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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thursday update

SHORT TERM: another gap up and go, DOW +217

Overnight the Asian markets finished mixed. Europe opened lower but gained 0.9%. US index futures were much higher overnight. At 8:30 weekly Jobless claims were reported higher: 283k v 264k, at 9am the FHFA was reported higher: +0.5% v +0.1%. The market gapped up at the open to SPX 1943 and continued to rally. The SPX had closed at 1927 yesterday. After hitting yesterday’s SPX 1949 high in the opening minutes the market pulled back to 1944 by 10am. At 10am Leading indicators were reported higher: +0.8% v +0.2%. After that the market rallied to SPX 1958 just before 11am, pulled back to 1952 by 1pm, then rallied to 1962 by 2:30. After that the market started to pullback. Just after 3pm the SPX hit 1949, bounced to 1955 by 3:30, hit 1948 just before a 1951 close.

For the day the SPX/DOW were +1.30%, and the NDX/NAZ were +1.60%. Bonds lost 13 ticks, Crude rallied $1.45, Gold dropped $8, and the USD was higher. Medium term support rises to the 1929 and 1901 pivots, with resistance at the 1956 and 1973 pivots. Tomorrow: New home sales at 10am.

Another gap up and go open today. With the market holding the OEW 1929 pivot during yesterday’s pullback. It stormed ahead overnight, rallying right back to the 1956 pivot range again while setting up the negative divergence we mentioned yesterday. If the market is about to enter Int. wave B, it should be underway now. If not, and we are currently observing all of Major wave B. The market could rally to the targeted OEW 1973 pivot range next. This market has certainly been wild, as the DOW has been moving triple digits nearly every day for a couple of weeks. Best to your Friday trading!

MEDIUM TERM: Major B uptrend probably underway

LONG TERM: bull market

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

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wednesday update

SHORT TERM: higher open then pullback, DOW -153

Overnight the Asian markets gained 1.6%. Europe opened lower but gained 0.5%. US index futures were lower, then higher overnight, and at 8:30 the CPI was reported higher: +0.1% v 0.0%. The market opened three points above yesterday’s SPX 1941 close, dipped to 1940, then rallied to 1947 by 10am. Then after a small pullback to SPX 1942 just past 10am, the market rallied to the high of the day at 1949 by 11:30. After that the market started to pullback. Just before 1pm the SPX hit 1935, bounced to 1941 just after 1pm, then dropped to 1930 by 2:30. Another rallied followed to SPX 1938 by 3pm, but the market headed lower and closed at the low of the day 1927.

For the day the SPX/DOW were -0.80%, and the NDX/NAZ were -0.70%. Bonds lost 6 ticks, Crude dropped $2.10, Gold slipped $7, and the USD was higher. Medium term support drops to the 1901 and 1869 pivots, with resistance at the 1929 and 1956 pivots. Tomorrow: weekly Jobless claims at 8:30, the FHFA at 9am, then Leading indicators at 10am.

The market opened higher today, rallied right the edge of the OEW 1956 pivot range, then started to pullback for the first time since Monday’s open. The rally from last week’s Major A low at SPX 1821 has progressed in three Minor waves: 1898-1878-1949. At today’s high wave ‘c’ was nearly equal to wave ‘a’. This may have completed Int. wave A, and a downward Int. B could be underway. Support for Int. B should arrive at the 1901 or 1869 pivots. After that we should see another three wave rally to complete Int. C/Major B. Should the market hold the OEW 1929 pivot range, there is the possibility of one more push to the 1956 pivot to form a negative short term divergence. Then Int. B would follow. Best to your trading!

MEDIUM TERM: Major B uptrend probably underway

LONG TERM: bull market

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

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tuesday update

SHORT TERM: gap up and go rally, DOW +215

Overnight Asian markets lost 0.4%. Europe opened lower but rallied 2.0%. US index futures were higher overnight, and the market gapped up at the open to SPX 1916. The SPX had closed at 1904 yesterday. At 10am, as the rally continued, Existing home sales were reported higher: 5.17mn v 5.05mn. Also around this time NY FED Dudley’s speech was released from the closed door meeting yesterday: http://www.ny.frb.org/newsevents/speeches/2014/dud141020a.html. The rally continued, with just small pullbacks, until the SPX hit 1934 at 12:30. Then after a five point pullback the market headed higher again. At 3:30 the SPX hit 1942, then dipped to close at 1941.

For the day the SPX/DOW were +1.60%, and the NDX/NAZ were +2.50%. Bonds lost 9 ticks, Crude added 55 cents, Gold rose $2, and the USD was higher too. Medium term support now rises to the 1929 and 1901 pivots, with resistance at the 1956 and 1973 pivots. Tomorrow: the CPI at 8:30, then at 3:30 a FED open board meeting on Dodd-Frank.

The market gapped up at the open, following AAPL’s earnings beat, various rumors involving the ECB/FED, and the rally in Europe. The rally continued from the open throughout most of the day, except for a 5 point pullback around lunch time. Since yesterday’s SPX 1882 low the market has rallied 60 points. Quite impressive! What is also interesting is that the market took five trading days to drop from SPX 1970 to 1820. And now, has retraced from SPX 1820-1940 in just four days. Volatility continues. We are still counting the entire rally as Int. wave A of a Major wave B uptrend. The Int. A price targets we provided in the weekend update were either the 1929 pivot or the 1956 pivot. After that we expect a very sharp pullback for Int. wave B, followed by another sharp rally to end Major wave B. Short term support now rises to the 1929 and 1901 pivots, with resistance at the 1956 and 1973 pivot. Short term momentum is extremely overbought, with a very slight negative divergence. Best to your trading this wild market!

MEDIUM TERM: Major A downtrend probably bottomed

LONG TERM: bull market

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

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monday update

SHORT TERM: rally continues, DOW +19

Overnight the Asian markets gained 1.8%, mostly Japan. Europe opened lower and lost 1.0%. US index futures were higher, and then lower, overnight. The market opened one point below Friday’s SPX 1887 close, dipped to 1882 in the opening minutes, and then started to rise. The rally was a bit choppy as there were several five point swings along the way. But nothing like the volatility we have seen in the past week or so. At noon FED governor Tarullo’s speech was released in a closed door meeting at the NY FED: http://www.federalreserve.gov/newsevents/speech/tarullo20141020a.htm. Worth the read. Heading into the close the SPX hit 1905, then dipped to close at 1904.

For the day the SPX/DOW were +0.50, and the NDX/NAZ were +1.40%. Bonds gained 5 ticks, Crude dipped 5 cents, Gold rose $8, and the USD was lower. Medium term support rises to the 1901 and 1869 pivots, with resistance at the 1929 and 1956 pivots. Tomorrow: Existing home sales at 10am.

The market opened lower today, dipped to SPX 1882, and then rallied for the rest of the day. We did get a lower opening, but it did not dip below SPX 1878 as expected. As a result we updated the hourly SPX chart to display a Minor ‘a’ at 1898 and Minor ‘b’ at 1878. Minor wave c, to complete Int. wave A, should currently be underway. If Minor c = a, Int. A should end at the 1956 pivot. If c = 0.618 a, then Int. A should end at the 1929 pivot. Short term support is at the 1901 pivot and SPX 1878, with resistance at the 1929 and 1956 pivots. Short term momentum may be setting up a negative divergence, but no signs of weakness yet. Best to your trading!

MEDIUM TERM: Major A downtrend may have bottomed

LONG TERM: bull market

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

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weekend update

REVIEW

What a week! After the SPX dropped 3.1% last week ending at 1906, it started off quiet enough with a push to 1912 by around noon Monday. Then the bottom fell out, as the market dropped, gyrated on Tuesday, then dropped to 1821 by early afternoon Wednesday. After that it staged one heck of a come back rally, hitting SPX 1898 on Friday then ending the week at 1887. For the week the SPX/DOW were -1.0%, the NDX/NAZ were -0.9%, and the DJ World index dropped 0.8%. Economic reports for the week were biased 8:6 to the positive. On the uptick: business inventories, industrial production, housing starts, building permits, consumer sentiment, the monetary base, plus the budget surplus and weekly jobless claims improved. On the downtick: retail sales, the PPI, the NY/Philly FED, the NAHB and the WLEI. Next week is highlighted with the CPI, Existing/New home sales, and Leading indicators.

LONG TERM: bull market

The five Primary wave Cycle wave [1] bull market continues. However, the market is currently in its largest correction since 2011. Primary waves I and II completed in 2011. Primary wave III just recently completed in September 2014, and Primary wave IV is currently underway. Historically, the two most significant corrections during a five wave bull market, Primary waves II and IV in our bull market, are generally similar in the percentage of market decline. Using the DOW are a reference:

1982-1983: wave 2 -8.8%, wave 4 -8.6%. 1984-1987: wave 2 -7.9%, wave 4 -10.8%. 1987-1990: wave 2 -9.4%, wave 4 -11.3%. 1990-1998: wave 2 -10.1%, wave 4 -16.8. 1998-2000: wave 2 -7.5%, wave 4 -12.2%. 2002-2007: wave 2 -9.0%, wave 4 -10.7%. Even the lengthy 13 year bull market, 1987-2000 in OEW terms, met these parameters: wave 2 -22.4%, wave 4 -21.6%.

SPXweekly

Since Primary wave II took fives months while the market declined 22% in the SPX. We are expecting Primary IV to take about three months with a market decline between 15% and 20%. It could be higher, but not likely lower. The rising channel in the weekly chart above looks like it will provide good support.

MEDIUM TERM: Major wave A may have bottomed

Primary wave III topped in mid-September at SPX 2019 after completing the five Intermediate waves of Major wave 5. All Primary waves divide into five Major waves. As the market was correcting we set five parameters to help confirm that the top was in place. By a week ago Friday all five were met, including a downtrend confirmation which had occurred a week earlier.

The market then declined from SPX 2019 in three Intermediate waves: A 1926, B 1978, and C 1821. At the SPX 1821 low the market had lost 9.8% of its value. This was the largest correction since mid-2012. Refer to the weekly chart. On Thursday we posted a tentative green Major wave A label at the SPX 1821 low, when the characteristics of the market changed. Throughout most of the Major A decline we had observed seven wave declines, separated by quick one wave rallies. On Wednesday we observed a five wave advance from SPX 1821 to 1869. We knew when SPX 1869 was exceeded the characteristics had changed. This type of change often suggests a change is trend is underway.

SPXdaily

As noted above we are expecting Primary IV to correct for about three months. We are also expecting it to unfold in three waves: Majors A, B and C. Since Primary II took the form of an elongated flat, we are expecting a simple zigzag for Primary IV. If Major wave A ended on Wednesday at SPX 1821, we should now be in a counter rally Major wave B. Typically these counter rallies during a prolonged decline retrace anywhere from 50% to 61.8% of wave A. This suggests to rally to SPX 1920, or SPX 1943. They can also retrace back to the high of the B wave of the first ABC decline. In this case SPX 1978. Since the market has already rallied back to SPX 1898 in just two days we think the 1956 and 1973 pivots should be the upside targets for Major wave B.

Medium term support is currently at the 1869 and 1841 pivots, with resistance at the 1901 and 1929 pivots.

SHORT TERM

The downtrend decline from SPX 2019 unfolded in three Intermediate waves, with each of those three waves dividing into three Minor waves. The first Minor wave decline of Int. A was complex and the second simple. The first Minor wave decline of Int. C was simple and the second complex. Some alternation as the downtrend was unfolding. At Wednesday’s SPX 1821 low Int. wave C equaled a near perfect 1.618 relationship to Int. A.

SPXhourly

If we are indeed in Major wave B we should observe a three Intermediate wave advance, with three Minor waves within each Int. wave. The same as Major wave A only in reverse. From the SPX 1821 low we have had quite a complex rally: 1869-1835-1868-1852-1876-1857-1898-1878-1892. Notice nearly all these waves overlap each other as expected. We certainly would not consider this an impulsive advance. Thus far it appears the entire rally from SPX 1821-1898 can be counted as Minor wave a of Int. wave A. The pullback to SPX 1878 is probably part of Minor wave b. Which suggests some downside early Monday, providing the market does not exceed SPX 1898 first. After Minor b completes we should get a Minor c rally to the 1929 pivot ending Int. wave A. Keep in mind this market remains quite volatile with triple digit DOW swings nearly every day. Short term support is at the 1869 and 1841 pivots, with resistance at the 1901 and 1929 pivots. Short term momentum ended the week below neutral after getting extremely overbought.

FOREIGN MARKETS

Asian markets were mostly lower on the week for a net 1.0% loss.

European markets were sharply lower all week but rebounded Friday for a net 1.9% loss.

The Commodity equity group were all higher for net gain of 0.6%.

The DJ World index lost 0.8% on the week.

COMMODITIES

Bonds had a wild week, remain in an uptrend, and gained 0.9% on the week.

Crude continues to downtrend losing 3.0% on the week.

Gold is trying to uptrend and gained 1.2% on the week.

The USD looks like it is in a downtrend, unconfirmed, and lost 0.9% on the week.

NEXT WEEK

Tuesday: Existing home sales. Wednesday: the CPI. Thursday: weekly Jobless claims, FHFA housing prices, and Leading indicators. Friday: New home sales. Best to your weekend and week!

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

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friday update

SHORT TERM: gap up and go, DOW +263

Overnight the Asian markets lost 0.2%. Europe opened higher and gained a huge 2.6%. US index futures were much higher overnight. At 8:30 Housing starts were reported higher: 1017k v 956k, Building permits were reported higher: 1018k v 998k, and FED chair Yellen gave a speech: http://www.federalreserve.gov/newsevents/speech/yellen20141017a.htm. The market gapped up at the open to SPX 1879 and continued to rally. The SPX had closed at 1863 yesterday. As the market continued to rally at 10am Consumer sentiment was reported at a seven year high: 86.4 v 84.6. The market continued to rally until around noon when the SPX hit 1898. Then it started to pullback. Around 2pm the SPX hit 1878 and then tried to rally. The rally carried the SPX to 1892 by 3:30, then a pullback ended the week at 1887.

For the day the SPX/DOW were +1.45%, and the NDX/NAZ were +1.15%. Bonds lost 13 ticks, Crude gained 35 cents, Gold lost $2, and the USD was higher. Medium term support rises to the 1869 and 1841 pivots, with resistance at the 1901 and 1929 pivots. Last night the FED reported a rise in the Monetary base: $4.114tn v $4.036tn. Today the WLEI was reported lower again: 51.0% v 51.6%.

The market gapped open for the fourth day this week on Options expiration Friday. Been a wild week. The gap up jumped right over the 1869 pivot range, which was resistance yesterday, and the rally carried the SPX right to the 1901 pivot range. Where it ran into some resistance. Today was actually a quieter day, wave-wise, than any day this week. This market has been making triple digit moves in the DOW, on a daily basis, for quite some time. Volatility like this often indicates an ongoing correction. While we may have ended the Major wave A downtrend at SPX 1821, volatility is likely to continue during this potential Major wave B uptrend. Will cover where we think we are in the weekend update. Best to your weekend!

MEDIUM TERM: Major A downtrend may have bottomed

LONG TERM: bull market in Primary IV

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

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