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

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friday update

SHORT TERM: first notable pullback of week, DOW -38

Overnight the Asian markets gained 0.1%. Russia moved its convoy across the Ukrainian border. Europe opened lower and lost 0.6%. US index futures were lower overnight, but the market opened unchanged at SPX 1992. After an initial drop to SPX 1987 the market rose as to 1994 just past 10am as FED chair Yellen’s Jackson Hole speech was released: http://www.federalreserve.gov/newsevents/speech/yellen20140822a.htm. Then the market pulled back again. By 11am the SPX hit 1985, got oversold short term, and tried to rally. The rally hit SPX 1992 three times in the afternoon, then the market ended at 1988.

For the day the SPX/DOW were -0.20%, and the NDX/NAZ were +0.15%. Bonds lost 4 ticks, Crude slipped 35 cents, Gold rose $3, and the USD was higher. Medium term support remains at the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots. Last night the FED reported a record high in the Monetary base: $4.125tn v $4.121tn. Today the WLEI was reported lower: 52.8% v 53.6%.

The market opened unchanged today, dipped five points, rallied within one point of the SPX 1995 high, and then pulled back to 1985. After that it remained within that trading range for the rest of the day. We marked a Minute wave iii high at SPX 1995 during the second pullback, and are waiting to see if Minute iv ended at today’s 1985 low. When it does end, Minute v can rally to any level since Minute iii (53 pts) was longer than Minute wave i (36 pts).

Short term support is now at SPX 1985 and the 1973 pivot, with resistance at SPX 1995 and the 2019 pivot. Short term momentum dropped to oversold after being overbought all week, then bounced. The short term OEW charts flip-flopped today as the SPX 1988 reversal level was crossed several times. 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: new all time highs, DOW +60

Overnight Asian markets gained 0.1%. Europe opened higher and gained 0.8%. US index futures were higher overnight, and at 8:30 weekly Jobless claims were reported lower: 298k v 311k. The market opened two points above yesterday’s SPX 1987 close, and then hit 1992 by 10am. At 10am the Philly FED (28.0 v 23.9), Existing homes sales (5.15mn v 5.04mn), and Leading indicators (+0.9% v +0.3%)were all reported higher. The market pulled back to SPX 1987 just past 10am, and then started drifting higher. Just before 3:30 the SPX hit 1995, then dipped to 1992 to end the day.

For the day the SPX/DOW were +0.30%, and the NDX/NAZ were +0.15%. Bonds gained 3 ticks, Crude added 55 cents, Gold dropped $13, and the USD was lower. Medium term support remains at the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots. Tomorrow: a speech from FED chair Yellen at 10am, then a speech from ECB president Draghi at 12:30.

The market opened within two points of the SPX 1991 all time high, and by 10am it made a new high. After a 5 point pullback just past 10am, the market continued to set new records. Last friday, around noon, the market made a significant low at SPX 1942 – which we labeled Minute wave ii of Minor 3. Since then the market has risen over 50 points without one meaningful pullback. This rally certainly looks like Minute iii of Minor 3. The count posted remains unchanged.

Short term support is now at SPX 1991 and the 1973 pivot, with resistance at the 2019 and 2070 pivots. Short term momentum remains overbought, which it has been for most of the week. The short term OEW charts remain positive from 1950, with the reversal level now SPX 1988. Best to your Jackson Hole trading!

MEDIUM TERM: uptrend

LONG TERM: bull market

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

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wednesday update

SHORT TERM: pullbacks but rally continues, DOW +60

Overnight the Asian markets lost 0.1%. Europe opened lower and lost 0.3%. US index futures were lower overnight, and the market opened at SPX 1979. The SPX had closed at 1982 yesterday. Right after the open the market started to rally. With nothing more than two point pullbacks along the way the rally hit a new high at SPX 1986 around 1:30. At 2pm the FED released the FOMC minutes and the market started to pullback: http://www.federalreserve.gov/newsevents/press/monetary/20140820a.htm. Just past 2pm the market hit SPX 1980, bounced, retested it, and then headed higher. At 3:30 the SPX hit 1989, then dipped to close at 1987.

For the day the SPX/DOW were +0.30%, and the NDX/NAZ were mixed. Bonds lost 11 ticks, Crude added 55 cents, Gold dropped $4, and the USD was higher. Medium term support remains at the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots. Tomorrow: weekly Jobless claims at 8:30, then Existing home sales, the Philly FED and Leading indicators all at 10am.

The market opened five points under yesterday’s SPX 1983 high, then rallied to 1986. After the FOMC minutes were released the market had its largest pullback of the week: six points. It then rallied to SPX 1989 before closing at 1987. Thus far, we have a Minor wave 1 and 2 (1945-1928), an unfinished Minor 3 (1964-1942-1989 so far), during this uptrend. We did get two pullbacks today, but both are not noteworthy.

Short term support is at the 1973 pivot and SPX 1964, with resistance at SPX 1991 and the 2019 pivot. Short term momentum ended the day with a potential negative divergence. The short term OEW charts are still positive with the reversal level now SPX 1981. Best to your trading!

MEDIUM TERM: uptrend confirmation pending

LONG TERM: bull market

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

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tuesday update

SHORT TERM: rally continues, DOW +81

Overnight the Asian markets gained 0.5%. Europe opened higher and gained 0.7%. US index futures were higher overnight as well. At 8:30 the CPI (+0.1% v +0.3%, Housing starts (1093k v 893k) and Building permits (1052k v 963k) were all reported higher. The market opened three points above yesterday’s SPX 1972 close and continued to rally. Nearing 3:30 the SPX hit 1983, then dipped to close at 1982.

For the day the SPX/DOW were +0.50%, and the NDX/NAZ were +0.45%. Bonds lost 4 ticks, Crude dropped 75 cents, Gold slipped $3, and the USD was higher. Medium term support rises to the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots. Tomorrow: FOMC minutes at 2pm.

On Friday the market closed just under the 1956 pivot, then gapped over it on Monday. On Monday the market closed just under the 1973 pivot, then opened above it on Tuesday. This is typical market activity, during this bull market, when dealing with overhead resistance pivots. The next important level is not a pivot, but the all time high SPX 1991. Thus far from the SPX 1905 low we have had three rallies: 1905-1945, 1928-1964, and 1942-1983. We have been labeling this advance as Minor 1-2, and Minute i-ii-iii. Notice all three rallies have been about the same size, between 36 and 41 points. Even the two pullbacks (1945-1928 and 1964-1942) have been similar. With this symmetry and an extreme overbought short term reading today a pullback may be next.

Short term support is at the 1973 and 1956 pivots, with resistance at SPX 1991 and the 2019 pivot. Short term momentum hit extremely overbought today. The short term OEW charts remain positive with the reversal level now SPX 1975. Best to your trading!

MEDIUM TERM: confirmation highly probable

LONG TERM: bull market

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

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monday update

SHORT TERM: gap up and go, DOW +176

Overnight the Asian markets gained 0.4%. Europe opened higher and gained 1.3%. US index futures were higher overnight, and the market gapped up at the open to SPX 1965. The market had closed at SPX 1955 on friday. At 10am the NAHB was reported higher: 55 v 53. The rally continued higher to SPX 1972 by 12:30. A small pullback followed to SPX 1969 by 3:30, then back to the highs to end the day.

For the day the SPX/DOW were +0.95%, and the NDX/NAZ were +0.90%. Bonds lost 10 ticks, Crude dropped $1.45, Gold slipped $5, and the USD was higher. Medium term support rises to the 1956 and 1929 pivots, with resistance at the 1973 and 2019 pivots. Tomorrow: the CPI, Housing starts and Building permits all at 8:30.

The market gapped up at the open, rallied to within one point of the OEW 1973 pivot, was quite overbought, and then began to pullback. The rally off friday’s SPX 1942 low has already traversed 30 points in just one day of trading. When the SPX passed 1964 this AM we marked that low Minute wave ii. Minute iii of Minor 3 should be underway. Normal pullbacks at this juncture should be limited to about 10 points. With the NAZ and NDX both in confirmed uptrends it appears it’s just a matter of time before the SPX and DOW confirm as well.

Short term support is at SPX 1964 and the 1956 pivot, with resistance at the 1973 pivot and SPX 1991. Short term momentum hit quite overbought at today’s high. The short term OEW charts remains positive with the reversal level now SPX 1964. Best to your trading!

MEDIUM TERM: uptrend highly probable

LONG TERM: bul l market

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

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weekend update

REVIEW

The market opened the week with a gap up to SPX 1945, pulled back to 1928 by tuesday, then gapped up twice more during the week to hit 1964 on friday. Then some geopolitical news spooked the market and it sold off to SPX 1942 before rebounding in the afternoon. For the week the SPX/DOW 0.95%, the NDX/NAZ were +2.40%, and the DJ World index rose 1.65%. On the economic front positive reports were slightly more than negative ones. On the uptick: business inventories, export prices, the PPI, industrial production, capacity utilization and the budget deficit improved. On the downtick: the NY FED, consumer sentiment, the WLEI and weekly jobless claims rose. Next week we get the FOMC minutes, reports on Housing, Jackson Hole, Wy., and Leading indicators.

LONG TERM: bull market

The bull market continues to unfold as labeled. A Supercycle wave 2 low in March 2009 at SPX 667, kicked off Cycle wave [1] of Supercycle 3. Cycle wave bull markets unfold in five Primary waves. Primary waves I and II ended in 2011, and Primary wave III has been underway since the SPX 1075 low. Primary I divided into five Major waves with a subdividing Major wave 1. Primary III has divided into five Major waves as well, but Major waves 3 and 5 are subdividing.

SPXweekly

Major waves 1 and 2 completed in late-2011, and Major waves 3 and 4 completed in early 2014. A subdividing Major wave 5 has been underway since that SPX 1738 low. Currently it looks like Intermediate waves i, ii, iii and iv have completed, and the market is in Int. wave v. When it concludes it should end Major 5, and Primary III as well. Then the market should experience its largest correction since 2011 for Primary wave IV. After that, a Primary V should take the market to new highs again to end the bull market.

MEDIUM TERM: uptrend probable

After the Intermediate wave iii uptrend ended at SPX 1991/1985 we counted a complex zigzag down to SPX 1905. This zigzag alternated with the irregular zigzag for Int. wave ii. Both corrections produced similar market loses of 4.4% and 4.3%. At the Int. wave iv downtrend low we had a good oversold condition in the daily MACD, and a positive divergence in the daily RSI. The technical conditions were set for an uptrend to begin, and the market has rallied about 3% off that low.

SPXdaily

Off the SPX 1905 low we had a rally to 1945, a pullback to 1928, a rally to 1965, a pullback to 1942, and now a rally to 1955. We labeled the first rally and pullback as Minor waves 1 and 2. We are expecting this Int. wave v uptrend to unfold in five Minor waves, with a subdividing Minor wave 3. The rally to SPX 1965 on friday we labeled as Minute wave i of Minor 3, and the pullback to 1942, also on friday, could have been all of Minute wave ii. This would suggest the friday afternoon rally to SPX 1955 is the beginning of Minute wave iii.

Usually the daily RSI gets quite overbought during Minor wave 3’s. And thus far the RSI has yet to reach overbought. This suggests the market could be entering the best part of the uptrend. And, the recent uptrend confirmation by the NDX supports that scenario.

We offer one caveat. Should the SPX drop belows 1928 before the uptrend is confirmed the recent advance would be counted as an a-b-c rally to 1965 in an ongoing Int. iv downtrend. Medium term support is at the 1929 and 1901 pivots, with resistance at the 1956 and 1973 pivots.

SHORT TERM

Short term support is at SPX 1942 and the 1929 pivot, with resistance at the 1956 and 1973 pivots. Short term momentum ended the week above neutral. The short term OEW charts ended postive with the reversal level now 1951.

SPXhourly

As noted above we labeled Minor waves 1 and 2 at SPX 1945 and 1928 respectively. If Minor 3 tops at 1.618 times Minor 1 it should reach SPX 1993. If Minute waves iii, iv and v top at 1.618 times Minute i, should Minute ii hold at 1942, Minor 3 should reach SPX 2000. Right now, the market’s objective is to clear the 1956 pivot range, and then the 1973 pivot range. For the entire uptrend we noted four levels last weekend: SPX 2003, the 2019 pivot range, SPX 2028 and the 2070 pivot range. Just some numbers to keep in mind in the weeks ahead.

FOREIGN MARKETS

The Asian markets were all higher on the week for a net gain of 2.2%.

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

The Commodity equity group were all higher gaining 3.1%.

The DJ World index gained 1.65%.

COMMODITIES

Bonds are still uptrending and gained 0.6% on the week.

Crude is still downtrending but only lost 0.1% on the week.

Gold is still uptrending but lost 0.4% on the week.

The USD remains in an uptrend but finished flat.

NEXT WEEK

Monday: the NAHB at 10am. Tuesday: the CPI, Housing starts and Building permits. Wednesday: the FOMC minutes. Thursday: weekly Jobless claims, Existing home sales, the Philly FED and Leading indicators. Friday: a speech from FED chair Yellen at Jackson Hole, Wy. at 10am. Jackson Hole, FOMC minutes, Housing reports, should be an interesting week. Best to your weekend and week!

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

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