2034 thus far. So this first wave up should be close to completing. When it does we would expect about a 15-20 point pullback before Intermediate iii heads higher.


Short term support is at the 2019 pivot and SPX 2000, with resistance at SPX 2040 and the 2070 pivot. Short term momentum ended the week with a negative divergence. Best to your trading!


Asian markets were mixed on the week but gained 1.1%.

European markets were mostly higher and gained 0.2%.

The Commodity equity group were all lower and lost 2.0%.

The DJ World index is uptrending and gained 0.5%.


Bonds are uptrending and gained 0.4%.

Crude is also uptrending but lost 3.6%.

Gold is uptrending and gained 2.4%.

The USD reversed into a downtrend and lost 0.2%.


Monday: the NAHB and a speech from FED governor Brainard at 10am. Tuesday: Building permits, Housing starts, and speeches from FED governor Powell and FED chair Yellen. Thursday: the ECB meets, weekly Jobless claims, the FHFA, Existing home sales, and Leading indicators. Best to your weekend and week!

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

About tony caldaro

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180 Responses to weekend update

  1. uncle10 says:

    Thanks Tony.
    I was hoping for a little higher to short but going to start a position here. gl all

  2. GYN LAB says:

    Good afternoon,
    The last wave from 2020 has a lazy diagonal look in its last leg target +-2036 at close today or early tomorrow. I have been expecting 2046 but this diagonal looks too weak to get there…

  3. mjtplayer says:

    Not feeling the whole wave 3 thing today, tight trading range on extremely light volume, feels more like a post OPEX hangover day before we roll-over on “Turnaround Tuesday”.

    The commodity bounce looks done, oil and gold both failed at resistance (oil at $50, gold at $1,200); even Brent is now below $50.

    I don’t know, seems more like the rally from 1,871 is out of gas, I’m counting this as minor 5 to complete int i, about to drop in int ii.


  4. tomasso60 says:

    well, the link is not hitting right but Aussies have 50000 signatures to change currency to Dollarydoo

  5. tomasso60 says:

    I guess when currencies hit the skids a bit its time to find something a bit funny

  6. ariez5 says:

    Looks like we are getting a Triangle 5th of a 5th (from 1990) of a 5th wave (from 1872) here.

  7. Dex T says:

    Down the financial firms go.

    Morgan Stanley

    “Morgan Stanley (MS) dropped on poor quarterly results. The bank missed on both the top and bottom lines. Q3 profit fell by 42%, posting earnings of $0.42 a share, missing estimates by 20 cents. Revenue was well below forecasts. Morgan Stanley’s CEO James Gorman blamed the “volatility in global markets,” as clients stayed away from the bond, foreign exchange and commodity markets.”


  8. Igor says:

    Guys, a question here about the layout for those who read my update today.
    I posted the update and chart below the first post. A reader has to scroll down a bit. Does it bother you? Do you think it is better to post updates on the top of a post moving down the previous material? I would appreciate your feedback, thank you.

    • H D says:

      Hi Igor, since volume is part of your analysis couldn’t you argue the opposite? Buying climax 9/17 and retest right here on lower volume?

      • Igor says:

        Hi HD, the bigger picture provides context. Taking a look at a limited segment of price/volume structure without a context is similar to trying to count EW over the last two months not looking at the overall count🙂
        If I try to defend a bear case, I would argue that the recent action is an upthrust before price returns back into the trading range. However, price structure, momentum and breadth don’t support such conclusion. The best bear case I can make now is that the short-term distribution is going to occur on higher levels, in vicinity of the upper border of the green box. Even in this case, there is no enough evidence of a longer-term distribution just yet. One step at a time.
        Good to see you and Lee on Tony’s site, not so many old-timers here, eh? :-))

        • H D says:

          I rarely look at volume, who knows what volume means anymore with HFT’s. Agree w the rest of your analysis IF things don’t turn down in the next day or 2, thx. 2006 SPX is an interesting price if so.

          • Igor says:

            I analyse consequent different quantified moves with corresponding volume relative to each other to get a clue. Sometimes helps.

          • Igor says:

            One more thing about volume. It works better on individual stocks. People obsessed trading the SP-500, trying to guess every turn, while much better trading opportunities arise in individual issues from a probability point of view.

        • hkloon says:

          +1 and well said🙂

    • simpleiam says:

      Hi Igor. I like your Updates. In answer to your question, YES, post the most recent at the top, and others below it in date chronology. IMO.

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