Weekend update


The week stated at SPX 2819. After a higher open on Monday the market sold off to SPX 2798 by early afternoon. A gap up opening on Tuesday carried the SPX to 2826 by Wednesday morning. Then another pullback, aided by a gap down opening Thursday, took the SPX down to 2796 that morning. After that the SPX rallied for the rest of the week, hitting 28 on Friday. For the week the SPX/DOW gained 0.4%, and the NDX/NAZ gained 1.2%. Economic reports were plentiful and mixed. On the downtick: ISM manufacturing/services, monthly payrolls, auto sales, construction spending, plus the trade deficit and jobless claims increased. On the uptick: pending home sales, personal income/spending, Case-Shiller, Chicago PMI, consumer confidence, and factory orders. Next week’s reports will be highlighted by the CPI/PPI and consumer credit.

LONG TERM: uptrend

While the NDX/NAZ/R2K have been making new all-time highs each month since June. The SPX/DOW, and for that matter the NYSE/DJW as well, have not made a new all-time high since January. Negative divergence? We don’t think so. It looks more like a trade/tariff rotation out of cyclical into growth. Remember, at the first mention of tariffs in late-January the SPX sold off nearly 12%. Then growth stocks recovered more quickly than the cyclicals.

The Major wave 1 bull market count remains the same. Four Intermediate waves completed thus far: i and ii in the spring of 2016, and iii and iv in the spring of 2018. Int. ii a zigzag, alternated with Int. iv a flat. Plus Int. iii divided into five Minor waves: waves 1 and 2 ended in the fall of 2016, and waves 3 and 4 ended in the spring of 2017. A complex wave 2, alternated with a simple wave 4. Currently Int. wave v remains underway from that Int. iv early-April low.

MEDIUM TERM: uptrend

After a three month, three-trend, Intermediate wave iv flat correction, Intermediate wave v began in early-April. For the NDX/NAZ, it has been quite impulsive looking all along. Not so for the SPX/DOW. The first three rallies, April-June, all overlapped each other. The DOW looks like a leading wave one diagonal.

The SPX a choppy, somewhat overlapping, wave one. Nevertheless, they both appeared to put in a wave 2 low in late-June. Suggesting a wave 3 is now underway.

Since third waves cannot be corrective looking, or form diagonal triangles, we have been patiently waiting for the SPX to show signs of an impulsing rally. Thus far, that appears to be occurring. From the wave two low at SPX 2692 we currently have five waves up: 2743-2699-2848-2796 (flat)-2840 (thus far). A rally to SPX 2848 would confirm the advance has been impulsing, and the third wave is clearly underway.


With a third wave underway in this Intermediate wave v uptrend, we should be looking for a potential bull market top soon. Should. The SPX would reach the minimum for a bull market high at 2873, it’s all-time high. But the DOW, NYSE and DJW indices all need to make new highs before they complete their bull markets. Each of these indices are 4% to 6% from their January high. This suggests the SPX will rise a lot more than just 1% before its bull market completes. Four percent, five percent, possibly six percent higher. Our target remains SPX 3000+ by 2018+.

Short term support is at the 2835 and 2798 pivots, with resistance at the 2858 and 2884 pivots. Short term momentum ended the week overbought. Best to your trading!


Asian markets were nearly all lower on the week and lost 1.6%.

European markets were also nearly all lower and lost 0.5%.

The DJ World index lost 0.3%, but the NYSE gained 0.2%.


Bonds are downtrending but gained 0.2%.

Crude is in a downtrend and lost 0.3%.

Gold remains in a lengthy downtrend but ended flat.

The USD is in an uptrend and gained 0.5%.


Tuesday: consumer credit. Thursday: weekly jobless claims, the PPI, and wholesale inventories. Friday: the CPI and the budget deficit. Best to your week!

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

About tony caldaro

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415 Responses to Weekend update

  1. aahmichael says:

    FWIW, the VIX daily signal that has been mentioned the last few days was confirmed today, as the VIX put in a hammer and closed above yesterday’s close. I’ve never really paid attention to the VIX before, so I’ll be curious to see if this “signal” actually pans out. A quick scan shows that a VIX hammer from under the lower BB is an extremely rare event.


  2. emuntrader says:

    Got on the short bus. I post charts latter today early tomorrow morning. GL to all


  3. vivelaamo says:

    Has it crashed yet?


  4. E says:

    Looks like a final stand for bears to me.


  5. jobjas says:

    Spx next stop 2880 for wave 3 top


  6. rd3777 says:

    Looking pretty tired up here. Dow down all day,as well as the JPN225 futures and DAX30
    Put a fork in it.


  7. Page says:

    Longs, are u worried about gap down open tomorrow? if not you should be. 😀


  8. rally time, a little late but time to go higher


  9. E says:

    This is nothing. No volume. No impulse. Still corrective. Still no direction. Should’ve learned to sell options since February. Would’ve made millions. LOL


    • Anne Day says:

      Good for shorted straddles or narrow strangles 🙂


    • Mary773 says:

      In 1987. a Los Angeles broker named Jim Kelly was making ten percent a month selling OEX straddles. As he used to proclaim on KWHY-TV, “Easy money. If they are gonna give it to you, why not take it?” Then came the crash, and they gave it to him alright. Boy, did they give it to him. Kelly’s clients lost years of gains in just hours, he was drummed out of the business, and the brokerage ate $30 million.

      That is why I always say, “Let’s write naked options!’


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