weekend update


The market started this volatile week at SPX 2071. After a gap up opening on Monday to SPX 2101 the market pulled back until Wednesday when it hit SPX 2084. Another gap up opening on Thursday carried the market to SPX 2113. Then Brexit was confirmed and markets worldwide plunged on Friday. For the week the SPX/DOW were -1.6%, and the NDX/NAZ were -2.0%. Economic reports were biased negative for the first time in quite a while. On the downtick: new home sales, durable goods, consumer sentiment and the Q2 GDP estimate. On the uptick: FHFA housing, existing home sales and weekly jobless claims declined. Next week’s reports will be highlighted by Q1 GDP, PCE prices and the Chicago PMI.

LONG TERM: neutral

For the past month or so we have been discussing the ongoing bifurcation between the futures driven SPX and the cash driven NYSE. Our OEW model suggests the SPX ended its bull market in 2015 and a bear market has been underway ever since.


The NYSE, however, suggests the bull market only completed four Primary waves, and Primary wave V is currently underway. Since some in our group consider both counts as valid, and future market action could fit both scenarios structurally, we have taken a neutral stance long term.


Despite which count wins out in the end, this has been one volatile market for investors. Since the 2015 all time high the SPX has dropped 268 points, rallied 249 points, dropped 306 points, rallied 311 points, and is now heading down again. As of Friday’s close it is down about 5% from the high.

MEDIUM TERM: downtrend

After coming within 8 points of the uptrend high at SPX 2121, the market reversed hard to the downside on Friday and confirmed a new downtrend. The inflection point, noted last week, has already been resolved without having to drop below SPX 2026. We now have three waves up from the SPX 1810 low. This naturally suggests the entire advance from that low to SPX 2121 has been corrective, and we have labeled it Major wave B. Corrective advances like this are typical bear market activity.


However, since we are dealing with a bifurcated market the three wave advance from SPX 1810 may only be Intermediate A of Major B, and the current downtrend only Intermediate wave B. This wave structure would allow for new highs during an irregular B wave, even though this is technically a bear market. For those interested, we are carrying this count on the NAZ daily chart.


Medium term support is at the 2019 and 1973 pivots, with resistance at the 2043 and 2070 pivots.


From the recent downtrend low at SPX 2026 the market rallied to SPX 2121, declined to 2050, then rallied on Thursday to 2113. This appears to be a failed inverted flat, as the last rally was five waves. Overnight the futures traded high enough for a SPX 2128 print, but the cash market never saw those levels since it opened on a gap down at SPX 2064.


Under the Major wave B scenario at SPX 2121/2113 the market should now be heading lower in a Major wave C. It could subdivide into three Intermediate waves (trends), like Major wave A, so no guarantee we are headed to new lows during this downtrend.

Under the bifurcated scenario this downtrend should only do a retracement of the entire advance from SPX 1810-2121. This would suggest two potential areas: the 1973 pivot range (50%) and the 1929 pivot range (61.8%). Short term support is at the 2019 and 1973 pivots, with resistance at the 2043 and 2070 pivots. Short term momentum ended the week quite oversold.


The Asian markets were mostly lower for a net loss of 1.2%.

The European markets were also mostly lower for a net loss of 3.3%.

The Commodity equity group were mixed for a net gain of 0.4%.

The DJ World index lost 1.7%.


Bonds continued their uptrend gaining 0.2%.

Crude may be in a downtrend and lost 2.6%.

Gold is in an uptrend and gained 1.3%.

The USD is in an uptrend and gained 1.3%.


Tuesday: Q1 GDP, Case-Shiller, Consumer confidence, and a speech from FED governor Powell. Wednesday: Personal income/spending, Pending home sales, the PCE, and a speech from FED chair Yellen. Thursday: weekly Jobless claims and the Chicago PMI. Friday: ISM manufacturing, Construction spending and Auto sales. Best to your weekend and week!

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

About tony caldaro

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664 Responses to weekend update

  1. China is ready to blow apart via its USDCNH PEG its manufacturing PMI due thursday should miss expectations 80% of recent data has been down. This is where the real risk is. Stay short!!

  2. Not sure I am being allowed to post anymore because of missing responses. Give it one more try.
    The Consumer is not only getting by but doing as best as it has prior to the mortgage debacle. Spending has thru this whole last 2 years INCREASED despite the argument to the contrary. Consumer spending SURGED last month and we get the Income and Outlay report Tomorrow. Consumer confidence came out Today and it SURGED to 98 from 92. I keep hearing phantom arguments on the death of the consumer yet when I look up the “FACTS” it shows a completely different picture. In fact Mr. Greenspan, perhaps our worse Fed Chairman, came out this week and said the FED is BEHIND the curve and inflation is creeping up. My point exactly and perhaps only one point I share with his analysis.

    Here are the facts: We not only have a near record job growth, highest JOLT level which indicated unfilled jobs, lowest unemployment figures in decades, wages exceeding inflation and taxes to a point where the consumer debt level is at 30 year lows. Paying down mortgages, saving more, spent these last two (dire) years on discretionary items as if they were on a buying binge, low borrowing costs, low energy costs, and recently started accelerating their spending ABOVE their wage growth. In the past 2 years most of the monthly reports showed a 2 to 1 to 4 to 1 ration on wages to spending. Now they are opening up their pocketbooks. TOMORROW we have the income and Outlays report.

    I never question someone’s opinion on market trend, ONLY on the FACTS they us to come to that conclusion. People make up facts to fit their position and then declare foul when the market defies their logic. In an era of easy access to TRUTHS and easy ability to verify the authors of those articles, why would anyone be so lazy and obstinate not to do so?

    Still looking for 2070. In one day or three. Hoped for a big spike here but obviously not happening.
    Watch July 5th. The lows of this leg down should be around 1950. After that we have a February style move up again, and to new highs this year. No QE needed and in fact rate hikes will be necessary sooner than people think.

    Silly argument to try and marry the US with the problems from Brits and EU. Desperate measure by the bears to find any reason for a deep drop and long winter. Not happening for a while folks. get used to it or get more frustrated. your choice.

  3. Bob Sagget says:

    $VIX – Fun and games with volatility manipulation. Check this out by watching this video up to 4:50

  4. dan pulford says:

    Time zone in Orlando is 1 hour later than what post time is.

  5. dan pulford says:

    Todays daytrade gains on one $5,000 account UVXY, $150 and another $5,000 account TZA $271 OK I guess, for two small investments? A days work though, I enjoy. VIXter

  6. dan pulford says:

    Sold TZA and UVXY, no overnite chances. Rules are rules, as that wandering one once said. VIXter

  7. Gross sees a low 10 year of 1.25%…that should get S&P down past 1965.Probably closer to 1920.

    • phil1247 says:

      he talking his book …..

      looking for suckers to take his huge inventory…..like me

    • phil1247 says:

      quite a bold call with it now at 1.45 …………..pulllleeeeeeezzzeee

    • fionamargaret says:

      I see TLT at 155+…..

      • phil1247 says:

        i hope you are right fiona

        but my policy is sell first …ask questions later

        if it goes thru target and upper trend line i will trade it

        but bonds are a hot potato now …not an investment

        when i bought treasury bonds yielding 7% they were an investment
        now i am ready to cash in my investment

        • fionamargaret says:

          155+ is what I think, but I look for your interim counts and decide….holding for a few days is a long time for me….just consider what scenario equates to 155 TLT….

      • Bob Sagget says:

        Fiona – Stockcharts P&F says 167. How did you get to 155?

        • fionamargaret says:

          …because I don’t just use “naked” charts – I use overlays as well…

          • fionamargaret says:

            …but even then I always doubt (except for the direction), thus my being very thankful to the guidance Phil gives me on the short term points……

  8. One way to count an impulse using The Eight Fold Path Methodology. Because it does not follow the parallel channel guidelines so well. It ‘might’ be a C wave. If it ‘were’ a C wave, a ‘failure’ for v? might be fine.

    SP500 (5 Min)  6_27_2016 TC1


  9. Scott C says:

    phil1247 — Regarding CL – are you looking for a corrective bounce now back up to 48 before a continuation down?

  10. johnnymagicmoney says:

    It cracks me up as I’m super short and I hear longs whine about this being an overraetion to Brexit. There are 50/reasons stocks should be down much more and Brexit is only one of them. Do you fundamental longs really believe stocks are great buys right here? They aren’t. You think they are great buys at 1810? They aren’t. Stocks are overvalued, there is negative earnings growth, and a multitude of global risks amongst huge global players that are connected to us. Stocks as saven asserts is one of the funniest phrases I’ve ever heard. Kind of like loving terrorist or courageous Yellen or Trader Joe AA Mikey Bunch. Stocks are risky – all of them – and always will be. If you don’t understand that you don’t understand stocks.

    • wanderer says:

      There is a *lot* of money on the sidelines. It has to eventually go somewhere. Sure, US stocks are overvalued, but so are the bonds and European equity. I am not making a bullish case for the US stocks, but rather suggesting that overvaluation, in absolute terms, is not a sufficient criteria for devaluation.

      • philip912 says:

        I have heard that ‘sidelines money’ mantra for years especially when longs have a couple of bad days.

        • Dex T says:

          Exactly. This has been discussed a number of times on the board

          The “money on the sidelines” point is always used as a justification to keep the bull going but is almost never quantified.

          Money doesn’t HAVE to go into U.S. equities. Cash/money markets/CDs are all viable and also attractive options especially with the unraveling of the EU.

          Why should overpriced stocks with declining earnings be considered more attractive?

          Also there is a huge amount of personal and corporate debt outstanding that needs to be paid back- maybe money will go to payoff it instead.

          • brian warner says:

            I have long thought “with rates so low… WHERE ELSE was I gonna put the money” is going to become the most expensive words ever spoken.

            • EXACTLY
              When the market marches to new high THIS YEAR I am sure the bears will lament over the “fix”. How sure am I? Extremely. Why? Same reason CHINA crash did NOTHING. In fact England is so much smaller in every important measure. Their market has so little to do with ours. It will however cause rates to stay at zero. Tell me, how has the market done with ZERO rates? Tripled?

  11. dan pulford says:

    Back in TZA UVXY for I hope another run up.. VIXter

  12. cj32 says:

    August CL, cr. to CBZ

  13. Page says:

    Now I am 100% long.

  14. magnus1234 says:

    Long european banks v.s. short England Banks. That is long EU bank index v.s. short RBS, Barclays, HSBC. Extreme good pair deal. Wait a couple of days before taking the position.

  15. phil1247 says:


    target hit ….45.83

    nice bounce means no extension short

  16. Jack Sparrow says:

    short term double bottom just now?

  17. vivelaamo says:

    I’m going to wait for 123 low’s before going long. The last one on the DOW and oil was text book after the Feb low’s.

  18. Bob Sagget says:

    S&P Cuts UK Credit Rating from AAA to AA

  19. gtoptions says:

    Thanks Tony
    SPY ~ WS2 @ 198.19
    SPX has some weekly swing symmetry at 1982
    GL ALL

  20. Tony Jordan says:

    I’m find it hard to come to terms with expectations of a significant decline (20%+) in US equity markets. We’ve had a terrific knee-jerk reaction to the Brexit vote. This is causing a lot of uncertainty and stocks don’t like uncertainty, that goes without saying. But the real problem is at the governmental level. The last couple of days we’ve had the normal process of stocks down and bonds up but the larger question is how far are investors willing to push bonds. German 10 yr bunds are currently yielding -0.112%, Japanese 10 yr -0.202% and UK 10 yr gilts 0.938% and the latter with the currency in freefall. US stocks have to be regarded as the safest haven for stock investors. It seems like a tall ask to expect investors to keep piling into near zero or negative yielding debt issued by bankrupt entities while simultaneously ignoring quality companies and allowing them to go 20% or more. It doesn’t make a lot of sense to me. I know the argument about overvaluations but the real bubble is the bond market now in its fib 34th year. As far as alternatives go there just aren’t any to handle the volume. The gold market, for example, is simply to small. Any continued weakness in stocks over the next couple of days I view as just another buying opportunity.

    • wanderer says:

      Agreed on the *relative* value of the U.S. stocks, as compared to bonds, gold, and European equities. However, the *absolute* value is not there, based on the S&P earnings. Perhaps a spread of some kind makes sense: long US, short Europe. I am not into this type of play, but just throwing this as an idea. The currency rates have to be taken into consideration, too, if one contemplates this spread.

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