Weekend update


The week started at SPX 2596. After a gap down opening on Monday to SPX 2570 the market rallied to SPX 2589. Tuesday and Wednesday the rally continued to SPX 2626. Another gap down opening on Thursday dropped the SPX to 2606 at the open. But then the market reversed, and rallied to SPX 2675 by Friday. For the week the SPX/DOW gained 2.95%, and the NDX/NAZ gained 2.75%. Economic reports for the week were mixed. On the downtick: the PPI, NY FED, import prices, and consumer sentiment. On the uptick: the NAHB, Philly FED, industrial production, capacity utilization, plus jobless claims improved. Next week’s reports will be highlighted by durable goods orders and housing. The ECRI ticked up 0.3% this week from -6.5% to -6.2%.

LONG TERM: uptrend 60% probability

After writing this blog for over 13 years, and reading over 200 emails a day, it is often hard to remember who said what and when, including oneself. That’s why I keep notes. My notes. Week of Sept 17th: mentioned after two year bull run it was time to get cautious. Scale out during bull market tops, and scale in during bear market bottoms came next. Week of October 22nd: consistent weakness in most of the foreign markets, with Canada, China, Germany and Spain already in confirmed bear markets. Week of November 26th: after a bear market rally many US indices looked ready to enter the next downtrend. Week of December 3rd: after the POTUS Tariff Man tweet sensed a potential mini-crash. Week of December 17th: the market needed some sort of event to halt the decline, i.e a PWG event. Week of December 24th: many of the foreign markets appeared to be in their last downtrend of their bear markets. This week: we offered on Wednesday, and will repeat below, the five criteria to help in determining the probabilities of the market retesting the December lows or already in a new bull market.

The long term count remains unchanged with the exception of the recent low around Christmas. Primary I unfolded from 2009-2015. Primary II was a moderate bear market from 2015-2016. Major wave 1 of Primary III advanced from 2016-2018. And now probabilities suggest a Major 2 bear market lasted from September/October until December of 2018. If this works out to be correct an Intermediate I, of Major wave 3, bull market should be underway.

MEDIUM TERM: uptrend 60% probability

In Wednesday’s update we published the following. We’re using five criteria to hopefully determine if the market will still retest the low to end Major 2, or the bear market has already ended. The criteria are: the size of rally, NDX/NAZ and SPX/DOW wave patterns, rebound percentage from the low, and breadth rise from the low.

First, this rally is the largest rally since the bear market began: a positive. Second, the NDX/NAZ look like they have done five waves up from the Christmas low: another positive. Third, the SPX/DOW look like they have done three waves up from the low: a negative so far. Fourth, the largest rebound for B waves, under similar conditions, in the past three decades has been 13%. The rally reached 14% on Friday: turning this positive. Fifth, the maximum percentage rise in breath for a B wave has been 26%. Thus far breadth has risen 24%: a negative.

Since the market now has reached three of the five criteria this would raises the probabilities in favor a new bull market to 60%. A fourth positive would increase those probabilities, and a fifth would almost assure them.


Quite a strong rally from the Christmas low. We can clearly see five waves up on the NDX/NAZ charts. But the SPX/DOW charts still look like three waves. The first two waves we have noted in previous updates [2347] 2520-2444. Last week we noted a lot of rising but choppy activity, and thought a possible ending diagonal was forming. That idea was blown away this week, especially in the latter part. That rising choppy activity now looks like a series of 1-2’s before the SPX 2570 low.

Looking ahead we see a wave 1 (2347-2520), a wave 2 (2520-2444), and a wave 3 underway (2444-2675). Currently wave 3 is 1.34% wave 1. At SPX 2704 wave 3 would equal 1.5 wave 1, and at SPX 2724 wave 3 would equal 1.62% wave 1. There is also an unlikely wave 3 double wave 1 at SPX 2790. With wave 3 starting off with a choppy rising series of 1-2’s, it is likely to end with a choppy rising series of 4-5’s. Then after a significant decline for the wave iv of this rally, a push to higher highs should follow. Short term support is at SPX 2656 and 2632, with resistance at SPX 2731 and 2780. Short term momentum hit its highest level since July 2018. Enjoy the three day weekend!


Asian markets were all higher on the week and gained 1.7%.

European markets were mostly higher and gained 1.3%.

The DJ World index gained 2.1%, and the NYSE gained 2.6%.


Bonds appear to be in a new downtrend and lost 0.8% on the week.

Crude is in a new uptrend and gained 4.8% on the week.

Gold is still in an uptrend but lost 0.5%.

The USD is in a downtrend but gained 0.8%.

Bitcoin remains in a downtrend and lost 1.0%.


Monday: MLK holiday. Tuesday: existing home sales. Thursday: weekly jobless claims and leading indicators. Friday: durable goods and new home sales.

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

About tony caldaro

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564 Responses to Weekend update

  1. I was looking for a SPX move up.
    Just can’t spark a rally.
    News must be coming … probably not for the bulls.


  2. Dex T says:

    Verizon Media, which owns HuffPost, AOL and Yahoo along with other media brands, will lay off 7 percent of its workforce this week, a company spokeswoman confirmed.

    The news comes more than a month after Verizon took a $4.6 billion write-down on HuffPost’s parent company, Oath (now called Verizon Media).

    In the wake of the write-down, some news outlets reported that Verizon planned to cut 10 percent of Oath staff, or more than 1,000 jobs. Now, with the updated numbers, the number of jobs affected will be closer to 750. HuffPost staffers in the U.S. expected to see layoffs in their newsrooms, though it was not immediately clear how the cuts would affect the brand.



  3. lots of afternoon news. Cohen postpones testimony claiming threats from Trump
    Pelosi says Trump cant have the keys to the House for his speech. little sell off. still think we head higher with a green close and gap up. but children in DC are making it difficult.
    See ya all tomorrow


    • Desensitized. Only the most powerful man in the world in total control of the justice department and FBI announcing threats in a TWEET for ALL to see against Cohen and his family. . A YAWN! But wait i have news not yet considered that will surely rally this dead market. mark this down. Pelosi firm on no state of union in the capital. Must open government before allowed in. Want to bet government gets opened so he can stand in chamber to give his speech. I mean the ego on this man is too great.

      Future news flash: Trump opens government before January 29th deadline.

      I will await the news and subsequent days rally. Easy way to make money without silly charts.


      • johnnymagicmoney says:

        news alert – Trump will have his state of the union address elsewhere. Trump knows that as long as the TV stations televise it and they call it a state of the union address then its a state of the union address. he doesn’t need Congress in front of them.


  4. fxaprendiz says:

    Last night I studied in more detail some of David Rice’s articles in seekingalpha regarding the business cycle, and then I researched on my own some more on the 10-yr bond/3-month Tbill yield curve (had previously studied only the 10-yr/2-yr bonds curve). I am now fairly sure I’m on the right track regarding my long term long count which calls for a top of this Cycle degree bull since 2009 not sooner than year 2022, with recession coming after.

    Having said that, on the other hand I think the Primary wave 4 we are in from SPX 2942 is only halfway done. The soonest I got for its end is May, but it’s more probable it will extend until July/August.

    Since it seems most trolls are gone or quiet, I’ll post some charts tonight giving more details.


  5. Mary773 says:

    Today provided a good ES day trade short and there could be more to the downside, but at some point Trump will announce a trade agreement with China and God forbid you are short overnight when that happens. It might be a great short on the open following the announcement, but the name of this game is preservation of capital.


    • nsteve24 says:

      or there may be non deal and more tariffs which is more likely as China will not bend on the IP argument, they will ride out Trump’s term (or impeachment) and deal with the next President. China has a longer term view than a Presidential cycle. Also China economy to pick up in 2H of 2019 while US economy is expected to slow in 2H of 2019. Why would they settle now.


      • Mary773 says:

        If Trump yielded on IP in exchange for concessions on manufacturing, it would simultaneously bolster his base while hurting his political opponents. What ultimately happens is conjectural. But if you are wrong and you are short the futures, you could be looking at a huge loss that will damage your ability to trade both financially and emotionally. Given your scenario, I would rather own inverse ETFs in moderation than be short ES.


  6. All markets should be in sync to trade higher. Sp made a lower low today. Rally time


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