weekend update


First things first. An equity bear market has been confirmed on Friday by OEW. The market started the week at SPX 1922. After three gap up openings the market gyrated its way up to SPX 1950 by Wednesday, then started to head lower. Thursday also had a gap up opening, and the market recovered to SPX 1934. Friday, however, we had a big gap down opening and the market traded down to SPX 1858 before recovering to end the week at 1880. For the week the SPX/DOW lost 2.20%, the NDX/NAZ lost 3.15%, and the DJ World index lost 3.0%. Economic reports for the week were nearly all negative. On the uptick only Consumer sentiment. On the downtick: export/import prices, retail sales, the PPI, the NY FED, industrial production, capacity utilization, business inventories, the WLEI, the GDPn, plus the treasury deficit and weekly jobless claims rose. Next week we get reports on the Philly FED, the CPI, and Housing.

LONG TERM: bear market

After 6+ years of a rising stock market, which more than tripled, the bull market ended with a very rare, (in fact I don’t recall ever seeing one of this degree), failed fifth wave pattern in December, 2015.


After the market sold off sharply in August to complete Primary wave IV, we suggested two possible scenarios for the months ahead. First, if the market made new highs during the first uptrend the bull market would be over when that uptrend ended. Second, if the market failed to make new highs during the first uptrend Primary wave V will probably extend. This market did neither of those two options. It failed to make new highs during the first uptrend and topped. Don’t recall ever seeing this either. It has been that kind of bull market. One hundred and thirty years of stock market data and it is still doing new things.

We have been labeling this bull market as a five primary wave Cycle wave [1]. Primary waves I and II ended in 2011; and Primary waves III, IV and V ended in 2015. A Cycle wave [2] bear market is now underway. Historically, Cycle wave bear markets have lost 45% to 50% of market value. This would suggest a bear market low around SPX 1100 over the next year or so. The market closed on Friday at SPX 1880.

MEDIUM TERM: downtrend

In anticipation of a potential bear market confirmation we examined all four major indices to determine the actual bull market high. The four indices staggered their actual print highs throughout the year. The SPX/DOW topped in May, the NAZ topped in July, and the NDX topped in December. The only alignment of the four came in August when they all hit the labeled Primary IV low. With that in mind we took a close look at uptrend in the SPX, since we follow that one closely, after that low.

What we observed was a clear five wave rally 1867-1993; an irregular correction 1903-2021-1872 ending with a clear five waves down; a very strong impulsive 240 point rally to 2116; a pullback to 2019; then a five wave rally to 2104 ending in a diagonal triangle. We at first labeled this as Major waves up expecting Primary V to make new highs. Then we downgraded it to a Major 1 uptrend when it failed to make new highs. This was wrong, and we were right the first time around, it was all of Primary V.


The fact that the last rally, SPX 2019-2104, ended in a diagonal triangle. The rally was a failed fifth wave for the uptrend. And, the entire uptrend was a failed fifth wave for the bull market makes it compelling evidence that it was a failed Primary wave V. Regardless of how others may want to label it a bear market is underway.

Under the failed fifth primary wave scenario, the market is currently in its first downtrend of a new bear market. Bear markets always unfold in corrective patterns. Some are quite complex, like 2000-2002, others are rather simple, like 2007-2009. There is no way of telling ahead of time whether this one will be simple or complex, until a few trends have unfolded. Yes, bear markets have uptrends and downtrends like bull markets. Only the main direction of the overall market is in opposite direction.


Counting from the failed fifth, of the failed fifth at SPX 2104. We have an abc down to SPX 1993, an abc rally to 2082, and now a more complex abc decline to 1858 so far. Correct, I do not see any of these declines as impulse waves. Currently this second stronger decline is a near perfect double of the first decline, i.e. 224 points v 111 points. If Friday’s low does not hold, a 2.618 relationship would suggest a downtrend low around SPX 1791. There is not much else to go on at the moment except for the OEW pivots.


Short term support is at the 1869, 1841, 1828 and 1779 pivots, with resistance at the 1901 and 1929 pivots. Short term momentum ended the week near neutral. Bear markets are usually quite turbulent and volatile events. Best to your trading!


Asian markets were all lower on the week for a net loss of 3.5%.

European markets were also all lower for a net loss of 3.1%.

The Commodity equity group were all lower and lost 6.1%.

The DJ World index continues to downtrend and lost 3.0%.


Bonds are in an uptrend and gained 0.8% on the week.

Crude continues its downtrend and lost 6.7% on the week.

Gold is still in an uptrend but lost 1.4% on the week.

The USD is trying to uptrend and gained 0.4% on the week.


Monday: holiday. Tuesday: the NAHB at 10am. Wednesday: the CPI, Housing starts, and Building permits. Thursday: weekly Jobless claims and the Philly FED. Friday: Existing home sales and Leading indicators. Best to your three day weekend and week!

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

About tony caldaro

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651 Responses to weekend update

  1. simpleiam says:

    Here’s an old one, for Glen Frey…

  2. johnnymagicmoney says:

    Last post for the day. I do think the bull has ended and I have been preaching about China being a joke for a while but fundamentally the market nor economists are projecting recession (although I think we get there). This is utterly ridiculously oversold here. I am looking at the valuations of some great stocks at there with really positive fundamentals trading at stupid PE’s like GILD at about 7/8 this year’s earnings. I see ALK for instance going down almost 20% YTD and you would think at the very least with oil down substantially it would be a bit of a market contrarian (it has in the last two years up until last two weeks). I see the Russell obliterated in 11 days. Obliterated! There definitely is some high valuations out there but there are tons of cheap stocks out there and I think the price is way way ahead of any lowered expectations, current or projected fundamentals. Until fundamentals deteriorate further (or expectations of them are) price is too low right now. Furthermore I have never heard of so many bears on here projecting prices 5/10/20% lower in the next month or so (after its already dropped a ton in short order) which to me tells me the bears are getting a bit greedy. I think the bounce is imminent.

  3. Lee X says:

    Hey Tony

    Some nice pivots you (the market) got there.
    We retake SPX 2134 by the close today you better put an X on last Fridays low 😛
    That’s # 3

  4. lunker1 says:

    600+ posts and people are posting every day trade like this is a Yahoo chat board.

    Post you view for the day/week.
    If it changes then update.

    Posting every day trade is crazy.

  5. kvilia says:

    I am inclined towards 1791 PP at this point, coincides with the long trendline on the weekly. Weekly 200 MA is there as well, so the bounce will be imminent.

  6. phil1247 says:

    targets about to be hit CL

  7. johnnymagicmoney says:

    what are the chances we retest Friday’s low and then go into the bear rally??

  8. SPX 1845’ish if 1868’ish gives way.

  9. mjtplayer says:

    SPX tagged 1,867 at the LOD, the .786 retrace from Friday’s low and another test of the Aug 24th plunge lows. If the SPX can rally from here it has a chance to get some momentum. Below 1,867 and forget it, Friday’s lows will get tested and probably LL’s ahead. Critical short-term juncture….

  10. It needs to be taken with caution, but this is bottom for next six weeks SPX 1871. MLK day is bottom.

  11. Totally fascinating to see Russell and Nas roll over.Not so fascinating to see gold go positive but GDX barely move.Difficult to call todays close on all fronts.Good luck all.

    • Dex T says:

      Gold positive but miners shown no mercy.

      NUGT down around 14% today!

      • GdX broke a H&S…built up since August.Hoping for one false breakdown but probably not.Still,gold is not a sell until under 1070

      • Gold is in downtrend until 1120 US is taken out. ALso, have you read up on the Gold mining business? Its a real bitch… lol, no joke

        • Dex T says:

          I have not been reading anything recently but not surprised. Commodities have been hit chard the past few years and with equities turning down I don’t really see much of rally for them.

          Gold may do ok because of a hedge against general instability but the 2008 bear brought it crashing down and until the new bull market starts I don’t really see much upside.

  12. phil1247 says:

    1871 es failed

    target is 1818

  13. Lee X says:

    Why are so many people angry ?
    Be like gto 😉
    Thanks dude

  14. Dex T says:

    Fed to hike rates three times in 2016, economic outlook subdued: poll

    “The poll of over 90 economists found the U.S. economy will grow 2.5 percent in 2016, the same as predicted for 2015 and down from the 2.8 percent they were expecting a year ago – a decent pace but not enough to generate a strong rebound in inflation.”

    “While growth this year is unlikely to be spectacular, respondents only saw a 15 percent chance of the economy sliding into a recession. A majority of those who answered an additional question said they expect the current business cycle to come to an end in the next two to three years.”

    “Economists polled by Reuters were more cautious than the Fed, forecasting only three hikes this year and a federal funds rate between 1.00 and 1.25 percent by end-2016, similar to what they were expecting last month.”


    • mjtplayer says:

      Good luck with that +2.5% GDP growth estimate for 2016. Do these people get paid for horrible and grossly wrong predictions??

      2015 GDP growth looks to finish around 1.7% and the data and trend are getting worse. How in the hell are we supposed to get 2.5% growth??????

      • Dex T says:

        Yes they do. Some of them are likely working for the Big I-Banks and getting paid quite well.

        As far as how… I have a feeling their projections will be “revised”…to the downside

  15. H D says:

    remember when VIX 30 was a market bottom? The same people that use VIX are now all eyes on Crude. Imagine if there was a VIX for Crude? Now that would surely be a leading indicator….

  16. phil1247 says:


    short targets coming up

    take partial profits

  17. 123 abc says:

    Speculating perhaps one more leg down below 1857 to complete Intermediate-c https://www.tradingview.com/x/6O42yIwS/

  18. H D says:

    what a hit from 1901P, SPX HWB now 1880 if C wave up yet to complete a small correction.

  19. stan502 says:

    FNV weekly is in an interesting spot, caution monthly working on 3 red soldiers http://stockcharts.com/h-sc/ui?s=FNV&p=W&b=5&g=0&id=p79127736284&a=435474054

  20. phil1247 says:

    1871 es is key level

    • ABchart says:

      Why that is the key level? Thank you.

      • hakunamatata1966 says:

        It is 61.8% retracement of ES move from 1849.25 (low) to 1907.50 (high). Measure move violation of ES long from 1849.25 to 1907.50 rise.

      • phil1247 says:

        -23% target of 15 min short

        .618 support from friday low

        thursdays morning low

        is that enough??

        • ABchart says:

          Thank you Hakuna and Phil.
          I try to share and interact with some people here. But the atmosphere is quite sectarian. some have not talked to me for a year and a half. Other rarely spoke to me, but they (Fiona for example) definitely stopped since the day I spoke French (??)
          I really appreciate Tony, who has great human quality. That was what kept me here, but unfortunately I feel less and less comfortable.

          • phil1247 says:

            you need a thick skin to survive on this blog…some people here are very angry..im sure you can tell who they are….probably because they have blown up their accounts and have lots of time on their hands because they have no money to trade…just ignore them and maybe they will go away……

            good luck AB

          • fionamargaret says:

            French is a second language to me – takes longer, thus intimacy is lost…nothing different except your perceptions…

          • simpleiam says:

            Fiona is about the easiest person to get along with on this blog, mister!!! You wanted to speak French on an English-speaking blog, with impunity, even when others told you they were interested (not angry) in what you had to say, and could you please write in English. You insisted on your own way, and you got it! You need to take the woe-is-me-nobody-cares act somewhere else.

          • hakunamatata1966 says:

            U Welcome ABChart. Foreign languages spoken/written don’t bother me at all as I myself am multilingual. However, on this blog would be nice to keep it in English so we all understand everybody’s ideas since we are all here trying to make our bread money :-).
            All in all I enjoy your charts.

            Thank you.

          • chrisk44342 says:

            AB it’s fine if you speak French- I just have to translate what you say, that’s all. I have no issues with you (: I really dislike predictive wave drawings but I guess that’s par for the course on an EW blog. The issue is actually mine in the sense that I disagree with how the tool is used by many here, so I guess it’s for me to decide if I can provide any value here or leave.

    • fionamargaret says:

      Think 1828…..

  21. stmro says:

    This was up 30 points overnight and now only up 6. I’m 90% sure we close the remaining gap but I expect overnight highs to be tested no later than end of day tomorrow.

  22. Page says:

    Get your buy orders ready for Gold miners, it is very close to the absolute bottom and bottom will happen today 🙂

  23. With fresh data, bullish potential moved further out…
    Bear challenged at 1908.11 and bullish position above 1919.90; values adjust tomorrow. I sit, I watch, I read about the momo-chasing rich traders.

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