Weekend update


The market started the holiday shortened week at SPX 2477. After a gap down opening on Tuesday, and a drop to SPX 2447, the market rebounded. Wednesday’s gap up opening rallied the market to SPX 2470. Then quiet sideways trading ended the week at SPX 2461. For the week the SPX/DOW lost 0.75%, and the NDX/NAZ lost 1.20%. Economic reports for the week were sparse and mixed. On the downtick: factory orders, the Q3 GDP estimate, plus jobless claims and the trade deficit increased. On the uptick: ISM services, consumer credit and wholesale inventories. Next week’s reports will be highlighted by industrial production, retail sales and the CPI/PPI. Best to your week!

LONG TERM: uptrend

In our continuing weekly coverage of the potential long-term headwinds for the general market, we update the following charts with appropriate comments.

The Transports appear to have completed 5/9 waves up from their 2016 low, potentially ending their bull market. A drop below 8744 would suggest this is more probability than possibility. Since the Trannies sometimes top a few months before the general market this index is worth watching. This week, however, the Trannies confirmed an uptrend after hitting 9010, well above that 8744. This suggest a subdividing Major wave 5,  like Major 3, may be underway. New highs, above 9764 would certainly increase that probability.

The NDX also displays a potential 5/9 waves up bull market. But it is still currently in an uptrend from 5580. This index is also worth watching, especially if it drops below that 5580 low in July.

The DOW does not have any of those potential completed bull market counts. It is still in its seventh wave up from its 2016 low. When the next downtrend is confirmed we can label an Int. iii at the recent high. But still the DOW would have to again make all time highs to end its bull market. This index suggests the bull has, at least, months still ahead of it.

MEDIUM TERM: inflection point continues

On the SPX daily chart we display the most conservative of count. Minor waves 3 and 4 ending in March-April. Intermediate iii ending in June at SPX 2454. Then an irregular Intermediate iv correction with wave A at SPX 2406/2408, wave B at SPX 2491, and wave C still underway. This irregular pattern should alternate with Intermediate ii, which was an irregular zigzag. This suggests a flat or a, rare these days, triangle. We’ll go with the flat.

An irregular flat suggests the downside for wave C should end around SPX 2400. This is a level the market first encountered as resistance (Mar/May), then support (June/Aug). Once the correction bottoms, then Intermediate wave v should take the market to new highs. Medium term support is at the 2456 and 2444 pivots, with resistance at the 2479 and 2525 pivots.


As an alternate to the above conservative count we display on the hourly chart a more bullish count. This is the reason for the inflection point. This more bullish count still maintains the Minor waves 3 and 4 in Mar/Apr. But the SPX 2454 high only ends Minute wave i of Minor 5, and not all of Int. iii as above. The correction to SPX 2406/2408 in July ends Minute ii, and Minute iii is currently underway. This count seems to be a reach at times, but nothing has occurred yet to invalidate it. We are, however, seeing a potential repetitive pattern emerging.

Reviewing the Minor 4 correction you will observe a large a-b-c down, a smaller a-b-c up, then a gradual grind down into the final Minor 4 low in April. The recent activity from the SPX 2491 high in July looks quite similar. A large a-b-c down, then a smaller a-b-c up, followed by sort of a grinding down decline from SPX 2480. Clearly the market can fit either of these scenarios. With SPX 2400 the expected maximum downside and upside unlimited, the risk/reward continues to look favorable. Short term support is at the 2456 and 2444 pivots, with resistance at the 2479 and 2525 pivots. Short term momentum ended the week oversold. Best to your trading!


Asian markets were mostly lower on the week for a net loss of 1.0%.

European markets were mostly lower as well for a net loss of 0.3%.

The DJ World index was unchanged on the week, and the NYSE lost 0.3%.


Bonds continue to uptrend and gained 0.7% on the week.

Crude remains in a downtrend but gained 0.4%.

Gold remains in an uptrend and gained 1.6%.

The USD has been in a downtrend for many months and lost 1.2%.


Wednesday: the PPI and Budget deficit. Thursday: jobless claims and the CPI. Friday: retail sales, industrial production, the NY FED, business inventories, consumer sentiment and its options expiration Friday.

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

About tony caldaro

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144 Responses to Weekend update

  1. Bud Fox says:

    IMHO…SDS is now a a critical price low $47.58…Yes, I own it….


  2. JK1987 says:

    bellwether, top 5 of US stock turned red, at low of day. it’s coming…


  3. from 2417 are we still counting 5 waves up
    2455-2428-2480-2447-? would think wave 3 was 52 points means wave 5 shouldn’t and end at most 2498. Which could be micro 3, could be an ending diagonal. So in my opinion worst case is up another 11 points then a pull back of of 31 points. .38 of the 81 point move up . that is 2467. then either micro 5 up to 2540 ish to finish the extension and then we get a 5 percent correction or we continue lower from the 2467 level.

    My 2 cents. Never got a chance to short today, just straight up with 2 point maybe 3 point pull back.
    so looking to short the close
    Posted wrong date. I apoligize


  4. llerias7 says:

    Shall we see VIX under 10?? Give little room for another upswing!


  5. HP999 says:

    I have been cautious/bearish for quite some time based on what seemed to be some logical analysis of both the geopolitical and economic situation but obviously the market has proven me wrong time and time again.
    No need to list all the reasons that should make people cautious, they are all around us.
    What is more interesting is to wonder why markets are ignoring them.
    The first justification one hears from the bulls is that there is lots of liquidity and no place to invest it except in the markets. It makes sense to a certain extent.
    The other reason, linked to the first one, is that no matter what happens the CB’s will always step in and keep adding liquidity if and when needed.
    These two axioms made me rethink the concept of risk that used to be the ultimate arbitrator of market behavior before CB’s actually kidnapped financial markets since 2009. It made me wonder what if the bulls were right? What if risk had been not truly eliminated, that would be a stupid statement to make, but reduced to a point where it should barely be taken into consideration, if at all?
    Markets have climbed relentlessly no matter what was thrown at them. All the potentially bearish events of late have resolved in the market barely retreating from ATH and the next few days will probably print new ATH in the major indices in the US and in the DAX.
    For example, markets do not think NK is a threat and in fact they are probably right to think that way. Kim Jong Un can do whatever he pleases and no Western power will do anything against him. It is unthinkable that the US, let alone any of its allies, kill tens of thousands or more North Koreans in any preventive strike. Hence the reason why any missiles test is met with a 10 to 15 pts drop in Globex to be retraced soon after during the main session or a couple of days later. On the other hand, it suffices that an anticipated missile test doesn’t materialize like this past weekend for the market to jump up 1% as it is the case today.
    It is the same story for any event that should normally be construed as “bearish”. The market barely budges in anticipation to the Irma’s damage but when the storm is gone and the damage is done, the market moves up. It is rather evident that Florida is in worse shape today that it was last Thursday but nonetheless the market is up 1%. It would have been understandable that using its discounting mechanism the markets had gone down 2 or 3% in anticipation of the storm’s damages to recoup part of this loss had the damages been less that was anticipated but it’s not what happened. The markets did not go down in anticipation but did go up after, defying all logic. Except of course if one thinks that any devastation is indeed positive for the economy and for corporate profits due to the massive reconstruction effort that would ensue in the future. This is probably what’s happening today !
    Same reasoning applies to the following issues in no particular order of importance: CB’s bloated balance sheet and the effect of tapering, auto loans, decreasing retail sales, Italian banks, world growth, debt ceiling, political uncertainty, Middle East, Isis, terrorism, etc …
    Majority of market participants is absorbing/discarding all of the above as it believes everything has a solution and thus nothing can touch the ever rising market or even slow it down. Problem for us bears is that the majority may be right and we may be wrong !


    • vivelaamo says:

      Good post. If you can’t beat them…..


    • JK1987 says:

      the most popular spx only up 3.6% for the last 6 months since Mar 1, it’s sideways , stalled and waiting for the time to crash. it will not break out. if no new high, it will be the perfect scenario.
      my favorite trade rut is at the exact same level of Mar 1, and down 2.5% from July high, it’s losing.


    • phil1247 says:

      Hi HP
      by the length of your post …. it seems you are overthinking it

      in a bull market .
      .participants are confident and optimistic, looking for any reason to buy
      all news is perceived as good news
      believe me… when confidence reverses
      neither the fed nor anyone else will stop the tidal wave of selling …
      all news will be perceived as bad news


      • HP999 says:

        What is confidence if not the expression of how one perceives risk ? If overall risk has been greatly reduced, then as a consequence confidence should mostly remain high.


        • learnedmylesson25 says:

          The Fed+JPM Chase,Wells,Merrill,are a stock market boosting team.If anyone thinks Japan and the ECB are the only entities buying stock,you have to be naive.This was instituted in 2009.Now instead of being antagonists,the government, banks,brokers and financial institutions are PROtagonists.Working together to guarantee return that pension funds and the economy desperately needs.Wages aren’t rising–so this is the solution.Nothing to do with confidence,but there IS a con job going on.The thought that markets do not have a gentle government hand underneath it to guide it higher will never be admitted to–unless a black swan event would occur.THEN,the Fed would publicly announce buying.Until then,its slowly higher.


          • phil1247 says:

            once the trend turns down
            buying by the fed
            that boosts the market temporarily will be perceived as a gift
            to be able to short at better levels


          • mcgcapital says:

            If they’ve constantly been buying since 2009 then how did 2011 and 2015/16 happen? The issue is sentiment.. people have stopped believing it can go down which shows with the short interest at decade lows. Plus low bond yields are what’s killing pension funds.. a rise in yields and they would actually be better off even if stocks fell


          • phil1247 says:


            look at all the buying by BOJ
            japanese market still down 50 % since 1989


          • learnedmylesson25 says:

            Who said they have been buying constantly?It’s been an evolving process.CBs getting more and more involved.Japan hasn’t been buying since 1989–5 to 7 years maybe?Their percentage of gov’t owned stock is estimated between 25 and 50% of all Nikkei shares outstanding.


          • phil1247 says:

            you make my point
            all that buying and still down 50%


    • micky says:

      The market already made its intentions clear in the first half of last year, it will keep going until those intentions have run its course to targets that have been mentioned.


  6. phil1247 says:

    little in the way of 2495 target
    stops raised
    see ya there !


  7. JK1987 says:

    SPX A-D new all time high. that’s the fact, no phantom.


  8. amittsite says:

    The correction was over at 2417.odd..Tony C’ s hourly count at play..


  9. vivelaamo says:

    Worth going short now the gap is filled. We all know that weekly gap below will get filled sooner rather than later.


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