Weekend update


This choppy and interesting week started off at SPX 2588. The market rallied to a new all-time high on Tuesday at SPX 2597. Then went into chop mode for the rest of the week. By  Tuesday afternoon the SPX had dropped to 2587, rallied to 2595 on Wednesday, then had a gap down opening on Friday which bottomed at SPX 2566. After that bottom the market rallied to SPX 2586 on Thursday, then traded lower on Friday to end the week at SPX 2582. For the week the SPX/DOW lost 0.35%, and the NDX/NAZ were mixed. Economic reports were sparse. Consumer sentiment declined, plus weekly jobless claims rose. Consumer credit rose, as did wholesale inventories. Next week’s reports are plentiful. Industrial production, the NY/Philly FED, and Options expiration highlight the week.

LONG TERM: uptrend

This has been quite a steady bull market. Since the February low at SPX 1810 the SPX has had only three corrections: 5.6%, 5.0% and 3.3%. This is quite extraordinary as the bull market is now in its 21st month. During the first 21 months of the 2009-2015 bull market there were also three corrections: 9.1%, 9.1% and 17.1%. And, during the first 21 months of the 2002-2007 bull market there were four corrections: 17.3%, 5.8%, 5.3% and 7.2%. As you can see this bull market is a lot less volatile than recent bulls. Characteristics of a Secular bull market?

The count from the Primary II low in 2016 remains unchanged. Intermediate waves i and ii completed in the spring of 2016. Then Intermediate iii started to subdivide. Minor waves 1 and 2 ended in the fall of 2016, and Minor waves 3 and 4 ended in the spring of 2017. Since then Minor wave 5 continues to be underway. When it concludes Intermediate iii will end. Then we will observe the largest correction since 2016.

MEDIUM TERM: uptrend

This Minor 5 uptrend started back in April. Already more complex and longer than the three previous uptrends, it has been a bit difficult to track for most. The previous three uptrends were of the 2 and 4 month variety. We identified early on that Minor 5 was subdividing into five Minute waves each with subdivisions of there own. Minute waves i and ii consisted of five Micro waves, with Nano and Pico wave subdivisions, and concluded in June/July. Minute wave iii began at that point. Minute iii has already divided into five Micro waves, with Nano and Pico subdivisions, and had reached our target of the OEW 2594 pivot. Micro wave 5, from the SPX 2544 Micro 4 low, has been quite choppy: 2588-2566-2597-2566-2586. As a result, we decided to look elsewhere for some clues.


The NAZ has also been tracking the waves quantitatively, and is on the same count. Its Minute waves i and ii are slightly shifted having ended in July/August. Here we can also count five Micro waves up for Minute iii. After a closer look we identified some interesting wave relationships. Micro wave 1 was 301 pts., and Micro 3 was a shorter 298 points. This suggests Micro wave 5 has to be the shortest wave. And so far it is, having travelled 279 pts. This also suggests to remain the shortest waves it cannot gain too many more points.  Thursday’s gap down selloff fits right in with a potential Micro5/Minute iii top at NAZ 6796. Which also suggests the SPX/DOW are not likely to make much upside progress without support of the Tech sector. Looks like the recent choppiness is the early stages of Minute iv.


If Minute iii did end in the SPX it probably topped at 2588. The spike up to SPX 2597 was probably NDX/NAZ related, as they looked to have topped out. The action from SPX 2588 could be an irregular flat ‘a’ wave: 2566-2597-2566, which ended with a short term positive divergence. The consistent negative daily RSI/MACD divergences, both on the SPX and NAZ, appear to support this scenario. As all Micro wave tops during this Minor 5 have ended with negative divergences.


We noted during the week we are watching these two levels SPX: 2566 and 2597. A break below SPX 2566 would suggest Minute iv is underway. A breakout above SPX 2597 would naturally suggest Micro 5 is not done yet. We’ll continue with those parameters. Short term support is at the 2575 pivot and SPX 2566, with resistance at the 2594 and 2632 pivots. Short term momentum ended the week around neutral. Best to your trading!


Asian market were mostly higher on the week for a net gain of 0.9%.

European market were all lower and lost 2.2%.

The DJ World index lost 0.3%, and the NYSE lost 0.4%.



Bonds continue to downtrend but gained 0.4%.

Crude continues to uptrend and gained 2.0%.

Gold remains in a downtrend and lost 0.4%.

The USD remains in an uptrend but lost 0.6%.


Monday: Budget deficit at 2pm. Tuesday: PPI. Wednesday: CPI, retail sales, the NY FED and business inventories. Thursday: jobless claims, export/import prices, the Philly FED, industrial production (+0.4%), and the NAHB. Friday: housing starts, building permits and options expiration.

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

About tony caldaro

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155 Responses to Weekend update

  1. Holly Silver says:

    SPX around 2634 should be top before any decent drop. Not concluding yet if drop is 2%, 5%, or 20% yet. External factors should coincide with this topping pattern. Time frame looking at Nov 20 – 24 for 2634 to be hit. if mild reaction off that target we go to January till bigger break seen.


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