Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Silver Price Trend Forecast Summer 2020 - 3rd Jul 20
Silver Market Is at a Critical Juncture - 3rd Jul 20
Gold Stocks Breakout Not Confirmed Yet - 3rd Jul 20
Coronavirus Strikes Back. But Force Is Strong With Gold - 3rd Jul 20
Stock Market Russell 2000 Gaps Present Real Targets - 3rd Jul 20
Johnson & Johnson (JNJ) Big Pharma Stock for Machine Learning Life Extension Investing - 2nd Jul 20
All Eyes on Markets to Get a Refreshed Outlook - 2nd Jul 20
The Darkening Clouds on the Stock Market S&P 500 Horizon - 2nd Jul 20
US Fourth Turning Reaches Boiling Point as America Bends its Knee - 2nd Jul 20
After 2nd Quarter Economic Carnage, the Quest for Philippine Recovery - 2nd Jul 20
Gold Completes Another Washout Rotation – Here We Go - 2nd Jul 20
Roosevelt 2.0 and ‘here, hold my beer' - 2nd Jul 20
U.S. Dollar: When Almost Everyone Is Bearish... - 1st Jul 20
Politicians Prepare New Money Drops as US Dollar Weakens - 1st Jul 20
Gold Stocks Still Undervalued - 1st Jul 20
High Premiums in Physical Gold Market: Scam or Supply Crisis? - 1st Jul 20
US Stock Markets Enter Parabolic Price Move - 1st Jul 20
In The Year 2025 If Fiat Currency Can Survive - 30th Jun 20
Gold Likes the IMF Predicting a Deeper Recession - 30th Jun 20
Silver Is Still Cheap For Now - 30th Jun 20
More Stock Market Selling Ahead - 30th Jun 20
Trending Ecommerce Sites in 2020 - 30th Jun 20
Stock Market S&P 500 Approaching the Precipice - 29th Jun 20
APPLE Tech Stock for Investing to Profit from the Machine Learning Mega trend - 29th Jun 20
Student / Gamer Custom System Build June 2020 Proving Impossible - Overclockers UK - 29th Jun 20
US Dollar with Ney and Gann Angles - 29th Jun 20
Europe's Banking Sector: When (and Why) the Rout Really Began - 29th Jun 20
Will People Accept Rampant Inflation? Hell, No! - 29th Jun 20
Gold & Silver Begin The Move To New All-Time Highs - 29th Jun 20
US Stock Market Enters Parabolic Price Move – Be Prepared - 29th Jun 20
Meet BlackRock, the New Great Vampire Squid - 28th Jun 20
Stock Market S&P 500 Approaching a Defining Moment - 28th Jun 20
U.S. Long Bond: Let's Review the "Upward Point of Exhaustion" - 27th Jun 20
Gold, Copper and Silver are Must-own Metals - 27th Jun 20
Why People Have Always Held Gold - 27th Jun 20
Crude Oil Price Meets Key Resistance - 27th Jun 20
INTEL x86 Chip Giant Stock Targets Artificial Intelligence and Quantum Computing for 2020's Growth - 25th Jun 20
Gold’s Long-term Turning Point is Here - 25th Jun 20
Hainan’s ASEAN Future and Dark Clouds Over Hong Kong - 25th Jun 20
Silver Price Trend Analysis - 24th Jun 20
A Stealth Stocks Double Dip or Bear Market Has Started - 24th Jun 20
Trillion-dollar US infrastructure plan will draw in plenty of metal - 24th Jun 20
WARNING: The U.S. Banking System ISN’T as Strong as Advertised - 24th Jun 20
All That Glitters When the World Jitters is Probably Gold - 24th Jun 20
Making Sense of Crude Oil Price Narrow Trading Range - 23rd Jun 20
Elon Musk Mocks Nikola Motors as “Dumb.” Is He Right? - 23rd Jun 20
MICROSOFT Transforming from PC Software to Cloud Services AI, Deep Learning Giant - 23rd Jun 20
Stock Market Decline Resumes - 22nd Jun 20
Excellent Silver Seasonal Buying Opportunity Lies Directly Ahead - 22nd Jun 20
Where is the US Dollar trend headed ? - 22nd Jun 20
Most Shoppers have Stopped Following Supermarket Arrows, is Coughing the New Racism? - 22nd Jun 20

Market Oracle FREE Newsletter

AI Stocks 2020-2035 15 Year Trend Forecast

Stock Market Trifurcation

Stock-Markets / Stock Markets 2013 Oct 06, 2013 - 12:57 PM GMT

By: Tony_Caldaro


While the stock market acted like business as usual: the SPX opened the week at 1692 and ended at 1691. The US government shut down on Tuesday due to lack of a budget, and a potential default looms as the debt limit is less than two weeks away. The political circus – democrats v republicans – continue to push for next year’s election talking points, while holding the American public and the economy hostage. For the week the SPX/DOW were -0.65%, the NDX/NAZ were +0.55%, and the DJ World index was -0.4%. On the economic front negative reports outpaced positive ones for the first time in quite a while. On the uptick: the Chicago PMI, ISM manufacturing and Investors turned more positive. On the downtick: the ADP index, ISM services, the Monetary base, the WLEI and weekly Jobless claims rose. Next week we may, or may not, get reports on Retail sales, Consumer sentiment and the FOMC minutes. Best to your week.

LONG TERM: bull market

While most of us agree this is a bull market. After all the SPX/DOW recently hit all time new highs. The trifurcation between the DOW, SPX and NDX/NAZ has produced a number of general market counts in the blogosphere. Quite confusing for most we would imagine. At OEW we try to tune out all the noise created by following a number of indices and just concentrate on one. The bellwether. The index that has a one hundred plus year history, is not heavily traded in the futures markets, and gets quoted every night on the news: the DOW. Certainly we track the popular SPX, and even the other indices. But when the four major indices start taking on a life of their own we always rely on the DOW.

For this entire bull market the DOW has provided clean, clearly defined waves. The SPX, NDX and NAZ unfortunately have not. This trifurcation reminds us of 1999-2000. Then the major indices were like they are now: strength in the NDX/NAZ, weakness in the DOW, and the SPX caught up somewhere in the middle. When the DOW made its last downtrend of the bull market in late 1999 it bottomed at DOW 9976. The SPX hit 1234 and the NDX hit 2300. Then in January 2000 the DOW ended its bull market at 11750, gaining 18% in its last uptrend. The SPX looked like it was topping in January too but continued on to SPX 1553 by March, gaining 26%. The NDX was the reason. It topped in March 2000 at 4816, gaining 109% in the blow off dotcom bubble. Irrational exuberance. We all know what happened next.

The catalyst then was the “new economy” and easy money. Is the catalyst this time quantitative easing? There are quite a large handful of momentum stocks already selling at valuations that are discounting the next five to ten years of earnings growth. Twitter just filed for its IPO. They are not making any profits, nor have they made any profits, but they are valuing their company in excess of $9 billion. Sound familiar? It should. The way things currently look we could have quite a wild ending to this bull market.

For now we continue to track this five Primary wave Cycle wave [1] bull market in OEW terms. Primary waves I and II completed in 2011. Primary wave I divided into five Major waves with a subdividing Major wave 1. Primary wave III has also divided into five Major waves, but both Major waves 1 and 3 subdivided. Major waves 1 and 2 of Primary III completed by mid-2012. Major waves 3 and 4 completed by mid-2013. Major wave 5 was probably simple and just completed in September, ending Primary wave III. The recent decline appears to be Primary wave IV. When this concludes a simple Primary V uptrend should take the market to all time new highs to end the bull market. We are still expecting this to occur by late-winter to early-spring 2014 near the OEW 1779 pivot.

MEDIUM TERM: uptrend weakening

After the Intermediate wave iii, of Major 3, high in May all four major indices corrected into an Intermediate wave iv low in June. Since then, yes it has been that long, the NDX/NAZ have been displaying strength, the DOW weakness, and the SPX has been caught in the middle. We labeled the simple, five wave, Jun-Aug uptrend as Intermediate wave v ending Major wave 3. Then the market trifurcated. The DOW confirmed a downtrend and dropped 5.7%. The SPX dropped 4.9% and the NDX dropped only 3%. This is when a plethora of counts arrived on the EW scene.

While the downtrend was shorter than expected in the SPX/DOW. It was sufficient to trigger a downtrend which we labeled Major wave 4. Then the market shot right up quickly to new all time highs on non-taper rumors and the non-taper news. The day after the non-taper news the SPX/DOW made their highs and have been declining ever since. We can label that high as the end of Primary III, with Primary IV currently underway. The DOW has already dropped 4.9% and the SPX 3.5%. But the NDX/NAZ are less than 0.5% from their highs. Trifurcation.

For now we take the conservative count as posted on the SPX charts: Primary III done and Primary IV underway. We do offer an alternate count which is posted on the DOW charts. But until the SPX 1730 highs are exceeded we prefer the Primary IV underway scenario. Medium term support is at the 1680 and 1628 pivots, with resistance at the 1699 and 1779 pivots.


The decline from SPX 1730 looks like a double zigzag. The first zigzag, SPX 1730-1675, we labeled Minor a. The rally to SPX 1697 we labeled Minor b. Then the recent decline to SPX 1670 we labeled Minor c to complete Intermediate wave a. Under the Primary IV scenario we would expect a potential flat to form consisting of Major waves A, B and C. This first decline, SPX 1730-1670, should be the first wave of the three Intermediate waves creating Major wave A. Intermediate wave b, currently underway, is the second wave. Upside potential is SPX 1693 (38%), SPX 1700 (50%) and SPX 1707 (62%).

Short term support is at the 1680 pivot and SPX 1654-1665, with resistance at the 1699 pivot and SPX 1730. Short term momentum ended the week nearly overbought. The short term OEW charts are positive with the reversal level SPX 1688.


The Asian markets were mixed on the week for a net loss of 1.1%.

The European markets were also mixed but gained 0.8%. The FTSE is downtrending.

The Commodity equity group were mixed for a net loss of 0.7%.

The DJ World index is still uptrending but lost 0.4%.


Bonds appear to be uptrending but gained only 0.1% on the week.

Crude is downtrending but gained 0.9% on the week.

Gold is downtrending and lost 1.9% on the week.

The USD is downtrending as well and lost 0.1% on the week.


Some of these reports may be delayed or not reported due to the government shutdown. Monday: Consumer credit at 3:00. Tuesday: the Trade deficit. Wednesday: Wholesale inventories and the FOMC minutes. Thursday: weekly Jobless claims, Export/Import prices, and the Treasury Budget. Friday: Retail sales, the PPI, Consumer sentiment and Business inventories. As for the FED there is a speech by FED governor Powell on Friday. Best to your weekend and week!


After about 40 years of investing in the markets one learns that the markets are constantly changing, not only in price, but in what drives the markets. In the 1960s, the Nifty Fifty were the leaders of the stock market. In the 1970s, stock selection using Technical Analysis was important, as the market stayed with a trading range for the entire decade. In the 1980s, the market finally broke out of it doldrums, as the DOW broke through 1100 in 1982, and launched the greatest bull market on record. 

Sharing is an important aspect of a life. Over 100 people have joined our group, from all walks of life, covering twenty three countries across the globe. It's been the most fun I have ever had in the market. Sharing uncommon knowledge, with investors. In hope of aiding them in finding their financial independence.

Copyright © 2013 Tony Caldaro - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Tony Caldaro Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules