thursday update

SHORT TERM: gap up opening to new high, DOW +109

Overnight the Asian markets gained 0.7%. Europe opened higher and gained 0.8%. US index futures were higher overnight. At 8:30 weekly Jobless claims were reported lower: 280k v 315k, Housing starts were reported lower: 956k v 1093k, and Building permits were lower: 998k v 1052k. Then at 8:15 FED chair Yellen’s speech was released: http://www.federalreserve.gov/newsevents/speech/yellen20140918a.htm. The market gapped up at the open, for the first time in two weeks, to SPX 2008. After a small dip to SPX 2005 it rallied to 2012 just before 11am. At 10am the Philly FED was reported lower: 22.5 v 28.0. After the SPX 2012 high the market entered a 4 point trading range (2008-2012) for the rest of the day, closing at 2011.

For the day the SPX/DOW were +0.60%, and the NDX/NAZ were +0.70%. Bonds lost 11 ticks, Crude dropped $1.25, Gold added $3, and the USD was lower. Medium term support remains at the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots. Tomorrow: the somewhat interesting Scotland independence vote, Leading indicators 10 am, the much awaited BABA IPO, and it’s OPEX day. This wild fundamental data week draws to a close.

The market gapped up at the open today, dipped a bit, then hit a marginal new all time high. The new high was the signal we had been waiting for to suggest an uptrend extension. At the new high we upgraded the count on the SPX hourly chart from five Minor waves up to SPX 2011, to just Minor waves 1 and 2 complete at SPX 2011 and 1979 with Minor 3 now underway. We had been carrying this count on the SPX daily chart. Minor wave 3 should now unfold in five Minute waves, and the OEW 2070 pivot looks like a good target. Short term support is at SPX 2000 and SPX 1993, with resistance at the 2019 and 2070 pivots. Short term momentum continues to display a negative divergence. Best to your OPEX trading!

MEDIUM TERM: uptrend

LONG TERM: bull market

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

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wednesday update

SHORT TERM: rally continues, DOW +25

Overnight the Asian markets gained 0.5%. Europe opened higher and gained 0.3%. US index futures were higher overnight. At 8:30 the CPI was reported lower: -0.2% v +0.1%. The market opened unchanged at SPX 1999, rallied to 2004 by 10am, then started to drift lower ahead of the FOMC statement. At 10am the NAHB was reported at a 9 year high: 59 v 55. By 1:30 the SPX had hit 1997, and then started to rise. At 2pm the FED released several reports: http://www.federalreserve.gov/newsevents/press/monetary/20140917a.htm, http://www.federalreserve.gov/newsevents/press/monetary/20140917c.htm, http://www.federalreserve.gov/newsevents/press/monetary/20140917b.htm. The market responded by initially rising back to SPX 2004, then dropping to 1993, and then rallying to 2008 by 2:30. Normal volatility after a FOMC statement. Then after a dip to SPX 2002 just before 3pm, the market rallied to the all time high at 2011 just past 3pm. Another pullback followed to SPX 2000 by 3:30. Then the market bounced to close at 2002.

For the day the SPX/DOW were +0.15%, and the NDX/NAZ were +0.20%. Bonds lost 10 ticks, Crude dropped 75 cents, Gold slid $14, and the USD was higher. Medium term support remains at the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots. Tomorrow: the ECB concludes its two day meeting, then weekly Jobless claims, Housing starts and Building permits at 8:30. A speech from FED chair Yellen at 8:45. Then the Philly FED at 10am.

We had a quiet opening to the typical volatile FOMC day. At 10am the SPX hit 2004, twenty-six points above Monday’s 1978 low. Then after a small pullback the market hit SPX 2004 again right after the FOMC statement. After that the market had its first notable pullback to SPX 1993. Then the market retested the all time high at SPX 2011, before pulling back again into the close. Several reversals is nothing unusual for an FOMC day. The important day, as we see it, is tomorrow. After traders have had the opportunity to digest whatever news resulted from the FED’s meeting. Counts remain the same.

Short term support is now at SPX 1993 and the 1973 pivot, with resistance still at SPX 2011 and the 2019 pivot. Short term momentum displayed a negative divergence at the SPX 2011 high and pulled back. Best to your trading the ECB day!

MEDIUM TERM: uptrend

LONG TERM: bull market

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

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tuesday update

SHORT TERM: gap down then big rally, DOW +101

Overnight the Asian markets lost 0.8%. Europe opened lower and lost 0.3%. US index futures were lower overnight, and at 8:30 the PPI was reported unchanged: 0.0% v +0.1%. The market gapped down at the open to SPX 1979, then immediately started to rally. After hitting SPX 1989 just before 10:30, it pulled back four points by 11:30, and then resumed the rally. At 1:30 the SPX hit 2002, then drifted lower into a 1999 close.

For the day the SPX/DOW were +0.65%, and the NDX/NAZ were +0.85%. Bonds gained 2 ticks, Crude rallied $1.90, Gold added $2, and the USD was lower. Medium term support remains at the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots. Tomorrow: the CPI at 8:30, the ECB starts their two day meeting, the NAHB index at 10am, then the FOMC statement at 2pm. With Friday’s OPEX, an interesting and potentially volatile three days ahead.

The market gapped down at the open today to SPX 1979, apparently completing the small ‘c’ wave we had been expecting from yesterday’s SPX 1987 high. While the decline was a bit smaller than expected, SPX 1973-ish, the ‘c’ wave apparently ended in a failure as it did not reach yesterday’s low of 1978. Nevertheless, the count we have been tracking appears complete: A 1990, B 2008, and then C (‘a’ 1991-2000-1983, ‘b’ 1997-1986-1998, ‘c’ 1978-1987-1979). This morning’s low should have concluded this somewhat complex a-b-c pullback.

During today’s rally, which is the strongest since the pullback began, the market broke out of a descending channel, the advance looked impulsive, and the laggard DOW made all time new highs. While we have placed a green Minor 2 label at today’s low on the SPX chart, we would like to see the SPX make new highs next to add confidence that an extension is underway. Short term support is at the 1973 and 1956 pivots, with resistance at SPX 2011 and the 2019 pivot. Short term momentum hit extremely overbought during today’s rally. Best to your FOMC trading!

MEDIUM TERM: uptrend

LONG TERM: bull market

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

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monday update

SHORT TERM: techs tank, DOW +44

Overnight the Asian markets lost 1.0%. Europe opened lower and lost 0.1%. US index futures were sharply lower overnight, then recovered heading into the open. At 8:30 the NY FED was reported higher: 27.5 v 14.7, but at 9:15 Industrial production was reported lower: -0.1% v +0.4%. The market opened unchanged at SPX 1986, then pulled back to 1978 by 10am. After a rally to SPX 1985 by 10:30, the market pulled back to 1979 by noon. After that the market worked its way to the high for the day at SPX 1987, before dipping to a 1984 close.

For the day the SPX/DOW were mixed, and the NDX/NAZ were -1.0%. Bonds gained 7 ticks, Crude rose 55 cents, Gold added $3, and the USD was flat. Medium term support remains at the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots. Tomorrow: PPI at 8:30, Senate testimony from FED director Hunter at 10am, and the FED starts its FOMC meeting.

After the futures went sharply lower at the open last night, they spent the rest of pre-market rebounding. The market opened unchanged, but made a slightly lower low for the pullback at SPX 1978. In the mean time the NDX/NAZ were under selling pressure all day, as high multiple growth stocks were being sold. Selling to purchase BABA’s IPO this week? We did get that rally we were expecting as the SPX hit 1987. Next we would expect the market to rollover again into the OEW 1973 pivot. Short term support is at the 1973 and 1956 pivots, with resistance at SPX 2011 and the 2019 pivot. Short term momentum ended the day around neutral. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: bull market

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

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weekend update

REVIEW

After closing within three points of the all time high last week, the market went into a choppy pullback mode this week. For the week the SPX/DOW were -1.0%, the NDX/NAZ were -0.4%, and the DJ World index was -1.4%. On the economic front, reports came in mostly to the positive. On the uptick: consumer credit, retail sales, wholesale/business inventories, import prices, consumer sentiment, and the budget deficit improved. On the downtick: export prices, the WLEI and weekly jobless claims increased. Next week is FOMC week, and we get reports on Industrial production and Housing.

LONG TERM: bull market

Here we are 66 months into this bull market and we are still trying to identify the top of Primary III, in a five primary wave bull market. The western central banks have been propping up liquidity since the bull market began. The FED with QE’s 1, 2, 3 and Operation Twist. The ECB with LTRO’s 1 and 2, and now ABS. During this period the SPX has tripled, and is more than 25% above its 2007 all time high. Germany’s DAX has nearly tripled as well, and is more than 23% above its all time high. With the ECB just starting ABS another liquidity injection is thrown into the count.

Thus far we have counted Primary waves I and II completing in 2011. Primary III could have topped in 2013, but extended into 2014. The current uptrend has the potential to end Primary III, as we can count five Intermediate waves up from the Major wave 4 low in February at SPX 1738. However, there are two problems with this count, one in the DOW and the other in the NDX/NAZ. We detailed these problems in the last weekend update, and the one two weeks before that. Currently we think the probabilities of Primary III ending with this uptrend, or extending into next year, are equal.

SPXweekly

The key levels to watch are first SPX 1905. If the market revisits this level Primary III probably ended at SPX 2011. Second SPX 2011. If the market rises above this level the uptrend is probably extending. Third SPX 1991. Should the uptrend extend it has to rise high enough to avoid overlapping the high of the previous uptrend. Since we are in pullback mode now, SPX 1905 and 2011 are the current levels to watch.

MEDIUM TERM: uptrend

From the early August low of SPX 1905 we have counted five waves up into 2011 a week ago. Since this was a five wave pattern and the market made new all time highs it could have completed the uptrend, and with it Primary III. The expected pullback to medium term support at the 1973 or 1956 pivots just occurred on friday. As the SPX hit the upper range of the 1973 pivot. At friday’s low the market was sufficiently oversold if this uptrend is going to extend. But we think there maybe one more wave down.

SPXdaily

If the uptrend does extend the five wave sequence up to SPX 2011 would be counted as Minor wave 1 of the Intermediate wave v uptrend. And SPX 1980, or lower, would be Minor wave 2. Minor wave 3 would then be getting underway. The rally to follow would take the market to the OEW 2070 pivot, or even higher, to complete Minor waves 3, 4 and 5. Currently the market remains in between the SPX 2011 uptrend high and the 1980 recent low. We can not confirm a Minor wave 3 rally until the market starts making new highs. Medium term support remains at the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots.

SHORT TERM

The five waves up during this uptrend were as follows. Waves 1 and 2 SPX 1945 and 1928. Wave 3 subdivided into five waves: SPX 1964-1942-1995-1985-2005. Wave 4 declined to SPX 1991, and wave 5 completed in a diagonal triangle: 2006-1995-2009-1998-2011. After that high we had a choppy pullback to SPX 1980. We have counted a simple wave ‘a’ at SPX 1990, wave ‘b’ at 2008, then a wave ‘c’ 1991-2000-1983-1997-1986-1998-1980.

SPXhourly

If we count 1991-2000-1983 as wave a of ‘c’, 1997-1986-1998 as wave b of ‘c’, and 1980 as the beginning of another three wave sequence for wave c of ‘c’. We should see a small rally early next week, then another decline to lower lows. Since wave ‘a’ was 21 points (2011-1990), a wave ‘c’ of 34 points should bottom at SPX 1974. Also since wave ‘a’ of c was 25 points, another decline of 25 points from SPX 1998 suggests 1973. So the OEW 1973 pivot appears to be the Fibonacci fit on both the larger and smaller waves of this pullback. Short term support is at the 1973 and 1956 pivots, with resistance at SPX 2011 and the 2019 pivot. Short term momentum ended the week just under neutral.

FOREIGN MARKETS

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

European markets were mostly lower and lost 1.3%.

The Commodity equity group were all lower losing 3.4%.

The DJ World index lost 1.4%.

COMMODITIES

Bonds confirmed a downtrend this week, -0.9%, as yields have again began to rise.

Crude remains in a downtrend losing 1.2%.

Gold continues to downtrend losing 3.0% on the week.

The USD uptrend continues gaining 0.5%.

NEXT WEEK

Monday: the NY FED at 8:30, then Industrial production at 9:15. Tuesday: the PPI, and senate testimony from FED director Hunter. Wednesday: the CPI, the NAHB, and the FOMC statment. Thursday: weekly Jobless claims, Housing starts, Building permits, the Philly FED, and a speech from FED chair Yellen. Friday: Leading indicators and Options expiration. By the looks of things next week could be quite volatile. Best to your weekend and week!

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

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friday update

SHORT TERM: pullback resumes, DOW -61

Overnight the Asian markets lost 0.1%. Europe opened higher but lost 0.1%. US index futures were lower overnight. At 8:30 Retail sales were reported higher: +0.6% v o.o%, and Export (-0.3% v +0.3%)/Import (+0.1% v 0.0%) prices were mixed. The market opened three points below yesterday’s SPX 1997 close, and continued to pullback. At 10am Consumer sentiment was reported higher: 84.6 v 82.5, Business inventories were reported higher: +0.4% v +0.4%, and the SPX hit 1987. The market then rallied to SPX 1993 by 11am before heading lower again. At 2:30 the SPX made a new low for the pullback at 1980, and then tried to rally. Heading into the close the SPX hit 1986 and closed there.

For the day the SPX/DOW were -0.50%, and the NDX/NAZ were -0.55%. Bonds lost 15 ticks, Crude lost 60 cents, Gold dropped $11, and the USD was lower. Today the WLEI was reported lower: 51.7% v 51.8%. Medium term support remains at the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots.

The market opened lower today then dropped nearly to yesterday’s low at SPX 1986. After yesterday afternoon’s activity we thought short term sentiment had turned positive. We were badly mistaken. Not only did it not turn positive, but the market made a lower low for the pullback at SPX 1980. Right at the upper end of the 1973 pivot range. After that we got a small bounce into the close. Will review this choppy pullback to see if it is giving some hints of its conclusion. Best to your 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 rebound, DOW -20

Overnight the Asian markets gained 0.1%. Europe opened higher but lost 0.3%. US index futures were lower overnight, and at 8:30 weekly Jobless claims were reported higher: 315k v 302k. The market gapped down to SPX 1988 at the open and then rallied back to 1994 by 10am. The SPX had closed at 1996 yesterday. The market pulled back to SPX 1986 by 10:30, and then it started to rally. By 12:30 the SPX hit 1995, pulled back to 1990 by 1:30. At 2pm the Budget deficit displayed some improvment: -$128.7bn v -$147.9bn. Heading into the close the SPX hit 1998 then dipped to a 1997 close.

For the day the SPX/DOW were mixed, and the NDX/NAZ were mixed. Bonds lost 4 ticks, Crude rose $1.55, Gold dropped $8, and the USD was higher. Medium term support remains at the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots. Tomorrow: Retail sales and Export/Import prices at 8:30, then Consumer sentiment and Business inventories at 10am.

The market gapped down at the open for the second time this week. After a bounce it pulled back to SPX 1986, then rallied to close the gap. During this pullback every rally made a lower high: 2008, 2000, 1997, until today’s 1998. Short term sentiment may have changed, and 1983 (a 23.6% retracement) might have been all we get for the pullback. We can’t be sure until the market makes new highs. But for now today’s SPX 1986 near retest of 1983 may have been it. Short term support is at SPX 1983 and the 1973 pivot, with resistance at 2011 and the 2019 pivot. Short term momentum ended the day above neutral. Best to your friday trading!

MEDIUM TERM: uptrend

LONG TERM: bull market

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

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