weekend update

REVIEW

The week started at SPX 2213. After a lower opening on Monday the market pulled back to SPX 2198 by Tuesday. An OPEC pact to cut crude oil production helped the market rally to a marginal new high at SPX 2214 on Wednesday. After that the market pulled back to SPX 2187 on Thursday, and ended the week at 2192. For the week the SPX/DOW were mixed, and the NDX/NAZ lost 2.7%. Economic reports for the week were nearly all positive. On the downtick: the Q4 GDP estimate and weekly jobless claims rose. On the uptick: Q3 GDP, consumer confidence, the ADP, personal income/spending, the Chicago PMI, pending home sales, construction spending, ISM manufacturing, auto sales, monthly payrolls, the WLEI, plus the unemployment rate dropped. Fourteen positive and only two negative reports. Next week’s reports will be highlighted by consumer credit, ISM services, the ECB and factory orders.

BONDS

Some pundits are concerned at the speed of the recent selloff in the bond market. Especially since the election. Historically, the reasons may be different this time, but we have seen this type of activity many times in recent years.

10yrweekly

Currently 10YR bond yields have risen from 1.34% to 2.49% (115 basis points) in just 5 months. To nearly double in such a short period of time seems like a lot. But one has to keep in mind the 1.34% yield represents a 68 year low. In recent years yields have moved up just as dramatically, and from higher levels. In 2013 10YR bond yield rose from 1.61% to 3.04% (143 basis points) in just 7 months. In 2010 10YR bond yields rose from 2.33% to 3.74% (141 basis points) in just 4 months. In 2008/2009 10YR bond yields rose from 2.04% to 4.01% (197 basis points) in just 6 months. And in 2003, 10YR bond yields rose from 3.07% to 4.67% (160 basis points) in just 2 months. The current rise is actually smaller than the previous four surges, and has thus far peaked at a lower high too.

It is also interesting to note that the years in which 10YR yields spiked, bonds sold off, were good years for equities: 2003 +26.4%, 2009 +23.8%, 2010 +13.8%, 2013 +29.6%, and 2016 +7.2% thus far with one month to go. One last point. A rise in long term yields does not usually affect an economy much until there is an inverted yield curve. This occurs when shorter term rates rise above longer term rates. When this occurs borrowing becomes more difficult, and within about one year an economy begins to contract. The last three inverted yields curves occurred in 2006, 1999 and 1989. Recessions followed in late-2007, 2000 and 1990, which were the years of stock market tops too. The current spread is about where it was in 2014 and 2010, and nowhere near an inversion.

LONG TERM: uptrend

We continue to gain more confidence in our long term count with each passing week. Since the February SPX 1810 low, uptrends have gone to new all time highs, and corrections have been prolonged and shallow, i.e. 5.6% and 5.0%. Not even the bull market in the USD, nor the bear market in 10YR bonds have rattled the market. The OPEC production cut, along with proposed infrastructure improvements, should have a stabilizing effect on commodities. Which should eventually help improve market earnings and hopefully the GDP in the quarters ahead. A secular shift appears underway from crisis to growth. Last seen during the Truman/Eisenhower era.

spxweekly

While we do not expect many to agree with us. We do see a multi-decade Cycle wave [1] underway since the 2009 SPX 667 low. During the last Super cycle (1932-2007) Cycle [1] lasted only 5 years, and Cycle waves [3] and [5] lasted 31 years and 33 years respectively. This Super cycle (2009-xxxx) appears to be starting off with an extended wave first. If this were not occurring the SPX would have already revisited 1100/1200/1300 by now. Cycle wave bull markets unfold in five primary waves. Primary waves I and II completed in May, 2015 and February, 2016 respectively. Primary III appears to be currently underway.

MEDIUM TERM: uptrend

The current uptrend, Minor wave 3, began just two trading days before the presidential election on November 8th. Despite the fact that Wall Street’s favored candidate lost, the market has rallied to all time new highs anyway. The first wave up, Minute i of five Minute waves, SPX 2084-2214 (130 points), has fit perfectly within the range (117-137 points) of the first waves up of the previous two uptrends. Suggesting this uptrend is following the characteristics of this new Primary III bull market. All bull markets have their own characteristics.

spxdaily

After the uptrend high at SPX 2214 on Wednesday the market appears to be now in a Minute wave ii pullback. When it concludes, probably in a day or so, the uptrend should resume with Minute waves iii, iv and v to much higher highs. Our questimate is that this uptrend will travel about the length of the first uptrend, which was 301 points. This projects an uptrend target within the SPX 2380’s. The SPX is currently just under 2200. Medium term support is at the 2177 and 2131 pivots, with resistance at the 2212 and 2270 pivots.

SHORT TERM

Thus far this uptrend has advanced from one pivot (2085) to another pivot (2212) to end its first wave up. And now appears it should find support for its second wave at another pivot (2177). If trading could only be that simple. We counted 27 small waves on the way up from SPX 2084-2214. Difficult to label as noted last weekend. For the Minute ii wave pullback we see support at SPX 2184 (0.236 retrace), SPX 2177 (OEW pivot) and SPX 2164 (0.382 retrace).

spxhourly

However with Sunday’s Italian referendum anything is likely to occur heading into Monday’s open. Short term support is at the 2177 and 2131 pivots, with resistance at the 2212 and 2270 pivots. Short term momentum ended the week just above oversold, with the possibility of making a positive divergence with a slightly lower (2187) print. Best to your trading!

FOREIGN MARKETS

Asian markets were mostly lower but ended mixed.

European markets were also mostly lower and lost 0.3%.

The DJ World index lost 0.5%.

COMMODITIES

Bonds continue to downtrend and lost 0.1% on the week.

Crude surged 12.2% and confirmed the uptrend.

Gold continues to downtrend and lost 0.1%.

The USD remains in an uptrend but lost 0.8%.

NEXT WEEK

Monday: ISM services at 10am. Tuesday: trade deficit and factory orders. Wednesday: consumer credit. Thursday: the ECB and weekly jobless claims. Friday: consumer sentiment and wholesale inventories. Best to your week!

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

Posted in weekend update | Tagged , , , | 72 Comments

OEW tutoring

All markets are driven by long term investor psychology cycles. When the cycle is positive a bull market unfolds, when negative a bear market. The Objective Elliott Wave (OEW) technique not only determines if a market is bullish or bearish, it also determines how far a market has progressed in its current cycle.

OEW is not textbook Elliott Wave. It is a proprietary technique that defines every significant wave within bull and bear markets quantitatively. With this approach one could historically analyze any market to define its most probable wave structure, and determine what the past is projecting about the future. We first uncovered this technique in the early 1980’s when doing an analysis of the entire history of the US stock market. When waves are determined quantitatively they never change, past or present.

At that time our analysis led us to believe that a stock market crash was likely in late-1987 to early-1988. Then another bull market would be underway. When the stock market did crash in October 1987, and a new bull market began in late-1987, we knew we had uncovered some of the missing tenets of the Elliott Wave Theory.

Over the decades OEW analysis has led to some important projections in a variety of markets. In the US stock market: the correction in 1990, the correction in 1998, the 2000-2002 bear market, the 2002-2007 bull market, the 2007-2009 bear market, then the 2009-2115 bull market as well. OEW pinpointed the bull market high in Crude at $148 in 2008. Identified a new bear market in Gold not too far from its 2011 $1900 high. In currencies: OEW tracked the bear market in the USD until 2011, then identified a new bull market in the USD and bear markets in most other currencies. In real estate: OEW identified the bull market top in 2005, and then the bear market bottom in 2011. All of our projections since the year 2005 are detailed – unedited – day by day on this blog.

Bull and bear markets usually last for years. Uptrends and downtrends last for months, and are often mistaken for changes in long term trends. OEW analysis not only confirms when changes in long term trends are occurring, but often projects them ahead of time, allowing one to follow the bull or bear market as its unfolds. OEW tutoring covers the various indices in the US stock market and foreign markets, along with various modified technical indicators. It also covers currencies, bonds, commodities, housing, long term asset cycles and the Saeculum. If you are interested in learning how to do this type of analysis yourself, and joining our private international OEW group, please contact us at caldaro@msn.com for details. Best to your trading/investing.

Posted in Uncategorized | Tagged , , ,

Friday update

SHORT TERM: consolidation day, DOW -22

Overnight the Asian markets lost 1.1%. Europe opened lower and lost 0.4%. US index futures were relatively flat overnight. At 8:30 monthly payrolls were reported higher: 178K v 161K, and the unemployment rate hit a 9 year low: 4.6% v 4.9%. The market opened unchanged at SPX 2191, then rallied to 2198 by 11:30. After that the market started to pullback. Around 2pm the SPX hit 2188, then bounced to close at 2192.

For the day the SPX/DOW were mixed, and the NDX/NAZ gained 0.10%. Bonds rallied 15 ticks, Crude rose 50 cents, Gold added $6, and the USD was lower. Medium term support remains unchanged at the 2177 and 2131 pivots, with resistance at the 2212 and 2270 pivots. This week the Q4 GDP was lowered to 2.9% v 3.6%, and today the WLEI was reported higher: 58.3% v 57.2%.

The market opened unchanged today on a good payrolls report. Rallied to just under SPX 2200 and then pulled back for the rest of the day. Yesterday the NDX/NAZ led the SPX lower, while the DOW rose. Today the NDX/NAZ/SPX rose, while the DOW was lower. It still appears Minute wave ii is underway with support likely to arrive within the 2177 pivot range (2170-2184). Reviewed the recent decline in the Bond market, compared it to similar declines in the recent past, and the results will be reported in the weekend update. Best to your weekend!

MEDIUM TERM: uptrend

LONG TERM: uptrend

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

Posted in Updates | Tagged , , , | 34 Comments

Thursday update

SHORT TERM: flat open then mixed market, DOW +68

Overnight the Asian markets gained 0.4%. Europe opened lower and lost 0.6%. US index futures were lower overnight, and at 8:30 weekly jobless claims were reported higher: 268K v 251K. The market opened 2 points above yesterday’s SPX 2199 close, pulled back to 2196, then rallied to 2203 just past 10am. At 10am construction spending was reported higher: 0.5% v -0.4%, ISM manufacturing was reported higher: 53.2 v 51.6, and auto sales were reported higher. The market then pulled back to SPX 2193 by 11am, bounced to 2199 by 11:30, then hit 2187 at 3:30. Then a bounce to SPX 2191 ended the day.

For the day the SPX/DOW were mixed, and the NDX/NAZ lost 1.45%. Bonds dropped 17 ticks, Crude rallied $1.40, Gold slipped $2, and the USD was lower. Medium term support remains at the 2177 and 2131 pivots, with resistance at the 2212 and 2270 pivots. Tomorrow: monthly payrolls (est. 175K) at 8:30.

The market opened about flat today, bounced around, and then started to pullback. Yesterday’s action in the NDX/NAZ suggested the Minute wave ii we had been awaiting should be underway. Today’s drop to SPX 2187 suggests it is. Despite the pullback in the SPX/NDX/NAZ the DOW remained positive all day. Thought the rally in Crude was the driver, but it was actually the big banks rallying. Support for this Minute ii pullback should be the 2177 pivot range (2170-2184). When it bottoms the entire market is likely to rally in Minute iii. Short term support is at the 2177 and 2131 pivots, with resistance at the 2212 and 2270 pivots. Short term momentum ended the day quite oversold. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: uptrend

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

Posted in Updates | Tagged , , , | 108 Comments

Wednesday update

SHORT TERM: higher open on OPEC deal, DOW +2

Overnight the Asian markets gained 0.4%. Europe opened higher and gained 0.3%. US index futures were higher overnight. At 8:15 the ADP was reported higher: 216K v 147K, at 8:30 personal income (0.6% v 0.3%)/spending (0.3% v 0.5%) were reported higher and the PCE was reported higher (0.1% v 0.1%). The market opened 5 points above yesterday’s SPX 2205 close, rallied up to a new high at 2214 in the opening minutes, and then started to pullback. At 9:45 the Chicago PMI was reported higher: 57.6 v 50.6, then at 10am pending home sales were reported higher: 0.1% v 1.5%. By 10:30 the SPX had pulled back to unchanged at 2205. Then after rally to SPX 2211 by 11:30, the market headed lower again. At 2pm the FED released its beige book: https://www.federalreserve.gov/monetarypolicy/beigebook/beigebook201611.htm. Heading into the close the SPX hit 2199, and ended the day there.

For the day the SPX/DOW were mixed, and the NDX/NAZ lost 1.15%. Bonds dropped 21 ticks, Crude rallied $3.90, Gold slid $15, and the USD was higher. Medium term support remains at the 2177 and 2131 pivots, with resistance at the 2212 and 2270 pivots. Tomorrow: weekly jobless claims at 8:30, then construction spending, auto sales and ISM manufacturing at 10am.

With OPEC agreeing on a cut in production energy stocks rallied, carrying the SPX/DOW with them into the open. Soon after the open the SPX/DOW made new highs, the SPX by one point, while the NDX/NAZ did not and started to pullback. For most of the morning the SPX/DOW tried to rally, while the NDX/NAZ was declining. Then in the afternoon they all declined together. At today’s lows the NDX had dropped below the low of Monday a week ago. The NDX/NAZ look like they are in a wave 2 pullback. Waiting on the SPX/DOW to follow. Short term support remains at the 2177 and 2131 pivots, with resistance at the 2212 and 2270 pivots. Short term momentum put in another negative divergence at today’s high. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: uptrend

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

Posted in Updates | Tagged , , , | 151 Comments

Tuesday update

SHORT TERM: flat opening then rally, DOW +24

Overnight the Asian markets lost 0.2%. Europe opened lower but gained 0.3%. US index futures were higher overnight. At 8:30 Q3 GDP was reported higher: 3.2% v 2.9%, and at 9am Case-Shiller was reported unchanged at 5.1%. The market opened 1 point below yesterday’s SPX 2202 close, bounced to 2204, then dipped to 2198 all in the first few minutes of trading. Then the market started to rally. At 10am consumer confidence was reported higher: 107.1 v 98.6. The rally continued until 2:30 when the SPX hit 2210. Then a pullback into the close ended the day at SPX 2205.

For the day the SPX/DOW gained 0.10%, and the NDX/NAZ gained 0.25%. Bonds gained 3 ticks, Crude dropped $1.85, Gold slid $5, and the USD was lower. Medium term support remains at the 2177 and 2131 pivots, with resistance at the 2212 and 2270 pivots. Tomorrow: the ADP at 8:15, personal income/spending and the PCE at 8:30, the Chicago PMI at 9:45, pending home sale at 10am, then the FED’s beige book at 2pm.

The market opened flat today, pulled back to SPX 2198, then moved higher for the rest of the day. The pullback, thus far, is only 15 points from the uptrend high at SPX 2213. If the market rallies to new highs the pullback will have been just another small retracement, in a series of small retracements, since this uptrend began. Thus far, as you have probably observed, this uptrend has been quite resilient. Short term support remains at the 2177 and 2131 pivots, with resistance at the 2212 and 2270 pivots. Short term momentum rebounded to around neutral after getting oversold. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: uptrend

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

Posted in Updates | Tagged , , , | 91 Comments

Monday update

SHORT TERM: lower open pullback, DOW -54

Overnight the Asian market gained 0.2%. Europe opened lower and lost 0.9%. US index futures were lower overnight, and the market opened 5 points below Friday’s SPX 2213 record close. After a bump up to SPX 2211 by 10:30, the SPX pulled back to 2203 by 11am. Another bounce took the SPX to 2210 by 12:30, and then the SPX hit 2200 just before a 2202 close.

For the day the SPX/DOW lost 0.40%, and the NDX/NAZ lost 0.40%. Bonds rose 16 ticks, Crude gained 85 cents, Gold rallied $12, and the USD was lower. Medium term support drops to the 2177 and 2131 pivots, with resistance at the 2212 and 2270 pivots. Tomorrow: Q3 GDP (est. 2.9%) at 8:30, Case-Shiller at 9am and consumer confidence at 10am.

The market opened lower today, bounced within two points of the all time high, then moved lower again. While today’s pullback was only 13 points from the uptrend high, the market did something today it had not done since the uptrend began. It made a lower daily low than the day before: SPX 2200 v SPX 2208. With an extremely short term overbought on Friday, and a record close right at the 2212 pivot range, it might be time for the wave 2 pullback. Defensive utilities and telecom displayed strength today while the leaders pulled back. And, the R2K fifteen day win streak was broken. The uptrend started at 2085 pivot why not end the first wave up at the 2212 pivot? Short term support is at the 2177 and 2131 pivots, with resistance at the 2212 and 2270 pivots. Short term momentum dropped hit oversold for the first time in 3 weeks. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: uptrend

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

Posted in Updates | Tagged , , , | 69 Comments