weekend update


The market started the week at SPX 2033. After some choppy activity on Monday the market rose to SPX 2039 by Tuesday. Wednesday the market pulled back to SPX 2017. Then after two gap up openings the market hit SPX 2080 on Friday. For the week the SPX/DOW gained 2.3%, the NDX/NAZ gained 3.6%, and the DJ World index gained 1.2%. Economics reports for the week again came in mixed. On the uptick: housing starts, the NAHB, the FHFA and existing home sales. On the downtick: building permits, leading indicators, the WLEI, plus weekly jobless claims rose. Next week’s reports is highlighted by the FOMC meeting, Q3 GDP and the PCE.

LONG TERM: bull market

The 6+ year Cycle wave [1] bull market continues. Primary waves I and II, of this five primary wave bull market, completed in 2011. Primary waves III and IV recently completed in 2015. Primary wave V is currently underway.


During the past 30+ years there have been six important fifth waves. Five of these fifth waves completed with just one uptrend. One failed to make new highs during its uptrend, and then subdivided into five waves before completing its high. When all six of these fifth waves completed the market had at least a 20% correction, (1990 and 1998), or entered a bear market, (1984, 1987, 2000, 2007).

Currently the market is uptrending from its SPX 1867 Primary IV low. Should this uptrend make new all time highs before it ends, the current high is SPX 2135, probabilities suggest the bull market will end when the uptrend ends. Cycle wave bear markets can be quite nasty. Markets can lose between 45% and 50% of their value in a short period of time. The previous two Cycle wave bear markets were 1937-1942 and 1973-1974. The first one witnessed a 50.2% market decline in just the first 12 months. The second, a 46.6% market decline in just 23 months. After 6+ years of rising prices it is time to start preparing for the next bear market.

MEDIUM TERM: uptrend

We have labeled the Primary IV low in August at SPX 1867. Primary wave V should consist of five Major waves. Major wave 1 was labeled at the SPX 1993 high in late August. Then the market experienced an odd irregular zigzag for Major wave 2. This zigzag, (1903-2021-1872), bottomed in late September. After that low the market started rising in Major wave 3.


Impulsing Major waves divide into five Intermediate waves. During Major 1 these waves were quite quick: 1915-1880-1990-1948-1993. Major wave 3, however, is acting normally. Thus far we have counted Intermediate wave i completing at SPX 2022. Then after an Int. ii pullback to SPX 1991, Int. wave iii began rising. When Int. iii does conclude, possibly around SPX 2120, we should see an Int. iv pullback and then an Int. v rally to complete Major wave 3. Then after a Major wave 4 pullback, which could be quite steep, a Major wave 5 rally should end the uptrend. Medium term support is at the 2070 and 2019 pivots, with resistance at the 2085 and 2131 pivots.


When Major wave 3 got underway we counted 9 waves up to SPX 2022. The first four waves were of a Minor degree, and Minor 5 subdivided into five Minute waves. This advance ended Int. wave i. Then after an Int. ii pullback to SPX 1991 Int. wave iii got underway.


We have labeled Minor waves 1 and 2 at SPX 2039 and 2017 respectively. Minor wave 3, however, has started off by subdividing into five waves. Thus far we have observed: 2055-2042-2078-2064-2080. This could be most of Minor 3, or Minute i of Minor 3. Too early to tell until we observe some more price activity. Short term support is at the 2070 pivot and SPX 2040, with resistance at the 2085 and SPX 2100. Short term momentum ended the week with a negative divergence.


Asian markets were all higher for a net gain of 1.3%.

European markets were all higher but gained 3.5%.

The Commodity equity group was mixed and lost 0.1%.

The DJ World index is still uptrending and gained 1.2%.


Bonds are still in an uptrend but lost 0.6% on the week.

Crude looks like it’s downtrending and lost 6.6% on the week.

Gold is still uptrending and but lost 1.2% on the week.

The USD is uptrending again and soared 2.8% on the week.


Monday: New home sales at 10am. Tuesday: Durable goods and Consumer confidence. Wednesday: the FOMC meeting concludes. Thursday: Q3 GDP (est. +3.2%), weekly Jobless claims, and Pending home sales. Friday: Personal income/spending, PCE prices, 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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264 Responses to weekend update

  1. blackjak100 says:

    TC assuming minor 3 is done…minor 4 running triangle?

  2. H D says:

    Sept 28th last supermoon, October 27 final supermoon of 2015. Interpret as you see fit.

  3. Sam East says:

    What happens when a large disparity deveops between $SPX price and the number of stocks advancing?
    Signals of poor participation lead to significant pull backs historically:


  4. fotis2 says:

    So far looks like DB on the 30min for 2078…lets see.

  5. I’m starting to wonder if we’re going to see another running flat in progress.

  6. mjtplayer says:

    What a boring day, are we really going to trade sideways on light volume till the Fed meeting? I can’t remember the last time we had a more meaningless Fed meeting, should be a non-event.

    If there’s a central bank that could move markets in the short-term, that would be the BOJ meeting Friday (Thursday night US time). More stimulus? Up we go. No more stimulus? Sell-off on disappointment.

  7. My personal opinion is that we are in P4 at the beginning of the c wave down, headed back into low 1800s or even mid 1700s to complete this Primary wave. Avi Gilburt thinks we are still in P3 in wave iv.

    • frommi2 says:

      Agree. There are some cracks already visible when one looks at AAPL. IBB has for my eye just finished a one-month flat.

    • Page says:

      Right. May be we are still in P1.

      • fotis2 says:

        Strong possibility 😉

      • I think there is still evidence to support that we are either in b or c of P4 or an extension of v in P3. The Aug/Sept pullbacks could have been ii and iv or 3.

        • of 3 not or 3. Sorry…

          • Dex T says:

            There is almost no chance that we are still in P3. The past year of activity demonstrated that including the steep August drop. P3 waves are the strongest and need to continue impulsing. Not the back and forth behavior followed by a steep crash.

            Aside from that look at all of the technical and economic evidence surrounding it- monthly MACD, lows reached in McClellan Oscillator, stochastics, weakening volume ,- weak commodities, overall declining revenue, floundering emerging markets, China, weakness in the Russell, only a few stocks showing strength, etc…. These are the type of conditions that strongly hint at the prelude of a recession and oncoming bear.

            If this isn’t P5 up or P5 will truncate then the bear has already begun and the markets will eventually continuing to rollover.

            The Russell index is probably already in a bear market.

    • tommyboys says:

      Disagree. Anything can always happen but just look to the past weeks’ internals.

  8. New home sales down 11.8%.Of course the dollar drops, gold up a little (gdx down though), stocks not bothered a bit.I m just hoping for a pullback to 2040 this week.- div not doing much yet.Hope springs eternal…good luck all.

    • blackjak100 says:

      No offense to Avi, but how can anyone think we are still in P3 when some metrics became more oversold than P2 and it nearly triggered a long term downtrend

      • I guess that s how he sees lower lows on a break below 2000.Quite a difference of thought between him and Mr C.How is that possible to be that far apart on wave counts?

        • blackjak100 says:

          Is Avi ever right? Has trader joe been right? You get the point. There are 2 people who are consistently right because of a system they employ. They both offer their services for free to an extent. I know you all know who one of them is.

          • fishonhook says:

            Tony. Who is the other one?

          • Walter Crane says:

            Probably himself I would imagine.

          • blackjak100 says:

            Lol…very funny. Actually wish I had time and knowledge to build a model. I will not name other one other than I’ve referenced him in the past and probably will in the future.

          • EL MATADOR says:

            I’m going to assume you are referring to Pretzel as the other guy. 🙂

          • aahmichael says:

            Here’s someone else who should be required reading each week. His name is Jeffrey Saut. He’s a pro’s pro. He’s been around for a very long time and he doesn’t miss a thing. You won’t ever see EW mentioned, which is a good thing. He comes at it from a completely different perspective. Just for the record, he nailed the market top in July, and warned of an oncoming train wreck. Then, on 8/24, in the midst of the flash crash, he appeared on CNBC that morning and told everyone that it was time to get back in. He doesn’t give projections, rather, he calls market turns on an intermediate basis. His weekly blog is posted every Monday morning, and it’s always an entertaining and enlightening read. I highly recommend it to everyone who is involved in investing in the stock market.

          • fotis2 says:

            Must be either Newb or FRB 🙂

          • Page says:

            BJ: please tell us who is the other one, this suspense is killing us. Is the other one ‘Page’?

          • blackjak100 says:

            Pretzel is good and deserves credit because he uses EW only, but wasn’t referring to him. The guy I’m referring to does not use EW in his model.

          • H D says:

            Too much reading. I’m a big fan of GTO here. One of the few who can get in done in 1 line in real time… He nailed the Spy weekly pivot last week! Less is more.

        • blackjak100 says:

          Who’s page? Never seen or heard of him/her

  9. mjtplayer says:

    Could be pulling back in minor 4 of int iii from Friday’s high of 2,080. Target of about 2,050 – 2,055?

    • blackjak100 says:

      I expect 2060ish to hold for minor 4 or simply 200dma. I would not rule out an expanded flat either

      • llerias7 says:

        Could be 23% retrace of minor 3…meaning 2065 for minor 4 bottom…making today one day correction and then a bull run the rest of the week…(?)

      • mjtplayer says:

        Open gap at 2,052 from 10/22 close and 10/23 gap-up open, could act as a magnet

      • I am posting this count on the Dow, as one option : the Truncated Primary 5th wave. It is just an option at this point, and depends on Minor 4 not overlapping Minor 1. It is based on Neely’s observation that when a wave retraces > 78.6% of it’s prior wave it was likely in the same prior wave sequence (i.e. Primary wave upward). We are not there, yet, and there is a Fed meeting this week which will help resolve some wave sequences. More text below chart.

        DOWI - Primary Analysis - Oct-26 0949 AM (1 day)

        Right now, an Intermediate (B) wave of a Primary triangle is being greatly reduced in probability because (B) would be shorter than (A) in time, and ‘usually’, ‘most often’ in contracting triangles the A wave is the shortest in time. Many of the other options shown in my blog post of 10 October (regular Primary 5, double zigzag lower, Leading Diagonal, lower) remain ‘well on the table’. For example, if the upward sequence makes a new all-time high, just reduce the degree of labeling one degree, and the correct result can be obtained.

        • kevinm76 says:

          I gotta say Joe, for somebody that claims to “KNOW” so much about EW and TA, you completely missed the boat in late September. Tony kicked your arse! Now you come here and list your counts, which differ from tony’s. The nerve.

          I’m stating facts, so to those who don’t like the truth, you can play with the tooth fairly, for all I care.

          Good day ,

          • steventrees says:

            At least TJ made a good call on top May in his old blog, people can’t always right.

          • H D says:

            k76, that was pretty ruff. We each found our own path to TC’s analysis and think ET will too. The objective part will be the hardest. I’ve never seen anybody more focused on triangles. Just some constructive feedback. I value his efforts.

          • Hi Kev – you’re right. I don’t know anything about Elliott Wave theory after studying it and applying it for 25 years: you know that Fibonacci-based theory of natural market movement that says the market moves with only a Fibonacci five (5) patterns. They are impulses, diagonals, triangles, zigzags and flats.

            In the last post of the day today, a man I do actually have a lot of respect for (TC) posted that he “rarely counts triangles”. Probably because he sees them as rare. But it does tend to take them out of the mix. (He certainly has counted “diagonal triangles”, but I guess just not regular contracting or symmetrical triangles which Elliott clearly recognized.) Then, he says there is a pattern called the “irregular zigzag”, with a higher b wave, which did raise the eyebrows of almost everyone on his blog, and even that tooth fairy you want people to play with.

            Why do I have respect for TC? Because he actually takes the time to post his counts, rightly or wrongly for all to see. It would be great if you did. He has some excellent principles that I agree with (like using the lengths of movements as a good guide). But sometimes, when, there is a conflict with standard EW theory, I see little in the way of explanation other than “I counted it that way”. I don’t know TC very well personally, yet. We have exchanged some correspondence, and he seems like a genuinely positive person, with an intriguing personal viewpoint. I also have a lot of respect for someone who allows some polite ‘dissent’, particularly when we are talking about technical issues or the mechanics of wave counting. I think the challenge helps keep us all sharp.

            As for the September bottom, if you re-read TC’s 9/28 post, the day before the bottom, Tony was expecting one more wave down as I was. There wasn’t much difference. He even gave the parameters for the lower lows. They didn’t occur – for me or him. Then the next day, he said in more or less words, it could still occur, but it could be a truncation as well. As with today’s post in which there are three wave possibilities cited, we are all in the situation of finding out which wave we’re in. That’s life in a possible P4/P5. I never said we couldn’t be in either.

            I truly wish you well, and not knowing how much you know about wave theory or not, hope you come to see some of the patterns as they play out in real time, and make a good call as a result! Best to you.

  10. ariez5 says:

    I’ve been a contrary indicator recently, but I think EEM is a short.

  11. GM all… no chart update yet. Nothing much to tell in the ES Futures chart. Pretty flat right now and mixed on the time frames of it. I’ll do a midday update on the SPX/SPY if I see something. So, I’ll just go with what I “think” is going to happen today… “a whole lot of nothing”.

    Why? Because once again the Crackhead addicted Bulls are waiting to hear what the Fed’s are going to say at this Wednesday’s FOMC meeting. Since most FOMC days are bullish I’d lean toward a small pullback (mostly sideways) before it and then another push up after it’s over with.

  12. Scott Ford says:

    So does VRX continue to hold down the biotechs, or are they poised to fly high with the rest of the market? Any thoughts?

    I’d considering labd and labu, but unsure which way to play….

  13. michael sim says:

    Hi Tony,

    I know FED interest rate hike play a big role in a Bull Market.

    Any chance that FED does not raise interest rate and we have reached Primary Wave V peak sometime 2016/2017? Any history of that happened?

    • tony caldaro says:

      During the last Cycle wave [1] the FED got rates up to 75 basis points in March 1937.
      Then went back to zero not long after as the economy went back into recession.
      So whether they raise or don’t raise really does not matter now.
      Rates will probably end up negative before Cycle [2] is over.

  14. Hi,
    Dwcf weekly,channel is ok!,pullback to PIII trendline as the Dow,however Dow Channel is weird

  15. torehund says:

    March of new migrants through Slovenia. They bring jobs back to Europe, firstly by employing social services and later construction, and the huge costs will bring the Euro back to where the German Mark resided decades ago. Euro may become the powerhouse of low priced goods; and the US will be able to buy heaps of it without even receiving a nickel in pay rise. The “problem” is the solution 🙂

    • 1.How many of these “refugees”are going to learn German?
      2.How many are CAPABLE of learning German?
      3.Is Germanys economy really in need of broke, desperate, uneducated people?(and religious extremists to boot?)
      4.Do Muslims and Germans get along?
      5.What I ve read, many of these refugees are already committing horrific crimes, forming gangs etc.Police can t keep up with the crime, but they are not allowed to deport for fear of being called racist and unsympathetic.
      6.More deflation–even if they assimilate in any successful scenario.
      Can you tell I m not enamoured with any of this?

      • fotis2 says:

        Pandora’s box about to be open…..

      • torehund says:

        A helluva task, but with a € @ 0,3 usd there will be money to be made. But I agere, the task appears nearly impossible, lets see. Lawyers, police, sosial workers, lodgers will be profiteers. Proportions are biblical, to say the least.

      • Dex T says:

        All great points!

        The answer is they are going to bring nothing but trouble to the EU countries.

    • gasman88 says:

      Where do you find employment for millions of people who suddenly show up? Most of them will need social assistance for many many years. Plus if Europe really needs immigrants why not bring people from countries that are culturally closer.
      This is an enormous risk that Merkel took and I don’t think German people gave her that mandate.

      • fishonhook says:

        MAybe if we stopped invading and bombing these countries there wouldn’t be chaos. Just Iraq was invaded twice. The second time because Saudi’s undertook 9/11!! Does that make sense?/ Then Russia bombs ant-Assad rebels, while we support them with weapons. No wonder people are leaving. they were leaving 10, or 15 years ago.

        • tomasso60 says:

          bang on the numbers with this thought

        • fishonhook says:

          they ‘weren’t’ leaving 10 to 15 years ago..

        • Dex T says:

          I agree with you to a point. We should never have invaded Iraq. That led to the destabilization of the region.

          However, the “Arab Spring” happened independently in many countries. A large part of the problem is the huge population increases of dirt poor backwards people who are unable to survive in the current circumstances.

          Whatever the reasons the EU countries are NOT responsible for the Middle East’s problem and should not have to support any migrants.

          Also, the majority of migrants are not even coming from Syria but from other nations. Syrians are the definite minority. A significant number are not even migrating but are Muslim Albanians from Europe!

          • fishonhook says:

            Of course I was waiting for you to take the right wing comments out.

            Basically our actions in the Middle have been beyond evil and then we can call them backwards when they are mired in chaos.

            Get some history Dex so you can be a bit less self righteous.

            The Brits after WW1 installed their puppet Wahabi Saud family. One of the most extremist but loyal groups.
            1956 The US sponsors a coup in Iran and removes it’s first democratically elected government and brings the Shah back.
            Soon after the Brits and France Invade Eqypt to take away the Suez canal from Egyptian control.
            the support of Israel is well documented.
            1970’s Kissinger said oil is too important to allow the Arabs and the ME to be is peace.
            Iran has a religious revolution. Iraq invades and a blood thirsty war ensues killing millions. The US supplies Iraq with arms and intelligence, knowing well that they are using chemical weapons (which the CIA may have even got for them)
            Bush 1 invades Iraq for invading Kuwait (hardly a democracy itself!) but Saddam is left in power to kill all his opponents. Iraq invaded again, this tome by Bush 2 for 9/11 which had nothing to do with Iraq.
            New Iraq government is pro-Iran! and anti-sunni. Sunni’s feel disaffected and with the opponents of ASSAD which we are also supporting for ISIS.

            there you have it in a nut-shell.
            sow the seeds of chaos and ye shall reap them.

          • Dex T says:


            Self righteous? Pot calling kettle black? Also all the actions are not “totally evil” That is pure hyperbole.

            I am fully aware of the history. However, none of the Europeans responsible are alive today for what happened earlier last century! It’s an entirely new generation! And only a few countries were really responsible. The remainder are totally innocent!

            Aside from that I generally agree with your thought process. The U.S. involved and continues to involve itself in affairs that we should keep away from and make no sense. I can only say that I look forward to the continuous advances in clean energy to cut our dependence on that region.

            But once reliance on oil goes away the Middle East isn’t going to turn into some peaceful paradise! Tribal warfare is going to continue for a long time!

    • purplember says:

      why the migrating? maybe let’s fix the country their from. or Kill that JV isis team. our leadership is worst it’s ever been in USA. not sure whose side we are on.

  16. StemSki says:

    I thought I would share a technique that I use to decide if I am invested or in cash. This has worked extremely well for my 401K. Not perfect, but it is what I follow. I use the same technique for any ETF or fund. For S&P500, I was out of the market from 2089 (July 2015) until October 2015 when I got back in at ~1960. It has helped me tremendously. Again not perfect (some whipsaws), but pretty good nonetheless.


    • tony caldaro says:

      thank you for sharing Stem

      • perversionofthemean says:

        Systems work until they don’t. Zweig (?) had a 4% system, or something similar, that said to buy when the market moved up by 4%, and sell if it dropped that much. I backtested it to 1901, and it was amazing! Then it devolved into a money pit, and the equity curve imploded. Now, when I chart an equity curve, if there is a breakout, I see traders jumping on the system’s rules, and when there’s a break, they abandon the rules — just like we might time a security with crossovers or other. Pretty advanced algos!

        It takes tremendous faith to think a system is infallible long-term.

    • aahmichael says:

      A word of caution about your system. Unless you back test it over and at least 50 years of data, you have no idea if it’s a long term profitable system or not. It’s very easy to cherry pick certain time frames in the market where any system does great, however, the market is ever-changing, and when you have over-optimized a system to work over a small period of time, you’re guaranteed to get killed in the future. Also, in regards to switching in and out of the market with a 401K account, bear in mind that most mutual funds require that you stay out for 30 days once you have exited the fund. The same holds true when you enter a fund. So if you get signals that occur more frequently than 30 days at a time, then you cannot execute the system in a 401(k) plan.

      • StemSki says:

        I appreciate your point of view. I do agree that no system is perfect. I have gone back to the 1990s. It works. The point here is that Major downturns will be avoided. I get around the 30 day rule by making sure that there is a fund available for investing at any given time. For example, I have 5 or 6 funds that invest in large caps. Quite similar by the way. I diversify as much as possible. I have large cap, small cap, international, US bond, intl bond, gold, and real estate. This is a weekly chart. I just make sure that one fund for large caps is open in case I have to get back in.
        Just my way of avoiding major downturns

        • aahmichael says:

          Any trend following system that uses moving averages will surely catch every trending move, but will also get chopped to pieces in sideways markets. (you’ll always be buying tops and selling bottoms.) Another word of caution, though, is that your data feed is wildly inaccurate. None of your weekly candlestick bars reflect the correct O-H-L-C.

          • StemSki says:

            I’ll leave this topic alone after saying that I use Heiken-ashi candlesticks. I was just sharing something that I have found useful. The fact that I saved my 401K fund (hell, I actually made money) during 2007 and 2008 makes this system worth it to ME. You do not share my opinion which is fine. Thanks for your comments

          • aahmichael says:

            I’m happy that your system works for you. My comments really were to simply point out, for others who may be reading this board, the problems with a moving average crossover system. As I said before, these types of system are great when the market has a monster trending move, however, the rest of the time (which means most of the time,) these types of systems will get you whipsawed more times than any normal human being can stomach. This year is a perfect example. For 7 months, a system like yours would have been whipsawed on almost a weekly basis, until it finally got you out for the big drop. Plus, I haven’t even mentioned the problems that occur with mutual funds, given the fact that after you get a signal on a close on a Friday, you can’t enter or exit the mutual fund until the close of the next day (the following Monday.) This normally adds HUGE slippage when comparing actual results to the theoretical results of the system.

    • Also the 5 month crossing the 14 month ma…supposedly.It crossed down in Sept —I posted that.Probably recrossed up as well.Tough to find a monthly chart.

  17. Hello everybody, the results for the performance of the HighProTrading portfolio month 10 are in: http://www.highprotrading.com/portfolio-performance-update-month-10/

    In addition some thoughts on the Euro.


  18. Tony, thanks for another comprehensive and thorough update. I have a couple of questions:

    1. If you expect Primary 5 to complete with this uptrend, then how is it possible to have a steep Major 4 correction? Unless it’s not too steep?
    2. With the diagonal 1-2-3 patterns, many Elliott analysts put in x waves to account for waves which are hard to label. You seem to never do this. The Major 1-2 waves of primary 5 essentially made a double bottom at SPX 1867 and 1872. Why is it necessary to label these 2 waves as Major 1 and 2 when essentially the second one almost retraced the first. I am aware that the previous corrective pattern already looked complete. Why not just call Major 1 and 2 x-waves and start Primary 5, Major 1 from 1872?

  19. blackjak100 says:

    TC just want to clarify since I own JCP stock, bullish nest of 1-2-1-2-1-2 in progress? Basing pattern before launching higher?

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