REVIEW
Another productive week for the equity markets. For the second week in a row the SPX made new bull markets highs, and is now just 5% below its all time high. The DOW is around 2% below its all time high. For the week the SPX/DOW gained 1.5%, and the NDX/NAZ were mixed. Foreign markets were quite mixed. Asian markets lost 0.6%, European markets gained 1.7%, and the DJ World index gained 0.9%. On the economic front positive reports outpaced negative ones again. On the uptick: FHFA housing prices, leading indicators, the monetary base, the WLEI, and weekly jobless claims improved. On the downtick: new and existing home sales. Next week, the FOMC meets on tuesday/wednesday and we get a plethora of economic reports including: Q4 GDP, the Payrolls report and PCE. Best to your week!
LONG TERM: bull market
The 2009-2013 bull market continues to unfold as expected. We continue to envision this advance as Cycle wave [1] of a new Supercycle 3 bull market. Bullish cycle waves unfold in five Primary waves. Primary waves I and II completed in 2011 at SPX 1371 and 1075 respectively. Primary wave III has been underway since then. Primary I unfolded in the typical five Major waves, with only Major wave 1 subdividing into five Intermediate waves. Primary wave III is also unfolding in five Major waves, but both Major wave 1 and 3 are subdividing into five Intermediate wave structures.
Thus far, Major waves 1 and 2, of Primary III completed in 2012 at SPX 1422 and 1267 respectively. Major wave 3 began from that low. Within Major 3 the market has completed Intermediate waves i and ii in late 2012 at SPX 1475 and 1343 respectively. Intermediate wave iii has been underway from that low and has already made new bull market highs.
The weekly chart displays all the counts from late 2002. The bull market from 2002-2007 to complete SC1. The bear market from 2007-2009 to complete SC2. And, the current bull market. Observe how the MACD has spent much of the time well above the neutral line, similar to the bull market during 2002-2007. Also observe how the RSI has hit extremely overbought levels, similar to the previous bull market as well. One last note is the extreme RSI overbought readings during the Major waves. This indicates Major wave 3 has much more work on the upside ahead.
MEDIUM TERM: new uptrend high
The current uptrend, Intermediate wave iii, began in mid-November at SPX 1343. Thus far it has already risen 160 SPX points: 11.9%. We are tracking this advance with basically five Minor waves, the first subdivision of Intermediate waves. Minor wave 1 was short, ending at SPX 1424. Then the market experienced a quite bullish irregular Minor wave 2 flat, ending at SPX 1398. Minor wave 3 initially shot up off that low, then entered a steady advance after that.
When Minor wave 3 concludes, probably within the range of the OEW 1523 pivot, a substantial pullback should follow. Then after it concludes that Minor 4 low should lead to a Minor 5 rally to complete the uptrend. Notice the daily RSI has already become extremely overbought. This indicator is likely to set up a negative divergence when the entire uptrend concludes. Based upon the characteristics of this bull market we have been expecting this to occur in February, and within the range of the OEW 1552 pivot. Not too far from the SPX 1576 record high. Medium term support is now at the OEW 1499 and 1440 pivots, with resistance at the 1523 and 1552 pivots.
SHORT TERM
Short term support is at the 1499 pivot and SPX 1471/75, with resistance at the 1523 and 1552 pivots. Short term momentum ended the week slightly overbought. The short term OEW charts have remained positive since SPX 1420, with the swing level now at 1487.
This uptrend has been quite interesting to track, in that it has been using even the smallest of pullbacks to define waves down to the Nano level. The Nano wave is three sub-levels below the Minor wave: minute, micro, nano. During Minor wave 1 we were able to track the five Minute waves, labeled on the chart, down to the Micro level. Even after the Minor wave 2 low at SPX 1398, both Minute waves i and ii of Minor 3 remained at the Micro level. However, Minute wave iii from SPX 1452, immediately moved to the Nano level. Fortunately, we were able to identify this newer subdivision as it was unfolding.
Currently we count Minor wave 3 having completed four Minute waves: 1468-1452-1502-1491 with Minute v underway. Since Minute iii did end at the OEW 1499 pivot, and Minute waves i and iii were 70 points and 50 points, respectively. We see no reason not to expect Minute v/Minor 3 to hit our OEW 1523 pivot target. After that Minor 4 could pullback as much as 40 points. Then Minor wave 5 should rally to the OEW 1552 pivot to complete the uptrend. Best to your trading!
FOREIGN MARKETS
The Asian markets were mixed on the week for a net loss of 0.6%. All are in uptrends, but S.Korea appears to be weakening.
The European markets were all higher on the week for a net gain of 1.7%. All are in uptrends.
The Commodity equity group were mixed as well for a net gain of 0.2%. All are in uptrends.
The DJ World index continues to uptrend gaining 0.9% on the week.
COMMODITIES
Bonds prices continue to downtrend losing 0.6% on the week. 10YR yields are rising, and the 1YR looks like it’s about to start rising again as well.
Crude continues to uptrend gaining 0.2% on the week.
Gold has been trying to establish an uptrend but selling pressure this week (-1.6%) keeps it in a downtrend.
The USD barely remains in an uptrend losing 0.4% on the week. The EURUSD continues to uptrend gaining 1.0%, and the JPYUSD remains in its steep downtrend losing 0.8%.
NEXT WEEK
Monday kicks off a very busy economic week with Durable goods orders at 8:30, then Pending home sales at 10:00. Tuesday: Case-Shiller and Consumer confidence. Wednesday: Q4 GDP (est. +1.0%), the ADP, and the FOMC statement. Thursday: weekly Jobless claims, Personal income/spending, PCE prices and the Chicago PMI. Friday: monthly Payrolls, Consumer sentiment, ISM manufacturing, Construction spending, and monthly Auto sales. The FED meets on tuesday and wedneday with nothing else scheduled. Best to your weekend and week!
Slightly nasty close there. Anxious to read Tony’s Update.
M
M, good call on VIX!
+1
I think the investors who got slammed at these levels in 2008-09 are now getting out. Can prove this, but I think some of them are, while others who were in bonds are going in.
M
That should read: CAN’T prove this,….
M
if I have a get out of jail for free card, I would use it!
What was the call? What did I miss?
you even acknowledged that post..
My memory might be failing.
I expected VIX to fall in very low teens, which it did, at 12.29, but I’m wondering what Melinda said that I forgot now
BB, good call on the low teen VIX, in this case, everyone is a winner!
looks like it’s about that time to kiss some new highs today
on a daily MACD and RSI basis the TRAN index is the most overbought it’s been in the last 20 years. in case anybody was sitting there wondering…
Might want to look at AAPL daily chart. Dr T just posted a tentative green 4.
T2T
wow, she already dyed her hair blue and still nada, huh?
)
Hey Lee, just say something -we’ll all be tickled because we care
maybe it sounds funny to yas but there is an explanation for almost everything…it’s the big Jup – been going retrograde for a few months -it’s in Gemini, so it affects communications . It’s turning direct on jan 30 so its basically not moving now -so dead silence -everything has already been said, there is nothing more to say…only the market is walking the talk : )
Ah, so that is the reason for Ackman vs Icahn friday, and Dent’s fiasco.
Jupiter wasn’t moving
haa..too bad I missed it, and it makes sense Tony: the first two are doers ,so they do their talking with their money and Dent is a true talker, isn’t he, so yes, he must be at a diasdvantage now
Lee, you know we’re all dying to hear from you now, right? ..and it’s ‘how you say it’ Lee that’s so intriguing, so pick any subject….
hmm, there is one thing that would get Lee to say something….pssst.. : )
I was looking for a song caled window dressing but couldn’t find anything PG
haha, good 1
Bulk may soar, countwse it could be a 5 wave down reversed on Free ships, with a print at 18c end double 5. Lost it and not too sure it turned, I expected 11c as bottom.But lots of others like ESEAS.
Tankers moving too, yepp think the move is starting, graph upside down see it rolling over, lol.
torehund, the Israeli pharma you were talking about below is rosg, correct? I also have cimt, so wanted to make sure.
M
Be careful on CIMT. I looked at that one a few weeks ago. Nice balance sheet and steady business but the stock is popping on the premise that they are involved in 3D printing. They are NOT in 3D printing. Can’t believe it has run up this much on that seeking alpha article.
DSX is purty
Tore you expecting higher or lower on shippers?
Traders/Investors must be expecting gold to fall further because GLL rising fairly steadily.
M
M-for you.
http://www.orf-blog.com/rosetta-genomics-mining-gold-out-of-junk-part-i/
Thanks torehund!
10 year at 2% today… about an 8 month high.
Looking at the daily and weekly charts for FB, seems like it’s setting up very well for missing estimates this week…. leading to a very nice wave 4 correction. Thinking that might be a nice play coming out of that wave. I know a lot of folks are thinking it posts a strong quarter following GOOG earnings last week, but the divergences have me seeing something different….
Still uptrending, so be careful
That would be a good thing, I like to buy 3rd and 5th waves, so I’m hoping to see the drop and then enter into new position
first hour selloff, then buy the dip. something about this pattern is oddly familiar, but i just can’t quite place it…
Funny how that happens…
M
hahaha … every monday?
Hi Tony,
Does it look like potentially another irregular flat forming for Micro 2?
[1491] 1503 then 1496-1503-1496 yes so far.
OK, thanks. Only difference is my data shows [1491] 1502 for Micro 1.
correct, my error
Its done …over….The top is NOW and will go no higher in this leg. By he end of the week we are down good.
Sure, scotty
Noooo Scotty, say it ain’t so!!!!
That is bold..I like your style!
So, you don’t think this could be a little sideways consolidation?
M
This market has shown an amazing resilience. I was actually expecting another pullback, but with every day that passes it becomes less and less likely. The similarity to 2010, 2011, 2012 is amazing.
The level of bullishness is a bit concerning, but can persist for a while.
Topping signs are still missing on my charts, volume analysis is supportive and indicators are still in bullish mode:
http://tacticalstrategist.com/2013/01/27/correction-in-jeopardy-tactical-view-2013-01-27/
Its gap and go…even Prechter cant stop it.
torehund, I bought rosg this morning at 4.65. Hope for a pop.
M
M-if you are patient with this Israelian pharma spin-off, there could be a tsunai in the works for the stock. If it passes 60 bucks I will run naked around in my neighborhood and scream Halleluja, lol.
torehund, what israeli pharm, rosg or another?
M
torehund, Cimatron is also Israeli pharma (I think) and just tearing it up. Since I have a couple of them, be sure to tell me which one you’re talking about. As for you running naked… I won’t pay to watch it, but if you want to leave funds with me to bail you out of jail, I’ll gladly do so. LOL!
M
http://caldaro.wordpress.com/2012/10/27/weekend-update-368/
Nikkei, IF it starts a C-leg up could bring it to 13 000. My earlier projection was just a little lower.
Also platinum is worth a mention. Looks to me as though it is easily going to take out its 2008 high. Been trying to find the best way to play this. Unfortunately PPLT isn’t very liquid and has no options. The miners there still aren’t looking that great either. Anyone know of a way to play platinum aside from futures, PPLT, and SPPP?
Tony: As always appreciate your insights. Had a quick question regarding biotech. When looking at the $BTK it looks to me like it is currently in major 5 of primary wave III. Labeled as follows:
I= 102-812= 710
II= 812-275= 537
III- In progress broken down into
1= 275-894= 619
2= 894-542= 352
3= 542-1515= 973
4= 1515-1001
5= In progress
Haven’t heard much talk about biotech and the BTK looks very bullish. Curious as to your opinion on this count. Cheers!
Ryan,
Unfortunately it does not currently count that way.
There is a nice 13 waves up from 2009-2011.
Then a 33% selloff in 2011.
Since then it has done 9 overlapping waves into the recent highs.
Best count would be:
Completed Cycle [1] in 2011, wave A down in 2011.
Since then irregular B wave up into 2013.
For now it’s bullish, but a B wave advance.
cheers!
Thanks Tony!
TLT is forming several bullish divergences. RSI, ULT, MFI and MACD. At the same time, S&P is getting close to some important resistance. It might only be a small correction as per your comments, Tony, but it seems like a tradable correction is coming. I’ll be buying TLT under 117.25 and selling the S&P at 1520ish for a trade.
Gl Val
Hi Tony,
Thanks for the very nice weekend update. I’ve been following the sub-levels using 15 min charts in effort to confirm the waves and your comments in this report were helpful.
I’m wondering about the Irregular Flats in this recent uptrend. I believe you have Minor 2 and Minute iv as these type of waves. However, in the report you identify the Minute waves as 1468-1452-1502-1491 with Minute v underway. I thought the top of Minute iii would be 1495 and 1502 would be the Micro b under Minute iv. Any clarification of this labeling that you could provide would be greatly appreciated.
Regards,
Bill C
Hi Bill,
You are correct, we just tried to not make it too confusing.
As we noted during the week, Minute iv was an irregular flat.
Good post, I agree with your longer term outlook.
http://thegrowthinvestor.wordpress.com/2013/01/27/weekly-market-review-ftse-continues-to-rise/
tracking the DOW, thx TGI
Tony. As far as I understand a 10+ pts correction before the OEW1523 is not expected. Correct?
correct Michele
Michele, glad you asked this question, as I was wondering the same thing.
Melinda
http://standardpoor.wordpress.com
here are the trading results, so far, the 2 faced longs selected on 2013/01/13 show an 8.68& profit vs. spy’s +2.34%.
the 2 faced shorts selected on 2031/01/09 shows a 1.04% profit vs. spy’s +2.97%.
the combined system, the way it should be traded, shows a 9.72% profit versus spy’s +2.97%. quite a good start for this experiment.
much vital info in this post, new indicators explained, 2 faced stock system explained.
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Hi Tony.
Great weekend update. As usual !!
It is good to see that the Fed is still in charge of the markets and no bear market will start without their approval. Fed close friends will know in advance when the money printing will end. Hope we get the waves in advance from them.
I still have my alt count
http://scharts.co/X7HRh7
Have nice weekend
May fit with the end of Bernanke’s term
M1 or Tony,
Does the slight overlap of waves i and iv when looking at the DOW, potentially negate this alt count? I believe the overlap is on both an intraday and closing basis. Sorry for nit picking, but I previously considered that count and ruled it out due to the overlap. I’m just trying to make sure I have a clear understanding of OEW rules and techniques.
Regards,
Bill C
Thank you Tony and the wonderful community of contributors of comments to this site!
Hello Tony,
Thank you for your great and generous daily work.
My question: do you think the small caps (i.e R2000) will keep outperforming large caps on the $SPX? If so why and for how long?
Hi Ilerias,
It looks like the public is entering the market with these small caps.
Small cap, lower price, less risk. Or so the seem.
Should last for a while.
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My methods indicate that
next trading cycle low is due from her into Feb 7
Next intermediate cycle low is due in the April 5-May 17 time frame
Piazzi, was thinking about you today.
thank you for posting
You have always been kind, Tony
Greatest mentor ever !!!!!
I regularly read your posts, Tony, the only market opinion piece that I read
this intermediate cycle has been on cruise control since we picked the low
nothing to do, nothing to post
not even any yardwork
Yard work?
You know how much snow we have so far had?
No Yard work around here till April
Lost of baking and cooking and painting, though
Can just imagine.
cheers!
Hi Tony,
In Cycle 1, Primary 1 was about 700 points. Shouldn’t Primary 3 be at least as large in magnitude?
Thanks!
Not necessarily.
As long as III is not the shortest all is fine.
Tony, any thoughts on the FXE here? How much further do you see it going, and is it in a wave 3 uptrend or 5? Thanks.
Vik,
Was thinking 1.38 EURUSD, but we’re already at 1.35 and the Yen is keeping the DXY up.
May go higher.
Thanks Tony!
Great update Tony. I have been too cautious. Brilliant read on the market. Congrats.
A true 4-5 would change my perspective on this.
http://t.co/sm8kC3IS
Enjoy the weekend all.
HD,
Thanks, our little short term chart indicator has already made over 80 SPX points.
Quite an unusual run for that indicator.
thanks HD. I am a bit confused re: leading diagonal (5-3-5-3-5) vs. ending diagonal (3-3-3-3-3). If anyone can straigten me out on that, I’d appreciate it. Thanks.
http://t.co/r2dldL5K #urwelcome
haha!..Gracias HD..OK gotcha, ST implications are the same for both, so yes we can smell lthose burnt tires : ) ). Pardon my ignorance, just trying to undertand what ur envisioning LT. Here’s what I’ am assuming, so pls correct me where I am wrong. Ur 1 was 5 waves, ur II was 3 w’s, and now wave III is setting up to be 5 waves in LD, right? thanks.
1074-1422 is 5 waves, right..or not? : ) )
The wave count I am showing is just for consideration. I defer to Tony.
A LD would retrace all in 1/2 time before 3 of III up. A w2 down on deck?
1074-1422 3-3-5 subjectively
Thanks HD. I really appreciate ur help with this & thanks so for much for the extra explanation! I need to make sure I understand the terminology correctly; I’ve been laboring under the assumption that EDTs consist of 3 wave structures & imply the end of a trend, and LDTs contain 3 and 5-wave structures and imply trend continuation. Both imply sharp corrections when they end, but the LDT (in an unptrend) keeps the dream the alive, so to say (which is Ben’s favorite, I presume). I hope to get a better understanding of this as this things develops & I really appreciate the oppty. to ask you questions about all those EW patterns which you understand& apply so well. Thanks again HD.
Hi Tony,
Thank you for your updates. I just want to make sure that I read your public charts correctly. The $NDX (Nasdaq 100) is done with Cycle [1] of supercycle [3] and now its correcting in Cycle [2] of supercycle [3]. is this correct?
EEID,
NDX is an alternate count, as is the NAZ.
SPX/DOW is the primary count.
http://ycharts.com/indicators/crude_oil_spot_price/chart#series=calc%3A%2Ctype%3Aindicator%2Cid%3Acrude_oil_spot_price&format=real&recessions=false&zoom=10&startDate=&endDate=
From May 1st- 2011 until today it could be a finished ABC flattishly tilting down (wave major 2). Then wave 3 is beginning, just a thought !
Alt.. 2009 bottom to may 11 (A-wave), May 11 until now (B-wave), then waiting for a C that should be equal in length to the A-wave.
I hold a nanocap seismic surveys offshore comp and a nanocap chemical tanker stock, plus the Par Petroleum ( former Delta petroleum). They should profit if oil appreciates.
M: lets ceate a fund called SUGAR DIRECT, lol. At the and of the bull Direxion will maybe make one. Like UNG was created at the end of the nat gas bull…………..
http://investing.businessweek.com/research/stocks/charts/charts.asp?ticker=KTSG:IN
Looks tempting both chart and PE of 7,3.
torehund, we need SUGAR DIRECT now! LOL! Why waste a good bull run, then set up an ETN? So, you’re going with India stock instead of PEIX?
BTW, you’re a sm. caps guy, did you see what CIMT did on Friday? I wouldn’t go for it now, but sure want to catch a wave just like that one!
M
M: peix is not for sale. But if cycc runs to 26 usd, l will sell it in exchange for a sugar play. KMSUGAR looks nice too…from India.
Planning ahead.
M- nanocaps have to be caught before a run starts, or one may end up as a long term bagholder. I try to buy the sound ones with good techs and fundamentals. It is not always successful, but I d my best. Ew helps but is no guarantee of any big wins.
torehund, I hear ya. Bought rosg this morning, as it still looks as though it hasn’t popped yet. Maybe up 1-2% last week at most. Looking for a bit more. What do you think about it right now?
cycc at $26?! Really? That’s a HUGE gain!
M
One potential I have been watching for on oil since the 2011 high is a triangle. If this plays out oil should top soon (which would be D) followed by a leg down to a slightly higher high than C ($77.28). So maybe $80.00? Then the next move up.
Ryan: there is a divergence between May 2011 and now, if it doesnt hold its pretty negative for oil. However sentiment is generally subdued for oil, oil service etc, not what signals a peak. Seasonality is a little skewed this year,due to FC-talk and US elections.
Ryan: Yes I see, one more test not piercing the low before “driving season”.
I hadn’t taken driving season into account. Just looks to me like a bullish consolidation via symmetrical triangle. Would imply a top between here and $105, then another leg down to $80 or so, then the next move up.
Ryan, went through it once more…and it could just be…abc up from recession lows, then a weak abc down for oil. More clear count on sugar abc up, abc down + huge pos div.
In ethanol the double abc to peak is lucid, decline is fuzzy. If it pans out we will soon see the mother of all commodity rallies.
torehund, so you didn’t find anything of note to play sugar direct? What a shame. Well, ethanol it is then. PEIX…
M
Oh geez, torehund, rosg starting to lift now! Man, I bought this just in time! Hope it continues.
M
Well, down before up.
M
Hello Tony, I am a new reader of your blog in the past few months. Your analysis has been very inspiring and much for me to learn.
What do you think about the Hang Seng Index uptrend? I find it quite hard to manage counts as its movement is very cloggy and trading in small range recently.
With the US markets are reaching the all times nearly, how would the Chinese markets catch up? Or they are already very overbought?
Thank you and deeply appreciated.
Welcome Ipman,
The HSI is in a bear market rally from 2011.
It’s pattern has been all abc’s.
It usually follows the west, but is also influenced by China.
The SSEC could rally back to 3000, and is likely to top after the western markets.
good luck!
Hi Tony,
What is your thought regarding the 10-Yr UST yield? Do you think it can break through the current resistance or it may have to wait a little longer? TIA.
CT
CT,
Looks like it should break through this week.
Thanks Tony,
a very intersting update. And very interesting week. I read a lot of overbought market in this week. Yes the market is overbought (and a pullback can always occur), but not really overheatet. In the last 2 years my indicators showed 2 times per year a excessive heating and then good sell signals. Hope (and think) we will get also such situations in 2013.
In the last year a lot of people discuss a bad performance oft the DJ Transportation. But it was just a test of the long term uptrend (Trandsp.with longer macd-hist.).
http://s7.directupload.net/file/d/3147/e4edbpg7_jpg.htm
Roland,
The original transports, the rails, made all time new highs in 2010, 2011, 2012 and now again in 2013. They are currently 38% above their 2008 peak. FWIW
Yes Tony,
Warren Buffet bought a lot of railway-shares and so I observed this too. And Warren was right! Do you observe the rails primarily?
http://s14.directupload.net/file/d/3147/4c2ktazv_jpg.htm
Yes he did.
Just for the DOW Theory.
But they are hard to count using OEW.