Weekend update


Another wild and volatile week on wall street. The market started the week at SPX 2641. After a gap down opening to start the week on Monday, the SPX hit 2554. Rebounding with a gap up opening Tuesday the SPX hit 2619. A gap down opening followed on Wednesday, dropping the SPX to 2574 at the open. But the market reversed and rallied nearly 100-points by Thursday to SPX 2672. Then another gap down opening started a Friday decline to SPX 2586, before ending the week at 2604. For the week the SPX/DOW lost 1.05%, and the NDX/NAZ lost 2.20%. Economic reports were biased negative. On the downtick: ISM manufacturing/service, ADP, monthly payrolls, consumer credit, plus jobless claims and the trade deficit rose. On the uptick: construction spending, auto sales, and factory orders. Next week’s reports will be highlighted by the FOMC minutes and the CPI.

LONG TERM: uptrend

After nothing more than a 3.3% correction over a 15 month period, the market has made up for that calm with, thus far, a two month volatile storm. After hitting an all-time high at SPX 2873 in late January. The SPX dropped 11.8% in two weeks, rallied 10.6%, then dropped 8.9%. Our analysis suggests this week’s Monday low, SPX 2554, could have ended the Intermediate wave iv correction.

The Major wave 1 bull market from February 2016 continues. Intermediate waves i and ii completed in the spring of 2016. Minor waves 1 and 2, of Intermediate iii, completed in the fall of 2016. Minor waves 3 and 4 completed in the spring of 2017. Then Minor wave 5, and Intermediate wave iii, completed in January. Intermediate wave iv has been underway since then. And, may have bottomed this week in a flat.

MEDIUM TERM: downtrend may have bottomed

Intermediate wave iv began in late January, with a large three wave decline to SPX 2533 in February. This was followed by a complex three wave advance to SPX 2802 in March. Then a five wave decline to SPX 2554 bottomed on Monday, April 2nd. At that point there were daily RSI positive divergences on all four major indices. Usually a good indication of a significant low.

The market then rallied 118-points (2554-2672) over three days. Despite a 40-point gap down opening in the middle of that rally. We counted five waves up on the one-minute chart [2554]: 2619-2574-2672-2650-2672. And, quantified it all as one wave up too. Friday’s 35-point gap down opening started, what we thought was, a wave 2 pullback. It could still be. But the decline, 86-points, was quite steep. Medium term support is at the 2594 and 2575 pivots, with resistance at the 2632 and 2656 pivots.


As noted above, the five wave rally was: 2619-2574-2672-2650-2672. There was a weak 5th wave, so support could be between the wave 1 high and wave 2 low (2574-2619). The Fibonacci support levels did not hold during Friday’s selloff: 2599, 2613, and 2627, as the SPX dropped down to 2584 before rebounding some into the close.

Should SPX 2574 be broken to the downside, then this recent rally is probably just part of an ongoing Int. iv correction. The SPX will need to get back above the mid-2600’s to turn things positive again short term. Short term momentum ended the week quite oversold. Best to your trading!


Asian markets were mixed and gained 0.2%.

European markets were mostly higher and gained 1.1%.

The DJ World index lost 0.6%, and the NYSE lost 0.8%.


Bonds are uptrending but lost 0.1% on the week.

Crude is uptrending but lost 4.4%.

Gold is in a downtrend but gained 0.7%

The USD is uptrending and gained 0.4%.


Tuesday: PPI and wholesale inventories. Wednesday: the CPI, budget deficit and the FOMC minutes. Thursday: jobless claims and export/import prices. Friday: consumer sentiment.

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

About tony caldaro

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597 Responses to Weekend update

  1. xuwu99 says:

    Wow, what a weak and lame rally we had today. Given the good news and overall external environment, a 60+ S&P points would be normal and adequate. However, the rally was so wedgy and zigzagy, and there is no way that this is the “3 of 3” as I envisioned. In fact, the very ending sets up a gap-down open tomorrow. If this is NOT 3 of 3, and esp. since the 2672 was not taken out, the extended fifth of C (crash leg) is still viable. (sold all my calls with good profit, and prepare for the bear side tomorrow).


  2. Quite a standoff this afternoon.
    What is not said is that if the perma bulls don’t get this market going up very soon, something else will happen. And I don’t think that means “sideways“. We just did that.


  3. What a whippy day. No sustained rallys. Needed to be quicker than me to grab the rings.
    Still up 0.65% overall, but could have been higher if I just sold at certain BB upper bands (which ATM is not part of my signal).


  4. kvilia says:

    Very lame rally. More and more feeling that bull market top was in.


  5. H D says:

    Tony, very choppy wave 3? You ok with the price action for a 3 still?


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