weekend update


The market started the week at SPX 2000. After reaching SPX 2006 on Monday the market traded down to 1977 on Tuesday. Then after two gap up openings the market traded up to SPX 2005 on Thursday before selling off to 1969. By Thursday afternoon the market reversed and was making new uptrend highs, at SPX 2022, on Friday. For the week the SPX/DOW were +1.15%, the NDX/NAZ were +0.75%, and the DJ World index was +1.0%. Economic reports for the week again were slightly negative. On the uptick: wholesale inventories, the WLEI, plus weekly jobless claims improved. On the downtick: consumer credit, export/import prices, plus the budget deficit widened. Next week’s reports will be highlighted by the FOMC meeting, Industrial production and the CPI.

LONG TERM: bear market

During the past couple of weeks some have started to question the bear market scenario. The market has been in a four week uptrend, the economy is still positive, commodities have rebounded, market breadth has been rising, and the market has only corrected 15% from the bull market high at SPX 2135. To address the current situation let’s look at the previous two bear markets: 2000-2002 and 2007-2009.


In the year 2000 the SPX peaked at 1553 in March. It sold off 13.7% to start the bear market. Then it spent several months retracing 89% of that decline into Q3 2000. After that the market had a downtrend into Q4 2000, for a 19.3% loss from the high, and then the bear continued to work its way lower into October 2002. The economy was positive throughout 2000, and was not reported negative until Q2 of 2001. Commodities were rising throughout and peaked in Q4 2000. Market breath had been declining since 1998, made a low in Q2 2000, and then rose throughout the bear market.

SPX 2000

In the year 2007 the SPX peaked at 1576 in October. It sold off 10.7% to start the bear market. Then it retraced 69% of that decline in just two weeks. After that the market had a downtrend into Q1 2008, for a 19.4% loss from the high, and the bear market continued to work its way lower into March 2009. The economy was positive throughout 2007, and was not reported negative until Q2 2008. Commodities were rising throughout and peaked in Q2 2008. Market breath had peaked in Q2 2007, and then bounced around with the market as it worked its way lower.

SPX 2007

When the economy is positive at the start of a bear market, the first downtrend is not alarming and appears to be only a correction. That downtrend is then retraced quite a bit, as the “it’s only a correction” mentality remains the primary focus. The next downtrend creates a more substantial market loss, and then a few months later the economy is reported negative. While commodities have typically peaked after the stock market peaked, commodities this time peaked in Q2 2014 after several years of going sideways. Market breadth which usually peaks before a stock market peak, can also decline during a bull market and rise during a bear market. During the recent bull market breath peaked in Q2 2015. While the current uptrend has retraced 65% of the decline from the SPX 2135 bull market high, the market activity still looks quite normal for the beginning of recent bear markets.

MEDIUM TERM: uptrend

The Major wave B uptrend that started off the SPX 1810 Major A low surprisingly continues. We originally thought it would last about three weeks, and could top out around the 1973 pivot or SPX 1999 (61.8% retracement A). After completing Intermediate wave A, of the three Intermediate wave uptrend, we calculated two additional resistance levels: the 2019 pivot and SPX 2028.


The 2019 pivot range appeared to be a logical stop, as Int. wave C would then equal Int. A at SPX 2028. Last Friday the market stopped at SPX 2009, and we gave some consideration to that being the high. But this Friday the market closed at the uptrend high of SPX 2022, which is right inline with the upper range we anticipated. Reviewing the charts we noticed the weekly RSI is now overbought, and the MACD is still well below neutral. Typical B wave bear market action. The daily chart displays a developing negative divergence at the uptrend high, and its MACD is quite overbought. The potential for a Major wave B top has set up in price and momentum. Should the market exceed SPX 2028, there is little resistance until the 2043 and 2070 pivots. Medium term support is now at the 2019 and 1973 pivots, with resistance at the 2043 and 2070 pivots.


We had been labeling the short term activity as a series of zigzags for Intermediate waves A, B and C. This week’s activity, however, has stretched that potential count to its limits. We now think it is best to look at the uptrend as a much simpler zigzag. Five waves up to SPX 1947 for Int. A, an Int. B pullback to SPX 1891, then another five waves up for Int. C. This count appears to be more appropriate for the current short term wave pattern.


Short term support is at the 2019 and 1973 pivots, with resistance at SPX 2028 and the 2043 pivot. Short term momentum ended the week quite overbought. Best to your trading!


Asian markets were mixed for the week with a net loss of 0.1%.

European markets were mostly higher with a net gain of 1.2%.

The Commodity equity group were all higher for a net gain of 2.2%.

The DJ World index is in an uptrend and gained 1.0%


Bonds confirmed a downtrend this week and lost 0.5%.

Crude continues to uptrend and gained 6.0%.

Gold is still in an uptrend but lost 0.7%.

The USD is still in a downtrend and lost 1.2% on the week.


Tuesday: Retail sales, the PPI, the NY FED, Business inventories and the NAHB. Wednesday: the CPI, Housing starts, Building permits, Industrial production and the FOMC meeting concludes. Thursday: weekly Jobless claims, the Philly FED and Leading indicators. Friday: Consumer sentiment and Options Expiration. Quite an eventful week!

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

About tony caldaro

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324 Responses to weekend update

  1. Jimmy Porter says:

    I think Tony got tired of some of peoples posts and decided not to give a Monday update.

  2. simpleiam says:

    Stocks might ignore the fall in Crude for 1 or 2 days (for The Fed), but after that, if it keeps falling, it’s Adios Muchacho.

  3. johnnymagicmoney says:

    it would be nice if after the end of QE the market simply ignored the FED and priced according to profits, growth, and risk . Pricing has gotten dumbed down. Just like the political process there is no intellectual debate and reason anymore………………just “Make America Great Again” and what the money whore Janet says. What a wonderful world!

    • Dex T says:

      With enough time it’s possible that the markets would have reverted back to a pre-QE environment. But Wall street was addicted to the easy money and the Fed cannot stay out of the spotlight and has maintained it’s relevance by embarking on a path of interest rate hikes.

      Without QE growth is modest to nonexistent and that’s what investors fear. In the scenario you describe the markets would have faced a massive crash.

  4. phil1247 says:

    target spx 2037

    do we hit it in 30 min or wait till wed????????????

  5. Dex T says:

    Another article on the buybacks keeping the S&P going. Some interesting info.

    There’s Only One Buyer Keeping S&P 500’s Bull Market Alive

    “Standard & Poor’s 500 Index constituents are poised to repurchase as much as $165 billion of stock this quarter, approaching a record reached in 2007. The buying contrasts with rampant selling by clients of mutual and exchange-traded funds, who after pulling $40 billion since January are on pace for one of the biggest quarterly withdrawals ever.”

    ” The S&P 500 has posted daily swings of 1 percent or more in 26 of 48 trading sessions since December, a rate that if sustained would make 2016 the most volatile year since 1938.”

    “Should the current pace of withdrawals from mutual funds and ETFs last through the rest of March, outflows would hit $60 billion. That implies a gap with corporate buybacks of $225 billion, the widest in data going back to 1998.”


  6. Lee X says:

    H D was right, this 2019 pivot is a magnet, people all Scarified🙂

  7. stmro says:

    Yawn. This feels like the ramp and camp days of the early bull market. Maybe we’ve decided to skip the bear and proceed directly to the next bull?😉

  8. mjtplayer says:

    SPY has closed this mornings’ open gap, just the SPX remains

    Horrible volume today, easily on pact for the lightest volume day of 2016

    Total snoozer today….

  9. Bob Sagget says:

    Between Trump potentially “Crushing It” it tomorrow and the FOMC’s no-win announcement on Wednesday…The highs of Major B are already in. The following image comes to mind but the Skier has already left the ramp, has already reached max velocity/trajectory and there is only one direction left…

  10. What is the upside potential for IWM.
    I am short at 107 and wanted to place a stop loss.
    I am thinking no more than 112

  11. mjtplayer says:

    SPY is on pace for the lightest volume day of the year

    BOJ on deck tonight (Tuesday in Japan), expectations are for no change in policy

    • johnnymagicmoney says:

      it goes to show you how desperate longs are to attach any meaning to BOJ and what they are going to do. Their fiscal policy is literally a comic strip and yet it holds weight? Really amazing. Not that this is surprising anymore but I still find it amazing that people find their decisions to be positive at all at any time. Japan’s fate is already sealed.

  12. Page says:

    The market will continue its sideways action until Wednesday, not much to the upside however Thursday/Friday it will begin its downtrend and make significant low.

  13. simpleiam says:

    TRIN way up at 1.32 today. Regardless of this particular reading, crudes 4%+ loss today sort of makes me feel like stocks are ready to rollover at any time. Like others on this board, I think FOMC needs to be out of the way first. GL All!

    • johnnymagicmoney says:

      little tiny lots keeping the market up. No selling no buying but just enough manipulation to keep things higher.

  14. johnnymagicmoney says:

    hate to say it but everyone was calling for a death of the FANG stocks and previous leadership but all I see is MSFT, FB, and GOOG breaking out and AAPL breaking out of a longer base. I just see strength in that group

  15. EL MATADOR says:

    German right wing tells Mario Draghi: This may be the last time

    But, with regard to the ECB’s negative interest rates, a more apposite refrain might be from the Rolling Stones: “Well I told you once and I told you twice, but you never listen to my advice. You don’t try very hard to please me, with what you know it should be easy. Well, this could be the last time, this could be the last time, maybe the last time, I don’t know.”

    • Dex T says:

      It’s very possible. Draghi stated last week that the additional rate cut and QE was the limit of what the ECB was going to extend. He may very well realize that it’s not effective but what else can he do? Like the Japanese they keep doing the same thing over and over again. Do they really expect different results??

      As I posted earlier today the EU has problems that cannot be solved by the Central bank but people are unable or unwilling to do anything about it.

      The U.K. potentially leaving the EU later this year may shock them into changes.

    • simpleiam says:

      Love that song!

  16. jeffbalin says:

    I was hesitant to look for a possible Spx top until the naz confirmed this uptrend and looks like this week it will. Dow, Spx did a couple weeks ago. Now looking for a top and it is probably in or slightly higher this week.

  17. torehund says:

    ..to the bears🙂

  18. Lee X says:

    Well ES let you in better than the open….Most hacks are trading ESM now BTW
    Pivot Pool the water is fine

  19. 123 abc says:

    Tony, in regards to the three Minor waves thus far for Intermediate-c wave, does each Minor wave consist of three (a-b-c) corrective Minute waves, or five (1-2-3-4-5) impulsive Minute waves?

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