weekend update

REVIEW

The market started the week at SPX 2373. After ticking up to SPX 2374 on Monday the market gapped down on Tuesday to SPX 2358. After that it rallied to SPX 2390, after the FED raised rates 25 bps to 1.0% on Wednesday. Then it pulled back to SPX 2378 to end the week. For the week the SPX/DOW gained 0.15%, and the NDX/NAZ gained 0.55%. Economic reports for the week were mostly positive. On the downtick: the NY/Philly FED, building permits, and the Q1 GDP estimate. On the uptick: the CPI/PPI, retail sales, business inventories, the NAHB, housing starts, capacity utilization, leading indicators, consumer sentiment, the WLEI, plus weekly jobless claims improved. Next week’s reports will be highlighted by durable goods orders and housing. Best to your week!

FOUR-YEAR PRESIDENTIAL CYCLE

The four-year Presidential cycle has been used for quite a long time in anticipating major market lows. Since the year 1938 it has worked quite well. The cycle suggests a significant stock market low occurs in the second year of every President’s term. Then the market rises for a few years until the making another low in the second year of the next Presidential term. Counting the year 1938, there have been 20 potential occurrences. This cycle has been accurate 65% of the time. Recent dates include 1982, 1990, 1994, 1998 and 2002. Early in this cycle series, 1950, 1954, and then again in 2010, the cycle bottomed in the first year of the Presidential term, i.e. 1949, 1953 and 2009. This accounts for an additional 15% of the cycle lows. Bringing the total to 80%.

The other 20% of the time, which has confounded many of its followers, the cycle has inverted. In other words, it did not end with a major stock market low but a major stock market high. This first appears in 1958, then reappears in 1986, 2006 and 2014. One could also suggest that 2010 worked this way as well. Instead of making a significant market low on these dates, the second year of a Presidential term, the market made a significant high in the third year of the Presidential term, i.e. 1959, 1987, 2007 and 2015. This inversion counts for the last 20% of the 20-event series. What does this cycle suggest going forward?

A new President just entered the White House in 2017. With the market at all-time highs, and a significant low having just occurred in 2016, it is quite unlikely his first year will see another significant low. The most likely target year for a significant low would be next year, 2018, his second year in office. If a significant low does not occur next year either. Then a significant market top should occur in the year 2019, his third year in office. In summary: there is an unlikely 15% chance of a significant low in 2017; a probable 65% chance of a significant low in 2018; and a highly probable, if neither of the first two occur, 20% chance of a significant high in 2019. This is the modern day 4-year President Cycle.

LONG TERM: uptrend

The long term count continues to unfold as labeled. A Super cycle low in 2009 at SPX 667. A Primary wave I high of Cycle wave [1] at SPX 2135 in 2015. A Primary wave II low at SPX 1811 in 2016. Since then a Primary wave III underway, with this bull market probably only Major wave 1 of Primary III. Quite a long term bullish scenario being projected by OEW.

From the Primary II low in 2016 we have labeled Intermediate waves i and ii completing in April and June respectively. Minor waves 1 and 2 of Intermediate iii completing in August and November. Minor wave 3, from the November low, continues to unfold.

MEDIUM TERM: uptrend

This Minor wave 3 uptrend began in November at SPX 2084. It is naturally dividing into five Minute waves. Quite similar to Minor wave 1, but obviously on a much larger scale. Minute waves i and ii ended in mid-to-late December at SPX 2278 and 2234 respectively. Minute wave iii has been underway, and subdividing even further, since then. This uptrend has lasted twice as long as the two previous uptrends, and has travelled more points.

At the recent SPX 2401 high Minute iii is still about 27 points shorter than Minute i. Normally third waves are the longest. At SPX 2428 Minute iii will equal Minute i. So it appears this uptrend, on this point alone, has further to go. Despite the slowdown in upside momentum as noted by the daily MACD. Medium term support is at the 2336 and 2321 pivots, with resistance at the 2386 and 2411 pivots.

SHORT TERM

Minute wave iii has been subdividing also. This is what happens when uptrends continue to extend in time. While Minute wave i was a relatively simple five Micro wave (orange) structure, Minute iii has a Micro 3 that has also subdivided.

The count we have been tracking is that Nano wave v of Micro 3 is underway. When it makes new highs and concludes, Micro wave 3 would have ended. Then after a Micro wave 4 pullback, a Micro 5 rally should complete Minute wave iii. If you are still following, a Minute iv pullback will then lead to a Minute v rally and the end of the Minor wave 3 uptrend. Then the market should enter a downtrend and decline at least 5%, maybe more.

Short term support remains at SPX 2353/55/58 and the 2336 pivot, with resistance at the 2385 pivot and SPX 2401. Short term momentum ended the week below neutral and heading to oversold. Best to your trading next week!

FOREIGN MARKETS

Asian markets were mostly higher and gained 1.3%.

European markets were all higher and gained 1.3%.

The DJ World index gained 1.3%, and the NYSE gained 0.8%.

COMMODITIES

Bonds remain in a downtrend but gained 0.5%.

Crude is also in a downtrend but gained 1.7%.

Gold remains in a downtrend too but gained 2.4%.

The USD is in an uptrend but lost 1.0%.

NEXT WEEK

Wednesday: the FHFA index and existing home sales. Thursday: weekly jobless claims and new home sales. Friday: durable goods orders. Quiet week. Best to your weekend and week!

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

About tony caldaro

Investor
This entry was posted in special report, weekend update and tagged , , , . Bookmark the permalink.

150 Responses to weekend update

  1. captbara says:

    Turnaround Tues back on deck.

  2. gtoptions says:

    Thanks Tony
    SPX ~ (13 days) Testing WPP & +/Div
    What more do you need? 😉
    GL All

  3. GDX is either setting up for a big selloff or a bullish crossover of the 13 and 34 again.Big moment of truth coming.DXY saves the 100 level (AGAIN!).Just have to let the GDX chart decode the mystery with its next move.That should settle the issue short term and possibly longer term.I ‘ll throw my two cents in at the time.Good luck all.

    • I see what happened.Feds Evans threatening 4 rate hikes if inflation picks up.That’s always what happens when DXY meanders too close to a breakdown, for their tastes.
      Nothing new.Same M.O. as always.I was actually going to predict this last week after Yellen gave a semi dovish press conference.The Fed almost immediately talks out of the other side of their mouths with guys like Evans.

  4. SPX in a possible wave 2 of some degree. Looks like a bullish flag. Looking to buy around 2374 with stops just under 2369. Or on the run up if not get there before to start popping.

  5. phil1247 says:

    ALMOST

    ready to buy dollar

    and short gold

    getting there

    • fionamargaret says:

      I think GLD is a long, also SLV….GLD up to 1350…not all today…

      • fionamargaret says:

        ….that should read GLD and SLV long….gold up to 1350…not all today
        TLT try to buy at 116, but the numbers are 116 -122…

    • captbara says:

      Yep, dollar due for the bounce. Looking prime here

      • phil1247 says:

        want to see ending diagonal complete in dollar ..then pop up

        would wait to short gold to see how gold reacts to dollar surge

        as warned months ago…
        gold could be sniffing out the dollar peak due in this time frame and may not decline as many would expect ..this would be a valuable clue to the longer term fate of the dollar and gold

  6. captbara says:

    B/3 wave on track. Turnaround Monday 👍

  7. http://www.zerohedge.com/news/2017-03-20/deutsche-bank-plunges-red-2017-after-dilution-revenue-warning
    Because this has had a correlation before,I post this ahead of time and see if it happens again.DB looking weak.Last year and the year prior,DB was allowed to play games with borrowing gold from the ECB to prop their finances up in a few creative ways.When they dumped their free gold.gold prices plummeted. We’ll see how the ECB plays it this time.

  8. kjb0 says:

    Tony, were you hacked by Chris Ciovacvo ?
    Can’t think of any other reason for so many useless posts.

  9. phil1247 says:

    /CL

    long from lows has failed

    get short or get out !

    added more SCO premarket

    looking to pile on shorts when i can put in a stop at open

  10. Richard Glackin says:

    Today, March 20 is a major Bradley turn point 100/100.

  11. vivelaamo says:

    Remember BTFD. Have a good week all!

    • opader says:

      BTFD is profitable in a bull market. SGS is still long so it pays to BTFD, especially short term.

      I try to come up with an expected range for a given day (my early AM post here) and the idea is to play the high and low with SPY Wed-exp or Fri-exp weekly options.


  12. This Elroy’s EW view of the DXY.He also thinks oil may rise to 52 then fall to 44.SPX rally to 2390 then to 2320.Gold is having higher lows and lower highs,leading to a breakout to the UPSIDE in May.All this available on MW.

  13. fionamargaret says:

    https://twitter.com/moneyscience?t=1&cn=ZmxleGlibGVfcmVjcw%3D%3D&refsrc=email&iid=8be64c4308fd408a83a2bcda76d151dc&uid=21064949&nid=244+272764941
    Cornell has some interesting work with VIX models.

    Chris does really good work.

    I hope Raymond James comes back soon – I miss Jeffrey’s cheery commentary.

  14. bouraq says:

    Chart of the weekend is $EURUSD at http://www.tradingchannels.uk

  15. We, mostly them, have been working on a variation of a timing indicator designed to reveal when its safe to either short or buy SPX or ES. It remains a work in progress but appears to offer promise though generates a lot of noise in horizontal consolidation and must be used in conjunction with good judgement. Based upon a variation of the McClellan oscillator for the SPX along with several moving averages, its edging towards a buy but is not there yet and suffered a minor setback on Thursday when there were more declining issues than advancing issues; Friday was flat. The vertical green and red lines mark previous “calls” outside of congestion. Barring something dramatic, it may take several days before the market reveals what it wants to do. Until then, its likely the shorts will have the upper hand with all of the usual provisos.
    https://www.tradingview.com/x/A5hJ0Oj3/

  16. pooch77 says:

    No futures tonighr?

  17. Bud Fox says:

    You may have seen on the net, the latest revelation possible
    from AAPL….What appears to be an ad, is suggesting AAPL
    is going to build/mfg. An, APPL car…no further into than that.
    But — really the idea could be impressive. Think of all the gadgets
    that an APPL car might have. Self driving car…..oh well…

  18. torehund says:

    ..made a projection on top of the Biotech count 🙂 Mad hats ON…

  19. Arthur Knopf says:

    SENTIMENT UPDATE: Is the High Skew a Warning Sign?
    http://sentimentsignals.blogspot.com/

    • Bud Fox says:

      some of you gents, are providing some real nice charts, than you….

      my freestockcharts.com file is not working well of late.

  20. pw says:

    Thanks Tony. Have you posted projections for top of Major 1 and/or Int III of M1? I poked around prior posts but couldn’t find anything.

  21. nyjsec314 says:

    Does anyone know if there is a way to track the SPx500 Div Ratio vs 10 yr ratio on either StockCharts or Trading View? THx in Advance!

  22. Richard Glackin says:

    Again, I’d like to thank Bouraq for drawing my attention to the importance of trend lines, i.e. support and resistance trend lines can be uncanny in forecasting the market. On a separate note, it is my observation (and others) that one of the common mistakes by chartists is to think that a wave 4 is complete too early. I’ve learned the hard way that wave 4’s tend to drag on and on well past expectations. Further, the law of alternation can also come into play where oftentimes a small wave 2 is complemented by a significantly larger wave 4.

    All of that being said; the belief that minute IV completed in only 8 days at 2354.54 which is only a 46.5 pt drop seems contrary to what experience would suggest. Again, it is quite common to think that a wave 4 is complete when it is only the ‘A’ wave that completed. Wave 4’s are typically quite complex and often take the form of abc(A)BC.

    Now, to put all this together into a coherent point of view, draw a support trend line across; Minute II, micro 2 and, nano II. Next, draw a resistance trend line from the peak on Wednesday, March 1 2401) down across the peak on Friday, March 10 (about 2381). You will find that those lines intersect on March 28 at 2327. That is where C = 1.382 of A in a more complex Minute wave IV. That would give us a 64 point drop, more in line with a typically complex Wave 4.

    Needless to say, I’m holding my SPY puts and will continue holding them unless or until the SPX exceeds the last high. If we get the drop I would expect to see shortly, I will add.

    Food for thought.

  23. fionamargaret says:

    http://tradingdiary.incrediblecharts.com/
    Thanks Colin Twiggs

    http://www.mcoscillator.com/learning_center/weekly_chart/dji_oscillator_positive_index/
    Thanks Tom McClellan

    Oil and UVXY broke their sequences….I left notes both times.
    Oil sequences suggest choppy with downward bias…
    UVXY went through its base to the downside quite dramatically….until I pick up the numbers again, just stay away….not a hedge. If we look on the bright side, maybe it will base lower to allow the market to go higher……

    Thanks Tony….and everyone xx

    • fionamargaret says:


    • fionamargaret says:

      Yes the first video was dragged in error….but Beethoven (where the violinist and ‘cellist are brothers)…how cool is that…and Dinah Washington should make up for the sadness portrayed by Vern Gosdin.
      Mahler and Haydn at the top of Friday’s Update…just watch the love between Abbado and the orchestra he put together to perform Mahler….totally moving….
      Now, you must know Abbado lived and breathed Mahler…..more love for him than Mahler received from his friends at the beginning of his composing…they would not talk to him….

  24. phil1247 says:

    http://finviz.com/futures_charts.ashx?t=ZB&p=w1

    OLD MANTRA………….
    ..”.sell into any bond rally ”
    since last june
    …….. warning of major bond peak

    well that worked out fine …but why?

    look at the commercial spread in june at the bond peak…a 5 year record short position

    what do you see now ? a 5 year record long position by commercials

    also looks like the initial impulse down has completed or nearly so with 4th wave triangle

    and thrust to new lows in /ZB and TLT.
    .. could go lower to 113.6 target
    but all that is required is a new low

    while the long from lows holds..i will not be shorting bonds any more

    NEW MANTRA

    ” sell into any crude oil rally”

    • phil1247 says:

      http://finviz.com/futures_charts.ashx?t=CL&p=w1

      see if there are any clues here in the chart

      • fotis2 says:

        +500k for big traders -500 for hedge last peak at 120/barrel and then we all know what happened.History repeat lesson no.xxx ?

        • phil1247 says:

          i think so fotis….

          longs will have to be slaughtered AGAIN…they never learn

          maybe the initial down wave is complete

          i am trying to find good short entries
          to prepare for the next down wave
          which should be much more violent
          and leave no doubt as to what is going on

      • mjtplayer says:

        Also very long silver and very short the vix while the hedgers are on the other side

    • Vishal says:

      Can you share your thoughts on SPX, /ES short to intermediate term ?
      Thanks.

      • phil1247 says:

        being long SPX now is like picking up dimes in front of a steamroller

        can you make a few cents more before you get crushed? probably

        not a time to risk any serious money here

        would ideally be selling into SPX spikes upward

        and buying into BOND spikes downward

        • bfquant says:

          Bonds have acted unreliably in the face of market weakness, and much like they did last September.

          • phil1247 says:

            not implying any correlation between stocks and bonds
            … just acting on what each instrument is telling me

        • Vishal says:

          On the same page, however wanted to see if you had downside targets ? If we get a retrace at some point over the next month.. shooting for SPX 2280ish

  25. stormchaser80llc says:

    My complete blog post today is open to the public to read. If you like the post, you can sign up for a FREE subscription to view this analysis daily at the bottom of today’s blog post!

    My signals have been saying a neutral/bearish position is best now for over a week and I am positioned that way. Sold the market in my 401K and my cash is sitting in an interest account. Meanwhile earlier in the week I sold my May SPY calls for an 87% profit (with 100% of trading account invested). My trading account is currently 40% bearish with SPY June Puts.

    My proprietary Technicals Model has been rising for over a week now, but even that gain shows a strong negative divergence from readings in February. My favorite signal has been bearish for some time and is now at a level that could support bearish tones for the next week or two, but perhaps a shorter time frame (meaning its hard to initiate new positions). For that reason its best to monitor price action instead of jumping into a new position with both feet.

    My site (http://navigatethemarketstorm.com) is completely FREE. However, be advised that I do ask folks to take a few seconds to register for a log-in, making sure you agree to my legal documents.

  26. Mary773 says:

    Stockman”s Ides of March deadline for the Financial Apocalypse has come and gone. Anyone still solvent? One of the benefits of Tony’s blog is that while I still notice the hysterics, I am now taking them with a grain of salt. Things like Y2K and the Hindenburg Omen used to paralyze my trading. Now, I just trade what is in front of me. It is considerably less stressful.

  27. Ryan Parker says:

    Just wanted to drop in and say hello to all. Also, thanks to Tony for wonderful insight he provides!

  28. 123 abc says:

    Superb weekend report and analysis, thank you Tony et OEW team.



  29. Thanks Tony
    Oil testing MA200 / trendline
    https://invst.ly/3h2da

  30. Thanks Tony. A question for you: if we take 61.8% of the run from 2084 to 2278 and add it to 2234, we get 2354 which is very near the double bottom around 2355. The market closed at 2354.50, seemingly splitting the difference. Is it possible there is a buried pivot around 2354?

    Separately, even though the pullback from 2390 has been modest I have found myself in the last days vacillating as to whether we are in nano iv or v. Should we still be in iv, its interesting that a 38.2% retracement from 2401 to 2234 is 2337, very close to the big pivot at 2336 and close to a messy area around 2338 where we are close to having matching tops and bottoms. But we have daily triple top at 2351 which should offer serious support should the market move south.

    Looking ahead, a POSSIBLE catalyst for a deeper correction is the national debt ceiling which was reached on the 16th of this month and which must be either raised or suspended. if not, a crisis could be in the making in this highly partisan environment. If not a clean vote, its a powerful tool for the obstructionist Democrats use it to shape budget priorities. From the always hysterical David Stockman:

    “I think what people are missing is this date, March 15th 2017. That’s the day that this debt ceiling holiday that Obama and Boehner put together right before the last election in October of 2015. That holiday expires. The debt ceiling will freeze in at $20 trillion. It will then be law. It will be a hard stop. The Treasury will have roughly $200 billion in cash. We are burning cash at a $75 billion a month rate. By summer, they will be out of cash. Then we will be in the mother of all debt ceiling crises. Everything will grind to a halt. I think we will have a government shutdown. There will not be Obama Care repeal and replace. There will be no tax cut. There will be no infrastructure stimulus. There will be just one giant fiscal bloodbath over a debt ceiling that has to be increased and no one wants to vote for.”

    • I believe June is the time for this to come to some kind of “semi-crisis” head.Treasury can supposedly get by until then.

    • vivelaamo says:

      wasn’t there a government shut down a few years back which caused pb’s which lead to stronger rallies?

      • Viv I was going to take a look at this anyway and, yes, there were three corrections in 2013: the first, which began in late May, became serious when Bernanke announced in late June bond purchases could be trimmed in 2014 leading to about a 6% draw down; the second, in early August, stemmed from Fed fears; and the third, beginning Sept 16, likely began over tapering fears and continued with the government shutdown beginning Oct 1 and lasting through the 16th…..but the pullback lasted only until the 9th and was a modest 3.4%, leading me to believe the “debt ceiling crisis” at that time had little impact upon the market. This time, however, could be different if Stockman is anywhere close to correct in saying the Trump agenda will be gutted and doomed. Lots of unknowns.

    • tony caldaro says:

      Laws get repealed all the time.
      The Debt ceiling is a political ruse. It allows politicians to take a stand against raising the debt ceiling. While knowing all along, if they are doing their job correctly there would be no reason for a debt ceiling. It’s all show, no substance.

  31. I love systems and percentages also.The January indicator has a certain percentage of being correct,during up and down January’s as well .
    Up years are 80% bullish
    Down years are 50% bearish.
    That means not all up January’s are bullish,not all down January’s are bearish.But if you look at this indicator,the odds of it being sucessful change when the previous year or two does what it’s supposed to.In otherwords,the more years in a row it’s been correct,the more likely it will be wrong the next time.
    I don’t have a chart of this handy,but I seemed to remember the last two up January’s were correctly predicted up,the previous one was wrong and before that 3 indicators were correct.
    To me,that sets up the possibility of an incorrect January indicator.Lots of fundamental reasons this could happen–anything Trump,North Korea,recession etc.
    I’ll see if I can find a chart on that system.Good luck all.Thanks Mr C for attempting to decipher this market everyday.

  32. cj32 says:

    Cr.CBZ

  33. Hugh Jazole says:

    “Then the market should enter a downtrend and decline at least 5%, maybe more.” Any thoughts on time frame?

  34. torehund says:

    https://www.armstrongeconomics.com/world-news/taxes/taxing-property-going-crazy/

    Martin airing Norwegian news too 🙂
    Market going as expected, Tony driving sturdily even with one arm hanging relaxed out of the window 🙂 Good weekend all, and enjoy.

    • tony caldaro says:

      Is Armstrong trying to say the property is worth less than the inheritance taxes in Greece?
      Take the property, sell the property, pay the taxes, reap the excess.
      We have had this problem with family farms in the US for decades.

      • mjtplayer says:

        Another problem of course is that the property market in Greece is a disaster, following 6 years of depression and 30%+ unemployment

        • torehund says:

          If the property is unsellable, how can the state expect to claim taxes. Well as a state employee thats not their problem, they are just doing their job :):):)
          In Norway a man had to serve one year in jail for not feeding his cat inproperly (cat died from starvation), so we have invented an animal police.
          State growing steadily and economy collapsing, and no-one can see that the state growing is the problem 🙂

  35. Bud Fox says:

    Tony, brief question of “time” on your weekly SP chart. Which appears to have
    make a Primary W1 high, in roughly 6 years. Can, you estimate the time and
    price, for the Intermediate W3 high ???

    • tony caldaro says:

      Bud
      P1 and P2 are already done. P3 is underway.
      Next big objective is Major wave 1 of P3.
      Not sure about timing for the waves that create M1.
      But M1 should top between 2018 and 2020.

  36. Hugh Jazole says:

    The market is starting to look a lot like 95/96, even the PE ratio is similar.

  37. Mary773 says:

    Thank you, Tony. For those of us who have benefited financially from your analysis and are very appreciative, which is your favorite charity?

  38. Bud Fox says:

    Tony and Phil…Thank you, for your updates. Phil, you like Ira’s work.
    Had a chance, long ago. To be interviewed by Ira for his Saturday TV program.
    Which, I assume had been canceled, long time ago. Sir. Your on the right track.
    Ira is a hard working analyst. I do appreciate your sharing his weekend comments
    as well. Bud…

  39. vivelaamo says:

    Thanks Tony. Looks very bullish but things can change quickly. All the best.

  40. alexhartley1 says:

    Thank you Tony. Very helpful and informative. May I ask what does the 82.56 number represent on the JPY Index. It needs to break this number to signify further downside (continuation of bear market) to the original 135 target on USD/JPY for e.g.?

  41. phil1247 says:

    Thanks Tony

Comments are closed.