Weekend update

REVIEW

Another volatile week. The week started off at SPX 2760, after the best week in 8 years. A gap up opening Monday put the SPX at 2800, and then it started to pullback. On Tuesday the market gapped down at the open and traded down to SPX 2697. Another gap down opening on Thursday took the SPX to 2622 before it started to rebound. After closing at SPX 2696 on Thursday, the market rallied to SPX 2709 on Friday before heading back down again. Another pullback took the SPX to 2623, before it rebounded some into a 2633 close. For the week the SPX/DOW was -4.55%, and the NDX/NAZ was -4.85%. Economic reports for the week were mixed. On the downtick: monthly payrolls, the ADP, factory orders, construction spending, plus the trade deficit increased. On the uptick: ISM manufacturing/services, wholesale inventories, consumer credit, plus weekly jobless claims improved. Next week’s reports will be highlighted by industrial production, the CPI/PPI and retail sales.

LONG TERM: downtrend probable

If life were this simple. Notice the MACD crossover to the downside during the beginning of bear markets. Then back up again during the beginning of bull markets.

At the beginning of the bear market we noted we were expecting either a double zigzag or something more complex. We should have left out the “something more complex”. Because that is exactly what we are dealing with right now. Since the October top the SPX has dropped 300, rallied 200, dropped 200, rallied 200, then dropped 200 again. After the initial drop, just a big trading range between 2600 and 2800. Great for day traders. But not so great for EW technicians trying to uncover an overall pattern. Knowing exactly where one is in a bear market makes it easier to identify its ending.

Longer term nothing has changed. Five Intermediate waves up, with a subdividing third wave, from early 2016 to late 2018 to complete a Major wave 1 bull market. After that a Major wave 2 bear market began. So far, despite all the volatility, the SPX has only lost 11.5% from the high. Year over year, however, the market is about 1% lower. The year started at SPX 2674. The ECRI ticked down a notch.

MEDIUM TERM: downtrend

This bear market started off simple enough: a zigzag down to SPX 2604, then an a-b-c rally to SPX 2815. After that it has been a mess to count: -200, +200, -200, +100, -100. But Friday appears to have cleared it all up. What it looks like we are dealing with is an Intermediate wave A taking the form of a double zigzag. First a Minor A zigzag SPX 2941-2603, then Minor B to SPX 2815, now a Minor C zigzag to SPX 2622 thus far. It’s been quite choppy and volatile just like a bear market.

Since Minor A dropped 337 points, Minor C should have some Fibonacci relationship to A before it ends. We see four possibilities: SPX 2607 (0.618), SPX 2577 (0.707), SPX 2550 (0.786) and SPX 2478 (equal). Two of these four fall within OEW pivots: 2577 and 2478. Too early to tell which is likely to work out. But with all the political problems out there, (US, China, Italy, France, Ukraine and the UK), any of these levels are possible.

SHORT TERM

Trying to track this market with short term waves has been a near impossible task. At times this market just seems to bounce between OEW pivots with no identifiable pattern. Minute wave C, of Minor C, had 7 waves down to SPX 2622, 7 waves up to SPX 2709, and now 5 waves down to SPX 2631, (2643-2665-2623-2650-2631). Another 7 wave pattern in the making? Hopefully we will see the end of this downtrend soon. Then we could get a good counter rally uptrend for a while.

Short term support is at the 2632 and 2594 pivots, with resistance at the 2656 and 2731 pivots. Short term momentum ended the week oversold. Best to your trading!

FOREIGN MARKETS

Asian markets were mostly lower on the week losing 0.9%.

European markets were also mostly lower losing 2.3%.

The DJ World index lost 3.5%, and the NYSE lost 4.1%.

COMMODITIES

Bonds continue to uptrend gaining 1.0% on the week.

Crude appears to be trying to start an uptrend and gained 3.3%.

Gold remains in an uptrend and gained 2.2%.

The USD is still in an uptrend but lost 0.4%.

NEXT WEEK

Tuesday: the PPI. Wednesday: CPI and the budget deficit. Thursday: weekly jobless claims, and export/import prices. Friday: industrial production, capacity utilization, retails sales, and business inventories.

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

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Tuesday update

SHORT TERM: gap down opening then slide, DOW -799

During the first two days of the week Asian markets gained 0.5%, and European markets gained 0.6%. The US market started the week at SPX 2760. After a gap up opening to SPX 2800 on Monday the market started to pullback. The pullback continued with today’s gap down opening as the SPX hit 2697. Quite a drop in two days, after a 5 day 169 point rally. Volatility continues.

We had counted five waves up from SPX 2631 to SPX 2800: 2672-2653-(2674-2656-2744-2723)-2754-2733-2800. The parenthesis are the subdivisions of wave 3. Notice all the pullbacks were around 20 points. On Monday the market dropped 27 points after that big gap up opening, suggesting the largest pullback since the SPX 2631 low was now underway. Dropping 103 points in 2 days is large, and swift. We placed a Minor wave A label at the SPX 2800 high, suggesting Minor B is now underway. A 61.8% retracement of the entire rally is at SPX 2696, close to today’s low. When Minor B concludes we expect another rally that should eclipse SPX 2800, then reach 2815 or higher. Short term support is at the 2656 and 2632 pivots, with resistance at the 2731 and 2780 pivots. Short term momentum was extremely oversold at the close. Best to your trading!

Tomorrow US markets are closed for a Day of Mourning for POTUS 41.

MEDIUM TERM: uptrend likely

LONG TERM: downtrend probable

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

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Weekend update

REVIEW

The FED turns dovish and the market rallies. The week started off at SPX 2633. After a gap up opening on Monday the market rallied to SPX 2674. Tuesday had a gap down opening to SPX 2656, but the market reversed and rallied to 2683 by the close. Wednesday had another gap up opening as the market surged to SPX 2744. Thursday another gap down opening, this time to SPX 2723. But the market rallied to SPX 2754 before pulling back into the close. Friday had a quiet open, but rallied to SPX 2761 just before the close. For the week the SPX/DOW gained 5.05%, and the NDX/NAZ gained 6.05%. Economic reports for the week were mixed. On the downtick: Case Shiller, consumer confidence, new/pending home sales, plus weekly jobless claims rose. On the uptick: personal income/spending, the CPI, and the Chicago PMI. Next week’s reports will be highlighted by the Beige book, the payrolls report, and the ISMs. Best to your week!

LONG TERM: downtrend probable

The strong FED induced rally now has a number US indices in confirmed uptrends: TRAN, SOX, R2K, NYSE, HGX, XLB, XLF, XLI, XLP, XLV, and XLU. It might have also contributed to confirmed uptrends in the following foreign indices: Brazil, Canada, China, Hong Kong, India, Japan, Singapore, S. Korea, Spain, and Switzerland. This would suggest that Intermediate wave B is finally underway in the big four US indices. This weeks WROC signal, which sometimes occurs prior to uptrend confirmations, suggests the same. Meanwhile the ECRI continues to slip.

Our long term view remains unchanged. Primary wave I ended in 2015, and Primary wave II ended in 2016. After that Primary wave III was underway. The bull market from 2016-2018 was Major wave 1, of Primary III, and a bear market Major wave 2 should be underway now. Thus far the growth sector has taken the brunt of the selling, down 16% at the low. While the SPX was down 11.5% at its low. Once this potential uptrend concludes the market should decline in an Intermediate wave C to end the bear market.

MEDIUM TERM: uptrend potentially underway

With this weeks strong rally and WROC signal there is a good chance the Int. B uptrend is underway from last Friday’s low. So far we have one wave up and we would expect three, or something more complicated, before the uptrend ends. A normal retracement of Int. A would put the SPX right back around the 2815 area.

B wave retracements, in recent years, have been stronger than normal. This would suggest possibly the 2858 or 2884 pivots. For now let’s take it one pivot at a time. After Int. wave B concludes, Int. wave C should take the market to new lows for the bear market before it ends.

SHORT TERM

The one wave noted above, on a much shorter term basis, is actually nine waves up, and looks impulsive: 2672-2653-2754 (2674-2656-2744-2723-2754)-2733-2761. The waves within the parenthesis are the subdivisions of the third wave. All of the pullbacks during this rally have only been about 20 points.

With five waves up, a negative divergence on the hourly chart, and overbought on the daily chart, it’s possible for a bigger pullback early next week. Short term support is at the 2731 and 2656 pivots, with resistance at the 2780 and 2798 pivots. Best to your trading!

FOREIGN MARKETS

Asian markets were nearly all higher on the week for a gain of 1.7%.

European markets were all higher and gained 2.1%.

The DJ World index gained 3.2%, and the NYSE gained 3.5%.

COMMODITIES

Bonds continue to uptrend and gained 0.3%.

Crude remains in a downtrend but gained 1.0%.

Gold remains in a choppy uptrend and lost 0.3%.

The USD is still in an uptrend but lost 0.1%.

NEXT WEEK

Monday: ISM and constructions pending at 10am. Tuesday: auto sales. Wednesday: ADP, ISM services, and the Beige book. Thursday: weekly jobless claims, the trade deficit, and factory orders. Friday: monthly payrolls, consumer sentiment, consumer credit, and wholesale inventories.

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

Posted in weekend update | Tagged , , , | 439 Comments

Wednesday update

SHORT TERM: gap up and go rally, DOW +618

For the first three days of the week Asian markets have gained 2.3%, while European markets have gained 0.8%. The week started at SPX 2633 and hasn’t looked back. After a gap up opening on Monday and rally to SPX 2674, the market gapped down on Tuesday hitting SPX 2656 early, before rallying for the rest of the day. Another gap up opening on Wednesday took the SPX over 2700, then hitting 2744 in the afternoon, and closed there.

In the morning we had updated the charts to display a potential Int. A completed at the recent low. Then later a completed five waves down by the NAZ at its recent low. If the NAZ is going to do seven waves down to end the bear market it should run into resistance around NAZ 7320. If we are now in an uptrend the SPX could get back to 2815 before it runs into resistance. Interesting juncture in the market with the Santa rally and all. Short term support is at the 2731 and 2656 pivots, with resistance at the 2780 and 2798 pivots. Short term momentum ended the day extremely overbought after Friday’s positive divergence. Best to your trading!

MEDIUM TERM: downtrend

LONG TERM: downtrend probable

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

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the stock market’s best and worse presidents

First published in 2008. Thought to update it through January 21, 2017. Only goes to confirm that raw statistics are just raw statistics.

DOW performance for their entire tenure, ranked from best to worse:
Clinton … + 226.3%
Roosevelt … + 194.4%
Obama … + 149.7%
Reagan … + 135.1%
Eisenhower … + 120.3%
Truman … + 81.7%
G. Bush … + 45.0%
Johnson … + 30.9%
Ford … + 23.4%
Kennedy … + 12.2%
Carter … – 0.9%
Nixon … – 16.5%
GW Bush … – 24.9%
Hoover … – 82.8%

Next, it might also be interesting to rate each of these fourteen presidents by the median yearly gain, since their terms were quite varied:
Clinton … + 28.3%
Obama … + 18.7%
Reagan … + 16.9%
Roosevelt … + 16.2%
Eisenhower . + 15.4%
G. Bush … + 11.3%
Truman … + 10.5%
Ford … + 9.7%
Johnson … + 6.0%
Kennedy … + 4.3%
Carter … – 0.2%
Nixon … – 3.0%
GW Bush … – 3.1%
Hoover … – 20.7%

One last note in regard to this 80+ year period. Starting with Hoover 1n March, 1929 and ending with GW Bush in January 2009, the Democrats and Republicans split that entire period right down the middle: 40 years for each party. Trump started his presidency with the DOW at 19,827.

Posted in special report | Tagged , , , | 99 Comments

Weekend update

REVIEW

The market started this holiday shortened week at SPX 2736. The market opened lower on Monday, traded down to SPX 2681, then gapped down on Tuesday carrying the market to SPX 2632 near the close. Wednesday was a gap up opening as the SPX rallied to 2671. Then during Friday’s half-day session the market gapped down, hit SPX 2631, then closed at 2633. For the week the SPX/DOW lost 4.10%, and the NDX/NAZ lost 4.65%. Economic reports for the week mostly lower. On the downtick: the NAHB, building permits, durable goods, consumer sentiment, plus jobless claims moved higher. On the uptick: housing starts, existing homes sales, and the leading indicators. Next week’s reports will be highlighted by Q3 GDP, the FOMC minutes and personal income/spending. Best to your week!

LONG TERM: downtrend probable

As we noted in our Wednesday update, the market took a turn for the worse this week deviating from the projected path we had been tracking for a couple of months. We were expecting a rally back to the SPX 2800’s. But the market gapped down on Monday, then never looked back as the SPX came within 1% of the October lows. As a result, the medium term downtrend that started after the bull market top has extended. We thought it had ended in October, but apparently that was only part of it. The ECRI continues to slip.

Longer term our count remains unchanged. Primary I ended in 2015, Primary II ended in early-2016, and Major wave 1 of Primary III just ended in the fall of 2018. Primary I was five Major waves up with many subdivisions. Major wave 1 was five Intermediate waves up with a subdividing Intermediate iii. Currently the market appears to be in a Major wave 2 bear market, with the first wave down still underway. When the bear market concludes a Major wave 3 bull market will be underway to new all time highs.

MEDIUM TERM: downtrend continues

As noted, we had thought the first downtrend of this bear market could have ended in October at SPX 2604. There was a good rally to SPX 2815 in November. But that rally has nearly been completely retraced. Meanwhile the NDX/NAZ have already made lower lows in November. It is likely the SPX/DOW will make lower lows before this downtrend ends. This brings us to an interesting situation.

When reviewing the longer term NAZ charts we find the daily MACD is already more oversold than the 2016 and 2008 lows, and is as oversold as it was in the year 2001. The weekly chart is already as oversold as 2016, but not as oversold as 2009 and 2001. This suggests there is already a lot of bearishness in the growth sector. Which suggests it could be a lot closer to a bear market low than many think. We have also noticed the NAZ has done 5 waves down from its September all-time high. While the other three indices have been moving in a-b-c’s. A good counter-rally, then a solid decline into the lower 6,000’s may be all that is required to end its bear market. Something to keep an eye on in the coming weeks.

In the SPX we are displaying this type of scenario on the daily chart. If the NAZ does follow the above scenario, then the SPX is also closer to the end of the bear market than most think. As a result, on the daily charts, we have posted an Intermediate wave A and B completed, with Intermediate wave C underway. The hourly chart has a less aggressive labeling.

SHORT TERM

The SPX hourly chart is the same count we are carrying on the DOW and NDX. Here the first decline to SPX 2604 is only Minor A of Int. A. The rally to SPX 2815 is Minor B. And Minor C of Intermediate wave A is currently underway. This count would suggest that Intermediate wave B will be an uptrend. And then a new downtrend for Int. C will end the bear market. It will be interesting to see how it all unfolds.

We don’t have much to add to the short term pattern. Three waves down to SPX 2604, three waves up to SPX 2815, and now three waves down to 2631 so far. Next logical support level appears to be around SPX 2554. Short term support is at the 2632 and 2594 pivots, with resistance at the 2656 and 2731 pivots. Short term momentum ended the week with a positive divergence. Best to your trading!

FOREIGN MARKETS

Asian markets were all lower on the week losing 1.4%.

Europeans markets were also all lower losing 1.7%.

The DJ World index lost 2.6%, and the NYSE lost 2.9%.

COMMODITIES

Bonds continue to uptrend but ended flat on the week.

Crude continues to downtrend and lost 11.0% on the week.

Gold continues to uptrend but ended flat as well.

The USD remains in an uptrend and gained 0.3%.

NEXT WEEK

Tuesday: Case-Shiller and consumer confidence. Wednesday: Q3 GDP and new homes sales. Thursday: personal income/spending, FOMC minutes, pending home sales, and weekly jobless claims. Friday: the Chicago PMI.

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

Posted in weekend update | Tagged , , , | 389 Comments

Wednesday update

SHORT TERM: gap up opening then pullback, DOW -1

The first three days of the week displayed Asian markets losing 0.8%, and European markets losing 0.5%. The SPX started the week at 2736, sold off to 2681 on Monday, gapped down to 2633, and then 2632 on Tuesday. Then Wednesday had a gap up opening carrying the SPX to 2671, before an afternoon pullback ended the day at 2650. This is not exactly what we had planned in the weekend update. This week, for the first time in many weeks, the market has deviated from the pattern we had been tracking.

Yesterday the NDX/NAZ made lower lows for their downtrends. While the SPX/DOW have not, we were not expecting that. This suggests their Intermediate wave A downtrends are continuing. Which also suggests the SPX/DOW may follow in an extended downtrend. Hard to pinpoint at the moment what lies immediately ahead. But we did notice that the NAZ, and only the NAZ, appears to have done five waves down from its bull market high. The other three indices are all in a-b-c mode. If this is the case it might help us identify the bear market low as it is unfolding. Short term support is at the 2632 and 2594 pivots, with resistance at the 2656 and 2731 pivots. Short term momentum ended the day nearly at oversold. Happy Thanksgiving everyone. Friday the markets close at 1pm.

MEDIUM TERM: downtrend

LONG TERM: downtrend probable

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

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