weekend update


The week started with the SPX at 2128. After a gap down opening Monday the SPX hit 2119 then rallied to 2163 just before the close. On Tuesday another gap down opening took the SPX to 2120, then after a rally to 2141 on Wednesday the SPX hit 2120 again. On Thursday the SPX rallied to 2151, then gapped down again on Friday to 2131 before ending the week at 2139. For the week the SPX/DOW gained 0.35%, and the NDX/NAZ gained 2.60%. Three gap down openings and the market ended positive on the week. Economic reports for the week were predominantly negative. On the downtick: export prices, retail sales, NY FED, industrial production, capacity utilization, the Q3 GDP estimate, plus weekly jobless claims and the budget deficit increased. On the uptick: the Philly FED and the CPI. Next week’s reports will be highlighted by the FOMC and housing.

LONG TERM: uptrend

Markets worldwide are now seven months into the reversal off the February lows. The four major US indices have made all time new highs, as has the Wilshire 5000 an index of just US operating companies. At its recent peak the NYSE is still 3.1% below its all time high, and the DJ World index is 3.8% below. Just this week alone the four major US indices had gains ranging from 0.35% to 2.60%, while the NYSE lost 0.75% and the DJ World index lost 0.95%. It is now quite clear the NYSE composite is more of an international index, than a US index.

In OEW terms this is quite important, as the NYSE is the only US based index, of the six noted above, that quantifies with a potential Primary V underway. Suggesting an ongoing bull market from the year 2009. The other five indices, (SPX, DOW, NDX, NAZ, W5K), all quantify a new Primary III bull market, or alternately a Primary B, is underway. There is a significant difference between a Primary V scenario, and a Primary III scenario.

Under the Primary V scenario all the NYSE is required to do is to make all time new highs. Then a significant bear market would follow retracing a major portion of the entire advance from 2009. Under the Primary III scenario the bull market from the year 2009 ended in 2015, and the retracement bear market ended in 2016. This suggests a new bull market is underway that should last anywhere from two to four years, with the SPX possibly reaching 3000+. The alternate Primary B scenario is nowhere near as favorable. But will be eliminated when, and if, the SPX exceeds 2336.

As a result of this observation we will still be tracking the P5 count on the NYSE charts, but are dropping it from consideration as a viable US stock market count. The two remaining scenarios, we have been noting in recent months, will be the main and alternate counts. The Primary III scenario is now the main count, and the Primary B the alternate. The charts will now display the SPX, DOW, then NYSE, with the NAZ and NDX remaining on the second page. The DOW count displays the main P3 scenario, as well as the SPX hourly/daily charts. The alternate Primary B scenario will be displayed only on the SPX weekly chart.

MEDIUM TERM: uptrend underway?

The uptrend from SPX 1992-2194 topped in price in mid-August. But we counted that high as part of a one month expanding fifth wave diagonal triangle, which ended at SPX 2188 in early-September. Confirming that pattern the market dropped to SPX 2119 in only three days. When we count that three day decline as a zigzag, it is followed by a one day rally to SPX 2163, then a two day decline that formed a flat: 2120-2141-2120.


At that point we considered the downtrend potentially complete with a double three pattern. Supporting this possibility is an oversold weekly RSI similar to the last downtrend, an extremely oversold daily RSI, and an extremely oversold hourly RSI followed by a positive divergence at the SPX 2120 lows. If correct this would have been the smallest downtrend decline, in percentage terms, in the past 10 years. Which would suggest relative strength going forward. Medium term support is at the 2131 and 2116 pivots, with resistance at the 2177 and 2212 pivots.


As you probably noticed by now the daily chart above, and the hourly chart below have been updated with the main count we have been carrying on the DOW charts. Remember, this is the main count, the Primary B scenario is an alternate count, and the Primary V scenario has been left to the NYSE alone. And is not a US stock index count.


After the SPX 2120 low the market rallied to 2151, then pulled back to 2131. This could be counted as the first two waves off the downtrend low. As long as the OEW 2131 pivot range (2124-2138) holds for support a new uptrend should be underway. Any break below this range would obviously challenge the OEW 2116 pivot range, and a reassessment would be required. Short term support is at the 2131 and 2116 pivots, with resistance at the 2177 pivot and SPX 2194. Short term momentum ended the week at neutral. Best to your trading!


Asian markets were all lower for a net loss of 1.8%.

European markets were all lower for a net loss of 3.0%.

The Commodity group were all lower too for a net loss of 1.9%.

The DJ World index lost 0.95%.


Bonds are still downtrending but gained 0.1%.

Crude’s downtrend continues as it lost 6.2%.

Gold is still in a downtrend and lost 1.8%.

The USD may be in an uptrend and gained 0.8%.


Monday: NAHB at 10am. Tuesday: housing starts and building permits. Wednesday: FOMC rate decision. Thursday: weekly jobless claims, FHFA, and existing home sales. Best to your weekend and week!

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

About tony caldaro

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168 Responses to weekend update

  1. captbara says:

    Trump is in wave 3 of 3 now with this terror attack.

    • johnnymagicmoney says:

      just read (and this is done by the LA Times of Southern Cal – ie Compton and whatnot) that a month ago trump’s black support was at 6%. Now it is over 20%. If Clinton only gets 71% of the black vote she is toast. she will lose Florida, Ohio, North Carolina, and possibly PA. Crazy

      • captbara says:

        That is crazy. Immigration is a really sensitive topic that Trump seems to be killing the dems on overall, which is probably helping to negate whatever racist quotient he’s being labeled with.

      • She’s already behind in all of those states, except PA, but she still leads in the electoral college. A great place to get a snapshot of the polls is realclearpolitics.com

  2. johnnymagicmoney says:

    By the way just to once again show you how ridiculous the spin is. Even after the IEA last week said the glut would last longer than expected and oil production continues to ramp up in key countries, oil was up almost 3% this morning on fighting in Libya in 2 key oil ports. A local militia briefly took over two ports which were then retaken by the Libyan Army. The production per day is 300k in Libya. The invasion which didn’t even last a day (ie skirmish) delayed loading ONE tanker. Worldwide oil production is 77 million per day. Funny how those algos work

    • learnedmylesson25 says:

      I agree with your premise JMM,so then I wonder–is there ANYTHING that’s programmed into the algos,that would be bearish?What econ stat,what event,what support level broken?Maybe there IS none.After January,maybe the algos were tweaked to eliminate everything bearish–except maybe Gartman giving a buy signal…lol.

      • johnnymagicmoney says:

        I guess what I don’t understand (and maybe someone can shed light on this) is when do the algos get reprogrammed or do their algorithims work in bear markets as well? Are they biased to the bull side because overall markets go higher over time? What is the impetus to flip the algo the other way? Is it built in or can people make a concerted effort to change the algo to fit the bear? How did those trading units do in February? DId they make money then too? Do the same things that measure or quantify internals, waves, or trend lines effect the algo as well flipping BTD to STR?? Maybe I make no sense or my mind is too feeble. Comments welcomed.

  3. EL MATADOR says:

    Tony, you swept the blog clean pretty good, what type of broom you use? 😉

    Summer is drawing to an end
    Spooky season is almost here
    Oh and it’s football (soccer) season….now back to volunteer coaching for me

    And thanks for all you do Tony.

  4. jobjas says:

    SPX top in , next target below 1800

    NYSE truncates

  5. phil1247 says:


    daily short traded at 10 am

    target remains 2078
    bearish below 2157 as it has been since last monday

  6. From today’s John Hussman’s weekly blog post: http://www.hussmanfunds.com/wmc/wmc160919.htm

    “Last week, the most reliable of those trend-following components deteriorated to a negative condition. That’s not a forecast of immediate market direction, particularly with a Fed statement on Wednesday, but it’s an indication that we presently estimate both razor-thin (and even negative) equity risk premiums from a valuation standpoint, and also a uniform, if subtle, shift toward increasing risk-aversion among investors. That, historically, is the most negative combination of conditions we identify. The equity market has been dancing sideways for months on a very thin floor supported strictly by trend-following considerations. That’s kept our near-term outlook rather neutral. Last week, on the most reliable measures we identify, that floor quietly dropped away.”

  7. H D says:

    Thx Tony, I should have waited to read the weekend update. I just ruled out the B wave count on Friday and made the PV complete my primary count. The DJI 2-4 TL will keep me objective.

  8. fionamargaret says:

    IBB has a nice chart, with lots of upside… demographics are with you…also CURE
    SPXL if you agree we are going up….
    VRX if you can handle all the negative comments on generic drugs…..

    • cosmos77 says:

      Thanks for the ideas Fiona. I also have been looking at IBB for a possible rally. I’ll take a look at VRX. The market seems to be a crossroad. here, but Tony’s count is biased toward an uptrend developing as long as the S&P stays above 2116, I think.

      • fionamargaret says:

        VRX is not for the faint of heart, but with new management maybe they can get it together. I suggested 42 as a price, and MS came out and suggested the same.
        If we get a good rally the underdogs tend to do better…..
        I have the S&P going to 2550…..the first number was 2185 (we have done that), the next is 2330….and then 2550…
        Of course Cosmos this is just a pattern…good until it is not….x

        • cosmos77 says:

          This crazy market in general is not for the faint of heart. Frustrating the way it gaps down at the open and then about 11 am or so it just slowly floats up all day with very small pull backs. Never seen this before. This patter might be ending, I hope. VRX looks like it might break out from a basing pattern on the long-term chart. If it is then it could have some good days ahead coming. The 3 mo. chart looks like it is impulsing in five waves up. Currently it looks like it is completing the fourth wave abc down and about to start a fifth wave targeting 32 minimum. I’m thinking placing a stop at 24.5 (top of first wave). A break of 24.5 negates the pattern. Not a great risk/reward setup under my scenario, but you never know 🙂

  9. learnedmylesson25 says:

    Nasdaq 196 new highs 115 new lows.The indecision continues.

  10. phil1247 says:

    bot tbt

Comments are closed.