Weekend update


The week started at SPX 2718. After a gap down opening on Monday to SPX 2699, the market rallied for the rest of this holiday week. Tuesday’s gap up opening carried the SPX to 2737. Then after a pullback to SPX 2713 by Tuesday’s close, the market gapped up again on Thursday. By Friday the SPX had hit 2764, then ended the week at 2760. For the week the SPX/DOW gained 1.15%, and the NDX/NAZ gained 2.4%. Economic reports for the week were mostly positive. On the downtick: the ADP, Payrolls, plus jobless claims increased. On the uptick: ISM manufacturing/services, construction spending, auto sales, factory orders, and the trade deficit improved. Next week’s reports will be highlighted by the CPI/PPI and export/import prices. Best to your week!

LONG TERM: uptrend

Trade and tariffs have in the news for weeks and months. In fact, the POTUS started this whole series of events back in January: https://www.nytimes.com/2018/01/22/business/trump-tariffs-washing-machines-solar-panels.html. Initially most stock markets fell: Dow Jones Global index dropped 11%. Since then most world markets have stabilized, except one: China. Since its January high it has dropped 24% in one continuous downtrend into a bear market. S. Korea, which is also mentioned in the article is only down 14% from January. And the US is currently down only about 5% from its January high. China is the clear loser in any trade war with the US.

Nothing has changed with the long-term view. Super cycle low 2009, Primary I high 2015, and Primary II low 2016. Primary III has been underway since then. Primary III is dividing into five Major waves. The first Major wave bull market is currently in its late stages. Major wave 1 has divided into five Intermediate waves. Int. waves i and ii completed in the spring of 2016. Int. iii then subdivided into five Minor waves. Minor waves 1 and 2 completed in the fall of 2016, and Minor waves 3 and 4 completed in the spring of 2017. Minor wave 5, completing Int. iii, took 10 months to unfold and completed in January. Since then a complex Int. iv has been underway. When it concludes Int. v should take the SPX to new highs.

MEDIUM TERM: downtrend probably underway

Last weekend, with the SPX at 2718, we expected the market to continue to decline until it hit the 2656 or 2632 pivots. The market opened on Monday at SPX 2699, but then immediately rallied after that and ended the week 2% higher at 2760. No decline, and no downtrend conformation. The choppiness continues.

We  continue to carry the triangle scenario on the SPX daily chart. Should/when we do see an OEW downtrend confirmation, then we can be relatively certain wave e, of the triangle, is underway. Until then this market is still in an uptrend, and only about 1% from a higher high (SPX 2791). It has been that kind of market. Medium term support is at the 2731 and 2656 pivots, with resistance at the 2780 and 2798 pivots.


Last weekend we posted this count on the hourly chart but spent little/no time discussing it. On Wednesday we noted that the SPX 2690’s were providing support, while the rallies had been topping at lower and lower levels: 2746, 2743, 2737. On Thursday the SPX hit 2738, before closing at 2737. Then on Friday, the market opened at SPX 2738 and rallied all the way to 2764, before closing at 2760. Clearly the short term pattern changed over the past two days.

What this suggests, is that a continuation of the uptrend is back on the table if SPX 2791 is exceeded. Other than that we are still expecting lower lows (SPX 2692) this month. Short term support is at the 2731 pivot and the SPX 2690’s, with resistance at the 2780 and 2798 pivots. Short term momentum ended the week extremely overbought. Best to your trading!


The Asian markets were mostly lower and lost 1.3%.

The European markets were mostly higher and gained 1.0%.

The DJ World index gained 0.9%, and the NYSE gained 1.3%.


Bonds are uptrending and gained 0.2% on the week.

Crude continues to uptrend but lost 0.5% on the week.

Gold continues to downtrend but gained 0.1% on the week.

The USD remains in an uptrend but lost 0.1%% on the week.


Monday: consumer credit at 3pm. Wednesday: the PPI and wholesale inventories. Thursday: the CPI, weekly jobless claims, and the budget deficit. Friday: export/import prices and consumer sentiment.

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

About tony caldaro

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602 Responses to Weekend update

  1. E says:

    I think we just witnessed a 5-3-5 4th wave correction between last night and today. The rally should resume tomorrow and exceed 2800 in the coming days.


  2. aahmichael says:

    My response to a few comments I read today:
    1.) Someone said that markets have evolved, and therefore backtesting doesn’t work anymore.

    I couldn’t disagree more. At least speaking for SPX, I don’t see one iota of change in the last 70 years that I’ve backtested. Of course, it all depends on what you’re backtesting. Garbage in will give you garbage out. However, if you backtest sound patterns and trading rules, everything that worked before continues to work exactly the same. In addition, EW is the measure of human behavior, and that certainly has never changed, otherwise, EW would have stopped working long ago.

    2.) Speaking of EW, someone posted that what you read in EW books doesn’t apply to the reality of the actual market.

    Once again, I couldn’t disagree more. People who think that the rules of EW that are found in Prechter’s book and/or Neely’s book are meaningless, are the same people who post charts that consistently violate one EW rule after another. They post invalid counts. I have never seen a count that violated EW rules that turned out to be the path that the market ultimately followed. At some point, every one of those kinds of counts gets tossed into the trashbin.


  3. emuntrader says:

    Using RSI to determine trend. One of my lagging indicators, but the read still says “sideways to downward movement”


    • CampFreddie says:

      “sideways to downward movement” ??? … call me old fashioned, but your chart clearly shows higher highs and higher lows and that is an uptrend , is it not ?


  4. emuntrader says:

    Yesterday, I preferred upward impulsing, after the futures and downtrend today. I think the triangle is 50/50. if we breakdown tomorrow morning. It would appear we are impulsing in a downward direction. Demark still signaling exhaustion levels.


  5. alexh110 says:

    Think the market’s probably entered a choppy downtrend now for the next week or so. Should be fun for day trading!


    • extremely tough call here.
      over 2780 bullish under 2767 bearish. was im hoping last 30 minutes break 2767 IDK


      • Ashley says:

        Covered at 2776 making the last two days of trading a total waste time and maybe netted a little LOL But I’ll sleep well tonight anyway, GLTA


      • alexh110 says:

        Hourly momentum on the Dow hit a medium term resistance level just before today’s decline: so I think it will play out something like the chart attached below (and something similar for SPX).


        • Ashley says:

          And of course the bearish close but Im spooked, held that 2774 short for 2 days and got close to even, don’t trust the overnight “news” with all thats going on and no doubt PPT has a watchful eye and a FAT wallet should the need arise (or if they think they have enough shorts to BBQ going into the end of the week and “earnings”….


  6. fxaprendiz says:

    Guys, it’s really easy: stop feeding the political troll.
    I tried to engage him/her a week ago, trying to make him understand this is not the place for political rants. He replied with another long rant not related at all to what I had said to him. It was then I saw he’s just a troll, and trolls thrive with attention, no matter if it’s negative or positive feedback, for they are craving the attention no matter what kind.
    I then told him I would stop reading his posts and have actually just done that since then. I simply skim over his posts whenever I see his a avatar.
    But now I’m seeing many of you are getting distracted by him and engaging him. That will only make him stay for longer. There’s only 2 solutions. Kick him out or stop feeding the troll. Tony apparently doesn’t want to do the first, so it’s up to you guys to ignore him.
    Now, before you say his political views are valid, I don’t care if they are or not, I’m not here for politics neither are you all.
    He may be a good trader or even a great one, only he knows that as I told him, but that’s not the point, the point is that his posts do nothing to help you trade.
    And Vivelamo is right that Leibowitz needs help. He slipped once and mentioned he has OCD, so if you try to reason with him and persuade him to stop he won’t do it, his compulsive posting is pathological so he can’t help it. I’m sorry for the guy but he needs medical help and we won’t give it to him here.
    Just ignore him and he will slowly fade away without your feedback. Pity him if you want to but stop feeding him or you’ll endure him for months on end until Tony bans him again.


    • micky says:

      Good idea.


    • H D says:

      TBH, It’s an interesting conversation. Interesting enough for Tony to comment on his POV in the weekend update. For once gary was actually on topic.

      We the people, USA, owe China $1.5T if you think there is a clear winner or loser now-IMO the real negotiating hasn’t even begun. Oh well. It’s just a blog and just 1 topic. Let’s revisit in a few weeks, months.


  7. H D says:

    I would also point out this is one of the rare times OEW can not quantify whether the SPX is impulsing 1-2 or in a corrective triangle? Very rare. It’s either choppy or not usually.
    Interpret as you see fit.


  8. todays close 2750


  9. kvilia says:

    Is this leg down on CL going to continue? I got it wrong this morning…


  10. 1:35 moving window plus or minus 15 minutes is approaching. Move it higher and then dump it into the close would be my guess


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