Weekend update

REVIEW

The week started at SPX 2781. After a slightly down opening on Monday the market dropped to SPX 2722. Tuesday it had a gap up opening, hit SPX 2743, dropped to 2719, rallied to 2755, then dropped to 2715. Another gap up opening on Wednesday carried the SPX to 2747. But it quickly reversed trading down to a low of SPX 2671 on Thursday. After that it began to rebound and hit SPX 2747 on Friday. For the week the SPX/DOW lost 1.9%, and the NDX/NAZ lost 2.35%. Economic reports for the week were mostly positive. On the downtick: capacity utilization, the Philly FED, plus the budget deficit and weekly jobless claims rose. On the uptick: the NY FED, the CPI, retail sales, export/import prices, business inventories, and industrial production. Next week’s reports will be highlighted by durable goods, the leading indicator and housing. Best to your holiday week!

LONG TERM: downtrend probable

Now that some of the vocal pundits have been touting a global economic slowdown, and possibly a bear market and recession, there are two charts we would like to cover. First confirming the economic weakness is the ECRI. Notice their leading indicator has dropped below zero in recent weeks indicating some softness in the economy. It has not dropped to levels that would suggest a recession is on the way. In fact, it does not even look like 2015/2016 yet. Which was a bear market with no recession.

Second is the long term SOX index. Semiconductors have been hammered lately with some of the popular stocks down nearly 50% from their highs. This is somewhat to be expected when the 2-year cycle is bottoming. We are not sure where the index will bottom. But the low should occur this year: 2008-2010-2012-2014-2016-2018. After it does the SOX should launch into another 1 to 2 year up cycle.

Our long term SPX count remains the same. Five Intermediate waves up, with a subdividing third wave, from early-2016 to late-2018 to complete a Major wave 1 bull market (1810-2941). After that high the market entered what we suspect will be a short-lived Major wave 2 bear market, with a possible loss of 15% to 20%.

MEDIUM TERM: uptrend possible

The first wave down of the bear market, Intermediate wave A, appears to have ended at SPX 2604 (11.5% decline). Now the market is in a counter-trend Intermediate wave B rally. Since Int. A was three Minor waves down, we have been expecting Int. B to be three Minor waves up. Minor wave A topped at SPX 2815, and Minor wave B probably bottomed at SPX 2671. After the Minor wave A high we were expecting a drop to SPX 2700. The market went right through that level on Wednesday, and bottomed on Thursday.

We have been expecting the rising Minor B to rally back to SPX 2815 area or slightly higher. However, due to volatility and seasonal factors it could rally all the way to SPX 2880. At that level Minor C would about equal Minor A. After Int. B completes then the bear market should resume with Intermediate wave C.

SHORT TERM

At the recent SPX 2671 low the market presented a short term double positive divergence, and a sufficient oversold condition on the daily RSI. On Friday the SPX put in its first higher daily bar since the Minor wave B began. Further signaling that Minor B may have indeed ended at SPX 2671. From that Thursday low we have counted eight waves up, with a possible ninth underway: 2709-2691-2735-2712-2739-2720-2747-2734-2744 so far.

Not expecting any impulsive activity for a counter-trend wave, this choppy overlapping activity looks quite normal. We think it should continue this way into early December. Then the market is likely to rollover heading into the FED’s next rate hike in mid-December. January could be a nasty month to start the year. Short term support is at the 2731 and 2656 pivots, with resistance at the 2780 and 2798 pivots. Short term momentum ended the week just below overbought. Best to your holiday trading.

FOREIGN MARKETS

Asian markets were mixed on the week for a net loss of 0.2%.

European markets were all lower losing 1.8%.

The DJ World index lost 1.2%, and the NYSE lost 1.1%.

COMMODITIES

Bonds appear to be uptrending and gained 0.6% on the week.

Crude remains in a downtrend and lost 5.8%.

Gold is in an uptrend and gained 0.5%.

The USD is still in an uptrend and gained 0.1%.

NEXT WEEK

Monday: homebuilders index. Tuesday: housing starts and building permits. Wednesday: weekly jobless claims, durable goods, existing home sales, consumer sentiment and leading indicators. Thursday: Thanksgiving.

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

INITIATIVE Q

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Wednesday update

SHORT TERM: gap up opening then selloff, DOW -206

So far this week Asian markets have lost 0.6%, and European markets have lost 0.9%. US stocks started the week at SPX 2781. After a selloff on Monday the SPX gapped up on Tuesday, but reversed and hit 2719 in the first hour of trading. Then after a rally to SPX 2755 by midday the market made a lower low at SPX 2715. A gap up opening on Wednesday pushed the SPX to 2747. But it was sold off to an even lower low at SPX 2686 in the afternoon. The market has rallied but has consistently failed to maintain the advance.

The pullback we have been expecting has been underway. We have been expecting support around the SPX 2700 level, before the market reverses right back to the recent 2815 highs. Today the market hit that level, paused, then dropped to SPX 2686, a 0.618 retracement. We had a positive divergence yesterday, then about a 30-point rally, and now have another positive divergence at today’s low. Would like to see the market take out today’s highs before thinking Minor B concluded at SPX 2686. Short term support is at the 2656 and 2632 pivots, with resistance at the 2731 and 2780 pivots. Short term momentum ended the day with a positive divergence. Best to your trading Options expiration!

MEDIUM TERM: uptrend possible

LONG TERM: downtrend probable

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

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Weekend update

REVIEW

The week started off at SPX 2723. It was a strong week to the upside until the FED announced on Thursday a rate increase is likely next month, and three more in 2019. The market gapped up on Monday, continued higher on Tuesday, then gapped up again post mid-term elections on Wednesday. At Wednesday’s high the SPX hit 2815. After a small pullback and another rally to SPX 2815 the market began to pullback. A gap down opening on Friday took the SPX to 2764, then the market bounced to end the week at 2781. For the week the SPX/DOW gained 2.45%, and the NDX/NAZ gained 0.90%. Economic reports for the week were mixed. On the downtick: ISM services, consumer credit and consumer sentiment. On the uptick: the PPI, wholesale inventories and weekly jobless claims improved. Next week’s reports will be highlighted by industrial production, retail sales and the CPI. Best to your week!

LONG TERM: downtrend probable

The market continues to generally track as expected. After a five wave bull market, with a subdividing third wave, from SPX 1810 to SPX 2941, the market reversed and appears to be in a potentially short-lived bear market. The first decline of this bear market bottomed in October at SPX 2604. Currently it looks like the market has been in a counter-trend rally, and has already retraced 61.8% of that entire initial decline.

Since we are expecting a three wave bear market we are labeling the first decline as Intermediate wave A, and the current rally as Intermediate wave B. Intermediate wave C should naturally follow once this rally/uptrend concludes. During the C we are expecting the SPX to break through the recent lows with a maximum downside target around SPX 2400 (green line). After that the next bull market should begin. Keep in mind we are in a Secular generational bull market, and we are not expecting it to top until the early 2030’s.

MEDIUM TERM: uptrend probable

We are currently working with a couple of variables as is normally the case when one trend appears done and a new one underway. We refer to the downtrend from SPX 2941-2604 as probably being completed at that low, and a counter-trend uptrend now underway. The second variable is the degree of the waves. Are they Minor or Intermediate? What occurs in the next couple of weeks/months should determine that. But we will go with Intermediate scenario for now since the initial decline was quite steep.

From the SPX 2941/2940 bull market high we labeled the first decline in three Minor waves: 2711-2817-2604, as Int. A. Off that low it appears that Minor wave A, of Int. B, has completed at SPX 2815, which we labeled with a tentative green label. If this is correct we now would expect a decline to around SPX 2700 for Minor wave B. When that concludes, a Minor C rally should take the market back to SPX 2815, or a bit higher, to end the Intermediate wave B uptrend. After that an Intermediate wave C downtrend should take over.

SHORT TERM

While the Intermediate wave A downtrend was quite volatile, creating many waves. This uptrend has been a bit more subdued. Off the SPX 2604 low we tracked 5 waves up to 2737, a pullback to 2709, then a rally to 2757. Then after a decline to SPX 2700 the market streaked higher to SPX 2815. The entire movement can be considered a zigzag: 2757-2700-2815. Next a pullback to around SPX 2700 would fit as it matches the B wave of the zigzag.

Short term support is at the 2780 and 2731 pivots, with resistance at the 2798 and 2835 pivots. Short term momentum ended the week heading toward neutral. Best to your trading!

FOREIGN MARKETS

Asian markets were mixed on the week for a net 0.8% loss.

European markets were all higher for a 1.3% gain.

The DJ World index gained 0.8%, and the NYSE gained 1.8%.

COMMODITIES

Bonds are in a downtrend but gained 0.1%.

Crude remains in a downtrend and lost 4.7%.

Gold appears to be heading into a downtrend and lost 2.0%.

The USD is still in an uptrend and gained 0.2%.

NEXT WEEK

Monday: Veterans Day. Tuesday: Budget deficit. Wednesday: the CPI. Thursday: jobless claims, retail sales, business inventories, export/import prices, the NY/Philly FED. Friday: industrial production, capacity utilization, and options expiration.

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

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OEW tutoring

Objective Elliott Wave, (OEW), is a quantitative approach to the Elliott Wave Theory. Once you learn OEW you will be able to quantitatively research the historical price performance of any asset class, or stock, and determine its current position within its overall long term trend. Quantified waves never change. Then using shorter term charts, you will be able to determine good entry and exit price areas in the asset you are tracking.

This is not a course, this is private tutoring: one on one. You may take as long as you like to fully grasp the material, and concepts at hand. It is not complicated. Actually you will be amazed, after some period of time and dedicated study, how easily you will be able to discern the waves as they unfold. OEW quantitatively identifies all the medium and long term waves that create bull and bear markets. Every one! We have been applying this technique, successfully, for thirty-five years.

The lessons also include OEW analysis of long term investor sentiment, the PCE, the Unemployment rate, and the Baltic Dry index. Housing: leading/lagging indicators, what works and what does not. Currencies: tracking the long term currency cycle in OEW terms. How the Saeculum applies to the markets, and Investing/Trading Psychology. In recent years we added an historical evaluation of the FED, how QE impacts the SPX, plus historical comparisons of the SPX/DOW/NAZ. This is our most complete lesson plan yet.

Over the years OEW analysis has led to some important projections in just the stock market alone. We projected the 1987 top and subsequent crash, and called the Dec. 1987 low, the July 1990 top to the day, the 2000 top, and the Oct. 2002 low. Then we called the Oct. 2007 top (in early Jan08), and the Mar. 2009 bear market low nearly to the day. And in mid-2016 the current bull market to new highs.

In Real Estate: OEW confirmed the bear market in 2006, and a new bull market starting in 2011. In Bonds: OEW confirmed the bull market in 2007, then turned long term bearish in 2016. In the Currency markets: OEW projected a strong rally in the USD in early 2008 after a three year decline. Then a resumption of its choppy bear market in 2009/10. We turned bearish on most foreign currencies in mid-2011, then long term bearish on the USD in 2016. In early 2009, OEW projected a resumption of the ongoing 13 year bull market in some Commodities: including Gold and Silver. Then turned long term bearish in 2012.

OEW can be used to track any asset class, including individual stocks, providing there is sufficient historical data. All of my analysis since 2005 are detailed – unedited – day by day on the blog. Bull and bear markets can last for years. Medium term uptrends and downtrends only last for a few 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 also allows one to track a bull or bear market as it unfolds. If you are interested in learning how to do this type of analysis yourself, and joining our private OEW group, just contact me at caldaro@msn.com for details. Best to your trading/investing.

“The possession of knowledge, unless accompanied by the manifestation and expression in sharing is a vain and foolish thing. The Law of Use is universal, and he who violates it suffers by reason of his conflict with natural forces.”

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Wednesday update

SHORT TERM: gap up opening, DOW +545

For the first three days of the week Asian markets lost 0.8%, and European markets gained 0.5%. US elections ended in a split decision. The Democrats took control of the House, and the Republicans maintained control of the Senate. The market anticipated and obviously liked the result. After last Friday’s pullback low to SPX 2700 the market has soared. It closed at SPX 2723 on Friday, SPX 2738 on Monday, SPX 2755 on Tuesday, and SPX 2814 on Wednesday after hitting 2815. Quite a rally in just a few days.

Out short term count remains the same. From the Int. a low at SPX 2604 in late October, the market has rallied in a zigzag to SPX 2757. Pulled back to SPX 2700. And has now rallied to SPX 2815. Our initial resistance levels for this entire advance were: 2773, 2812, and possibly a little bump over the mid-October 2817 high. With the first two already accomplished the third appears to be next. There is also the possibility of this C wave equaling the A wave (2604-2757), which would occur at SPX 2853. Between these Fibonacci levels, and the OEW pivots, this rally should run into resistance in the coming days. Short term support is at the 2798 and 2780 pivots, with resistance at the 2835 and 2858 pivots. Short term momentum ended the day extremely overbought. Best to your trading!

MEDIUM TERM: potential uptrend

LONG TERM: probable downtrend

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

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Weekend update

REVIEW

The week started at SPX 2659. After a gap up opening on Monday and run up to SPX 2707 the market sold off to 2604 in the last hour of trading. Then the market started to rally. On Tuesday it rallied to SPX 2674, pulled back to 2641, then gapped up on Wednesday to 2724. After a pullback to SPX 2709 it rallied to 2737 before the close. Another gap up opening on Thursday was sold off to SPX 2709. But the market rallied again and hit SPX 2757 on Friday. After that the market started to pullback. The decline took the SPX to 2700 before it bounced to 2723 to end the week. For the week the SPX/DOW gained 2.4%, and the NDX/NAZ gained 2.2%. Economic reports for the week were mostly higher. On the downtick: Case-Shiller, Chicago PMI, ISM, plus the trade deficit increased. On the uptick: personal income/spending, consumer confidence, the ADP, auto sales, factory orders, payrolls, plus jobless claims declined. Next week’s reports will be highlighted by the FOMC meeting and ISM. Best to your week!

LONG TERM: downtrend probable

This week S. Korea joined, Canada, China, Germany, and Spain in confirmed bear markets. Despite the volatility and large price drop the four major US indices have not confirmed bear markets yet. We may not see a bear market confirmation in the US until the bear market is nearly over. That’s what happened in 2016, and is part of the reason we were caught off guard at that low. But one lives and learns how markets respond to uptrend/downtrend confirmations.

We continue to count the five wave movement from the Feb 2016 SPX 1810 low to the Sept/Oct 2018 SPX 2940/41 high as a completed bull market. Major wave 1. Since then we have been expecting a Major 2 bear market to unfold. Typically they do not take long to unfold, a few months, and the decline is usually a modest 15% to 20%. We have tentatively labeled the SPX 2400 with a line, suggesting the maximum downside we’re expecting. Thus far the decline from SPX 2941 to 2604 might have ended the first downtrend, tentatively labeled A. And a potential wave B uptrend is now underway.

MEDIUM TERM: downtrend

We labeled the Wave A downtrend as an abc: 2711-2817-2604. The first decline, 230 points, was nearly equal to the second decline, 213 points. We noted last weekend we expected a drop to the OEW 2594 pivot, and then expected the market to reverse. The SPX fell to within 3 points of the pivot range on Monday, and then reversed.

If the market did complete the wave A downtrend at that SPX 2604 low, we expect the wave B to be an uptrend that retraces 50% to 61.8% of the entire decline: SPX 2773 – 2812. Since the previous B wave was at SPX 2817 it could move higher. Also, we’re beginning to believe that this first downtrend was indeed an Intermediate wave. It dropped further than we expected, nearly down to the spring lows, for it to be a Minor wave. Plus, the NAZ/NDX declined nearly 15%. If this works out, then we could have just ended Int. A, are rising in Int. B, and should see an Int. C decline to end the bear market by early next year.

SHORT TERM

As noted above the first downtrend, Int. A, dropped from SPX 2941 to 2604. The three retracement levels for an Int. B uptrend: 2712, 2773, and 2812. The market has already traded as high as SPX 2757 on Friday. Since Int. B is a counter-trend rally it should be quite choppy, and probably will take a good deal of time to unfold.

Thus far, in this first rally up from the SPX 2604 low we have: 2674-2641-2729-2709-2737-2709-2757. This looks like a simple zigzag: 2737-2709-2757. The normal downward retracements for this advance would be SPX: 2699, 2681 and 2662. On Friday the market sold off from SPX 2757 to 2700 before bouncing to 2728, and ending at 2723. The Friday low may have been all of the retracement as the hourly RSI is already oversold after the negative divergence at the SPX 2757 high. An equal rally from this 2700 low could push the SPX to 2853. Short term support is at the 2656 and 2632 pivots, with resistance at the 2731 and 2780 pivots. Best to your trading!

FOREIGN MARKETS

Asian markets were all higher and gained 4.3%.

European markets were mostly higher and gained 2.0%.

The DJ World index gained 3.2%, and the NYSE gained 2.9%.

COMMODITIES

Bonds continue to downtrend and lost 0.9%.

Crude is in a downtrend as well and lost 6.6%.

Gold is in an uptrend but lost 0.2%.

The USD may be starting a downtrend but gained 0.3%.

BITCOIN

We have been following this very volatile cryptocurrency since its bear market began in late 2017. It has crashed, as it normally does, from $20000 to just under $6000 during 2018. Currently there looks to be a nice wave pattern potentially completing near the lows. It could break either way out of that 6 month triangle. But usually, in this pattern, the breakout is to the upside. This is not a recommendation. Just an observation.

NEXT WEEK

Monday: ISM services at 10am. Tuesday: election day. Wednesday: consumer credit. Thursday: the FOMC statement, and weekly jobless claims. Friday: the PPI, consumer sentiment and wholesale inventories. Best to your week, and get out and vote!

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

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Wednesday update

SHORT TERM: gap up opening as rally continues, DOW +241

The first three days of the week display Asian markets up 2.7%, and European markets up 3.1%. US markets started the week at SPX 2659. Gapped up on Monday, hit SPX 2707, then did another 100-point selloff to 2604. If the market continues its 100-points drops, followed by 60+ point rallies, the 2594 pivot could be next and last for now. After that the market rallied into the close Monday, rallied again on Tuesday, then gapped up again on Wednesday hitting SPX 2737. Biggest rally (2604-2737) since the downtrend began.

Today we posted a tentative green Minor wave A at the SPX 2604 low. We posted this label for four reasons. 1. the short term down-100, up-60 pattern has changed. 2. the SPX crossed out 2723 reversal target. 3. the downward expanding diagonal looks complete at the lows. And 4. wave C (213) nearly equals wave A (230). Next we should see a 50% to 61.8% retracement of the entire SPX 2941-2604 decline: SPX 2773 – 2812. With the previous B wave at SPX 2817, the retracement may go a bit higher than 61.8%.

Short term support is at the 2656 and 2632 pivots, with resistance at the 2731 and 2780 pivots. Short term momentum finally reached overbought after a huge double positive divergence. Best to your trading!

MEDIUM TERM: downtrend

LONG TERM: downtrend probable

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

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