Weekend update

REVIEW

Serious turn of events this week. The week started at SPX 2886. After a gap down opening on Monday the market traded down to SPX 2862. A rally into Tuesday morning turned the SPX (2895) higher for the week. Then after a lower opening on Wednesday the market started to head south in a hurry. After a gap down opening on Thursday the SPX hit 2711. Then it tried to rebound, and even had a huge gap up opening on Friday, to close the week at SPX 2767. For the week the SPX/DOW lost 4.15%, and the NDX/NAZ lost 3.50%. Economic reports for the week mostly positive. On the downtick: consumer sentiment, plus jobless claims moved up. On the uptick: import prices, CPI/PPI, and wholesale inventories. Next week’s reports will be highlighted by: the FOMC minutes, Capacity utilization, the NY/Philly FED, and housing. Best to your options expiration week!

LONG TERM: downtrend probably underway

For the past several months we had been warning that the market was probably in its last uptrend of the 2016 bull market. For the past several weeks we have been noting that the NDX/NAZ wave patterns looked complete, and the SPX/DOW might have a bit more work to do to the upside. This week the Tech sector bear market took control of the general market and everything sold off. Scale in around bear market lows. Scale out around bull market highs.

With the SPX/DOW joining the NDX/NAZ in confirmed downtrends, we can now count five waves up from early-2016. This suggests, as we have been noting the technical deterioration, that the Major wave 1 bull market ended at the recent highs. We are now expecting a shallow 15% to 20% bear market lasting several months into next year. Bear markets are often quite volatile. And a rally back to SPX 2900 at some point would not be a surprise. After the expected Major wave 2 bear market ends, the Primary III secular bull market will resume.

MEDIUM TERM: downtrend

We have noted the NDX/NAZ had been in confirmed downtrends, and probably bear markets, since early October. This week the SPX/DOW joined the growth sector with confirmed downtrends. We had thought the SPX/DOW had a bit more upside to go. Especially with the SPX nearing our 3000+ in 2018+ target, after a 2016 SPX 1810 low. SPX 2941 was the best it could do. Sixty-two percent in about 2.5 years.

With the first downtrend underway of an expected bear market it is a bit difficult to determine, in advance, how this is all going to unfold. In recent years all the selloffs, (2011, 2015/2016, and 2018) have been quite similar. About a 250+ point decline, a 50% retracement, and then a lower low for wave A. In all three cases that was one downtrend. Then an uptrend retracing about 61.8% of that entire decline. This is probably a good general guideline for starters.

SHORT TERM

The one thing we know for sure at this point is that the SPX has completed five waves up from the early-2016 bear market low. And, is now in a confirmed downtrend with the DOW/NDX/NAZ. We can assume the entire decline will correct some portion of the five wave bull market. Works just like a downtrend correcting some portion of the previous 5 wave uptrend. Only this time the five waves was from February 2016 to October 2018.

Thus far the market has dropped from SPX 2941 to 2711, about 230 points. If this is enough for the first rebound. A rally to around the 2835 pivot would appear to be underway. Keep in mind volatility is king right now. The three potential retracements from 2711 are SPX: 2799, 2826 and 2853. Short term support is at 2731 and 2656, with resistance at 2780 and 2798. Short term momentum rose to about neutral after a positive divergence on Thursday. Best to your trading!

FOREIGN MARKETS

Asian markets were all lower for a 4.6% loss.

European markets were all lower for a 4.5% loss.

The DJ World index lost 4.3%, and the NYSE lost 3.9%.

COMMODITIES

Bonds continue to downtrend but gained 0.5% on the week.

Crude remains in an uptrend but lost 4.0%.

Gold is in an uptrend and gained 1.4%.

The USD is in an uptrend but lost 0.6%.

NEXT WEEK

Monday: retail sales and NY FED at 8:30, then business inventories at 10am. Tuesday: industrial production and the NAHB. Wednesday: housing starts, building permits and the FOMC minutes. Thursday: jobless claims, Philly FED and leading indicators. Friday: existing home sales and options expiration.

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

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Weekend update

REVIEW

Wild week! The SPX started the week at 2914. After a gap up opening Monday, an inside day Tuesday, and another gap up opening on Wednesday, the SPX hit 2940. One point shy of the all-time high. After Wednesday morning’s high it was all downhill from there. By Friday the SPX was trading at 2869. For the week the SPX/DOW lost 0.5%, and the NDX/NAZ lost 3.1%. Economic reports for the week were mostly positive. On the downtick: ISM, monthly payrolls, plus the trade deficit widened. On the uptick: construction spending, auto sales, the ADP, ISM services, factory orders, consumer credit, plus jobless claims and unemployment declined. Next week’s reports will be highlighted by the CPI/PPI and export/import prices. Best to your week!

LONG TERM: uptrend weakening

For the past few weeks we have been noting that the four major indices, (SPX, DOW, NDX, NAZ) not only appear to be in their last uptrend of this bull market. But are also getting close to completing, or in some cases may have completed, that uptrend. We noted last weekend that the NDX/NAZ were already in confirmed downtrends. But the SPX/DOW appeared to have more work to do on the upside before entering their downtrends.

This week the DOW made all-time new highs on two consecutive days, falling less than 50 points short of hitting 27,000 for the first time. The SPX rallied to within one point of its 2941 all-time high before retreating. Yet the TRAN and R2K confirmed downtrends this week. As noted we scale into positions during potential bear market bottoms, and scale out during potential bull market tops. But do your own homework and make your own investment decisions.

MEDIUM TERM: uptrend weakening

We had marked last week that Minor 3 was done at SPX 2941. When the SPX rallied back to 2940, and the DOW was making new highs, for one day we thought Minor 3 might go higher. Then the SPX reversed, along with the rest of the market, and the SPX 2941 level still stands as the Minor 3 high. Minor wave 4, within this Intermediate wave v uptrend, resumed. On Friday the SPX traded down to 2869, for a 72 point drop from the all-time high. We have been projecting Minor wave 4 would drop 60-100 points.

At this point everything seems to fit quite nicely. The SPX displayed daily RSI/MACD divergences at the 2941 Minor wave 3 high. The decline since then has been an a-b-c. With the A wave 38 points and the C wave 71 points thus far. Nearly a 2:1 ratio. Time to start looking for a Minor wave 4 low. Medium term support is at the 2884 and 2858 pivots, with resistance at the 2929 and 2995 pivots.

SHORT TERM

Tricky market lately with all the cross currents. Nothing new for this bull market though. As noted earlier the Minor wave 4 decline displays a C wave nearly double the size of the A wave. Usually a good relationship in a zigzag. The decline has been 72 points, and is within our 60-100 point range. At Friday’s low the daily RSI hit oversold for the first time since Minor wave 2. And Friday’s low was within just a few points of the previous 4th wave at SPX 2864.

Overall this activity looks good for a potential Minor wave 4 low, especially when you add the positive divergence on the hourly chart at the low. Placed a tentative green label at that 2869 low. Short term support is at the 2884 and 2858 pivots, with resistance at the 2929 and 2995 pivots. Short term momentum ended the week with a positive divergence. Best to your trading!

FOREIGN MARKETS

Asian markets were mostly lower and lost 2.2%.

European markets were all lower and lost 2.0%.

The DJ World index lost 1.9%, and the NYSE lost 0.7%.

COMMODITIES

Bonds continue to downtrend and lost 1.0%.

Crude remains in an uptrend and gained 1.5%.

Gold is still in a sluggish uptrend and gained 0.8%.

The USD is also in an uptrend and gained 0.7%.

NEXT WEEK

Wednesday: PPI and wholesale inventories. Thursday: weekly jobless claims, the CPI, and the Federal budget. Friday: export/import prices and consumer sentiment. Best to your week!

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 then pullback, DOW +54

The first three days of this week display Asian markets with an 0.8% loss, and European markets with a 0.1% gain. US markets started the week at SPX 2914. After a gap up opening Monday and rally to SPX 2937, the market dropped to 2918 by the end of the day. Tuesday traded in between those two levels. Then today, another gap up opening with a rally to SPX 2940, before pulling back in the afternoon. This certainly sounds positive.

Three of the four major indices, however, are all in different wave counts. The NDX/NAZ are in downtrends, along with the R2K and recently the TRAN. While the SPX/DOW are still in uptrends, and the DOW has been making new all-time highs the last two days. Quite a mix. Almost as bad as the divergence between the US and the rest of the world.

We updated the DOW charts to display a Minor wave 3 that is still underway. The SPX chart has been updated to suggest its Minor 3 may not have ended yet. The NDX/NAZ charts remain the same. If either can confirm an uptrend, this would suggest an extending Intermediate wave v. Short term support is at the 2884 and 2858 pivots with resistance at the 2929 and 2995 pivots. Short term momentum ended the day nearly oversold. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: uptrend

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

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Weekend update

REVIEW

The week started at SPX 2930. After a gap down opening on Monday the market hit SPX 2913. Then it rallied to 2931 right after the FED raised rates on Wednesday. Immediately after that the SPX dropped to 2903 before a 2906 close. On Thursday the market gapped up and rallied to SPX 2927, before heading down in the afternoon. Friday the market hit SPX 2908, before ending the week at 2914. For the week the SPX/DOW lost 0.8%, and the NDX/NAZ gained 1.0%. On the economic front positive reports were even with negative ones. On the downtick: Case-Shiller, pending home sales, Chicago PMI, consumer sentiment, plus jobless claims rose. On the uptick: consumer confidence, new home sales, durable goods, and personal income/spending. Next week’s highlights: monthly payrolls, the ISMs and auto sales. Best to your week!

LONG TERM: uptrend inflection point

Last weekend we discussed why we feel this bull market is in its late stages. While our target all along has been SPX 3000+ by 2018+, and it still may get there, we’re not one to try and pick the exact top. We scale in when we think a bull market is underway, and scale out when we think it is close to ending.

Since the low in early-April, Intermediate wave iv, the market has struggled to make new highs. It was not until August that the SPX made new highs, and September for the DOW. Typically this is a sign of a weakening trend and impending top. With four Intermediate waves already in the books, and this Intermediate wave v up entering its late stages, a bull market high may occur in the next few weeks/months.

MEDIUM TERM: uptrend

This Intermediate wave v uptrend began in early-April at SPX 2554. Minor waves 1 and 2 completed in June at SPX 2791 and SPX 2692 respectively. Minor wave 3 appears to have completed less than two weeks ago at SPX 2941. And, Minor wave 4, which could drop about 60-100 points, should be underway. Normal support is the previous 4th wave near the low 2860’s, and the 2858 pivot. Once Minor 4 concludes, Minor wave 5 should take the market to new highs to complete Int. v and the Major 1 bull market. After that we are expecting a short-lived, and moderate, bear market to unfold.

Supporting this potential scenario are the negative RSI/MACD divergences in several US indices. A negative divergence on the NYAD breadth. US sectors that look like they have already topped, i.e. NDX/NAZ and R2K. Foreign markets that have already turned down, 12 of the 14 we track, with 3 of them already in confirmed bear markets. It is quite odd that the US has been making new highs, while the rest of the world is heading lower.

SHORT TERM

The recent Minor wave 3 unfolded in five Minute waves: 2863-2802-2917-2864-2941. Notice the third wave was shorter than the first, which limited the upside potential for the fifth wave. If you review the entire uptrend you will observe pullbacks have ranged from 53 to 100+ points. With three of the five pullbacks around 50+ to 60+ points. This is why we expect Minor 4 to range from 60-100 points.

Also of note, the NDX/NAZ have confirmed downtrends. We believe the recent highs were the high for their bull market. However, some in our group prefer the count posted on the NDX charts, suggesting one more bull market uptrend. Either way these two indices are looking toppish as well. Short term support is at the 2884 and 2858 pivots, with resistance at the 2929 and 2995 pivots. Short term momentum ended the week around neutral. Best to your trading!

FOREIGN MARKETS

Asian markets were mostly higher on the week but gained only 0.1%.

European markets were mostly lower and lost 0.7%.

The DJ World index lost 0.7%, and the NYSE lost 1.2%.

COMMODITIES

Bonds continue to downtrend but gained 0.1%.

Crude is still in an uptrend and gained 3.5%.

Gold is in an uptrend too but lost 0.4%.

The USD remains in a downtrend but gained 0.8%.

NEXT WEEK

Monday: ISM and construction spending at 10am. Tuesday: auto sales. Wednesday: ADP and ISM services. Thursday: jobless claims and factory orders. Friday: monthly payrolls, the trade deficit and consumer credit.

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

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Wednesday update

SHORT TERM: FED raises rates, DOW -107

During the first three days of this week the Asian markets have gained 0.1%, and European markets have also gained 0.1%. US stocks gapped down at the open Monday, declined to SPX 2913, bounced around until Wednesday morning’s 2916 low, and then rallied into and after the FED’s rate hike to 2%. After hitting SPX 2931 just after 2pm, the market reversed and slid to 2903 just before the close 2906. FOMC volatility.

It looks like Minor wave 3 did end at SPX 2941 last week. That five waves advance was: 2863-2802-2917-2864-2941. The decline from that high hit SPX 2913 on Monday, overlapping 2917. But the today’s decline below SPX 2908 was more convincing that Minor 4 is underway. If it is, the market could drop 60-100 points from the SPX 2941 all-time high. After that Minor wave 5 should kick in, and the market should take out, or match its highs. Short term support is at the 2884 and 2858 pivots, with resistance at the 2929 and 2995 pivots. Short term momentum ended the day at oversold. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: uptrend inflection point

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

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Weekend update

REVIEW

The week started off at SPX 2905. After a dip down to SPX 2886 by Monday afternoon the market started to rally. Higher opens took the SPX to 2911 on Tuesday, 2912 on Wednesday, a new all-time high of 2935 on Thursday, and 2941 on Friday. For the week the SPX/DOW gained 1.6%, and the NDX/NAZ lost 0.25%. Economic reports for the week were mostly positive. On the downtick: the NY FED and building permits. On the uptick: the Philly FED, housing starts, leading indicators, plus weekly jobless claims and the account deficit both improved. Next weeks reports will be highlighted by the FOMC meeting, Q2 GDP and more housing. Another rate hike on Wednesday probable.

LONG TERM: uptrend inflection point

The Major wave 1 bull market extended into its 31st month for the DOW this week, as it made all-time new highs on Thursday. The SPX made all-time new highs as well. The NDX and NAZ had made their new highs in August. Now that the four major indices have registered five Intermediate waves up from the February 2016 low, it’s time to review the technicals.

The first observation is the building negative divergences on the SPX/DOW weekly and monthly RSI. Not a problem until new highs were hit. Now that they have, it’s a potential warning of a bull market high in the making. We can add that the R2K may also be in its last uptrend of its bull market.

Typically nearing a bull market top various sectors begin to displays negative divergences as well. The banking index BKX, and the housing index HGX are doing just that. Plus, the four major indices breadth, as measured by the percentage of stocks above their 200 dma, are all displaying negative divergences. As well as the NYAD.

Last, the weakness in the foreign markets. Which most have been noticing for a while. Eleven of the fourteen indices we track appear to have topped. Three have already confirmed bear markets: China, Spain and Switzerland. And we know Switzerland usually tops within a year of an SPX top. After more than two years of riding the bull we think its time to get cautious.

MEDIUM TERM: uptrend

For the past couple of weeks the SPX has had a short term inflection point to resolve. There were three possible counts. With this week’s new high one count was totally eliminated, one downgraded, and the other made the primary count. That count is on the daily chart below. This suggests the uptrend is in Minor wave 3 of Intermediate wave v, with Minor waves 4 and 5 still to unfold.

The NDX/NAZ continue to display weakness as the cyclicals make new high. In fact if they do not make new highs next week they will likely confirm a downtrend. And that might be it for their bull market. The only other thing that would alter this scenario is if Intermediate wave v were to subdivide into five Minor wave trends. Just like Int. iii. Other than that we continue to believe this is the last uptrend of the 2016-2018 bull market.

SHORT TERM

We have been labeling this Int. v uptrend, from the early-April low, with five Minor waves. Minor waves 1 and 2 completed at 2791 and 2692 in June. Minor wave 3 has been underway since that low. Minor 3 has been labeled with five Minute waves: 2863-2802-2917-2864-2941 so far. Since Minute iii is shorter than Minute i, Minute v has to be the shortest up wave. This give us a maximum for Minor 3 at SPX 2979.

We have a similar situation with the DOW. You can check the hourly chart using the link below for that. Short term support is at the 2929 and 2884 pivots, with resistance at the 2995 pivot. Short term momentum ended the week at neutral. Best to your week!

FOREIGN MARKETS

Asian markets were mostly higher on the week and gained 1.3%.

European markets were all higher on the week and gained 2.1%.

The DJ World index gained 1.6%, while the NYSE gained 1.4%.

COMMODITIES

Bonds are downtrending and lost 0.5% on the week.

Crude is uptrending and gained 2.6%.

Gold looks like its uptrending but ended flat.

The USD is downtrending and lost 1.5% during the week.

NEXT WEEK

Tuesday: Case-Shiller and consumer confidence. Wednesday: FOMC statement and new home sales. Thursday: Q2 GDP (est. 4.3%), weekly jobless claims, durable goods, and pending home sales. Friday: personal income/spending, consumer sentiment, and the Chicago PMI.

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

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