Weekend Report

Weekend Report

Provided by the OEW Group

September 21 2019

SPX opened the week with a gap down and traded to 2991 by noon, before rallying back to close Monday 9 points off last weeks close at 2998.  Tuesday opened flat and traded in a narrow range all day until a rally in the last half hour to finish the day just one point off last weeks close at 3006.   Wednesday opened down and traded lower into the Fed announcement to cut rates by 25 bps with the new target range at 1.75 to 2.00%, then proceeded to make the low of the week at 2979 by 3pm, before reversing and rallying back to last weeks close at 3007.  Thursday opened with a gap higher and rallied up just above last week’s high at 3022 by noon, then faded for the rest of the day to finish unchanged.  Friday opened higher but peaked in the first half hour of trade at 3016, then sold off sharply in the afternoon to retest the low at 2985 before recovering to finish the week at 2992.

For the week, SPX/DOW lost 0.51%/1.05% while NDX/NAZ lost 0.88%/0.72%.

On the economic front, Industrial Production, Capacity Utilization, Housing Starts, Building Permits, Existing Home Sales and Crude Inventories were all higher.  The ECRI weekly growth indictor moved up again to -1.46%.

LONG TERM: Uptrend may be weakening

spxwkly

In the US, the long-term count remains unchanged with the Super Cycle SC2 low in March 2009.  The Primary wave I high occurred in May 2015 and Primary wave II low in February 2016.  Primary wave III has been underway ever since and the Major wave 1 high of Primary wave III occurred in October 2018.  We continue to track our alternate count on DOW in the public chart list.  Our preferred long term count remains on SPX, as Intermediate wave i of Major wave 3 is underway from the Major wave 2 low in December 2018 and continues to subdivide into Minor and Minute waves.

Even though this is a very bullish long term outlook, we maintain the current status that the uptrend may be weakening.  Major wave 3 subdivisions have yet to breakout of an overlapping structure, while the bond market remains in turmoil with negative rates, yield inversion and now this week’s Fed intervention to mitigate spikes in short term rates.  We reported previously about the negative OEW consequences of the yield inversion which gave us the alternate count.  Until Major wave 3 can clearly breakout, we remain cautious long term with the possibility that Major wave 2 could extend and retest the December low.

MEDIUM TERM: Uptrend

spxdaily

SPX traded down this week into the Fed rate decision and made the low of the week at 2979 after the announcement.  From there, SPX recovered to reach a high of 3022 by Thursday noon, but couldn’t hold that level and proceeded to retest the low on Friday, before finishing the week down at 2992.  This price action was sufficient to generate additional medium term subdivisions, such that we can now count three waves up from the Minute wave ii low established last month, followed by a subdividing fourth wave.  As suggested last week, we got the 42 point pullback that was anticipated, but its appearance this early in the sequence creates a dilemma with the wave count.  The scale of the three waves up so far is uncertain pending further price action.  For now, we’re counting the structure as Micro wave 1 = 2940, Micro wave 2 = 2892, Micro wave 3 = 3021 and Micro wave 4 subdividing with a retest of the weekly low still in play.  This structure requires a large fifth wave in order to achieve the logical target for Minute wave iii.  Otherwise, a small fifth suggests the count will need to be rescaled to Micro wave 1 for the entire sequence off the August low.  The other possibility would be a Micro wave 3 subdivision, but there’s no way to know without additional price action.  Main thing now is the uptrend continues to show impulse structure.

A clarification on price targets may be helpful, as some of our members noted confusion in numbers previously reported.  The overall price structure for Minute wave i and ii project the 3300 level as our initial target for Minute wave iii.  This is taken from the 1.618x ratio with the first wave.  In order to achieve that target given the current subdivision, it would require one of the Micro waves up to exceed the same extension ratio of 1.618x.  Currently, that ratio for the potential Micro wave 5 would suggest limited upside to just under 3200.

SHORT TERM

spxhourly

There’s not much to add for the short term discussion since the medium term and short term waves are currently tracking close to one another.  In addition to the three waves up mentioned in the previous section, we’re counting Micro wave 4 as an irregular pattern, Nano wave a = 2979, Nano wave b = 3022 and Nano wave c in progress with potential to extend below 2979.  This count will be invalidated if the pullback is deep enough to overlap Micro wave 1 at 2940.  The 32 point “small wave subdivision” reported last week was negated by our short term techniques as Micro wave 3 was qualified by price action this week.  This caused Micro wave 3 to fall short of the 3080 target and now sets up one of the other scenarios mentioned in the previous section for Micro wave 5.

Short term support is at the 2984 and 2957 pivots.  Resistance is at the 2995 and 3033 pivots.  Short term RSI ended the week oversold.

FOREIGN MARKETS

Asian markets (using AAXJ as a proxy) lost 2.06%.

European markets (using FEZ as a proxy) lost 0.33%.

The DJ World index lost 0.33%, and the NYSE lost 0.23%.

COMMODITIES

Bonds are in a downtrend and gained 1.07%

Crude oil is in an uptrend and gained 5.91%

Gold is in an uptrend and gained 1.04%

GBTC is in a downtrend and lost 1.51%.

The USD is in an uptrend and gained 0.31%.

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

 

Have a good week!

Posted in Updates | 21 Comments

Weekend Report

Weekend Report

Provided by the OEW Group

September 14 2019

SPX opened the week higher, but quickly reversed to trade down, then rally back to close Monday just one point off last weeks close at 2978.  Tuesday gapped down and made the low of the week at 2957 within the first hour of trade, then proceeded to rally and finish the day back to last weeks close at 2979.  SPX continued to rally Wednesday and Thursday, with an 18 point pullback Thursday morning, to reach the high of the week at 3021 in the afternoon, before finishing the day at 3010.  Friday had a quiet open, then traded in a 14 point range before closing the week at 3007.

For the week, SPX/DOW gained 0.96%/1.57% while NDX/NAZ gained 0.51%/0.91%.

On the economic front, PPI, Core PPI, CPI, Core CPI and Retail Sales were all higher, while Retail Sales ex-Autos was flat.  Consumer Sentiment was higher and remains bullish at 57%.  The ECRI weekly growth indictor was up slightly to -2.5%.

LONG TERM: Uptrend may be weakening

spxweekly

In the US, the long-term count remains unchanged with the Super Cycle SC2 low in March 2009.  The Primary wave I high occurred in May 2015 and Primary wave II low in February 2016.  Primary wave III has been underway ever since and the Major wave 1 high of Primary wave III occurred in October 2018.  We continue to track our alternate count on DOW in the public chart list.  No change to our long term count on SPX, as Intermediate wave i of Major wave 3 is underway from the Major wave 2 low in December 2018 and continues to subdivide into Minor and Minute waves.

MEDIUM TERM: Uptrend

spxdaily

SPX continued to rally this week, extending Micro wave 3 of Minute wave iii to a high of 3021 on Thursday before closing the week at 3007.  That gives 129 points so far for Micro wave 3 with no medium term subdivisions.  Most US and international markets we track are now in confirmed uptrends.  XLE, XLV and Hong Kong remain notable exceptions.  Not much to add, as this uptrend continues to show signs of an impulsive structure off the Micro wave 2 low established last week.  Now that Micro wave 3 has exceeded Micro wave 1, there could be 40-50 point pullback at any time.  A much larger decline back to overlap the breakout level of 2940 would be concerning and suggest a corrective structure may still be in play.  Our nominal target for Minute wave iii remains unchanged at the 3200 level.

SHORT TERM

spxhourly.png

Using our short term techniques, we’re counting this Micro wave 3 rally as three small waves up from the Micro wave 2 low at 2892, which gives 2989-2957-3021.  As mentioned last week, we’re tracking several other short term counts as a backup to resolve the choppy price action in August.  We will update the short term count if/when the small wave subdivisions develop such that one of those becomes the more likely pattern.  For now, we have Micro wave 1 = 118 points at 2940, Micro wave 2 = 48 points at 2892 and Micro wave 3 = 129 points at the Thursday high of 3021.  The 32 point pullback internal to Micro wave 3 suggests a small wave subdivision may be developing, however additional price action is needed to sort that out.  Our initial target for Micro wave 3 remains unchanged from last week, at around 3080.

Short term support is at the 2995 and 2984 pivots.  Resistance is at the 3033 and 3046 pivots.  Short term RSI ended the week neutral after reaching overbought levels at the high.

FOREIGN MARKETS

Asian markets (using AAXJ as a proxy) gained 2.57%.

European markets (using FEZ as a proxy) gained 2.09%.

The DJ World index gained 1.47%, and the NYSE gained 1.48%.

COMMODITIES

Bonds are in an downtrend and lost 2.09%

Crude oil is in a uptrend and lost 2.95%

Gold is in an uptrend and lost 1.06%

GBTC is in a downtrend and lost 2.20%.

The USD is in an uptrend and lost 0.54%.

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

 

Have a good week!

Posted in Updates | 343 Comments

Weekend Report

Weekend Report

Provided by the OEW Group

September 7 2019

SPX opened the week lower on Tuesday (post Labor Day Holiday) and made the low of the week at 2892 within the first hour of trading, then proceeded to rally back and finish the day at 2906, down from last weeks close at 2926.  Wednesday had a gap up at the open to retest last weeks close and continued to rally for the rest of the day to reach the highest close since August 8th at 2938.  Thursday saw an even larger gap up to make the high of the week at 2986 within the first hour of trade, then consolidated in a narrow trading range for the rest of the day and finish at 2976.  Friday had a quiet open and continued to stay in that same narrow range for the remainder of the day before closing the week at 2979.

For the week, SPX/DOW gained 1.79%/1.49% while NDX/NAZ gained 2.10%/1.76%.

On the economic front, ISM non-Manufacturing increased and accelerated, while ISM-Manufacturing declined below 50%.  Factory Orders, Unit Labor Costs, Payrolls, Hourly Earnings and Labor Force Participation Rate were all higher, while the rate of job growth slowed.  Unemployment rate held steady at 3.7%.

Investor Confidence declined to the lowest reading since December, just below the bullish line and into the neutral range as we read the data.  The ECRI growth indicator declined and is now extending the previous low further negative.

ecriweekly

LONG TERM: Uptrend may be weakening

spxwkly

In the US, the long-term count remains unchanged with the Super Cycle SC2 low in March 2009.  The Primary wave I high occurred in May 2015 and Primary wave II low in February 2016.  Primary wave III has been underway ever since and the Major wave 1 high of Primary wave III occurred in October 2018.  We continue to track our alternate count on DOW in the public chart list.  No change to our long term count on SPX, as Intermediate wave i of Major wave 3 is underway from the Major wave 2 low in December 2018 and continues to subdivide into Minor and Minute waves.

MEDIUM TERM: Uptrend

spxdaily.png

SPX broke out on Thursday with a large gap over prior resistance established during the August trading range and reached the high of 2986, before settling in to close the week at 2979, which was sufficient to confirm a new uptrend is underway.  We’ve updated the medium term status accordingly, which suggests Minute wave ii bottom has finally been established.  Our cautionary posture proved wrong, as the favorable close mentioned last week turned out to be the correct signal that the downtrend was over.  We have confirmed uptrends now on all four key US markets that we track as well as 5 of 9 US sectors and China too.  However, there are notable laggards including RUT, TRAN, XLE, XLF, as well as some in Asia and Europe.  We would expect most of these to confirm in the near future for our long term view to remain intact.  There was much discussion and some disagreement within the group over various choices for counting the sideways chop in August.  Regardless of the differences, there was strong consensus that Minute wave ii bottom occurred at one of the three lows, 2822, 2826 or 2835 and Minute wave iii is now underway.  For now, we’re tracking that price action as a leading diagonal for Micro wave 1 of Minute wave iii from 2822 to 2940, followed by Micro wave 2 pullback to 2892, with Micro wave 3 in progress to 2986 so far.  This price structure projects our nominal target for Minute wave iii at around 3200.

SHORT TERM

spxhourly

As mentioned last week, the group has come up with several counts to resolve the choppy price action in August, but all of these have various pros and cons relative to our OEW methodology.  Some generate odd patterns and others don’t fit with our short term tracking techniques.  Yet they all suggest the same basic outcome, which is that Micro waves 1 and 2 are complete and Micro wave 3 of Minute wave iii is underway with possibility of some small wave subdivisions developing.  We’ve chosen the one that seems to fit best with our short term tracking techniques and will continue to monitor the other options as the trend evolves.  We counted three corrective rallies off each of the August lows as Nano wave a = 2943, Nano wave c = 2939 and Nano wave e = 2940, which suggests the leading diagonal pattern shown for Micro wave 1.  Then Micro wave 2 = 2892, which is pretty close to fib 38.2% retracement of the entire diagonal pattern.  Micro wave 3 found resistance at our 2984 pivot and has consolidated just below there for the time being.  We’re now watching for impulsive price action to continue.  If it remains corrective, then something else may be in play.  Our initial target for Micro wave 3 is up around 3080.

Short term support is at the 2957 and 2929 pivots.  Resistance is at the 2984 and 2995 pivots.  Short term RSI ended the week neutral after reaching overbought levels at the high.

FOREIGN MARKETS

Asian markets (using AAXJ as a proxy) gained 2.93%.

European markets (using FEZ as a proxy) gained 1.91%.

The DJ World index gained 1.89%, and the NYSE gained 1.54%.

COMMODITIES

Bonds are in an uptrend and lost 0.25%

Crude oil is in a downtrend and gained 2.58%

Gold is in an uptrend and lost 0.91%

GBTC is in a downtrend and gained 9.99%.

The USD is in an uptrend and lost 0.50%.

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

 

Have a good week!

Posted in Updates | 416 Comments

Weekend Report

Weekend Report

Provided by the OEW Group

August 31 2019

SPX opened the week higher and rallied to finish Monday at 2878, up from last weeks close at 2847.  Tuesday had a large gap up at the open, but quickly sold off into the early afternoon before a rally into the close at 2869.  Wednesday gapped down and tested below Monday’s range, to make the low of the week at 2853 within the first 30 minutes of trade.  From there, the market quickly reversed, rallying for the rest of the day to close higher on Wednesday, followed by gaps up both Thursday and Friday, to make the high of the week at 2940 within the first hour of Friday trade.  SPX then pulled back and consolidated for the rest of the day to finish the week at 2926.  The best week since the first of June!

For the week, SPX/DOW gained 2.79%/3.02% while NDX/NAZ gained 3.03%/2.72%.

On the economic front, Durable Goods, Personal Income and Spending, PCE and core PCE were all positive.  Consumer Confidence and Sentiment both declined, however Consumer Sentiment is still bullish at 54.8 as we read it.  GDP (2nd estimate) is +2.0% but was revised down slightly from the previous estimate.

The ECRI growth indicator declined and is now testing the higher low for the year.

ECRIwkly

LONG TERM: Uptrend may be weakening

spxwkly

In the US, the long-term count remains unchanged with the Super Cycle SC2 low in March 2009.  The Primary wave I high occurred in May 2015 and Primary wave II low in February 2016.  Primary wave III has been underway ever since and the Major wave 1 high of Primary wave III occurred in October 2018.  As mentioned last week, we’ve opened up the possibility for an alternate outcome, which suggests that Major wave 2 may be extending with a possible retest of the lows established in December 2018.  This more bearish view is posted on our DOW charts, which can be found in the public chart list via the link provided at the end of this report.  This week price recovered to close above the long term EMA’s, which suggests the market may be firming up and supports our primary count that Intermediate wave i of Major wave 3 is underway from the Major wave 2 low in December 2018 and is subdividing into Minor and Minute waves, as shown on the SPX chart.  We will continue to focus our attention on this more bullish view until it becomes invalidated by future price action.

MEDIUM TERM: Downtrend may be firming up

spxdaily

SPX started the week positive and continued to make a strong rally throughout the week with only one retest to a higher low at 2853 on Wednesday morning.  It peeked Friday morning at 2940 to get the high of the week, but again ran into resistance only to fall back and consolidate just below our 2929 pivot, the same level it’s been battling to break out of all month.  Similar price action to last week, however this time SPX was able to close in favorable territory, above both the medium and long term EMA’s.  Although this typically suggests the downtrend has bottomed, we’re cautious until price can break out of the trading range.  Consequently we’ve updated the medium term count such that Micro wave b is still underway and has now subdivided into three waves so far, 2939-2835-2940.  Micro wave c is pending, with the next target for potential Minute wave ii extension down to 2815.  Alternatively, a break above 2950 would suggest Minute wave ii bottom may be in.

Medium term, RSI is rising through the neutral zone and MACD has turned positive with a bullish cross.

SHORT TERM

spxhourly

For the third week in a row, SPX was unable to impulse higher off of the previous week’s low, and again stalled out in the same region, with an intraday high of 2940 at the open on Friday, before closing the week at 2926.  This was the strongest weekly rally since coming off the Minor wave 2 low in early June.  As mentioned, we still remain cautious until SPX can break out of the trading range and begin to show impulsive structure.  There’s lots of short term counts to consider under this kind of price action.  Some in our group have suggested a leading diagonal from 2822.  Others have suggested a contracting triangle that may have ended at 2835.  Some may see a possibility that an impulsive 1-2 sequence is underway from our original Minute wave ii low reported previously at 2826.  However, until the rally proves itself, we’re taking the most conservative view which suggests Micro wave b may have extended.  Using our short term techniques, we can count seven waves up from Micro wave a low at 2826, and have labeled that sequence as a double three pattern, Nano wave a 2931-2900-2939, Nano wave b 2835 and Nano wave c 2899-2853-2940.  If the small pullback on Friday can hold and extend higher, then that would be the first chance for an impulsive rally since the downtrend began.  Until then, we’re anticipating another retest of the low and possibly lower to complete Minute wave ii.  Our next target below is 2815 which is taken as 0.618x Micro wave a.

Short term support is at the 2884 and 2858 pivots.  Resistance is at 2929 and 2957 pivots.  Short term RSI ended the week with a negative divergence.

FOREIGN MARKETS

Asian markets (using AAXJ as a proxy) gained 2.37%.

European markets (using FEZ as a proxy) gained 2.32%.

The DJ World index gained 1.83%, and the NYSE gained 2.58%.

COMMODITIES

Bonds are in an uptrend and gained 0.04%

Crude oil is in a downtrend and gained 1.72%

Gold is in an uptrend and lost 0.53%

GBTC is in a downtrend and lost 7.74%.

The USD is in an uptrend and gained 1.36%.

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

 

Have a good week!

Posted in Updates | 487 Comments

Weekend Report

Weekend Report

Provided by the OEW Group

August 24 2019

SPX started out the week with a gap up and rally to close Monday at 2924.  Last week’s close was 2919.  Tuesday gapped down at the open, rallied back to fill the gap, then proceeded lower for the rest of the day to finish at 2901.  Thursday gapped over Mondays high and made the high of the week at 2939 within the first 20 minutes, then retraced most of the prior two day rally before noon, but recovered to finish the day just one point off Monday’s close.   Friday gapped down at the open to test Tuesday’s low within the first 30 minutes, then rallied to fill the gap, but reversed and accelerated lower on the latest Tariff Man threat to “order US companies to find an alternative to doing business in China”.  From there the markets continued lower to make the low of the week at 2835, before closing above at 2847.  Volatility continues for the fourth week in a row.

For the week, SPX/DOW lost 1.44%/0.99% while NDX/NAZ lost 1.83%/1.83%.

On the economic front, Existing Home Sales increased, while new Home Sales declined.  Initial and Continuing Claims both declined.  The ECRI was down slightly just below the zero line, but still holding higher lows for its uptrend this year.

ecri

Next week economic news comes from Durable Goods, Consumer Confidence, GDP, Personal Income and Spending, PCE and Consumer Sentiment.

LONG TERM: Uptrend may be weakening

spxwkly

In the US, the long-term count remains unchanged with the Super Cycle SC2 low in March 2009.  The Primary wave I high occurred in May 2015 and Primary wave II low in February 2016.  Primary wave III has been underway ever since and the Major wave 1 high of Primary wave III occurred in October 2018.  Based on price action this week, the Major wave 2 low in December 2018 has come into question.  As a result, we’ve updated the DOW charts with an alternate count to reflect the possibility of an extended Major wave 2, which suggests that Intermediate wave b high occurred in July 2019 and Intermediate wave c has been underway since then.  We continue to carry our primary count on SPX until more data becomes available, which suggests Intermediate wave i of Major wave 3 is underway from the December low and is subdividing into Minor and Minute waves.

induwkly

Based on concerns discussed last week about the move in bonds, we’ve been searching our historical OEW data set for clues of a pending change in the share markets.  We got the first signal of a potential crack in the long term charts this week as three of the four key US markets we track closed below the long term EMAs.  DOW is now below for two weeks in a row, while NDX is the one holdout but only by a slim margin.  This price action can be associated with the end of a medium term downtrend in context of an ongoing bull market, as long as it reverses quickly.  However, a sustained series of closes below would be concerning and give credence to our alternate DOW count.

The second clue came out of all the recent attention in the media about a pending inversion of US Treasury maturities 2’s/10’s.  Most of the focus seems to be whether an inversion has occurred and if it signals a recession, and even some of it may be political.  We’re looking at it instead from a purely OEW viewpoint.  We noticed since mid-1970 there’s a cycle in the data, that’s currently overdue with the trend clearly in place for inversion, https://fred.stlouisfed.org/series/T10Y2Y/.  Given that, we checked data going back to the mid-1950’s for these kind of events against our OEW historical data set and found an 80% correlation with either the end of OEW bull markets or the beginning of OEW bear markets.  It’s a limited set of data points, so not statistically significant, but nonetheless, enough for us to consider the alternate count.

 

MEDIUM TERM: Downtrend

spxdaily

SPX opened the week with a strong gap up but ran into resistance right our 2929 pivot.  Every day it tried to breach that level, was unable to close above, and maxed out with an intraday test on Thursday at 2939.  Although the reversal on Friday did not take out the prior lows, we believe it was sufficient to invalidate our medium pattern for Minute wave ii.  Consequently we’ve updated the count to show another extension underway, which gives Micro wave a = 2826, Micro wave b = 2839 and Micro wave c ongoing.  Turns out the glass may have been half empty, since NAZ and NDX are having difficulty sustaining higher lows as discussed last week.  In order for this new count to remain viable, we would target Micro wave c at the 0.618x ratio with Micro wave a, which suggests a bottom around 2812.  If it extends much below that, we would have to consider a possible extension of Minor wave 2, or maybe even revert to the alternate bearish count shown on the DOW (chart below).  Another concern is the Tariff Man Tweets, which suggests a minimum decline down to the June low around 2727.  Our alternate count suggests the market may have topped at the July high of 3028 and is now extending the Major wave 2 from the December low.  A SPX rally back above 2940 or so will reverse the pattern and possibly extend Micro wave b.  A break below 2822 will further confirm the extension of Minute wave ii.

indudaily

Medium term, RSI ended the week down but still in the neutral zone and MACD flipped from a bullish to bearish cross.

SHORT TERM

spxhourly.png

For the second week in a row, SPX was unable to impulse higher off of the previous week’s rally, and again failed in the same region, this time at the intraday high of 2939 on Thursday.  Last week it failed at 2943.  This time it started strong on Monday, but chopped around the highs in corrective fashion generating three small waves up to 2943, before collapsing back down on Friday to test just nine points off the prior low and right on our pivot at 2835.  This now suggests a likely extension of Minute wave ii, so we’ve updated the short term count such that the failed flat at 2826 becomes Micro wave a, Micro wave b is a zig-zag pattern at 2939 and Micro wave c is ongoing with only one wave down to 2835 so far.  The week closed up off the low at 2847, which could be the beginning of the next small wave up, but more data is needed to qualify that.  For now, we’re focusing only on the SPX bullish count until that pattern is broken.  The bearish alternate is posted on the DOW chart below.

induhourly

Short term support is at the 2835 and 2798 pivots.  Resistance is at 2858 (typo on hourly chart should read 2858) and 2884 pivots.  Short term RSI ended the week oversold.

FOREIGN MARKETS

Asian markets (using AAXJ as a proxy) gained 0.33%.

European markets (using FEZ as a proxy) lost 1.48%.

The DJ World index lost 0.44%, and the NYSE lost 1.30%.

COMMODITIES

Bonds are in an uptrend and gained 0.04%

Crude oil is in a downtrend and lost 1.17%

Gold is in an uptrend and gained 0.92%

GBTC is in a downtrend and gained 0.08%.

The USD is in an uptrend and lost 0.49%.

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

 

Have a good week!

Posted in Updates | 308 Comments

Weekend Report

Weekend Report

Provided by the OEW Group

August 17 2019

SPX started out the week with a gap down (same as last week) and continued lower for the rest of the day to close 9 points off Monday’s low at 2882.  Last week’s close was 2919.  Tuesday rallied sharply to the high of the week at 2943 within the first hour of trading, but then pulled back and traded in a range to finish the day at 2926. Wednesday gapped down big at the open, as the bond market reacted forcefully, apparently to the turmoil in Hong Kong.  Within the first 10 minutes, SPX retraced the entire Tuesday rally, then proceed to decline for the rest of the day and close on the low at 2840.  Thursday saw continued weakness as SPX declined to the low of the week at 2826 in the afternoon, followed by a rally back to 2855 before closing the day at 2845.  Friday finally gapped up and rallied to a high of 2891 just before noon, then leveled off within a few points for the rest of the day to close the week at 2889.  A third consecutive week of volatility!

For the week, SPX/DOW lost 1.03%/1.53% while NDX/NAZ lost 0.60%/0.55%.

On the economic front, CPI, Core CPI, Import Prices, and the Treasury Budget deficit all increased.  Our Weekly Leading Indicator is down slightly from last week but holding firm at 49.5%.

Next week economic news comes from Existing Home Sales and Initial Claims.

LONG TERM: Uptrend

spxwkly

In the US, the long-term count remains unchanged with the Super Cycle SC2 low in March 2009.  The Primary wave I high occurred in May 2015 and Primary wave II low in February 2016.  Primary wave III has been underway ever since.  Major wave 1 high of Primary wave III occurred in October 2018 and Major wave 2 low in December 2018.  Intermediate wave i of Major 3 is now underway and is subdividing into Minor and Minute waves.

As mentioned last week, we haven’t yet seen any evidence on the long term charts to suggest anything more than a typical medium term downtrend in context of an ongoing bull market.  However, the move in bonds this week pushed 3o year rates to new lows, prompting an additional subdivision and extension of our long term cycle low originally established by Tony back in 2016 (updated chart below).

tyxmonthly

This caused some concern and generated much discussion within the group.  The general consensus was that even though tariffs may be a contributing factor, the root cause of such a shift is most likely based on worries over economic risk in Asia due to the Hong Kong protests and potential for recession in Europe.  Nevertheless, it’s just not showing up broadly in the US markets yet.  We discussed several options for alternate counts with more bearish outcomes and concluded that the probabilities are too low at this time to warrant adding these into the mix.  We will continue to monitor and adjust our outlook on these alternates as more data comes in.

Currently we have all four of our core US markets and most US sectors in confirmed bull markets and trading not far from the highs.  While RUT and TRAN are notable outliers, these indices have been in bear markets since December and have been struggling to regain their footing.  It’s not unusual for TRAN to deviate from DOW like this, it happened exactly the same way back in 2012 coming off a deep 20% correction in 2011.  One of our members has suggested that RUT in particular may be more susceptible than most to the bond rally due to higher weighing in rate sensitive shares.  Still there’s historical precedence for these kinds of sideways moves as RUT moves in corrective structures whether in bull or bear mode.  Consequently, we don’t consider these deviations either out of the norm or cause for concern.  The bottom line here again is, there’s just not enough OEW evidence in the few sectors that are underperforming to change our long term outlook.

MEDIUM TERM: Downtrend

spxdaily

SPX opened lower for the third week in a row, rallied back on Tuesday to find resistance at the medium term EMA’s, then accelerated down from there to find support right at last week’s higher low of 2826.  This is now the second test of the low established last week at 2922 and sets up a potentially completed pattern for Minute wave ii, with Micro wave a = 2822, Micro wave b = 2943 and Micro wave c = 2826. The 200+ point 6.5% decline mentioned last week is still intact.  Although, the rally off the low is substantial, it’s still within range of countertrend moves in context of the existing downtrend.  Consequently, caution is advised for a possible extension lower.  Some in our group have noted that strength in NAZ and NDX may be a bullish indicator, since these are making higher lows relative to DOW and SPX.  It’s possible, but could also be a case of the glass half full, since these may still have work to do on the downside.  There’s just not enough evidence yet to mark the bottom for this downtrend.  A SPX rally back above 2930 or so will further build confidence for the Minute wave ii bottom.  However, a break below 2822 will signal Micro wave c is subdividing and brings into play alternate counts.  We will report on those if/when price dictates.  We’re still waiting till it becomes clear that a new uptrend is underway before updating our targets for Minute wave iii.

Medium term, RSI ended the week neutral and MACD is yet again trying to turn back up.  DOW continues to show positive divergence based on the low this week.

SHORT TERM

spxhourly

SPX was never able to impulse higher off of last week’s rally, but instead failed at the 2943 high on Tuesday, after a corrective sequence of overlapping waves up from 2822, then collapsed to retest prior lows at 2826.  This now suggests the irregular zig-zag pattern reported last week becomes our preferred count for Micro wave a, followed by an overlapping five wave structure for Micro wave b.  Micro wave c is either underway with two small waves so far or completed as a failed flat at 2826.  As mentioned in the previous section, the wave status at this juncture is unclear, so further waves are needed to sort it out.  As always, we’re looking for an impulsive structure to develop using our short term techniques to help solidify a potential bottom.  We can count one 68 point wave up to 2894 based on Friday’s rally, but so far, it’s inconclusive.  If the market reverses lower, that will suggest the possibility of double three pattern and potential extension for Minute wave ii.  Not much more to report until further price action clears up the near term picture.

Short term support is at the 2884 and 2858 pivots.  Resistance is at 2929 and 2957 pivots.  SPX is still holding within the same support and resistance levels as last week.

FOREIGN MARKETS

Asian markets (using AAXJ as a proxy) gained 0.33%.

European markets (using FEZ as a proxy) lost 1.48%.

The DJ World index lost 1.28%, and the NYSE lost 1.32%.

COMMODITIES

Bonds are in an uptrend and gained 1.04%

Crude oil is in a downtrend and gained 0.57%

Gold is in an uptrend and gained 1.00%

GBTC is in a downtrend and lost 11.35%.

The USD is in an uptrend and gained 0.70%.

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

 

Have a good week!

Posted in Updates | 457 Comments

Weekend Report

Weekend Report

Provided by the OEW Group

August 10 2019

SPX started out the week with a large gap down and continued lower till late afternoon, to make the low of the week at 2822, before a brief rally to finish Monday down at 2845.  Last week’s close was 2932.  Tuesday gapped down again and retested within a few points off the low in the first 20 minutes of trading, then made a strong rally for the rest of the day with only one small pullback along the way, to finish higher at 2884.  Thursday gapped higher and continued to rally straight up with no pullbacks to finish the day just off the high at 2938.   Friday opened lower and continued down to 2900 by noon, then reversed course and rallied back to close the week at 2919.  A consecutive week of volatility!

For the week, SPX/DOW lost 0.46%/0.034% while NDX/NAZ lost 0.60%/0.56%.

On the economic front, Crude Oil Inventories, Consumer Credit and MBA Mortgage Application Index increased, while ISM non-Manufacturing Index decreased.  JOLTS were little changed.

Next week economic news comes from the Treasury Budget, CPI, Core CPI and Import Prices.

LONG TERM: Uptrend

spxwkly

In the US, the long-term count remains unchanged with the Super Cycle SC2 low in March 2009.  The Primary wave I high occurred in May 2015 and Primary wave II low in February 2016.  Primary wave III has been underway ever since.  Major wave 1 high of Primary wave III occurred in October 2018 and Major wave 2 low in December 2018.  Intermediate wave i of Major 3 is now underway and is subdividing into Minor and Minute waves.  Despite the recent volatility and calls by some for the end of this bull market, we see no evidence yet to suggest these subdivisions are anything more than typical medium term downtrends in context of an overall bull market profile.  We will update the long term status, if/when anything develops to change this view.

MEDIUM TERM: Downtrend

spxdaily

SPX opened lower for the second week in a row and accelerated down, but seemed to find a near term bottom on Monday at 2822.  This gives 200+ points so far for this Minute wave ii downtrend that we believe has been underway since mid-July at the 3018 early top.  Although it’s exceeded the typical 5% decline mentioned last week, the 6.5% decline so far is still within the norm for this bull market.  SPX retested the low on Wednesday for an apparent double bottom, then rallied back above the 50% retracement zone, but ran into resistance there.  Consequently, we updated our medium term status to reflect a potential Minute wave ii bottom with the possibility of another retest before it’s complete.  A rally above 2950 or so will further confirm the Minute wave ii bottom.  If SPX breaks lower, then we will revaluate.

Some in our group pointed out a possible correlation of this downtrend with prior declines triggered by Tariff Man Tweets (TMT).  We’ve had three occurrences of these tariff threats since December and each time the market sold off in the 200+ point range.  We’ve annotated the medium term chart to show this effect.  The May selloff bottomed after a 200+ point decline.  The Dec selloff paused at 200+ points, but then continued lower after Fed autopilot comments (PAP on chart), which likely contributed to that extension.

SPX followed the DOW profile from last week and got extremely oversold at the low, the most so since Major wave 2 last December.  We will be watching the short term waves for direction of the pending rally.  Although we still expect Minor wave 3 to exceed the 3300 level, our medium target for Minute wave iii will be updated after it becomes clear that a new uptrend is underway.

Medium term, RSI is in the neutral zone and MACD is turning back up.  DOW generated a positive divergence off the low on Wednesday.

SHORT TERM

spxhourly

SPX gapped down and blew right through our support targets mentioned last week to reach beyond the 61.8% retrace level of Minute wave i, but was able to close above that level at 2845.  From there, SPX rallied to fill the gap and close the week back above the 38.2% retrace level at 2919.  We noticed a pattern developing this week based on our qualified small waves and short term tracking techniques, so we adjusted the count accordingly.  We continue to track the irregular Minute wave ii previously discussed, but have rescaled the count to reflect a double three pattern.  That gives an irregular zig-zag for Micro wave a, [3018]-2973-3028-2958, followed by Micro wave b single wave rally to 3014.  Micro wave c then suggests a potentially complete zig-zag pattern at the low [3014]-2914-2944-2822.  We can also make a case for an elongated flat into the higher low at 2826, but either one suggests a completed double three pattern from the Minute wave i top.  From there, we can count two waves up from the failed bottom, [2826]-2939-2900, with a potential third wave still developing.  There’s still a possibility of another retest of the low as shown with the optional ii/a label on the chart.  We’re waiting to see if this rally can impulse or is going to fade into another b-wave.

Short term support is at the 2884 and 2858 pivots.  Resistance is at 2929 and 2957 pivots.

FOREIGN MARKETS

Asian markets (using AAXJ as a proxy) lost 2.07%.

European markets (using FEZ as a proxy) lost 0.36%.

The DJ World index lost 0.90%, and the NYSE lost 0.71%.

COMMODITIES

Bonds are in an uptrend and gained 0.64%

Crude oil is in a downtrend and lost 2.08%

Gold is in an uptrend and gained 3.50%

GBTC is in a downtrend and gained 0.20%.

The USD is in an uptrend and lost 0.11%.

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

 

Have a good week!

 

 

Posted in Updates | 444 Comments