Elliott Wave roadmap updated and explained for 2012 & beyond: Tony Caldaro's 4/28/12 OEW update

Stock indices mixed, bonds uptrending and precious metals poised to rally - the markets' roadmap may be challenging but who better than Tony Caldaro to give great guidance, with his Objective Elliott Wave weekend update (thanks again Tony!). As I noted the past two weeks, slower-moving equity investors (and even some KI$$ traders) might prefer to cash out and wait for a good buying opportunity likely after this month, although gold and silver may be ready now. Tony's work also addresses global stock markets, bonds, the U.S. dollar and other currencies, crude oil and other commodities, and some individual stocks including Apple. Use his charts link at the bottom to view all of his public charts. You can also find his daily market updates via his tweets as @OEWtony on Twitter, linking to his OEW website http://caldaro.wordpress.com/, or right here in the OEW feed at lower right side of the page.
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the ELLIOTT WAVE lives on

April 28, 2012
weekend update

by Tony Caldaro

REVIEW

An interesting week. The market opened the week with a large gap down, the fifth gap opening in six trading days, and traded down to SPX 1359 in the first half hour. That was the low for the week. The market then recovered, somewhat, on monday and tuesday. Then AAPL's earnings were released after tuesday's close. On wednesday the market rallied, despite a 'hold the course' FOMC statement. Thursday the rally continued. Then on friday Q1 GDP was reported lower than expected, but the market still managed to end higher. For the week the SPX/DOW were +1.65%, and the NDX/NAZ were +2.35%. Asian markets were -0.6%, European markets were +1.0%, and the DJ World index rose 1.1%. Economic reports were mixed, with negatives outpacing positives 7 to 6. On the uptick: new/pending homes sales, FHFA, new home prices, consumer sentiment and the monetary base. On the downtick: Q1 GDP, WLEI, Case-Shiller, durable goods orders, the M1-multiplier, and weekly jobless claims rose. Next week we'll get reports on monthly Payrolls, ISM, Chicago PMI and Auto sales. Best to your week!

LONG TERM: bull market

We continue to see a bull market unfolding in the US stock indices from the Mar09 low at SPX 667. Primary I, of a five primary wave bull market, completed in May11 at SPX 1371. Primary II completed in Oct11 at SPX 1075. Primary III is currently underway. Within Primary III we are tracking five Major waves. Major wave 1 concluded in Oct11 at SPX 1293. Major wave 2 ended in Nov11 at SPX 1159. And, Major wave 3 probably concluded in Apr12 at SPX 1422. We state probably, because the SPX has not confirmed a Major wave 4 downtrend yet. When Major wave 4 does conclude we will still have a rising Major wave 5 ahead to end Primary wave III. Then a declining Primary wave IV will lead to a rising Primary wave V to end the bull market some time in 2013 within the SPX 1545-1586 range. This should be followed by a nasty 50% market decline into 2014/2016.

The weekly chart continues to display positive technicals, as well as, the labeling for the bull/bear/bull markets over the past ten years. The RSI continues to hit extremely overbought levels, and the MACD continues to remain generally above neutral. These indicators do just the opposite during bear markets. We also note the economy is expanding, (over 50%), consumer sentiment is still on the bearish side, (under 50%), while investors are generally neutral (just above 50%).

MEDIUM TERM: DOW confirmed a downtrend, the SPX has not

During the month of April the DOW, and probably the NAZ, confirmed downtrends but the SPX and NDX did not. This is a somewhat rare, and unusual event, but has occurred before. Typically, all four major indices move trend for trend, in unison, with some lag time. Since 2006 there has been hardly any deviation. During the 2003-2005period, however, the DOW deviated from the other major indices on five occassions.

The first two times occurred early in uptrends. This does not appear applicable to our current market since all four major indices had been uptrending for five months before the DOW confirmed a downtrend. During the last three times the DOW eventually ended with the same wave pattern: an irregular ABC correction. The initial downtrend in the DOW confirmed an A wave, while the SPX only pulled back. When the SPX continued to rally the DOW confirmed a B wave uptrend. All three DOW B waves were limited to 1.382 times A, or less, i.e. DOW 13,520 or lower. Then all four major indices entered confirmed downtrends to complete the correction. When the correction completed the C wave ended at a slightly lower level than the A wave low. This type of correction, in this bull market, would certainly alternate with the Major wave 2 zigzag that occurred between Oct11-Nov11.

Since OEW relies on quantitative wave analysis and the objectivity of probability. We are labeling the April decline as Intermediate wave A of Major wave 4 in the DOW, and the current rally as Intermediate wave B. Probabilities, 60%, suggest Major wave 4 has not completed. This count is carried on the DOW daily chart. In all fairness, however, even with a low 20% probability. We will track the April low, as the end of Major wave 4, with an alternate count on the NAZ daily chart.

Remaining objective again. The SPX and NDX have not confirmed downtrends. Probabilities suggest the recent decline was only wave 4 of the uptrend, i.e. Intermediate wave iv. This suggests Int. wave five is currently underway. It is likely to make a new high, be short in length and duration, and complete Major wave 3. We display this count on the SPX and NDX daily charts.

When indices divergence like this it is generally a sign of current weakness specific to that particular index. Since the DOW is the international index of the four majors, it is reflecting the general weakness in the international markets. Over 80% are in confirmed downtrends. The SPX/NDX are more US specific, and have not confirmed that weakness yet. There is also the factor of futures related volatility. The DOW and NAZ are less sensitive to futures activity than the heavily traded SPX and NDX.

The main takeaway from all this analysis is this. The DOW is now the important index to watch. If it turns lower from around current levels, and makes news lows, Major wave 4 should be completing. If it confirms a new uptrend, the uptrend should be limited to DOW 13,520. This will keep the Int. wave B correction counter rally in place, and Int. wave C would follow to complete Major wave 4. Should the DOW exceed 13,520 then the Major wave 4 completed alternate count would gain in probablity. This market has basically reached another inflection point.

SHORT TERM

Support for the SPX remains at the 1386 and 1372 pivots, with resistance at the 1440 and 1499 pivots. Short term momentum hit an extremely overbought level on friday and has started to pullback. Since the SPX has not made new highs during this recent rally we are still considering the expanding triangle Intermediate wave B, as posted on the hourly chart. Should the SPX continue to rally this count will be eliminated and the Int. wave iv low at SPX 1359, posted on the daily chart, will be preferred. If the SPX makes new highs, this would suggest a potential uptrend high within the OEW 1440 pivot range. The OEW 1440 pivot would align with the upper limits of the Int. wave B scenario in the DOW.

Currently this is a difficult market to trade with all the cross-currents between indices. Historically, the US stock market does not make much progress when the four major indices are out of sync. The last time this occurred was during the 2004-2005 period of the 2002-2007 bull market. Probabilities suggest, regardless of the short term direction over the next few weeks, the April lows in all four major indices will be revisited before Major wave 4 concludes.

Short term support is at SPX 1397, and then the 1386 and 1372 pivot ranges. Short term resistance is at SPX 1414, 1419 and 1422. Short term momentum hit an extremely overbought level on friday, highest since mid-March, and has started to pullback. This rally, from SPX 1359, looks like fives waves thus far: 1376, 1368, 1405, 1397, and 1407. Short term OEW charts have been positive since around SPX 1380. Best to your trading!

FOREIGN MARKETS

The Asian markets were nearly all lower on the week for a net loss of 0.6%. Only Australia and Indonesia, of the eight indices we track, are in confirmed uptrends.

The Europeans markets were nearly all higher for a gain of 1.0%. Not one of the seven indices we track are in confirmed uptrends.

The Commodity equity group was mixed on the week for a net loss of 0.8%. All three are in confirmed downtrends.

The DJ World index remains in a downtrend but gained 1.1% on the week.

COMMODITIES

Bonds are uptrending and gained 0.4% on the week. The 10yr rate traded below 2.0% all week.

Crude looks like it's trying to establish an uptrend, after a positive divergence, and gained 0.6% on the week.

Gold is trying to establish an uptrend, after a two month correction, and gained 1.2% on the week.

The USD, which had been in a trading range for weeks, is now downtrending and lost 0.6% on the week. The EUR, potentially uptrending, gained 0.3%. The uptrending, and potentially topping, JPY gained 1.8%.

NEXT WEEK

Monday kicks off the economic week with Personal income/spending and PCE prices at 8:30. Then the Chicago PMI at 9:45. On tuesday we have ISM manufacturing, Construction spending and monthly Auto sales. On wednesday the ADP index and Factory orders. Thursday offers weekly Jobless claims, Productivity and ISM services. Then on friday the monthly Payrolls report. The FED has one activity scheduled for the week. And, an interesting one at that. FED governor Tarullo gives a speech at the Council on Foreign Relations, on wednesday, at 8:00 AM. Best to your weekend and week!

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

Time for caution/consolidation in stocks bull market: Tony Caldaro's 2/25/12 OEW update

If you're bearish, you'll get a chance soon to benefit; but the stock market is overall more bullish than you may realize. Tony Caldaro discusses this, plus gold's prospects and more, in his weekend update (thanks again Tony!). He details the stock market, and reviews global stock markets, bonds, the U.S. dollar and other currencies, gold and precious metals, crude oil and other commodities, use his charts link at the bottom to view his charts for those. You can also find his daily market updates via his tweets as @OEWtony on Twitter, linking to his OEW website http://caldaro.wordpress.com/, or right here in the OEW feed at lower right side of the page.
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the ELLIOTT WAVE lives on

February 25, 2012
weekend update

by Tony Caldaro

REVIEW

Another quiet week in the US equity market as the entire range for the week was between SPX 1352 and 1369. While the SPX did not make a new print high, above 1371, it did make a new closing high for the bull market. Now all four major US indices are in new bull market territory. For the week the SPX/DOW were +0.3%, and the NDX/NAZ were +0.6%. Asian markets gained 0.4%, European markets lost 0.2%, and the DJ World index was +0.9%. On the economic front it was a quiet mixed week. On the uptick: consumer sentiment, new home sales, the WLEI, and the monetary base made a new high. On the downtick: existing home sales, FHFA housing prices, the M1 multiplier, and weekly jobless claims rose. Next week we'll get a look at the first revision of Q4 GDP, the FED's beige book, Case-Shiller and PCE prices. Best to your weekend and week!

LONG TERM: bull market

With the DOW crossing the 13,005 threshold on friday, historically, and that's going back over 80 years, this advance from the early October low can no longer be considered a potential Major wave B of an ongoing bear market. As a result we have removed that count and now have all four major US indices in bull markets. Our indicators on the monthly chart continue to rise in a bullish manner.

On the weekly chart we have more of the same. A rising and above neutral MACD, with a rising and now quite overbought RSI. Notice how previous bull market uptrends, of the past 10 years, have peaked both above and below the current RSI level.

Our current bull market count, as you can see, remains the same. A Supercycle wave 2 low in Mar09 at SPX 667. A multi-generational Supercycle wave 3 began at that time. This bull market should be Cycle wave [1] of a five cycle wave supercycle bull market. Primary I completed in May11 at SPX 1371, and Primary wave II in Oct11 at SPX 1075. Primary wave III has been unfolding since that low. Within Primary III we should have five Major waves. Major waves 1 and 2 completed in Oct11 at SPX 1293, and in Nov11 at SPX 1175 respectively. Major wave 3 has been underway since that low. We have been counting this uptrend, from that low, as Intermediate wave i. Major wave 3 should include five intermediate waves. In summary the market is currently in: SC 3, Cycle [1], Primary III, Major 3 and Intermediate wave i. We have put together a tentative roadmap for the rest of this bull market. But are waiting for a confirmed downtrend before making it public.

MEDIUM TERM: uptrend high SPX 1369

The current uptrend started in late November at SPX 1159. The market has risen in five Minor waves since that low to friday's high, or 18% in three months. For the first time since this uptrend began a negative RSI divergence has appeared, along with a weakening MACD. Upside momentum is definitely waning. Our initial fibonacci target for Minor wave 5 was SPX 1367. At this level Minor 5 = 0.618 Minor 1. Our other targets, which are posted on the hourly chart, are SPX 1381, 1408 and 1432. The current high, SPX 1369, falls in between our two OEW pivots: 1363 and 1372. This suggests there is a lot of resistance around current levels.

When this uptrend first began in November we expected it to last about three months and run into significant resistance just above the OEW 1313 pivot. In January that price target was hit during Minor wave 3. This suggested the next important resistance, after a small pullback, would be between the OEW 1363, 1372 and 1386 pivots. The SPX first entered the 1363 pivot range on February 15th. It has been 7 trading days, and the market has still not cleared this pivot. In early December, at Minor wave 1, the market spent only 4 trading days within the OEW 1261 pivot range before dropping 65 points. This pivot is definitely offering significant resistance.

SHORT TERM

Support for the SPX remains at the 1363 and 1313 pivots, with resistance at the 1372 and 1386 pivots. Short term momentum is displaying a negative divergence. As we tracked this uptrend we identified Minor wave 1 at SPX 1267, Minor 2 at SPX 1202, Minor 3 at SPX 1333, Minor 4 at SPX 1300, and Minor wave 5 underway. This uptrend, despite its three month duration, has not been that difficult to track. Now, however, we have arrived at an important juncture.

The internal wave structure of Minor wave 5 appears, at or, near completion. We can count five Minute waves up from the Minor wave 4 low. All rising Minor waves during this uptrend contained five Minute waves. We can also count five, complete or near complete, Micro waves within Minute wave v. It appears, on friday, this uptrend may have ended Micro wave 5, of Minute wave v, of Minor wave 5. This suggests a potential uptrend top is at hand. Heading into next week there are several technical parameters we are tracking.

First, we have drawn on the hourly chart an overhead resistance trendline that has halted every rally during this uptrend. The market may try to tag that trendline again before heading lower, or even break through it if the uptrend is about to extend. Second, the market set up important support at SPX 1352 this week. Should the SPX trade below that level next week the uptrend has likely ended. Third, during this entire uptrend all pullbacks have been limited to 20 points or less, with the exception of Minor waves 2 and 4. Should the market break below, currently SPX 1349, the uptrend is likely over. In summary, there is trendline resistance in the low 1370′s, and two potential downtrend underway signals below SPX 1349 and 1352. Time to be cautious in this bull market.

Short term support is at the OEW 1363 pivot, then SPX 1352 and 1341. Overhead resistance is at the 1372 and 1386 pivots. Momentum displays negative divergences on every timeframe up to, and including, the daily charts. The short term OEW charts will turn negative with a drop into the low 1350′s. Next week should be quite important for this uptrend. Best to your trading!

FOREIGN MARKETS

The Asian markets were mixed on the week for a net gain of 0.4%. All uptrending.

The European markets were also mixed for a net loss of 0.2%. All uptrending.

The Commodity equity group was mixed as well for a net gain of 2.1%. All uptrending.

The DJ World index is still uptrending with a gain of 0.9% on the week.

COMMODITIES

Bonds continue to display a weakening uptrend but gained 0.2% on the week.

Crude soared 5.0% this week extending its uptrend to $110.

Gold rose 2.9% for the week extending its uptrend, but has reached an interesting juncture. Should our posted five wave count be correct the uptrend may be nearing an end. If another count we are tracking is in play, then another $100 higher should push gold toward $1900. So we have about $100 risk on the downside from here, or a $100 rally and then the $100 risk. Probability suggests we are currently in a 50/50 situation.

The USD lost 1.2% on the week as its downtrend continues. The EUR gained 2.3% on the week but is nearing resistance around 135.50 and is quite overbought. The JPY lost 1.9%, and appears to be in the process of breaking its multi-year uptrend.

NEXT WEEK

Monday kicks off the week with Pending home sales at 10:00. On tuesday we have Durable goods orders, Case-Shiller and then Consumer confidence. Wednesday looks important, Q4 GDP, the Chicago PMI, and the FED's beige book. On thursday, weekly Jobless claims, Personal income/spending, PCE prices, ISM manufacturing, Construction spending, and monthly Auto sales. It's testimony week for the FED. On tuesday, FED governor Duke testifies before the Senate on Housing. Then on wednesday, FED chairman Bernanke testifies before Congress on Monetary policy. Best to your weekend and week!

CHARTS:http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1606987

When can we pen that yen for the Yen is at zen-ith? Careful over 133, 135

Is the Japanese Yen's strong rise reaching toward a top? It's possible. Despite publicly announced concerted efforts by the Bank if Japan for many months, investors have bid up the currency and it's been looking like a refuge. How far we've come from when shorting the yen was a carry trade supporting the momentum buying of other assets. Meanwhile the Nikkei 225 index is languishing barely above 9000, and ten-day historical volatility in the MSCI index reached its highest level since March. We can't blame earthquakes and tsunamis so much as market forces and even Fibonacci! Let's see if the Yen is reaching a zenith.

My big-picture monthly chart of the Yen ($XJY, or it can be traded via the ETF called FXY which tracks very closely) has supported a price target beyond 128 and toward either at 135.88, or over 138. These projections which I calculated almost two years ago are based partly on one Elliott Wave alternative, and partly on my Fibonacci calculation of a conservative 1.272 extension of the monthly chart's consolidation range carved out over years. See my monthly chart (second chart below). The daily chart (my first chart below) has a hint of a potential triangle target at 135.70-ish, with possible negative divergence just starting to creep in. The wide volatile swings in price on the daily chart are another hint that the yen may be chopping to a significant top.

As a more conservative target, 133 $XJY is identified by Tony Caldaro, the Objective Elliott Wave analyst we respect, in his excellent overview analyzing currencies at http://caldaro.wordpress.com/2011/08/15/foreign-currency-and-usd-update-2/. So I won't stand on ceremony if the Yen carves out a topping pattern at 133, even though the Fibonacci projections I respect hold out the promise of 138+.

Then again, investors' yen to buy Yen (even in a short-covering blowoff) may carry it beyond 138 $XJY. I say that partly based on my own ideas for possible Elliott Wave counts; Fibonacci projections like 1.382 and 1.618 that can carry it well past the 1.272 projection of 138; and also, the basic point-and-figure (P&F) chart courtesy of Stockcharts.com (bottom chart below). Are you sitting down? That P&F projection based on the breakout in late July, assuming support holds at/above 124, points to a target of 151 ...!

Good reason to evaluate the negative divergence plus reversal patterns, if any, that might print out at the lower levels - 133, 135, 138 - to see if they get the job done, or if 151 may actually await traders who turn bearish on the yen too soon. So if you're trading the Yen, be alert at these price levels. Don't be deterred from speculating on a potential reversal, but if you do, then absolutely use stop protection in case the Yen becomes a shooting star in forming its zenith for this upward cycle.

Why and how $SPX 1333 remains so important: Tony Caldaro's OEW weekend update

The stock market has played around the 1333 level in S&P 500 ($SPX) quite a bit, finally pushing nicely past it. Tony Caldaro explains other reasons to keep that level in mind, as he evaluates equities' bullish potential. Read on for his analyses of this as well as the outlook for commodities, bonds, currencies, and economic indicators (thanks again Tony!). Keep up with his posts and, via his link, public charts shared from his website (always in the links list at right, and you can find his updates via his tweets as @OEWtony on Twitter, or right here on the OEW feed at lower right side of the page), at http://caldaro.wordpress.com/:
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the ELLIOTT WAVE lives on

July 23, 2011
weekend update

by Tony Caldaro

REVIEW

The market rebounded this week retracing all of last week's loss. Foreign markets recovered as well. On the economic front reports came in 6 : 2 to the good. On the negative side: weekly jobless claims rose and existing home sales fell. On the positive side: housing starts, building permits, the NAHB housing index rose, as did the FHFA housing price index. The Philly FED swung from negative to positive, and leading indicators were positive as well. The SPX/DOW gained 1.9%, and the NDX/NAZ gained 2.8% with the NDX making new bull market highs. Asian markets were +1.2%, European markets +2.9%, the Commodity equity group was +1.6%, and the DJ World gained 2.5%. Next week we have Case-Shiller, durable goods, the FED's beige book and the first look at Q2 GDP.

LONG TERM: bull market at inflection point

In case you missed it we posted three special reports this week:http://caldaro.wordpress.com/2011/07/18/remaining-objective/http://caldaro.wordpress.com/2011/07/20/ndxnaz-and-aapl/ http://caldaro.wordpress.com/2011/07/21/inflection-point-and-long-term-view-update%e2%80%8f/. The first discussed a potential completed five wave pattern at the May 2011 high. The second, a potentially final Primary wave V uptrend in the tech sector, including AAPL. The last, described five potential long term counts with four of them using the Feb 2011 high as the end of Primary wave III. It has been an interesting few weeks to say the least. Let's try to explain all these counts.

The above SPX weekly chart displays two of the alternate counts for the market. These, we may add, are not the preferred counts. The first count, which is closer to the price labels, displays a Primary III high in Feb11 and an ongoing contracting Primary IV triangle, (blue lines). The Mar11 low forms wave A, the May11 high wave B, the Jun11 low wave C, and the current uptrend wave D. This count suggests there will be another downtrend to complete wave E and Primary IV before Primary V begins. This is a bullish count, which still allows for the bull market to end near the all time highs. This count will be eliminated if the SPX reaches about 1380, or DOW 13,000 during this uptrend. The second count posted above/below the first count suggests Primary III again ended in Feb11, Primary IV concluded in Mar11 and Primary V ended at the May11 high. The bull market is over. This count will be eliminated if the SPX or DOW make new highs.

The above DOW weekly chart displays the preferred alternate counts for the market. The first, again closest to the price labels, is our ongoing count: Major wave 1 ended in Feb11, Major 2 in Mar11, Intermediate wave one ended in May11, Intermediate two ended in June11, and we now currently in Intermediate wave three possibly heading to SPX 1440 by Sept11. This is a bullish count suggesting a retest of the all time highs next year. The count will be eliminated if the SPX drops below 1250, or DOW 11,800. The second count, posted above/below the first, suggests Primary III again ended in Feb11, Primary IV in Mar11, and Primary V is taking the form of a diagonal triangle. Wave A of the diagonal ended in May11, wave B in Jun11, and wave C is currently underway. This count suggests the market will move higher but struggle to do so in a choppy fashion. The count will be eliminated if the next downtrend fails to overlap the May11 high, or if the SPX drops below 1250 or DOW 11,800.

The last alternate count for the market is posted on the NAZ weekly chart above. This count suggests Primary III ended in Feb11, Primary IV ended with an irregular flat in Jun11, and Primary wave V is underway now. The count suggests the bull market is probably in its last uptrend. Since Primary I subdivided into five Major waves, and Primary III did not. It is highly unlikely that Primary V would now subdivide. In the entire 125 year history of the US stock market I do not recall ever seeing that occur. This count will be eliminated if the next uptrend makes higher highs.

There you have it. This summarizes the three reports with some parameters for eliminating each of the counts as this market progresses in time. It may be a bit confusing since there are a lot of variables at work. The thing to remember is that the DOW charts carry the preferred counts, not the SPX charts. In time, the market will display its actual count and this is the reason for calling this an inflection point.

MEDIUM TERM: uptrend high SPX 1356

This past monday the SPX declined to 1296 overlapping our 1299 June 22nd high. This created some wave structure problems in the SPX. The other three major indices, the NDX/NAZ/DOW, did not experience this overlap. Since we always default to the bellwether DOW this overlap did not create a wave structure problem for the market. But it certainly was a signal that some other potential longer term patterns were at work. The three special reports followed. The DOW charts now display our ongoing count.

As you can clearly observe our Minor wave 4 and Minor wave 1 did not overlap. Therefore our original, and ongoing count, remains in place. Should we now be in the anticipated very strong Minor wave 5, the market should rally to the OEW 1440 pivot to complete Intermediate wave three. This would allow enough price space on the downside to prevent overlapping the SPX 1371 Intermediate wave one high during the next correction, (see SPX chart). If the foreign markets were doing a lot better we would assign this count the highest probability. Unfortunately that is not currently the case.

SHORT TERM

Support for the SPX remains at 1313 and then 1303, with resistance at 1363 and then 1372. Short term momentum ended the week just under overbought. As noted above the internal waves structure displays a completed Minor waves 1 – 4, and Minor wave 5 underway now. The DOW nearly posted a new uptrend high on thursday, but fell a few points short. The NDX, however, posted one on friday.

Short term OEW charts remain positive as long as the SPX remains above 1333. Short term support below that is at the 1313 and 1291 pivot ranges. Overhead resistance remains around the SPX 1344 area, then the 1363 pivot range starting with 1356. Despite the strong showing in the market: a rally from SPX 1296 to 1347 with only one 10 point pullback. We would like to see the market reach new bull market highs so we can start eliminating some of these alternates counts. The NYAD has not made higher highs during this recent rally. But we do not see any negative divergences on the hourly charts yet. This news sensitive market will probably continue to react overnight to overseas economic news. Best to your trading!

FOREIGN MARKETS

Asian markets were mostly higher for a net gain of 1.2%. Australia and Hong Kong remain in downtrends. China (potentially bottomed) and Japan remain in bear markets.

European markets were all higher on the week for a net gain of 2.9%. Spain, Switzerland and the STOX index remain in downtrends. Spain and Switzerland are in bear markets.

The Commodity equity group were all higher for a net gain of 1.6%. Brazil remains in a downtrend, and is close to confirming a bear market.

The DJ World index continues to uptrend gaining 2.5% on the week.

COMMODITIES

Bonds lost 0.4% on the week as they appear to be in another uptrend. 10 YR yields are hovering around 3%.

Crude gained 2% on the week, and is quite close to confirming an uptrend from the mid-June (release strategic reserves) $90 low.

Gold continues to uptrend gaining 0.7% on the week and hitting record highs at $1611.

The USD lost 1.2% on the week, and is getting close to confirming another downtrend. The EUR gained 1.2%, and the uptrending JPY gained 0.8%.

NEXT WEEK

The economic week kicks off on tuesday with Case-Shiller, Consumer confidence and New home sales. On wednesday Durable goods orders and the FED's beige book. Thursday we have the stagnant weekly Jobless report and Pending home sales. Then on friday Q2 GDP (est. +1.6% to +2.1%), the Chicago PMI and Consumer sentiment. The FED has nothing on its schedule at this time. Best to your weekend and week!

CHARTS: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1606987

Yen ($XJY, FXY) continues its march upward toward monthly charts' targets

The Japanese yen ($XJY or the ETF, $FXY) remains in a seemingly inexorable uptrend. Did it seem preposterous when I first starting showing almost two years ago, that the yen would go to 125 and even above and into the mid- to high 130's? Despite the stated goals of the Japanese bank and policymakers over that time seeking to keep the yen lower? Okay, it hasn't broken over 125 yet, but it's been waving higher and higher in its long-term uptrend. The point and figure (P&F) chart shows that its bullish price objective is 140, and suggests that it should remain at/above 116 to avoid a reversal signal. The daily bar chart shows you that it's been looking like an up-and-down ride, yet that's a form of consolidation after new highs are reached, and my monthly chart (at bottom) reveals this has all been part of a huge uptrend. The same uptrend I've been talking about since I created that monthly chart and started posting it almost two years ago.

You'll note that the DMI-ADX indicator on the monthly chart shows that it's still in strongly uptrending mode. It's been rewarding buy-on-the-dip investing for a long time. I first realized it would move to much higher levels when it made a sustained move above 111.49, because 111.49 was the Fibonacci .786 retracement to the previous all-time high of approximately 123.33. Now it's been working on sustaining its move above 123.33, which sets up the Fibonacci targets I outlined on the monthly chart almost two years ago - past the 120's and toward 135 and probably 138. I do believe that Fibonacci levels work, so I have believed for a long time that the $XJY (and the ETF, FXY) would get to those levels, no matter what the fundamental reasons might be at the time in order to support those levels.

Now that the P&F chart also points there (indeed, a little higher to 140), that's additional reason to shore up investors' and traders' confidence that the yen will continue to rise. If one is looking to go sell or short it, one should wait until these targets are met and the indicators also support the uptrend stopping (and yielding to a reversal pattern). While the monthly chart relative strength indicators (RSI) should show some negative divergence as the yen moves toward those higher levels, that kind of divergence will merely be a warning of when to start doing TMAR ("take money and run") upon the price targets being met.

Until then, unless the yen breaks support levels like 111.49 (a major level now) or the 116 indicated on the P&F chart, we should respect that this currency will continue marching upward, no matter what that might imply regarding other world currencies and markets.

The Yen's future path revealed into 2012 and beyond: Tony Caldaro's special Elliott Wave report

I've posted numerous charts over a very long time here (under the "Yen" label), showing my bullish long-term projections regarding the Japanese Yen (which can be tracked via $XJY or the ETF, $FXY). Based on one set of Fibonacci projections, I could see it getting to $XJY at $135. Now Tony Caldaro at his "the ELLIOTT WAVE Lives On" site has published a detailed analysis projecting $133 or so, using his Objective Elliott Wave techniques juxtaposed on long-term cycles. Especially if you're a currency trader - and even if you're not - you owe it to yourself to look at this, below (thanks again, Tony!). Tony occasionally features special reports on certain markets, such as this one, or another country's stock index, commodities, etc. We feature his general weekend updates here, and you can also use the feed at lower right on the pages here to locate his daily updates and special reports. So, here's his in-depth analysis of the Yen including link to his public charts, shared from his website (always in the links list at right, and via the feed at lower right too; plus he tweets as @OEWtony), at http://caldaro.wordpress.com/:
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The Japanese Yen: JPYUSD
by Tony Caldaro
March 29, 2011

As a followup to our recent long term report on the Japan Nikkei equity index we present our long term analysis on the JPYUSD. The Yen is a western economy currency which generally follows the CHFUSD long term currency cycle model, as opposed to commodity sensitive currencies like the AUDUSD, CADUSD and ZARUSD. The CHFUSD model displays Cyclical tops and bottoms every 16-17 years, with the bottoms occurring only 6-7 years after the tops. The long term charts of the JPYUSD display this currency cycle quite well with a slight variation at the lows.

The above chart displays the currency cycle quite well over the past 40 years. Notice the Cyclical tops in 1978, 1995, and the rise into the next scheduled top in 2012. The Cyclical lows, however, occur much more quickly than the general model. Instead of the typical 6-7 year decline the JPYUSD makes a low in 3-4 years and then a secondary (higher) low at the normal end of the 6-7 year decline. This will be important after the JPYUSD tops next year. The monthly JPYUSD chart displays the same pattern from 1980-2011 with the OEW labeling.

A JPYUSD Supercycle bull market began in 1985 at 38.00. Cycle wave [A] contained three Primary waves and ended in 1995 at 123.33. The Cycle wave [B] bear phase unfolded in three Primary waves as well and bottomed in 2001/2002 at 74.00. Since then the Cycle wave [C] bull phase has unfolded, completing two of the Primary waves, and will likely conclude Primary wave C in 2012.

A closer view of Primary wave C is presented in the JPYUSD weekly chart. Notice Primary C has divided into the typical three Major waves: Major wave A ended in Jan09 at 114.75 and Major wave B in Apr09 at 98.94. Major wave C is dividing into the typical three Intermediate waves: Int. wave A ended in Nov09 at 116.21 and Int. wave B ended in Apr10 at 105.36. Therefore the JPYUSD is currently in Int. wave C, of Major wave C, of Primary wave C, of Cycle wave [C] of a multi-decade Supercycle bull market. Fibonacci price analysis of the final waves of this bull market suggest the following upside price target: @ 133.1 Major C = Major A, and @ 133.2 Int. C = 1.62 Int. A. The JPYUSD appears to have a lot more to go on the upside before topping in 2012. To follow this currency pair with us go to page 15 on the following link: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1606987. Best to your trading/investing.

Where this stock market's about to go, plus essential info for all financial market traders: Tony Caldaro's Objective Elliott Wave update

Tony Caldaro has been remarkably prescient in his market forecasts based on his Objective Elliott Wave techniques, so read on to learn his projections and background on his methods. He's explaining what the correction or consolidation means in context of the stock market's overall strength. You should also read this to know what price levels are most likely for the stock market next, and to learn more about the pullback in gold and silver, and what's going on with crude oil, bonds, and currencies like the euro, dollar, and yen. Tony with his "the ELLIOTT WAVE lives on" shares his insights and this is quite helpful to investors and traders in all time frames. Let's take a look at this weekend's analysis (thanks again Tony!) shared from his website (always in the links list at right, and via the feed there too; plus he tweets as @OEWtony), at http://caldaro.wordpress.com/:
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the ELLIOTT WAVE lives on

January 29, 2011
weekend update

by Tony Caldaro

REVIEW

During the past six trading days the market had cleared the Ops-Ex and the FOMC potential obstacles, but on friday ran into serious trouble with a lower than expected Q4 GDP. Just after the open on friday the SPX was at a new bull market high and up 1.6% on the week. After friday's close it ended down 0.6% for the week. This week's economic reports were more mixed than in recent weeks: seven improving and five weakening. The decliners were Case-Shiller housing prices, durable goods, the M1-multiplier, the WLEI, and a rise in jobless claims. The improving reports were consumer confidence/sentiment, new/pending homes sales, FHFA housing prices, Q4 GDP, and the monetary base. For the week the SPX/DOW were -0.5%, and the NDX/NAZ were mixed. Asian markets were mixed -0.4%, European markets were mostly lower -0.6%, the Commodity equity group was mixed -0.7%, and the DJ World index was -0.1%. Bonds were +0.8%, Crude gained 0.4%, Gold slid 0.6%, and the USD was -0.1%. Next week we have the Payrolls report, along with the Chicago PMI, ISM, PCE prices and Auto sales.

LONG TERM: bull market

This week we will review how our basic weekly technical indicators, (RSI and MACD), respond during bull and bear markets. We have covered this before, from time to time, but after a six month uptrend it is worth another look. In review of the weekly chart below we can easily identify when a bull market was unfolding, and a bear market, just by looking at the RSI and MACD. For example, the RSI typically gets extremely overbought during uptrends in bull markets and barely oversold during downtrends. During bear markets, however, the reverse effect occurs: extremely oversold during downtrends and barely overbought during uptrends. The MACD is a bit different. During bull markets the MACD vacillates between extremely overbought and neutral. While during bear markets the opposite again occurs: it vacillates between extremely oversold and neutral. A simple review of the weekly SPX chart clearly displays a bull market with bullish technicals since the March 2009 low. This technique can be applied to any market, stock, or asset class.

Objective Elliott Wave (OEW), however, is quite a bit more comprehensive than just a couple of weekly indicators. In OEW we first, and foremost, track the long term and medium term trends. These trends are created by market movement and are confirmed, quantitatively, by OEW. Long term trends, quite naturally, are usually bull and bears markets lasting for years. Medium term trends usually last only a few months, and are the important waves that create these bull and bear markets. As the waves are quantified by OEW we label them depending upon which is the most probable pattern within the long term uptrend or downtrend. When the pattern is complete, typically, a bull or bear markets ends.

For more than a year now this market has been in a confirmed long term uptrend: a bull market. We have been tracking the medium term trends and labeling the waves accordingly. Referring back to the weekly chart above one can observe five Major waves up, from the Mar09 SPX 667 bear market low, into the Apr10 at SPX 1220. We labeled these five Major waves the completion of Primary wave I. A three month 17% correction followed into a July10 low of SPX 1011. We labeled this correction Primary wave II. After that low we entered Primary wave III, and specifically Major wave 1 of Primary wave III. Yes, we are expecting Primary wave III to also divide into five Major waves, just like Primary wave I. And, thus far, that is exactly what is occurring!

In September we posted a tentative projection for the rest of the bull market, when the SPX was trading at 1149. You can review it here:http://caldaro.wordpress.com/2010/09/26/spx-bull-market-projection/. Our first projection was for a Major wave 1 six month uptrend, from the July10 SPX 1011 low until Jan11 and topping around the OEW 1313 pivot. On friday the SPX came within three points of hitting the range of that pivot when it hit the 1303 pivot. Our second projection called for a correction of about 9% into a Feb10 low. Since we are already heading into the last trading day of the month on monday we'll see how these two projections work out in the weeks ahead. Overall we're expecting the bull market to continue with a retest of the 2007 highs, or higher, in early 2012.

MEDIUM TERM: uptrend weakening, high SPX 1303

What a difference one day can make. Heading into friday we were tracking this six month uptrend as it continually drifted higher and higher. We had counted five Intermediate waves, as noted on the chart below, and since late November we were in the fifth wave. We had counted five Minor waves, within Intermediate wave five, and we were reaching the limit of Minor wave 5 at SPX 1307 under the present count. We had noted, for several weeks now, the strong resistance of the fibonacci cluster between SPX 1289 and 1306. Also, the liikely difficulty this market would have dealing with the cluster of OEW pivots between 1291 and 1313 after a six month uptrend. On friday we received our first OEW leading indication that the uptrend may have ended friday morning at SPX 1303.

At the current high of SPX 1303, Major wave 1 of Primary wave III is within three SPX points of equaling Major wave 1 of Primary wave I, (292 vs 289 pts). Major wave 1 of Primary wave III equals Major wave 3 of Primary I in time, (six months). And, Intermediate wave five is within three SPX points of a 0.618 fibonacci relationship to Intermediate waves one through three. This uptrend just hit the limits, 289 SPX points and six months, in the characteristics of this bull market.

SHORT TERM

Support for the SPX is now at 1261 and then 1240, with resistance at 1291 and then 1303. Short term momentum ended friday at extremely oversold. On friday, as noted above, we received the first leading indication of an Major wave 1 uptrend top. We posted the tentative "green" labeling on the SPX charts. Naturally OEW will need to confirm the downtrend before the labeling is upgraded to the Major wave black.

The current chart pattern suggests OEW will likely confirm a Major wave 2 downtrend when the SPX breaks through the OEW 1261 pivot. If not before! It is day to day heading into next week. Should the downtrend be confirmed we would expect a correcton of about 9% in the SPX. This suggests a decline to around SPX 1186 and the OEW 1187 pivot. Since the previous fourth wave of a lesser degree, Intermediate wave four, bottomed at SPX 1173 we would appear to have good downtrend support within the range of the OEW 1168, 1176 and 1187 pivot cluster. We could effectively trade from one OEW pivot cluster to another.

A slightly different interpretation of this bull market's characteristics, would suggest a more moderate 7% correction finding support between SPX 1209 and 1219. This is closer to the projected Major wave 2 support at the 1222 pivot. The shape of the correction is likely to be another zigzag. However, it may take any of the normal wave two forms since it is the first correction within a new series of Major waves.

On the upside. Should the SPX hold the 1261 pivot without confirming a downtrend, and rally back above the 1291 pivot on a closing basis, this uptrend could start extending. This is quite rare, but it is possible. On the downside. A break below the 1261 pivot would likely confirm a downtrend. We continue to remain cautious on this market, medium term, as we have since SPX 1296 was hit a couple of weeks ago. Best to your trading!

FOREIGN MARKETS

Asian markets were mixed on the week for a net loss of 0.4%. The loss was mostly from India's BSE (-3.2%) and Hong Kong's HSI (-1.1%). The other three indices we track were up on the week. The BSE and China's SSEC remain in downtrends.

European markets were mostly lower on the week for a net loss of 0.6%. Germany's DAX was the only one of the five we track to display a gain. All five are still in uptrends.

The Commodity equity group was mixed for a net loss of 0.7%. Brazil's BVSP tumbled 3.5% on the week and is now in a confirmed downtrend.

The DJ World index slipped 0.1% on the week and remains uptrending.

COMMODITIES

Bonds (+0.8%) now look like they are about to confirm an uptrend after bouncing around for most of the week and ending on a positive note on friday. The rise in 30YR yields stopped at long term resistance. And the 10YR yield topped at 3.57% about six weeks ago.

Crude (+0.4%) continues to be one heck of a volatile market. Currently we have Crude in a confirmed downtrend from the January $93.00 high. But friday it rallied from a downtrend low of $85 to a high of $90, and closed at $89.

Gold (-0.6%) hit what appears to be a downtrend low at $1308 on friday, with a positive daily RSI divergence and an extremely oversold MACD. Silver (+1.8%) did likewise. This potential count will be invalidated with a decline below the recent $1308 low.

The downtrending USD was quite oversold short term and bounced on friday to end the week -0.1%. The uptrending EUR was flat on the week, and the potentially uptrending JPY gained 0.6%.

NEXT WEEK

Busy economic week ahead. Monday kicks it off with Personal income/spending and PCE prices at 8:30, then the Chicago PMI at 9:45. On tuesday, Construction spending and ISM manufacturing at 10:00, then monthly Auto sales in the afternoon. Wednesday the ADP employment report. On thursday weekly Jobless claims, Q4 Productivity, Factory orders and ISM services. Then on friday, the monthly Payrolls report with the Unemployment rate. The FED returns to the circuit with speeches from FED governor Duke in NC tuesday evening. Then FED chairman Bernanke addresses the Natl Press Club at a Wash, DC luncheon. Best to your week! Should be an interesting one.

CHARTS:http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1606987