Provided by the OEW Group
May 18, 2019
The week started with a large gap down of 41 points to open at SPX 2840 and sold off into lunchtime where the low for the week was made at 2801, before a bounce and then close at 2812. Tuesday gapped up and rose into lunch hitting 2853, then gave back some of those gains into the close finishing at 2834. Wednesday gave a gap down opening of 14pts and hit 2815 within the first hour, from that point the market then rallied and managed to reach 2892 by Thursday lunchtime with no more than an 8pt pullback along the way, but the afternoon session saw some of those gains given back, hitting 2871 and closing at 2876. Friday saw a gap down and hit 2854 within the first hour, then rallied to 2885 but gave back nearly all of those gains closing the week at 2860
For the week, the SPX/Dow lost 0.76% while the NDX/NAS lost 1.27%
Economic news this week had positive reports from Building Permits and Philadelphia FED Manufacturing Index and negative reports from Core Retails Sales and Export Price Index.
Next week, economic news comes from Existing Home Sales, FOMC Minutes, New Homes Sales and Core Durable Goods Orders. In addition, on Monday at 7pm (ET) FED Chair Powell speaks.
LONG TERM: Uptrend
In the US, the long-term count remains unchanged with the Super Cycle SC2 low in March 2009. The Primary I high occurred in May 2015 and Primary II low in February 2016. Major wave 1 high occurred in October 2018 and Major wave 2 low in December 2018. Intermediate wave i of Major 3 is now underway.
MEDIUM TERM: Downtrend
This week the inflection point was resolved as the SPX, NAZ and NDX did indeed follow the DOW as expected with downtrend confirmations. For all three of these indices, it’s the first downtrend since the Major 2 low in December. After this week’s action, the count has become clearer with Minor 1 at the recent high after what looks like an ending diagonal Minute v that has been ongoing since early Feb. Minor 1 started in late December at 2347 and took just over 4 months to complete, totalling 607pts. Minor 2 has been underway for the past couple of weeks and made a low at 2801 on Monday. This could be all of Minor 2 or just Minute a. The DOW count remains unchanged with an irregular Minor 2 correction as posted last week for our alternate count. Minor 1 top at the Feb high, Minute a at the March low, an irregular Minute b at the April high and Minute c in progress. With all 4 indices now aligned, once Minor 2 completes, Minor 3 should carry the markets to new highs once again.
As mentioned, we’re now counting Minute v of Minor 1 as an ending diagonal. Since Minor 1 topped, Minor 2 has declined 5.2% which is sufficient to satisfy Minor wave degree correction. Looks like last Friday’s rally turned out to be just another b wave of the ongoing correction from Minor 1 top. From Monday’s low at 2801, we can count 3 small waves up, 2853>2815>2892, followed by choppy price action on Friday. This has been the largest rally since Minor 2 began, but it fell short of clearing the 61.8% retracement level at 2896. More price action is needed before feeling confident Minor 3 is underway. If 2853 is overlapped before further upside, then the rally remains corrective and suggests Minor 2 may still be unfolding.
Short term support is at the 2858 and 2835 pivots. Resistance is at 2884 and 2929 pivots. The SPX 60-minute chart is approaching oversold territory with the daily chart neutral after hitting its most oversold reading this year on Monday.
Asian markets (using AAXJ as a proxy) lost 3.48%.
European markets (using FEZ as a proxy) gained 0.11%.
The DJ World index lost 0.85%, and the NYSE lost 1.02%.
Bonds are in an uptrend and gained 0.47%
Crude oil is in a downtrend and gained 1.96%
Gold is in a downtrend and lost 0. 91%
GBTC is in an uptrend and gained 13.02%.
The USD is in an uptrend and gained 0.72%.
Have a good week!