weekend update


The week started at SPX 2050. After a somewhat choppy move higher to SPX 2057 by Tuesday, the market pulled back to SPX 2022 on Thursday. Then it rose for the rest of the day to close at SPX 2036. For the week the SPX/DOW lost 0.6%, the NDX/NAZ lost 0.3%, and the DJ World lost 1.3%. On the economic front reports finally came in on the positive side. On the uptick: FHFA housing, new homes sales, Q4 GDP and the WLEI. On the downtick: existing home sales, durable goods, and Q1 GDPN. Next week, a busy one, is highlighted by Payrolls, the Chicago PMI, and the PCE.

LONG TERM: bear market

The recent six week uptrend has rekindled the bullish spirits. After each of the two 15% selloffs since May the market has responded with two quite impressive rallies. During this uptrend breadth has been strong, commodities have rebounded, credit spreads have narrowed, and many are expecting a resumption of the bull market. If this does occur, it would be a first in the entire 120+ year history of the DOW in OEW terms. Maybe this time is different.

Historically there have only been five bull markets that have lasted five years or more, or gained more than 150%. This is the sixth. It lasted six years, gained 184%, and a new bear was confirmed by OEW in January 2016. The previous five bull markets were followed by some of the nastiest bear markets in the history of the DOW. The bear market that followed the 1921-1929 bull market lost 89%, the 1932-1937 bull was followed by a 52% market loss, the 1984-1987 bull was followed by a 41% stock market crash, the 1987-2000 bull was followed by a 39% market loss, and the 2002-2007 bull was followed by a 54% market loss. Maybe this time is different.


We continue to label the 2009-2015 bull market as having completed in December. We were expecting five Primary waves for this Cycle [1] bull market, and have labeled them in the chart above. Primary waves I and II completed in 2011, and Primary waves III, IV and V completed in 2015. When OEW confirmed a long term downtrend in January we were certain a Cycle wave [2] bear market was underway and the count, as posted, fit that scenario. Cycle wave [2] bear markets can be quite severe. The previous ones on record had a minimum market loss of 47%.

MEDIUM TERM: uptrend may have topped

At the beginning of this uptrend in mid-February we thought it would only last about 3-4 weeks and top out between the 1956 and 1973 pivots, with possibly a maximum upside to the 2019 pivot. It proved us wrong, as it has rallied even beyond the 2043 pivot to SPX 2057 just this week. This market has proven to be quite accommodating to the bulls and the bears over the past ten months. Big swings of 250+ SPX points in both directions.


As noted in the previous section we have labeled the bull market ending in Q4 2015. The first downtrend, which bottomed at SPX 1810 in February we labeled Major wave A. The current uptrend we are labeling as a three Intermediate wave Major wave B. Intermediate wave A hit SPX 1947, Int. B SPX 1891, and Int. C SPX 2057 thus far.

At this week’s high, the weekly RSI hit overbought. The last weekly RSI overbought during a bear market rally was also a B wave in 2008. The daily RSI hit its highest overbought condition since Q4 2014, and has started to decline. The daily MACD is now nearly as high as its peak during Primary wave V. Lots of upside momentum to create the current pundit bullish bias in the market. Medium term support is at the 2019 and 1973 pivots, with resistance at the 2043 and 2070 pivots.


As noted in the previous section we are labeling this uptrend as a three Int. wave Major B advance SPX: 1947-1891-2057. Int. wave A was a bit sloppy but we settled on a 5 wave structure, followed by the largest pullback of the uptrend for Int. B. Intermediate wave C is a clear five wave structure: 1963-1932-2009-1969-2057. During the Int. wave C advance it had created a nice rising channel, as noted on the hourly chart, which was broken to the downside only on Thursday.


We had noted in the daily updates that we were looking for four signals that the uptrend may have ended: 1. a break of the OEW 2043 pivot, 2. a break of the lower rising trend line of the channel, 3. a drop below SPX 2009, and 4. a drop below SPX 1969. Thus far two events have already occurred. Should the next event occur before the uptrend makes new highs, evidence will be building for a new downtrend underway. Short term support is at the 2019 and 1970 pivots, with resistance at the 2043 and 2070 pivots. Short term momentum hit quite oversold on Friday, after several negative divergences, then ended the week above neutral. Best to your trading the upcoming busy week!


Asian markets were mixed on the week for a net loss of 0.5%.

European markets were mostly lower for a loss of 1.5%.

The Commodity equity group were all lower for a 2.6% loss.

The DJ World index is still in an uptrend but lost 1.3%.


Bonds remain in a downtrend and lost 0.4%.

Crude is in a weakening uptrend and lost 3.7%.

Gold is also in a weakening uptrend and lost 3.1%.

The USD is trying to uptrend and gained 1.1%.


Monday: Personal income/spending and the PCE at 8:30, then Pending home sales at 10am. Tuesday: Case-Shiller, Consumer confidence, and a speech from FED chair Yellen. Wednesday: the ADP index. Thursday: weekly Jobless claims and the Chicago PMI. Friday: monthly Payrolls, Construction spending, ISM manufacturing, Consume sentiment and Auto sales. Best to your holiday weekend and week!

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

About tony caldaro

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322 Responses to weekend update

  1. blackjak100 says:

    34 down, 21 up, 34 down next to 2009 and int iv?

  2. simpleiam says:

    Interesting that we have a shooting at Capitol and markets rise a bit, even with Congress out.

  3. uncle10 says:

    Thanks Tony.
    Nat gas and the grains treating me well so far.
    I see some posts about UVXY. Just remember you can always buy it lower… 😉
    gl all

  4. A breakout or a reversal?That is the question.

  5. bears might have gotten into a little trouble on the Dow … (note the alternate for a diagonal is almost always 1-2-i, as noted). I say ‘might’ have because if it is a ‘true’ diagonal, then one never knows if it is ‘ending’ as in a ‘c’ wave, or a ‘leading’ diagonal. SP500 15-min has the same pattern – just not as well defined.

    DJIA (15 Min)  3_28_2016

    Cheers and enjoy the chart.

    • Right on the money, so far. The Dow has already confirmed at least the start of the ‘c’ wave lower, with a lower low than ‘a’. Question is always whether there will be the “deep retrace”. Could gap lower for -iii of c, tomorrow. Never know. Time to sit & see.

      DJIA (15 Min)  3_28_2016a

      Cheers and enjoy the chart!

  6. H D says:

    GM all, 10 handles off the early Monday low, crazy, EOM windows, 2005 incoming. We could debate abc’s and 123’s for another 7 years too. There’s at least 5 great tradeable EW set ups, the counts only confirm them, Just a humble opinion from a hack.

  7. I get criticism because I don’t post trading ideas on here. Earlier in this weekend update post, I showed you the four-hourly chart of Crude Oil, and said it was possible we were at / near a wave four bottom. The lower edge of the channel had not been broken yet. So, here is a clear ‘trading idea’ based on pure Elliott Wave Theory. This refines the Crude Oil chart down to the one-hour chart. The reason I post this example, is that after much ‘patience’ waiting for the set-up to develop, the time is right. Please refer to the chart below.

    CL 05-16 (60 Min)  3_28_2016a

    So, based on the chart, it is clear there has been a 1.618 extension, lower, off of the high. The price move is still in a channel. But the move downward can legitimately be counted as a-b-c, or as i-ii-iii; they are equivalent until they are not. Are there any clues that can separate the two? The only one we can see is that both up moves are zigzags: there is no alternation yet.

    So, how ‘might’ one handle this chart? (This is not trading or investment advice). Price this morning has retraced down to the 61.8% level at $39. There are tails at that location. But between the bottom tail, the low of this morning, and the low of Friday at $38.33, the risk is clearly defined! This is a risk of approximately $750.

    So, one ‘could’ buy long at prices between $38.50 and $39 looking for an initial target of the prior high, with a ‘stop’ at the $38.30 level – below the low. If prices break the channel higher, one moves the stop up. If the stop gets hit, then one takes the time to re-evaluate the chart to see if the stop was hit with a wave that looks like a FLAT for iv, or a triangle for iv. If so, and the fifth wave of a ‘true impulse’ was made, then one can wait for a 50 – 61.8% retracement to re-short — but that is getting ahead of one’s self).

    Again, this is not trading or investment advice. Whether you take the trade is your business. Whether I take the trade is my business. Whether you and your account can tolerate $750 in risk is your business. If you can’t, or your account is ‘under-capitalized for the trade’, then taking such a trade would likely put too much emotional pressure on one to stay in it appropriately.

  8. mjtplayer says:

    Volume today is a complete joke, has a shot at being the lightest day of the year for the SPY. UK markets closed today for holiday, that’s helping to keep trading activity low. Yellen speech tomorrow at 11:30am, it appears everyone is waiting for that.


  9. mjtplayer says:

    We’re still getting that 10am corporate buyback ramp, but it’s effect is becoming less and less with each passing day as more companies enter the buyback “blackout period”.

    It has the “feel” as though the bulls are desperately trying to hold-up the market into quarter end on Thursday. Last quarter, they failed, as the market dropped 2% in the final couple trading days of Dec before falling apart in Jan. This week could be interesting….

  10. phil1247 says:

    RE….pesky stochastic…

    thursday looked like embedded stoch would be lost but stick save held it at the close

    same thing going on today …need to see if it stays lost at 4pm…

    until then all drops are bear traps

  11. phil1247 says:

    Trader JOe

    your CL 240 min chart has 5- 16 at the top ….

    but the chart looks like the continuous contract where the gaps are due to the contract changes

    the CLK (may )contract does not have those gaps and did not make a lower low in early feb

    how do these differences enter into the overall pattern analysis??

    • Hi Phil – first you are correct. The gaps occurred at contract rollover, so good observation! Here is a chart of the “pure May” contract for Crude. Still possible to see it in an up channel, with a kick-off gap in iii of 3, so doesn’t change the overall analysis.


      It’s a ‘risky’ situation either way. I know some people (not you) want them to be ‘risk-less’ but trading is ‘risk’. EW helps one ‘manage’ the risk.

      Cheers, Joe.

  12. EL MATADOR says:

    Watching CL a LL below Friday low will give us 5 impulsive waves down and that will put a fork in all those uptrends

  13. ABchart says:

    Thanks Tony! Happy Easter to all.
    No trading in Europe today.

  14. opader says:

    Thx Tony,
    Monday … March 28, 2016
    @ 08:40 – Support: 2015 / Resistance: 2040

  15. Bob Sagget says:

    Liquidity, liquidity, liquidity.

    “Since the financial crisis, total cumulative share buybacks have been bigger than the feds buying of US treasuries.”


    • rabbittrader1 says:

      Which indicates that many major corporations canont find any investment alternatives that they consider a good risk /reward ratio for a decent Return on Investment ,other than buying their own stock. A sign of major weakness in Corporate America!! Rabbit So shareholders should be saying”This is all you can find to do with the money we have given you ,and the money you have borrowed? “,SHAME ON YOU” !

    • simpleiam says:

      I can believe it. And on borrowed money too. Should be a hell of a Bear market in front of us when this gets flushed down the toilet.

  16. A question to everyone:

    What is in your view your favourite blogger/subscription site for general mkts? Anyone who has done well past many years ? I’m a bit confused lately.

    Thank you if know some good ones. (Apprecciate Tony C)

  17. john b says:

    @ Fishonhook. I agree with Aahmicheal and others on this board have mentioned that the market influences have changed .Elliott Wave still works but it has become very difficult to distinguish between impulsive and corrective behaviour most of the time. Those that tries to count academically falls by the wayside. We have all witnessed Tonys incredible accuracy and calls at times, but there is no system or person that can be 100% correct all the time.
    One of the things that does give EW a bad name is the people who gets distracted and influenced by other factors than their count, also some have a overwhelming desire to call a top or bottom before anyone else and therefore cannot count properly.Where EW is very useful is when it becomes clear what pattern is playing out, for example:
    On the 9th of March the S&P and Dow were busy building a triangle , and as there are a few possibilities with triangles,one has to wait and see what the outcome is. In that case it broke out to the upside on the 10th Seeing that EW(not all are EW) triangles only occur in 4th,b or x waves, the hasty guys could be forgiven for calling it a 4th and subsequently the 5th .On the 10th I for one realised that it could have been all part of a move that actually started on the 7th I think, where the Dow had an abc, =A, then a, that triangle b and the breakout to the top as the c wave to finish B and the quick drop for the C. IOW that whole business was an irregular correction which portends to strength. The S&P had a straight A, a, triangle b, c for B,then quick down C for a flat correction. On the 10th I mentioned/ warned of the possible count and then started to call st support at 1975. Others also warned of higher targets so I think there were enough warnings and an EW count/pattern to warrant caution for going short ,especially with that nice C wave coming down. And so, one can see the merits of EW if you took the trouble to learn it , and always weigh the different scenarios. Hope it helps a bit to get your mind in the right direction.

    • The problem with EW is it is based on emotional psychology. Computers do not have emotions and it is far too subjective. Also it will not work well in a market that is being manipulated and front run by the big 5 banks and the Fed However I do find it very useful once a trend is in place.

      • john b says:

        Agree on the trend part, even intraday trends. I have concentrated my efforts mostly on corrections the last year or three and in this regard I find the book by Robert Balan is quite good, . He has some nice stuff on deviations from the norm and substitution of patterns.

  18. floyd drummer says:


    thanks for all you do….!

  19. fotis2 says:

    CL monthly with +D ..

  20. H D says:

    Excellent read Tony. Thanks.

  21. torehund says:

    nobody knows who draws first…

  22. captbara says:

    Thought this move I found in some unnamed stock looked similar to the one in SPX from Feb 12. Post your EW count of it and I will reveal what happened shortly after. Note: It was a corrective move.

  23. rd3777 says:

    Futures opened up a bit….right into the window of resistance…we will see if the bears can take control. JPN225 opens in about 35 minutes and Crude opens in 90 minutes.

  24. Arthur Knopf says:

    SENTIMENT UPDATE – When Bad Is Good, sentimentsignals.blogspot.com
    Today’s update will be very brief due to the holiday.

    As promised I wanted to show a comparison to this weeks sentiment indicators compared to the last rally top on Nov 3, 2015.

    Comparing the Nov 3 rally top to then week ending Mar 18 was identical in overall score with 0 indicators up, 9 down and 7 neutral for a rating of -7. However, many of the negatives in Nov were more extreme, more important is that after only a 2% decline last week, the score dropped to only a -5. Looking at the put/call ratios shows very low bearishness for both ETF and SPX P/C, While the Equity P/C reached a high enough level to become bullish, as well as turn the overall CPC to a neutral. Changes in the put/call measure support an end of quarter rally next week mostly in the beaten down stocks (Equity P/C) with less support for the large caps (ETF and SPX P/C).

    As for the title “When Bad Is Good”, I am referring to the extreme overbought condition of some of the indicators that can actually be a sign of strength – at least short term. Similar to the Zweig breadth thrust off the Aug 2015 lows that convinced many that a bull market rally to ATH was around the corner, we now have extreme readings in the NYMO and the cumulative NYSI that did not occur in either the 2000-02 or the 2008-09 bear markets. A strong rally in the DJIA late 2000 into 2001 could be view as similar but weaker.

    Another indicator the VXV/VIX, whose 20 day SMA normally oscillates between 1.00 and 1.20, reached a level of 1.22 last week. This last occurred at the Dec 2014 and Mar 2015 tops on the markets way to ATHs last May. The extreme overbought conditions may keep the market afloat for another two or three months as in 2015, but there is no doubt that Cinderella’s coach will turn into a pumpkin sooner or later.

  25. rd3777 says:

    IBM has been the leader on the downside. I think it will track crude oil all the way down,as oil goes below $20. The market should start 5 large waves down from here. IMHO

  26. fotis2 says:

    For Fiona…

    • fionamargaret says:

      Thank you fotis …..such a great song with so many meanings (just don’t let yourself get caught up in the dark side)….you are a kind thoughtful man…xxx

  27. bud67 says:

    JOHN _B.
    had comment about my SP500 BoYu
    chart – If you wish to see it, I wil email you
    a copy, one time only though.

  28. From an email received just minutes ago, from the NeoWave , Glenn Neely just called for one more new high before the end of the bull market.

    ..just saying, the expectation of a new high before this is over is not an unreasonable proposition. It doesn’t ‘have’ to happen – or could happen in just the DOW, but not the S&P – but it is not at all unreasonable from an Elliott Wave perspective.

    • fotis2 says:

      You don’t say one more high then..

    • aahmichael says:

      Neely has always had the screwiest counts. He’s been lost for at least the last 7 years. When the market has him baffled, he just says it’s a new pattern that’s never been seen before, and gives it a new name. If he’s calling for a new ATH, then it certainly would not be in the context of a P5, or any kind of impulse wave higher, for that matter. He sees almost everything as a series of never ending expanding triangles connected by x waves.

      • Yep. Neely invented new Elliott wave requirements that are not in Elliott’s original work. Specifically, he said, “a corrective wave must ‘always’ take more time than an impulse wave”. This was clearly not true from the 1929 (high) to 1932 low, but he went with it anyway. This required him to invent all the new patterns. Sounds a lot like another poster on here who invented a requirement Elliott never did that “all major markets must be in impulses or corrections together”, when this is also easily demonstrated by history not to be true. One of the reasons Elliott didn’t impose this requirement is he largely ‘only’ had the Dow. The S&P500 was not even invented until ~.1954

        Still Neely has a fund to run, and has to make a projection for followers of his newsletter service, so he is probably trying to save some skin by doing what he sees as the right thing.

        • aahmichael says:

          The world is a much different place than when Elliott made his initial observations, and market action reflects that.

            • aahmichael says:

              The financial markets are an entirely different beast than they were during Elliott’s lifetime. Markets throughout the world are highly interrelated and correlated now. That’s how the shenanigans in a little meaningless country like Greece can cripple the entire world. The S&P 500 index didn’t even exist during his lifetime, not to mention the S&P futures market. There was no program trading. There was no arbitrage. There was no HFT. Heck, there were no computers! For all practical purposes he lived in the stone age compared to the state of financial markets today.

              • fishonhook says:

                True enough aah, that would explain the abysmal track record of EW. In fact I would one hard pressed to think of another area where a theory that so often wrong and redefined could still exist and be followed by so many. Maybe astrology?

              • fishonhook says:

                lets try that again..

                True enough aah, that would explain the abysmal track record of EW.

                In fact I think that one would be hard pressed to think of another area, where a theory that is so often wrong, and redefined could still exist, and be followed by so many. Maybe astrology?

              • I figured you were going to go in that direction – which is why I asked the question. Elliott’s Principle has nothing to do with ‘market mechanics’ – whether it be the tulip bulb market, the market for shares of the East India Trading Company, or the market for Coffee futures.

                His principle is a pattern of human psychology – of how people will always buy ‘near the top’ when they are most excited by the news, and how they will sell near the bottom when they are most despondent that they will never recoup their losses.

                This is why one can find five waves in Crude Oil, or in Polaroid (sic) or Apple. Elliott’s work has been verified by formal mathematicians including, most recently, Benoit Mandelbrot. But your seat-of-the pants and predictable answers continue display your self-absorption and an apparent unwillingness to learn.

              • aahmichael says:

                Fish, I’m going to have to disagree with you about the legitimacy of EWT. I’ve never seen a move in the market that had no EW explanation. At its core, it’s a very sound theory. However, that doesn’t mean that most people (including so-called EW gurus) have no clue how to count waves correctly, or how to use it in their trading strategies successfully. Personally, I’d be completely lost without it. It would be like driving a race car with a blindfold on.

              • aahmichael says:

                TJ, you’re correct that I’m not here to learn anything from you. With all due respect, when it comes to trading and EW, you have absolutely nothing to teach me. Your methods are incredibly plodding, mechanical, and academic. If they work for you, that’s wonderful, but in my opinion, they have no basis to the real world of successful trading and portfolio management. I certainly have no interest in anything that you have to offer.

              • Ok. Good. AahM – Then will you please leave my posts alone? It was you who replied to my daily FTSE chart – when someone else asked me to provide it – not you. And it was you who replied to the Neely post. If you have nothing to learn from me, then please exit yourself from my conversations.

      • john b says:

        +1 He lost it just like P, Tony is the best of them all. Btw you do good work here Aahm, I agree with most of your ideas/counts..gl

  29. TMF says:

    Equal weight spx struggling with downtrend line. Could have been a false breakout if it can continue down next week and break the 20dma. If it regroups and hits a new short term high then it looks like P5 is the correct path.


  30. bud67 says:

    ref OEW’s SP500 plot of Major B wave high.
    SP500 BoYu has confimed, the OEW signal.
    Good call TC…

  31. M1 says:

    I see a lot of discussions on who is right or wrong. On who is Bullish or Bearish. Having the correct or incorrect count. Does it matter ? I really don’t care
    I read most of the comments on this blog and found some very interesting. Thanks for sharing.
    From my side you know that I turned short term cautious (NAZ) last week after being very bullish since this uptrend started (seven weeks ago) and took the warnings from master Tony very serious.
    However, this does not mean I went cash or exit my long positions. In fact I believe we should see new highs before I exit my long positions. IMO NAZ 4630 could be an important support to watch.
    SHORT TERM: Bullish but cautious. Minor wave 3 of interm wave i looks is unfolding.
    MED TERM: Bullish. Primary wave IV may have bottomed
    LONG TERM: Bullish. I see only three waves from 2009 lows to 2015
    Here the charts:

    • simpleiam says:

      “Never listen to CNBC, these clown.” Good point. Faber is basically a PM guy. What people might not realize is that if you use your physical PMs to buy or convert to the currency in order to purchase something, the one that you’re doing business with does NOT have to offer you market price for the conversion. Say gold is $2000 oz (just ex.) and you go to a bank or other broker, they are not obligated to offer you market price. They could offer you $1000, or any other price they want.

      Hence, ANY ASSET is only worth what someone will pay for it. This is true across the board: stocks, bonds, PMs, RE, etc.

  32. J.Wenger says:

    Thanks Tony. I, for one, am looking forward to shorting this B.

Comments are closed.