Thursday update

SHORT TERM: quiet day ahead of Friday’s GDP report, DOW -23

Overnight the Asian markets gained 0.6%. Europe opened higher and gained 0.5%. US index futures were higher overnight. At 8:30 weekly Jobless claims were reported lower: 268K v 278K, and Durable goods were reported higher: +3.4% v +0.8%. The market opened three points above yesterday’s SPX 2091 close and immediately began to pullback. At 10am Pending home sales were reported higher: +5.1% v +1.4%. At 11am the SPX hit 2087 and then started to drift higher. At 12:30 FED governor Powell speech: http://www.federalreserve.gov/newsevents/speech/powell20160526a.htm. By 3:30 the SPX hit 2093, and then pulled back to close at 2090.

For the day the SPX/DOW were -0.10%, and the NDX/NAZ gained 0.20%. Bonds gained 11 ticks, Crude slipped 25 cents, Gold dipped $4, and the USD was lower. Medium term support remains at the 2085 and 2070 pivots, with resistance at the 2131 pivot. Today Q2 GDP was raised: +2.9% v +2.5%. Tomorrow: Q1 GDP (est. +1.0%) at 8:30, then Consumer sentiment at 10am.

The market opened higher today, pullback 7 points, then went sideways for the rest of the day. It appears Memorial day holiday trading is already underway. The market did pullback after yesterday’s short term negative divergence. But so far it is only 8 points. The previous pullback, since the SPX 2026 low last week, was only 11 points. Nearly a 70 point rally with only two small pullbacks along the way. So far not much selling pressure during this rally. The market needs to drop back into the 2070 pivot range to get selling pressure underway. Short term support is at the 2085 and 2070 pivots, with resistance at SPX 2111 and the 2131 pivot. Short term momentum ended the day around neutral. Best to your trading the GDP report tomorrow!

MEDIUM TERM: downtrend weakening

LONG TERM: bear market rally

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

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Wednesday update

SHORT TERM: gap up opening again, DOW +145

Overnight the Asian markets gained 2.2%. Europe opened higher and gained 1.1%. US index futures were higher overnight, and at 9am FHFA housing was reported higher: +0.7% v +0.4%. The market gapped up at the open to SPX 2084 and continued to rally. The SPX had closed at 2076 yesterday. By 10:30 the SPX hit 2094. Then after a pullback to SPX 2089 by 12:30 the market hit 2094 again by 2:30. After another dip to SPX 2089 by 3pm, the market bounced to 2095 by 3:30, then closed at 2091.

For the day the SPX/DOW gained 0.75%, and the NDX/NAZ gained 0.70%. Bonds lost 5 ticks, Crude rallied $1.05, Gold slipped $3, and the USD was lower. Medium term support rises to the 2085 and 2070 pivots, with resistance at the 2131 pivot. Tomorrow: weekly Jobless claims and Durable goods at 8:30, Pending home sales at 10am, then a speech from FED governor Powell at 12:30.

The market gapped up for the second day in a row for the first time since mid-April. After opening around the 2085 pivot the market then traded in, and above, its upper band for the rest of the day. This is a much stronger rally than what was expected for an Int. B wave. At today’s high short term momentum was extremely overbought and set up another potential negative divergence. The market now needs to drop below SPX 2069 to get some downside momentum going. Short term support is at the 2085 and 2070 pivots, with resistance at SPX 2111 and the 2131 pivot. Best to your trading!

MEDIUM TERM: downtrend

LONG TERM: bear market

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

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Tuesday update

SHORT TERM: gap up opening. DOW +213

Overnight the Asian markets lost 0.2%. Europe opened lower but gained 2.1%. US index futures were higher overnight, and the market gapped up at the open to SPX 2060 and continued to rally. The SPX had closed at 2048 yesterday. At 10am New home sales were reported higher: 619K v 511K. The rally continued to rally, with only one 4 point pullback, until the SPX hit 2080 at 3:30. Then the market pulled back to close at SPX 2076.

For the day the SPX/DOW gained 1.30%, and the NDX/NAZ gained 2.00%. Bonds lost 8 ticks, Crude gained 75 cents, Gold dropped $21, and the USD was higher. Medium term support rises to the 2070 and 2043 pivots, with resistance at the 2085 and 2131 pivots. Tomorrow: FHFA housing index at 9am.

The market gapped up at the open today after the lowest volume of the year yesterday. Overnight futures appeared to be following the DAX, as it rose 3% from its opening low to finish +2.3% on the day. After the European markets closed the SPX made only 5 additional points upside progress. Today’s high, SPX 2080, hit the lower range of the 2085 pivot, which is slightly above the level we were expecting for this Int. wave B rally from SPX 2026. Int. B could still travel a bit higher, but any intraday decline below SPX 2058 will suggest it has ended. Short term support is at the 2070 and 2043 pivots, with resistance at the 2085 pivot and SPX 2111. Short term momentum was quite overbought at the today’s high, and ended with a slight negative divergence. Best to your trading!

MEDIUM TERM: downtrend

LONG TERM: bear market

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

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Monday update

SHORT TERM: quiet day, DOW -8

Overnight the Asian markets lost 0.3%. Europe opened lower and lost 0.5%. US index futures were relatively flat overnight, and the market opened one point below Friday’s SPX 2052 close. By 10:30 the SPX had worked its way higher to 2056, then pulled back to 2049 by noon. After another rally to SPX 2055 the market hit 2047 just before a 2048 close.

For the day the SPX/DOW were -0.10%, and the NDX/NAZ were -0.15%. Bonds gained 3 ticks, Crude slipped 25 cents, Gold dipped $4, and the USD was lower. Medium term support remains at the 2043 and 2019 pivots, with resistance at the 2070 and 2085 pivots. Tomorrow: New homes sales at 10am.

The market started the week on a fairly quiet note. After opening one point lower it remained in a nine point range for the entire day: 4 above and 5 below Fridays’ close. Thus far we see only one wave up from Thursday’s SPX 2026 low to Friday’s 2058 high, and then a pullback to 2047. Still expecting a pop to the 2070 pivot range. Short term support remains at the 2043 and 2019 pivots, with resistance at the 2070 and 2085 pivots. Short term momentum headed toward oversold with today’s activity. Trade what’s in front of you!

MEDIUM TERM: downtrend

LONG TERM: bear market

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

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weekend update

REVIEW

The market started the week at SPX 2047. After a rally to SPX 2072 on Monday, the market worked its way down to SPX 2026 by Thursday. Then an options expiration on Friday closed the week at SPX 2052. For the week the SPX/DOW were mixed, and the NDX/NAZ were +0.95%. Economic reports for the week were again positive. On the downtick: the NY/Philly FED, and the Q2 GDP est. was lowered: +2.5% v +2.8%. On the uptick: the CPI, housing starts, building permits, industrial production, capacity utilization, leading indicators, existing home sales, and weekly jobless claims declined. Next week’s reports will be highlighted by Q1 GDP, Durable goods, and more Housing reports.

LONG TERM: bear market

For the past few weeks we have been noting that the Tech sector (NDX/NAZ) is probably a better indication of the general market than the Cyclical sector (SPX/DOW) due to the strong rally in commodities and commodity stocks. Last week the commodity rally was somewhat illustrated by the recent uptrend in the Transports – it’s strongest since it entered a bear market in late 2014.

GTXweekly

Another illustration of the commodity rally is displayed with the GTX. It too started to advance in January, like the Transports, and has had it best rally since it resumed its bear market in mid-2014. Some suggest commodities have bottomed. Longer term cycles suggest the recent rally is just another uptrend in a volatile bear market.

SPXweekly

Our count and labeling for the SPX remains unchanged. The bull market lasted from 2009-2015 and completed five primary waves. Primary waves I and II ended in 2011, and Primary waves III, IV and V ended in 2015. After that late-2015 high the SPX declined 15 % for Major wave A, and then rallied nearly back to the high for Major wave B. A Major wave C decline is now confirmed and underway.

We continue to hear there is lots of bearishness, and if everyone has sold then the market has to go higher. Every week we post Investor sentiment right on the weekly chart, and update it monthly. This is an adjusted stock allocation figure displaying what the public is actually doing, verses what they may be saying every week. Since the beginning of 2013 the public has been bullish, and not once has turned bearish. That’s three plus years despite the recent steep corrections.

MEDIUM TERM: downtrend

For the past couple of months we had been counting the first downtrend of this bear market, Major wave A, as a five wave structure. However over the past several weeks we had been noting that the declining waves did not really look impulsive. They looked more corrective, which typically occurs during bear markets. As a result we have been carrying the labeling of the current downtrend, Major wave C, with both impulsive and corrective labels. Since bear markets can unfold impulsively, i.e. 2007-2009, and correctively, i.e. 2000-2002 it usually takes a couple of trends before it can really be determined which pattern fits the new bear market. We think we have seen enough now to make that determination.

SPXdaily

As noted on the daily chart above we are updating the count to display a double three decline for Major wave A. Major wave B remains unchanged as an a-b-c uptrend. Major wave C should now also unfold as a double three to complete Primary A, of a Primary ABC bear market. Major wave A best counts as a small zigzag to SPX 1993, a zigzag to SPX 2082, and then a large elongated flat to SPX 1810. Agree, it is an odd looking pattern. We have, however, recently seen this pattern before and it was indeed corrective. Take a look at Primary wave II during 2011. At first glance it looks like five waves down, but it was not. In fact it looked like the 1987 crash pattern, which tipped us off during 2011 that it was indeed a corrective pattern. The market has apparently discovered a new Elliott wave pattern, and is making good use of it – confusing as many as possible. Medium term support is at the 2043 and 2019 pivots, with resistance at the 2070 and 2085 pivots.

SHORT TERM

As we have been noting in recent weeks all the activity during this bear market has been corrective. The current downtrend is also unfolding in corrective waves. From the SPX 2111 Major wave B uptrend high the market declined in seven waves to SPX 2039. Then after a nearly straight up rally to SPX 2085 it corrected in another seven waves down to SPX 2026 on Thursday. This seems to be the pattern since the bear market began: seven wave or eleven wave movements for the larger waves.

SPXhourly

As a result of this labeling update we have shifted Intermediate wave “a” from the SPX 2039 low to the recent SPX 2026 low. And we are now expecting an Int. wave “b” rally to be underway over the next several days. The upside target is the 2070 pivot range, but we would not rule out a run to the 2085 pivot range too. After it concludes, the recent low at SPX 2026 becomes a critical level. When the market closes below that level the possibility exists for another “waterfall” event. We will keep you updated. Short term support is at the 2043 and 2019 pivots, with resistance at the 2070 and 2085 pivots. Short term momentum ended the week below overbought. Trade what’s in front of you!

FOREIGN MARKETS

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

European markets were mostly higher and gained 0.7%.

The Commodity equity group were mixed for a net loss of 2.0%.

The DJ World index gained 0.1%.

COMMODITIES

Bonds remain in an uptrend but lost 1.0%.

Crude is also in an uptrend and gained 2.9%.

Gold in an uptrend as well but lost 1.7%.

The USD is in an uptrend too and gained 0.8%

NEXT WEEK

Tuesday: New home sales. Wednesday: FHFA housing prices. Thursday: weekly Jobless claims, Durable goods, Pending home sales, and a speech from FED governor Powell. Friday: Q1 GDP and Consumer sentiment.

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

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Friday update

SHORT TERM: gap up opening friday, DOW +66

Overnight the Asian markets gained 0.3%. Europe opened higher and gained 1.3%. US index futures were higher overnight, and the market gapped up at the open to SPX 2048. The market had closed at SPX 2040 yesterday. At 10am Existing home sales were reported higher: 5.45M v 5.33M. The market continued to rally until 11:30 when the SPX hit 2058. Then after a pullback to SPX 2048 by 3:30 the market bounced to close at 2052.

For the day the SPX/DOW gained 0.50%, and the NDX/NAZ gained 1.15%. Bonds gained 2 ticks, Crude slipped 20 cents, Gold dipped $2, and the USD was lower. Medium term support rises to the 2043 and 2019 pivots, with resistance at the 2070 and 2085 pivots.

The market gapped up at the open today, traded as high as SPX 2058, and then pulled back. The market did clear the 2043 pivot range today and it looks like it is headed, over the next few days, to the 2070 pivot range next. This was noted yesterday after the SPX 2026 low, that formed a positive divergence. Today we updated the charts to clear the i/a and ii/b counts. More on this in the weekend update. Best to your weekend!

MEDIUM TERM: downtrend

LONG TERM: bear market

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

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Thursday update

SHORT TERM: gap down opening, DOW -91

Overnight the Asian markets lost 0.6%. Europe opened lower and lost 1.4%. US index futures were lower overnight. At 8:30 weekly Jobless claims were reported lower: 278K v 294K, and the Philly FED was reported lower: -1.8% v -1.6%. The market gapped down at the open to SPX 2039, then declined to 2028 by 10am. The market had closed at SPX 2048 yesterday. At 10am Leading indicators were reported higher: +0.6% v +0.2%. The market then bounced to SPX 2035 by 10:30, before heading to 2026 just past 11am. Then the market started to rally. Heading into the close the market hit SPX 2042, then dipped to close at 2040.

For the day the SPX/DOW were -0.45%, and the NDX/NAZ were -0.55%. Bonds gained 9 ticks, Crude lost 15 cents, Gold slipped $2, and the USD was higher. Medium term support drops to the 2019 and 1973 pivots, with resistance at the 2043 and 2070 pivots. Tomorrow: a speech from FED governor Tarullo at 9am, Existing home sales at 10am, and it’s Options expiration Friday.

The market gapped down at the open for the first time in two weeks. The market then made a new downtrend low at SPX 2026, within the upper range of the 2019 pivot. After that the market started to rally. While the trend is still down, if the SPX can clear the 2043 pivot it is possible it could rally back to the 2070 pivot. Pivot ping pong so to say. After that it should resume the downtrend. Short term support is at the 2019 and 1973 pivots, with resistance at the 2043 and 2070 pivots. Short term momentum displayed a very slight positive divergence at today’s lows. Trade what is in front of you!

MEDIUM TERM: downtrend

LONG TERM: bear market

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

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