friday update

SHORT TERM: gap up opening, DOW +195

Overnight the Asian markets gained 2.8%. Europe opened higher and gained 1.9%. US index futures were sharply higher overnight. At 8:30 the PCE was reported higher: +0.1% v +0.1%, Personal income was reported higher: +0.2% v +0.3%, but spending was lower: -0.2% v +0.5%. The market gapped up at the open to SPX 2011. It had closed at SPX 1995 yesterday. Within the opening minutes it rose to SPX 2014, then dipped to 2009 just past 10am, before moving higher. At 9:45 the Chicago PMI was reported higher: 66.2 v 60.5. Then at 10am Consumer sentiment was also reported higher: 86.9 v 86.4. By 11:30 the SPX hit 2017. After a pull back to SPX 2011 by 3:30, it then rallied to 2018 to end the day.

For the day the SPX/DOW were +1.15%, and the NDX/NAZ were +1.40%. Bonds lost 8 ticks, Crude dropped 40 cents, Gold fell $25, 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 decline in the Monetary base: $3.976tn v $4.114tn. Today the WLEI was reported lower again: 48.8% v 49.9%.

Markets rallied overnight on a surprise increase in the monetary expansion by the Bank of Japan. The US market gapped up to SPX 2011, bounced around a bit, and then moved higher. The current uptrend has now gone 12 days of higher lows and equal/higher highs. Quite surprising considering we thought the probabilities suggested this to be a Major B wave rally of an ongoing Primary IV. We were obviously wrong as Primary III appears to be extending yet again. We spent most of the day attempting to unravel how the recent market action fits within the context of the overall bull market. We will report our findings in the weekend update.

Despite what appeared to be a highly probable setup for Primary IV. For the second year in a row it has eluded us again. We thought Primary III had topped around this time last year as well. The market extended higher then, and extended higher again this time as well. By the tone of some of the recent comments on the blog, there appears to be a misunderstanding on how to use the information we provide. We will be posting some general guidelines to hopefully prevent these misunderstandings from occurring in the future. For now, we can just say that we only trade, not day trade, what we post, and lost money during this unexpected rally beyond the OEW 1973 pivot. Also, keep in mind we are dealing with probabilities, not guarantees. The information we provide is not to be considered trading recommendations. We are just tracking the markets as they unfold. More on this over the weekend. Best to your weekend!

MEDIUM TERM: uptrend continues

LONG TERM: bull market

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

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thursday update

SHORT TERM: rally continues, DOW +221

Overnight the Asian markets gained 0.4%. Europe opened higher, dropped, then gained 0.3%. US index futures were lower overnight but rebounded after Q3 GDP was reported higher than expected: +3.5% v +2.5% est. Also at 8:30 weekly Jobless claims were reported higher: 287k v 283k. At 9am FED chair Yellen’s speech was released: http://www.federalreserve.gov/newsevents/speech/yellen20141030a.htm. The market opened four points below yesterday’s SPX 1982 close, dipped to 1977, and then began to rally. Within the opening minutes the SPX rallied to 1984, then dropped to 1975 by 10am. After that the market rallied to SPX 1999 by 2pm. A pullback followed to SPX 1987 by 3pm, then the market rallied into at 1995 close.

For the day the SPX/DOW were +0.95%, and the NDX/NAZ were +0.30%. Bonds gained 2 ticks, Crude dropped $1.20, Gold slid $12, and the USD was higher. 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, and Consumer sentiment at 10am.

The market opened lower today, bounced, then hit SPX 1975. After that it rallied, with nothing more than a three point pullback, to SPX 1999. This market has now rallied about 1.5% more than what was expected when this uptrend began at SPX 1821. In fact, the strength of the rally has been quite surprising as well. Since that low, 11 days ago, the market has made a higher low and a higher/equal high every day. Do not recall, in this five years bull market, when that has occurred before.

We continue to count this uptrend as three waves SPX: a 1898, b 1878, and c 1999. At SPX 2003 wave c equals 1.618 wave a. The rally has been so steady that counting our shortest timeframes has been futile. We can state two points of interest at this time. If the market makes new highs and this uptrend turns into five waves, then Primary III has extended yet again. If the market makes new highs, it will be the first time since this bull market began, that it has done so without aide of a FED liquidity program. All new bull market highs up till now, have been driven with either QE 1, 2 or 3, or Operation Twist 1 or 2. This would suggest the dynamics of this bull market may be changing. Which could suggest a more normalized business cycle is now driving the bull market. Two things to consider in the weeks and months ahead, if the market makes new highs. Short term support is at the 1973 and 1956 pivots, with resistance at SPX 2000 and the 2019 pivot. Short term momentum continues to set up negative divergences. Best to your end of month trading!

MEDIUM TERM: Major B uptrend continues

LONG TERM: bull market

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

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wednesday update

SHORT TERM: FOMC day, DOW -31

Overnight the Asian markets gained 1.2%. Europe opened higher and gained 0.3%. US index futures were lower overnight, but moved back up as the market opened unchanged at SPX 1985. After the open the market rallied to SPX 1991, and then started to drift lower ahead of the FOMC statement. At 2pm the market was trading at SPX 1981 when it was released: http://www.federalreserve.gov/newsevents/press/monetary/20141029a.htm. Suggest you read it. After the release the market dropped to SPX 1972, bounced to 1978, then dropped to 1969, before rallying back to 1980 by 2:30. Typical FOMC statement volatility. Then just before 3pm the SPX hit 1973, bounced to 1978 by 3pm, then dropped to 1971 just after 3pm. After that the market started to recover. At 3:30 the SPX hit 1984, then dipped to close at 1982.

For the day the SPX/DOW were -0.15%, and the NDX/NAZ were -0.35%. Bonds lost 16 ticks, Crude gained 90 cents, Gold dropped $17, and the USD was higher. Medium term support remains at the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots. Tomorrow: Q3 GDP (est. +2.5%) and weekly Jobless claims at 8:30. Then a speech from FED chair Yellen at 9am.

The market opened unchanged today, rallied to SPX 1991, then dropped to 1969 after the FOMC statement. Today’s decline was the largest since the pullback from 1869-1835 very early in this uptrend. While it was a large pullback, it did not drop below yesterday’s SPX 1964 level. So the higher lows, and equal/higher highs, streak extends to ten days. Despite today’s higher high at SPX 1991 our count remains unchanged. Short term support is at the 1973 and 1956 pivots, with resistance at SPX 1991 and SPX 2000. Short term momentum dropped to neutral after today’s negative divergence at the highs. Q 3 GDP tomorrow, best to your trading!

MEDIUM TERM: Major B makes new high

LONG TERM: bull market

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

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tuesday update

SHORT TERM: gap up and go, DOW +188

Overnight the Asian markets gained 0.6%. Europe opened higher and gained 1.0%. US index futures were higher overnight. At 8:30 Durable goods orders were reported lower: -1.3% v -18.4%, and at 9am Case-Shiller was reported lower: +5.6% v +6.7%. The market gapped up at the open to SPX 1969 and continued to rally. At 10am Consumer sentiment was reported higher: 94.5 v 86.0. At 11:30 the SPX hit 1975, pulled back to 1970 by 12:30, then moved higher again. Heading into the close the SPX hit 1985 and closed there.

For the day the SPX/DOW were +1.15%, and the NDX/NAZ were +1.60%. Bonds lost 8 ticks, Crude added 25 cents, Gold rose $1, and the USD was lower. Medium term support rises to the 1973 and 1956 pivots, with resistance at the 2019 and 2070 pivots. Tomorrow: the FOMC statement at 2pm.

The market gapped up at the open today, above yesterday’s high. It then rallied to the OEW 1973 pivot, pulled back, and then exceeded the +/- 7 point pivot range when it reached 1981. This rally has now extended somewhat beyond what was expected. However, we continue to see only three waves from the SPX 1821 low. Should it turn into five waves then we would consider adjusting the Primary III count. Also of note. We posted yesterday that the entire, now nine day rally, has produced higher highs/lows every day. The one exception was yesterday’s 1965 high, equaling Friday’s high. When this changes the trend may change as well. Short term support is at the 1973 and 1956 pivots, with resistance now at SPX 1986 and SPX 2000. Short term momentum is extremely overbought with a negative divergence. FOMC day tomorrow, which are often volatile, best to your trading!

MEDIUM TERM: Major B uptrend continues

LONG TERM: bull market

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

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monday update

SHORT TERM: gap down opening, DOW +12

Overnight the Asian markets lost 0.2%. Europe opened higher but lost 0.8%. US index futures were lower overnight, and the market gapped down to SPX 1958 at the open. The SPX had closed at 1965 on Friday. In the first half hour of trading the SPX hit 1951, the low for the day, and then began to rally. At 10am Pending home sales were reported higher: +0.3% v -1.0%. By 11am the SPX had rallied back to 1965 to close the opening gap. Then after a pullback to SPX 1956 by noon, it rallied to 1964 by 1:30. Then after a pullback to SPX 1958 by 3pm, the market bounced to close at 1962.

For the day the SPX/DOW were mixed, and the NDX/NAZ were +0.10%. Bonds gained 4 ticks, Crude dipped 25 cents, Gold slipped $3, and the USD was lower. Medium term support remains at the 1956 and 1929 pivots, with resistance at the 1973 and 2019 pivots. Tomorrow: Durable goods orders at 8:30, Case-Shiller at 9am, Consumer confidence at 10am, and the FED starts its two day FOMC meeting.

The market gapped down at the open today, for the first time since this rally began about two weeks ago. The down opening took the SPX to 1951, but the market quickly recovered to close the gap at 1965. After that it traded within that opening range for the rest of the day. While the US market has recouped nearly 73% of the recent downtrend. Europe has barely retraced 50% of their downtrend, and was down 0.8% today. Europe led lower during Primary II, and is doing so again during Primary IV. Throughout this rally, which is now in its eight day, every day had produced a higher high and high low from the day before. Except today. Today the SPX only matched Friday’s high (1965), and made a higher low (1951). A reversal in this trend may help in determining the Major B high. Short term support at the 1956 and 1929 pivots, with resistance at the 1973 and 2019 pivots. Short term momentum dropped to neutral after Friday’s negative divergence. Best to your trading!

MEDIUM TERM: Major wave B uptrend probably underway

LONG TERM: bull market

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

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weekend update

REVIEW

One impressive rally this week! The week started off at SPX 1887. After a notable pullback to SPX 1882 the market rallied straight up to 1949 by Wednesday. Then after a pullback to SPX 1927 on Wednesday, the market rallied to 1965 to end the week. For the week the SPX/DOW gained 3.35%, the NDX/NAZ gained 5.60%, and the DJ World index gained 3.10%. On the economic front things were not as rosy, as positive reports nudged out negative ones. On the uptick: existing home sales, the CPI, the FHFA index and leading indicators. On the downtick: new home sales, the WLEI, plus weekly jobless claims rose. Next week is FOMC week! Plus we get reports on Q3 GDP, the PCE and the Chicago PMI.

LONG TERM: bull market

The five Primary wave Cycle wave [1] bull market continues to unfold. We continue to count: Primary waves I and II ending in 2011, Primary III ending in September with Primary IV underway since then. After the SPX 2019 high five weeks ago Friday, the market started to work its way lower for about one week and a half. After that, and since then, it has become quite volatile. With the DOW moving triple digits nearly every day. This type of volatility usually occurs only in corrections.

SPXweekly

When reviewing the Primary II correction in 2011 one should notice that it unfolded in a five wave elongated flat: abA-B-C. Using alternation as a guide we have been expecting a simple zigzag for Primary IV. Basically, the first three waves of Primary II should suffice for a Primary IV correction. After this weeks strong rally we took a closer look at those three waves back in 2011.

The first wave down, labeled Int. a, took several weeks as the market lost 8.2%. The RSI got quite oversold, and then the market started to rally in Int. b. During the rally, which took a few weeks, the market had one week in which it surged +5.2%. The market then went sideways before dropping in Int. wave c. The total decline for Primary II was 22%. During Primary IV were are observing similar activity. The first decline took several weeks as the market lost 9.8%. After getting quite oversold, the market started to rally in a b wave. This week the market surged 4.1% during this rally. They certainly look quite similar.

MEDIUM TERM: Major B uptrend awaiting confirmation

After Primary wave III topped at SPX 2019 we observed an Int. wave a down to SPX 1926. Then we had an Int. wave b rally to SPX 1978. After that the market got quite volatile. After a drop to SPX 1925, the market rallied in one day to SPX 1970. The next day it totally reversed, giving back nearly all of that gain. After that the market went down, in a series of corrective waves, until it reached SPX 1821. At that point Int. c was a near perfect 1.618 relationship to Int. a.

SPXdaily

With the market then quite oversold it started to rally. After the first day we noted the characteristics of the market had changed, and suggested Major wave B was underway. We also suggested the OEW 1973 pivot range would probably be the upside target. However, we expected the advance to be quite choppy. The rally started off choppy, SPX 1821-1898, but then took off to the upside after a pullback to SPX 1878. At first we thought the uptrend would be three Int. waves subdividing into three Minor waves. When the market cleared the 1956 pivot on Friday we updated the charts to display Int. A at SPX 1898, Int. B at 1878, and Int. C underway. When this last rally concludes, Major wave B should conclude, and a potentially nasty Major wave C downtrend should follow. Medium term support is at the 1956 and 1929 pivots, with resistance a the 1973 and 2019 pivots.

SHORT TERM

During the Major wave A downtrend we noted the decline was occurring in a series of seven waves sets. The market was quite volatile and making notable waves several times a day. The last decline was also seven waves into the SPX 1821 low. And then suddenly the market changed its characteristics. As the rally progressed from the low it was quite volatile, but after several days it started to settle down. At the peak of the volatility, into the low and coming out of it, we counted ten waves on each of those two days.

SPXhourly

We noted during the week that we have been observing seven wave patterns again on the way up during this uptrend. These patterns have been much larger than during the decline. The first rally, Int. A, unfolded: 1869-1835-1868-1852-1876-1857-1898. Then after an Int. wave B pullback to 1878, Int. C has unfolded as follows: 1892-1882-1949-1927-1962-1946-1965+. Two sets of seven wave patterns, with the second set yet to complete. Our upside target has been the OEW 1973 pivot range, so we expect this last rally to top within the 1966-1980 range. Of note, Int. wave B of Major wave A ended at SPX 1978. Short term support is at the 1956 and 1929 pivots, with resistance at the 1973 and 2019 pivots. Short term momentum continues to form a negative divergence as the market has worked its way higher. The first 10 point reversal off of any high could suggest the top has been achieved. Best to your trading!

FOREIGN MARKETS

The Asian markets were nearly all higher and gained a net 1.8% on the week.

The European markets were all higher gaining 3.2% on the week.

The Commodity equity group were mixed and lost 2.7% on the week.

The DJ World index gained 3.1% on the week.

COMMODITIES

Bonds continue to uptrend but lost 0.5% on the week.

Crude remains in a downtrend and lost 2.0% on the week.

Gold is trying to uptrend, but lost 0.6% on the week.

The USD looks like it is heading into a downtrend, but gained 0.6% on the week.

NEXT WEEK

Monday: Pending home sales at 10am. Tuesday: Durable goods orders, Case-Shiller and Consumer confidence. Wednesday: FOMC statement at 2pm. Thursday: weekly Jobless claims and Q3 GDP (est. +2.65). Friday: Personal income/spending, the PCE, the Chicago PMI, and Consumer sentiment. This certainly looks like it could be quite a wild week. Best to your weekend and week!

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

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friday update

SHORT TERM: rally continues, DOW +128

Overnight the Asian markets gained 0.6%. Europe opened lower and lost 0.6%. US index futures were lower overnight, but rebounded, as the market opened two points above yesterday’s SPX 1951 close. In the opening minutes the market rallied to SPX 1958, then pulled back to 1946 by 10am. At 10am New home sales were reported lower: 467k v 504k. The market then turned around and rallied to SPX 1963 by 12:30. After a pullback to SPX 1955 the market moved even higher. Heading into the close the SPX hit 1965 and closed there.

For the day the SPX/DOW were +0.70%, and the NDX/NAZ were +0.70%. Bonds gained 1 tick, Crude lost 75 cents, Gold slipped $2, and the USD was lower. Medium term support rises to the 1956 and 1929 pivots, with resistance at the 1973 and 2019 pivots. Today the WLEI reported its first contraction since mid-2012: 49.9% v 51.6%.

The market opened higher today, dipped, and then rallied above yesterday’s SPX 1962 high. We can now count a seven wave advance, if SPX 1965 was the high, from the low at 1878. The advance from SPX 1821-1898 was also seven waves. This suggests, this entire SPX 1821-1965+ rally may be all of Major wave B. More on this in the weekend update. Short term support rises the 1956 and 1929 pivots, with resistance at the 1973 and 2019 pivots. Short term momentum continues to display negative divergences as the market moves higher. Best to your weekend!

MEDIUM TERM: Major B uptrend probably underway

LONG TERM: bull market

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

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