weekend update


The week started at SPX 2169. After a rally to SPX 2183 on Monday the market pulled back to 2161 by Wednesday. Thursday started off with a rally to SPX 2174, dropped to 2157, then the market rallied to 2185 by Friday. For the week the SPX/DOW gained 0.50%, and the NDX/NAZ gained 0.45%. Economic reports for the week had twice as many gainers as losers. On the downtick: the ADP, ISM, auto sales, monthly payrolls and weekly jobless claims increased. On the uptick: personal income/spending, the PCE, Case-Shiller, consumer confidence, the Chicago PMI, pending home sales, factory orders, the Q3 GDP estimate, plus the trade balance improved. Next week’s reports will be highlighted by the FED’s beige book and ISM services. Best to your week!

LONG TERM: uptrend

For the past several weeks we have been offering three different counts regarding the US market. Last week we upgraded one count, posted on the DOW charts, to the primary count. In probability terms we suggested 40%-30%-30% for the three counts. We have not observed anything new to change these probabilities.


The DOW count suggests a Primary I bull market unfolded from 2009-2015. Then over a 9-month period into February 2016 a Primary II bear market unfolded. This suggests a Primary III bull market is now underway from that February 2016 low. With the DOW in new high territory, and having a difficult time to even establish a correction, we see no reason to alter this view.


The SPX count suggests the advance from the February 2016 low is a Primary B wave of an ongoing, unorthodox bear market. While this is a fairly popular count among the bears, it suggests the upside limit for Primary B is SPX 2336 (1.618 x Primary A). Should the SPX exceed that level the count will be eliminated.


The NYSE count is clearly the most popular among the bulls. It suggests Primary waves I and II ended in 2011, Primary III ended in 2015, Primary IV ended in 2016, and Primary wave V is currently underway. We have explained in previous weeks why we do not find this count to be representative of the US stock market. It looks more representative of a foreign index than a US index. All of the major US indices have already made new all time highs, while none of the foreign indices have. And as you can see, neither has the NYSE.

MEDIUM TERM: market resists entering a correction

The current uptrend began in late-June at SPX 1992 and rallied to 2194 by early-August. After counting five waves up from that low to the high we expected a correction. It has been nearly three weeks and we are still waiting. Thus far all the SPX has done is a series of three 3-wave declines with slightly lower lows, while remaining in a SPX 2157-2194 2% trading range. Each time the market has dropped below the OEW 2177 pivot it has turned right around and rallied above it again.


After three weeks of choppy activity we perused the charts Friday to look for any deterioration in either the SPX sectors or the foreign markets. We didn’t find any. Typically when a SPX downtrend is underway the SPX sectors start breaking down first then the SPX follows. As of Friday only 33% of the sectors are in downtrends, and 44% are close to, or at, their uptrend highs. Also the foreign markets usually lead to the downside as well. As of Friday only 15% of the foreign markets are in downtrends, and 35% made new uptrend highs on Friday. It looks more like strength than weakness. Also the TRAN, SOX and R2K, are at or close to their uptrend highs.

Looking at the technicals, we see all the major indices displayed a daily positive divergence at Thursday’s low. Which was the lowest low of the pullback across the board. This usually occurs at end of downtrend lows. If it wasn’t for the strength in the foreign indices we would think we just completed an A wave of the correction, with a B wave now underway, and a C wave down to follow. After a two month 200-point uptrend the market has worked off the overbought condition by just drifting lower for three weeks. All these factors suggest the market may be ready to extend its uptrend without a correction at this time. Medium term support is at the 2177 and 2131 pivots, with resistance at 2212 and 2252 pivots.


As noted above we counted five waves up into the uptrend high: 2109-2074-2178-2148-2194. Then we counted three 3-wave declines into the low: 2169-2193-2160-2183-2157. Then after setting up the daily/hourly positive divergences on Thursday the market rallied, with a gap up, to SPX 2185 on Friday.


Reviewing the entire uptrend we observe three large pullbacks, in order: 35 points, 30 points, and 37 points. The first two took a couple of days. This last one has taken nearly three weeks. With declines this similar it also suggests this uptrend may extend. With the market closing at SPX 2180 on Friday, and the uptrend high only 14 points away, it may not take long to find out.

Short term support is at the 2177 pivot and SPX 2157, with resistance at SPX 2194 and the 2212 pivot. Short term momentum ended the week just above neutral. Best to your trading, come Tuesday!


Asian markets were mixed on the week and gained 0.2%.

European markets were all higher and gained 2.0%.

The Commodity equity group were mixed but gained 1.3%.

The DJ World index is in an uptrend and gained 0.9%.


Bonds are in a downtrend but gained 0.2%.

Crude is trying to uptrend but lost 6.7% on the week.

Gold is trying to reverse its downtrend and gained 0.1% on the week.

The USD is also trying to uptrend and gained 0.3%.


Monday: holiday. Tuesday: ISM services at 10am. Wednesday: the FED’s beige book. Thursday: weekly jobless claims and consumer credit. Friday: wholesale inventories. Best to your 3-day weekend and week!

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

About tony caldaro

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187 Responses to weekend update

  1. tommyboys says:

    All the talk on QE and the market and it’s done NOTHING! Great short piece here by Wesbury on why QE is no “magic elixir” 🙂


    • CampFreddie says:

      Tommyb, does this mean you are no longer bullish ?

      • tommyboys says:

        To the contrary Freddie. This just supports my thesis that QE is about as responsible for the bull market as it has been for unemployment or wages or productivity or ANY of it. Fed sure isn’t “buying stocks” as sooooo many proclaim for sure! It was implemented to buoy the banks balance sheets primarily and that’s hit. Makes me MORE bullish having it reinforced that the economy – AND MARKETS – have been moving along of their own volition. 6-18 months of big bull left – at least!

  2. Page says:

    Out of Gold/Miners Long position, initiated short position. Long Oil.

  3. fionamargaret says:

    My numbers are still suggesting to short oil…..goes quite a bit lower….in this land of up, do the waves agree….??

  4. Can you believe the huge miss on ISM?Topped only by the market shrugging it off.Expecting 58…comes in at 51.Gold loved it,DXY didn’t.Fed gov Williams is ready to speak later…lol.
    “Hey we’re still above 50″,he’ll say.”Rate increase on the table for September”.lol.

  5. Jack Sparrow says:

    did i miss some memo- where is everyone?

  6. Jack Sparrow says:

    so if this a 3rd of diagonal (a completed b completed or in process) and then c to take to new high about 2200

  7. opader says:

    Thank you again Tony. My thoughts: http://www.balancetrading.org/
    Have a great week everyone.

  8. fionamargaret says:

    Charts from Joanne Klein….

    Thanks Tony…..and everyone..

  9. Arthur Knopf says:

    SENTIMENT UPDATE: Enjoy the Halftime Break

  10. mharrison60 says:

    Hi Learned do you trade much gdxj or mostly stick with gdx? Interested in your preference. Thanks

  11. Could the cash IWM market be closed for Labor Day? I know the negative futures reading is current because it’s been changing all day.

  12. torehund says:

    Whats going on, cash IWM is + 0,97 and future IWM is -0,13, this is insane….

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