weekend update

REVIEW

The market started the week with a gap up opening on monday, hit SPX 2005 on tuesday before noon, then traded in a 14 point range for the rest of the week. For the week the SPX/DOW were +0.7%, the NDX/NAZ were +0.8%, and the DJ World index gained 0.6%. On the economic front positive reports outpaced negatives ones, led by a Q2 GDP +4.2%. On the uptick: new/pending homes sales, durable goods orders, the FHFA, consumer confidence/sentiment, Q2 GDP, personal income, the PCE, and the Chicago PMI. On the downtick: the WLEI, Case-Shiller, and personal spending. Next week will be highlighted by the FED’s beige book, ISM, and the Payrolls report.

LONG TERM: bull market

As we start our 10th year of publishing this blog it appears the market is entering another inflection point. The bulls have won them all since 2010, with the exception of 2011. Is another exception in the offering, or is Primary III set to extend once again? The next several days to weeks will give us the answer.

SPXweekly

Last weekend we offered a potential alternate count should Primary III extend. Yet, we continue to follow our main count which has worked well for us this year. As you can see from the weekly chart: the SPX should be in Intermediate wave v, of Major 5, of Primary III. When this uptrend concludes, Primary III ends, and the largest correction since 2011 should follow for Primary IV. Supporting this scenario are the negative divergences in the weeklly MACD/RSI, plus we are in Q3 and within our long standing target range: 1970-2070. These negative divergences also appear in the DOW/NDX/NAZ. On the monthly charts we have the most overbought MACD in the history of the stock market, plus a double negative divergence in the RSI.

SPXmonthly

There are additional headwinds which can be considered more fundamental than technical. The FED’s QE 3 ends in October. The end of QE 1 and QE 2 coincided with market declines of 17% and 22% respectively. Europe has renewed deflationary pressures, as their inflation rate is currently 0.3%. The ECB and FED both target 2% inflation. The recent uptrend to new highs has occurred with some of the lowest volume this year. Traders are likely to start returning next week, as Labor Day marks the end of summer in most areas. Geopolitical events continue to flare up: ISIS in Iraq and Syria, Russia in the Ukraine. Both have the potential to create volatile markets, which usually occurs during steep corrections.

MEDIUM TERM: uptrend

The current Intermediate wave v uptrend started in early August at SPX 1905. Thus far the market has risen to all time new highs, as it hit 2005 this week. At the low there was a positive RSI divergence and an oversold MACD. Recently this uptrend looks more like Int. wave i, than Int. wave iii. That uptrend took only about four weeks: early February to early March. This uptrend will be about four weeks old next week.

SPXdaily

While the SPX/NDX/NAZ have all hit all time new highs, the DOW/NYA have been struggling to keep pace. The DOW did make a new high by just 2 points, while the NYA (new york composite index) has yet to do so. This suggests the advance is being driven by market leaders and growth stocks. The typical fifth wave narrowing of market participation. The DOW has also remained within its expanding triangle, limited by that upper trend line. Until we see a substantial rally breaking that upper trend line an extension of Primary wave III seems doubtful. Medium term support is at the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots.

DOWhourly

SHORT TERM

Short term support is at SPX 1985 and the 1973 pivot, with resistance at SPX 2005 and the 2019 pivot. Short term momentum ended the week overbought. The short term OEW charts turned positive with the reversal level now SPX 1998.

SPXhourly

We have been counting this uptrend with five Minor waves. Minor waves 1 and 2 ended at SPX 1945 and 1928. Minor wave 3 divided into five Minute waves: 1964-1942-1995-1985-2005. Minor wave 4 appears to have ended on thursday at SPX 1991 with a positive short term divergence. During this bull market fifth waves have been somewhat limited: from less than the length of wave 1 to 1.618 times wave 1.

With wave 1 travelling 40 points (1905-1945) the upside limit for wave 5 would be about the OEW 2070 pivot. The minimum upside would be marginal new highs above SPX 2005. Assuming the short term count is correct, no Primary III extension, the uptrend target range is between these two numbers. Our next pivot is 2019, with a range of +/- 7 points. Within this pivot are two fibonacci relationships: @ SPX 2014 Int. v = 0.618 Int. iii, and @ SPX 2016 Minor 5 = 0.618 Minor 1. With all the indices setting up for potential negative daily RSI divergences at higher highs, let’s see how these numbers work out next week.

FOREIGN MARKETS

Asian markets were mostly lower for a net loss of 0.5%.

European markets were all higher for a net gain of 1.8%.

The Commodity equity group were mixed for a net gain of 0.1%.

The DJ World index gained 0.6%.

COMMODITIES

Bonds continue to uptrend gaining 0.4%.

Crude is still downtrending, but gained 2.7%.

Gold remains in a downtrend but gained 0.5%.

The USD continues to uptrend and gained 0.4%.

NEXT WEEK

Tuesday: ISM manufacturing and Construction spending at 10am. Wednesday: Factory orders, Auto sales and the FED’s beige book. Thursday: ADP, weekly Jobless claims, the Trade deficit, ISM services, and a speech from FED governor Powell. Friday: Payrolls and the Unemployment rate. Best to your three day weekend and week!

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

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friday update

SHORT TERM: choppy day, DOW +19

Overnight the Asian markets lost 0.1%. Europe opened higher but lost 0.1% too. US index futures were higher overnight. At 8:30 Personal income was reported higher +0.2% v +0.4%, spending lower -0.1% v +0.4%, and the PCE higher: +0.1% v +0.1%. The market opened four points above yesterday’s SPX 1997 close then immediately started to pullback. At 9:45 the Chicago PMI was reported higher: 64.3 v 52.6, and at 10am Consumer sentiment was reported higher: 82.5 v 79.2. The pullback continued until about 10:30 when the SPX hit 1995. Then the market started to rally. At 12:30 the SPX hit 2003, pulled back to 1999 by 3pm, then closed at 2003.

For the day the SPX/DOW were +0.20%, and the NDX/NAZ were +0.45%. Bonds lost 3 ticks, Crude gained $1.30, Gold slipped $2, and the USD was higher. Medium term support remains at the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots. Today the WLEI was reported lower: 52.3% v 52.8%.

The market opened higher today, dipped to SPX 1995, rallied to 2003, dipped to 1999, then closed at 2003. At the end it was a positive day after all the volatility in Europe. With today’s higher highs it looks like Minor wave 4 ended at SPX 1991 yesterday. We will wait until the SPX hits 2005 before updating that green label to dark blue. Reviewed the major indices during today’s quiet session. Looks like we are fast approaching another inflection point.

Short term support is at SPX 1985 and the 1973 pivot, with resistance at SPX 2005 and the 2019 pivot. Short term momentum ended the day overbought. The short term OEW charts turned positive with the reversal level now SPX 1999. Best to your three day weekend!

MEDIUM TERM: uptrend

LONG TERM: bull market

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

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thursday update

SHORT TERM: gap down opening-then bounce, DOW -42

Overnight the Asian markets lost 0.3%. Europe opened lower and lost 0.8%. US index futures traded lower overnight. At 8:30 Q2 GDP was revised upward: +4.2% v +4.0%, and weekly Jobless claims were unchanged: 298k v 298k. The market gapped down at the open to SPX 1992, dipped to 1991, and then started to rebound. The SPX had closed at 2000 yesterday. At 10am Pending home sales were reported higher: +3.3% v -1.1%. The rebound hit SPX 1999 around 12:30, then the market went sideways for the rest of the day closing at 1997.

For the day the SPX/DOW were -0.20%, and the NDX/NAZ were -0.20%. Bonds gained 5 ticks, Crude rose 75 cents, Gold rallied $7, and the USD was flat. Medium term support remains at the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots. Tomorrow: Personal income/spending and the PCE at 8:30, the Chicago PMI at 9:45, then Consumer sentiment at 10am.

The market gapped down at the open today for the first time since this uptrend began on August 7th. There have been five gap up openings. The market opened within one point of its low today, and then rebounded for the rest of the day. When the market opened below SPX 1995 we updated the Minor 3 label to dark blue. When the market formed a positive divergence at the SPX 1991 low we posted a tenetative green Minor 4 label at that level. The 14 point pullback, 2005-1991, may have been enough for Minor wave 4. However, if Europe continues to slide the SPX could still hit 1985 or even the 1973 pivot. Any new high would of course suggest we are in Minor wave 5.

Short term support is at SPX 1985 and the 1973 pivot, with resistance at SPX 2005 and the 2019 pivot. Short term momentum displayed a positive divergence at today’s low then bounced to neutral. The short term OEW charts remained negative all day with the reversal level now SPX 1998. Best to your pre-holiday trading!

MEDIUM TERM: uptrend

LONG TERM: bull market

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

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wednesday update

SHORT TERM: market finishes mixed, DOW +15

Overnight the Asian markets ended mixed. Europe opened higher but closed mixed as well. US index futures were higher overnight, and the market opened two points above yesterday’s SPX 2000 close. That was the high for the day as the market started to pullback. The market declined to SPX 1998 by 10:30, then bounced to 2001 just as Europe was closing at 11:30. After that it went sideways until about 2:30 then started to decline further. Just past 3pm the SPX hit 1996, then rebounded to close at 2000.

For the day the SPX/DOW were +0.05%, and the NDX/NAZ were mixed. Bonds gained 7 ticks, Crude slipped 5 cents, Gold was flat, and the USD was lower. Medium term support remains at the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots. Tomorrow: Q2 GDP (est. +4.0%) at 8:30, along with weekly Jobless claims. Then at 10am Pending home sales.

The market opened within three points of the all time high, then started to pullback in quiet trading. When Europe closed for the day the SPX was near its high, and then drifted down like it has done all week. In the last hour of trading the SPX hit 1996, and then rebounded. With the hourly RSI hitting oversold today a pullback of some degree is confirmed. But until we see an overlap of SPX 1995, we can not be sure Minor wave 3 ended at 2005. If the market makes new highs from here we would think Minor wave 3 is extending.

Short term support is at SPX 1985 and the 1973 pivot, with resistance at SPX 2005 and the 2019 pivot. Short term momentum hit oversold and then bounced to neutral. The short term OEW charts flip-flopped at the SPX 2000 level, ended neutral, with the reversal level still at 2000. Best to your trading GDP day!

MEDIUM TERM: uptrend

LONG TERM: bull market

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

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tuesday update

SHORT TERM: higher open-new high, DOW +30

Overnight the Asian market lost 0.3%. Europe opened higher and gained 1.0%. US index futures were higher overnight, and at 8:30 Durable goods orders were reported higher: +22.6% v +1.7%. At 9am Case-Shiller was reported lower: +8.1% v +9.3%, and the FHFA index higher: +0.4% v +0.4%. The market opened three points above yesterday’s SPX 1998 close, and continued to move higher. At 10am Consumer confidence was reported higher: 92.4 v 90.9. The market continued to drift higher until European markets closed and the SPX hit 2005. After that, like yesterday, it started to pullback. The pullback lasted into the close with the SPX ending the session just above 2000.

For the day the SPX/DOW were +0.15%, and the NDX/NAZ were +0.20%. Bonds gained 2 ticks, Crude rose 50 cents, Gold rallied $6, and the USD was higher. Medium term support remains at the 1973 and 1956 pivots, with resistance at the 2019 and 2073 pivots. Tomorrow: nothing on the economic schedule.

The market opened higher today, followed the rally in Europe, and hit a new all time high just about when Europe closed at SPX 2005. After that, like yesterday, it went sideways for the rest of the day. Thus far we have counted Minor waves 1 and 2 at SPX 1945 and 1928, and now a five wave Minor 3: 1964-1942-1995-1985-2005. With Minor 3 just about double Minor 1 (77 pts vs 40 pts), and the rising Minute waves of Minor 3 all near fibonacci numbers (36, 53, 20 vs 34, 55, 21), it might be time for a Minor wave 4 pullback. Especially with the ongoing negative divergence on the hourly chart. Thus far all we have seen is a five point pullback to SPX 2000. Should the pullback drop below SPX 1995 Minor 4 is probably underway.

Short term support is at SPX 1985 and the 1973 pivot, with resistance at SPX 2005 and the 2019 pivot. Short term momentum continues to display that negative divergence. The short term OEW charts remain positive with the reversal level now SPX 2000. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: bull market

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

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monday update

SHORT TERM: gap up – new highs, DOW +76

Overnight the Asian markets gained 0.3%. Europe opened higher and gained 1.7%. US index futures were higher overnight, and the market gapped up to new highs at the open: SPX 1997. The SPX had closed at 1988 on friday. As the rally continued New home sales were reported higher at 10am: 412k v 406k. By 11:30, when Europe closed, the SPX hit 2002. Then it started to pullback. At 1pm the SPX hit 1996. Then it drifted higher to end the day at SPX 1998.

For the day the SPX/DOW were +0.45%, and the NDX/NAZ were +0.40%. Bonds gained 3 ticks, Crude slipped 20 cents, Gold dipped $5, and the USD was higher. Medium term support remains at the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots. Tomorrow: Durable goods at 8:30, Case-Shiller and the FHFA at 9am, then Consumer confidence at 10am.

The market gapped up at the open to SPX 1997, then continued on to 2002 just as Europe closed. After that it pulled back some, but nothing meaningful as of yet. For the past couple of weeks this market appears to be following Europe. Not perfectly day to day, but in the general direction. Suspect ECB’s Draghi will announce something big on Sept. 4th. If not, both Europe and the US are likely to be quite disappointed. We labeled friday’s SPX 1985 low as Minute iv right after the open. Maybe SPX 2002 was the Minute v high, maybe not. Should the market drop to SPX 1993 it would increase the probabilities that it was the high.

Short term support is at SPX 1985 and the 1973 pivot, with resistance at SPX 2002 and the 2019 pivot. Short term momentum displayed a negative divergence at today’s high. The short term OEW charts turned positive with the reversal level now SPX 1996. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: bull market

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

Posted in Updates | Tagged , , , | 80 Comments

weekend update

REVIEW

US markets rise for third week in a row. The week started off with a gap up on monday, and then continued to rise every day until thursday. When it hit a new all time high at SPX 1995. A pullback on friday ended the week at SPX 1988. For the week the SPX/DOW were +1.85%, the NDX/NAZ were +1.65%, and the DJ World indix rose 1.2%. Economic reports for the week were all positive until the WLEI downticked on friday. The upticks: the NAHB, the CPI, housing starts, building permits, existing home sales, the Philly FED, leading indicators, the monetary base, and weekly jobless claims declined. Next week we get an update on Q2 GDP (est. +4.0%), PCE prices and the Chicago PMI.

LONG TERM: bull market

This bull market continues to unfold in five Primary waves from the March 2009 low. Primary waves I and II completed in 2011, and Primary wave III has been underway since that October 2011 low. Primary waves I and III have both divided into five major waves. During Primary I only Major wave 1 subdivided. During Primary III Major waves 3 and 5 are subdividing. Major waves 1 and 2 completed in late 2011. Major waves 3 and 4 completed in early 2014. Major wave 5 has been underway since that February 2014 low.

SPXweekly

Several months ago we detailed how and why Major wave 5 should subdivide in the SPX/DOW. While the NDX/NAZ completed their Major waves. The end result would be a completed Primary wave III. This would be followed by a Primary wave IV and the largest correction since 2011. We estimated the SPX would complete five Intermediate waves, which it appears to be doing. The DOW would complete a diagonal triangle Major wave 5. And, the NDX/NAZ would complete their Major 3, 4, 5 wave pattern.

For the past three weeks we have been noticing deviations in our monitor portion of our: project-monitor-and adjust when necessary mantra. While the SPX looks fine, as noted above. The DOW and NDX/NAZ have all deviated from what was expected. This deviation suggests the market may have evolved into an alternate count, and Primary wave III may not end soon. This will be explained near the end of the report.

MEDIUM TERM: uptrend

Last week the NDX confirmed its uptrend. This week the SPX/NAZ confirmed their uptrends. The DOW has yet to confirm, but this should occur shortly. We continue to count this uptrend as Intermediate wave v of Major wave 5. Thus far this uptrend has had three decent rallies: 1905-1945, 1928-1964 and 1942-1995. The first rally and pullback (1945-1928) we counted as Minor wave 1 and 2. The next rally and pullback (1964-1942) we counted a Minute waves i and ii of Minor 3. And, this last rally and pullback (1995-1985 so far) is being counted as Minute waves iii and iv of Minor 3, (see hourly chart).

SPXdaily

We noted last week that SPX 1993 and 2000 should come into play as Minor 3 unfolds. Minute iii topped at SPX 1995 this week. The next set of ranges we see are SPX 2000 to 2008, the 2019 pivot range, and then SPX 2033 to 2036. Minor wave 3 should top in one of these ranges. Since Minute wave iii was larger than Minute i, Minute v can be any length. Also, with the daily RSI just getting overbought this week, and the MACD just turning up, it is probably too early to even be considering an uptrend high next week. We will leave that to the weeks ahead. Medium term support remains at the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots.

SHORT TERM

Short term support is at SPX 1985 and the 1973 pivot, with resistance at SPX 1995 and the 2019 pivot. Short term momentum ended the week just below neutral. The short term OEW charts ended the week at neutral, with the reversal level at SPX 1988.

SPXhourly

The short term count within the uptrend continues to unfold as expected. The question now is how deep a pullback for Minute wave iv. Thus far it has declined 10 points, SPX 1995-1985. Previous pullbacks have been a bit larger: 22 points for Minute ii, and 17 points for Minor 2. Initially, with friday’s oversold condition, it looks like 10 points might be enough. However, with the 34 EMA at 1981 and the potential for a lower low setting up a positive divergence. We may see additional downward pressure on monday. SPX 1973 to 1978 appears to be the normal range for this uptrend, but 1981 may just be enough. After Minute iv concludes, Minute v will be underway to new all time highs.

POTENTIAL ALTERNATE COUNT

While we are maintaining our primary counts, noted above. We have noticed some deviations from what was expected during these past few months. The SPX, as you can see in the charts above, looks fine. The problems we are seeing are in the NAZ and the DOW. Since these two indices are key to our market observations, these deviations are worth noting.

NAZweekly

At first glance the NAZ looks fine. But if you look closer, the recent correction which is labeled Major wave 4 was only 3.7%. That is the smallest correction of the entire bull market. This, in itself, is quite unusual for an important fourth wave. In fact, the previous correction, of a lesser Intermediate degree, was 9.7%. Historically this does not look quite right. It actually looks like a correction of a lesser degree.

DOWhourly

The DOW was expected to form a contracting diagonal triangle Major wave 5. But look at what occurred to the contracting triangle. It now has the look of an expanding triangle. Historically I never observed this wave formation in the DOW.

NDXdaily

Both of these points may, in the end, prove to be insignificant. But if they are not, they could be telling us Major wave 5 in the SPX/DOW, and Primary III in the NDX/NAZ is about to extend in time and price. With this possibility in mind we arrived at two alternate counts that are worth watching.

DOWdaily

For now we will consider the trigger mechanism of the primary versus alternate count to be the DOW’s expanding triangle. Should the DOW rally strongly during this uptrend, and significantly clear the upper rising trend line, we will consider the extension is on. If the uptrend ends within the upper trendline the primary count remains in play. Something to watch in the weeks ahead.

FOREIGN MARKETS

Asian markets were mostly higher on the week for a net gain of 0.8%.

European markets were all higher for a net gain of 2.4%.

The Commodity equity group were all higher and gained 1.7%.

The DJ World index gained 1.2% on the week.

COMMODITIES

Bonds continue to uptrend but lost 0.6% on the week.

Crude remains in a steady downtrend losing 3.7% on the week.

Gold could not avoid Silver’s downtrend and lost 1.9% on the week.

The USD continues to uptrend soaring 1.2% on the week.

NEXT WEEK

Monday: New home sales at 10am. Tuesday: Durable goods, Case-Shiller, the FHFA and Consumer confidence. Thursday: Q2 GDP, weekly Jobless claims and Pending home sales. Friday: Personal income/spending, the PCE, Chicago PMI and Consumer sentiment. Nothing scheduled for the FED.

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

Posted in weekend update | Tagged , , , | 217 Comments