Tuesday update

SHORT TERM: pullback continues, DOW -48

Overnight the Asian markets lost 0.1%. Europe opened lower and finished mixed. US index futures were higher overnight, and the market opened at SPX 2101. Right after the open, however, the market started to pullback in what would end up as a choppy day. In the opening minutes the SPX hit 2095, then tried to rally. At 10am Factory orders were reported higher: +1.8% v -1.0%. By 10:30 the SPX had hit 2103, the high for the day. By 11am the SPX was trading at 2094. Then after a bounce to SPX 2099 by noon, a pullback back to 2094 by 1pm, and a bounce back to 2099 by 1:30, the market headed lower. Just past 2pm the SPX hit 2089 and tried to rally again. This rally carried to SPX 2096 by 3pm, then a pullback into the close ended the day at 2093.

For the day the SPX/DOW were -0.25%, and the NDX/NAZ were -0.25%. Bonds lost 22 ticks, Crude gained 65 cents, Gold added $2, and the USD was higher. Medium term support remains at the 2085 and 2070 pivots, with resistance at the 2131 and 2198 pivots. Tomorrow: the ADP and Trade deficit around 8:30, then ISM services at 10am.

The market opened slightly higher today, traded above SPX 2100 again, then dropped below it after the first hour, or so, of trading. Today’s choppy activity traded within yesterday’s SPX 2087-2106 range. However, we did observe another notable reversal in the waves. From the recent high at SPX 2033, which was a three wave rally, we now have we three waves down to 2064, three up to 2114, and now what appears to be three waves heading lower: 2087-2103-2089 so far. If we count SPX 2064 as Minute a, and SPX 2114 as Minute b, then Minute c will equal a at exactly 2045. Right back down to where the recent uptrend to SPX 2133 began. Short term support remains at the 2085 and 2070 pivots, with resistance at SPX 2114 and the 2131 pivot. Short term momentum spent most the day just under neutral. Best to your trading!

MEDIUM TERM: uptrend weakening

LONG TERM: bull market

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

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Monday update

SHORT TERM: pullback resumes, DOW -92

Overnight the Asian markets lost 0.3%. Europe opened lower but gained 0.6%. US index futures traded around neutral all night. At 8:30 Personal income (+0.4% v +0.5)/spending (+0.2% v +0.9%) were reported higher, as were PCE prices: +0.1% v +0.1%. The market opened two points above Friday’s SPX 2104 close and then began to pullback. In the opening minutes the market hit SPX 2098, then bounced to 2104 by 10am. At 10am ISM manufacturing was reported lower: 52.7 v 53.5, and Construction spending was reported higher: +0.1% v +0.8%. The market pulled back to SPX 2097 by 10:30, then rallied to 2105 by 11:30. Around 11am FED governor Powells’ speech was released: http://www.federalreserve.gov/newsevents/speech/powell20150803a.htm. Then market then headed lower hitting SPX 2087 just past 1pm. For the rest of the day the market worked its way higher and closed at SPX 2098.

For the day the SPX/DOW were -0.40%, and the NDX/NAZ were -0.20%. Bonds gained 13 ticks, Crude dropped $1.70, Gold slid $8, and the USD was higher. Medium term support remains at the 2085 and 2070 pivots, with resistance at the 2131 and 2198 pivots. Tomorrow: Factory orders at 10am.

The market opened two points higher to start the week, but then immediately started to pullback. After a choppy beginning to the day the market broke below SPX 2095 just past 12:30, then continued down to 2087. The drop below SPX 2095, which was initial support, confirms the recent rally from SPX 2064 was indeed a corrective three waves: 2011-2095-2114. The choppiness continues. As a result we labeled the recent high Minute wave b. A lower Minute wave c should now be underway. Short term support is at the 2085 and 2070 pivots, with resistance at SPX 2114 and the 2131 pivot. Short term momentum was quite oversold at the lows, but ended the day neutral after Friday’s negative divergence. Best to your trading!

MEDIUM TERM: uptrend still choppy

LONG TERM: bull market

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

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OEW tutoring

All markets are driven by long term investor psychology cycles. When the cycle is positive a bull market unfolds, when negative a bear market. The Objective Elliott Wave (OEW) technique not only determines if a market is bullish or bearish, it also determines how far a market has progressed in its current cycle.

OEW is not textbook Elliott Wave. It is a proprietary technique that defines every significant wave within bull and bear markets quantitatively. With this approach one could historically analyze any market to define its exact wave structure, and determine what the past is projecting about the future. We first uncovered this technique in the early 1980’s when doing an analysis of the entire history of the US stock market. When waves are determined quantitatively they never change, past of present.

At that time our analysis led us to believe that a stock market crash was likely in late-1987 to early-1988. Then another bull market would be underway. When the stock market did crash in October 1987, and a new bull market began in late-1987, we knew we had uncovered some of the missing tenets of the Elliott Wave Theory.

Over the years OEW analysis has led to some important projections in a variety of markets. In the US stock market: the correction in 1990, the correction in 1998, the 2000-2002 bear market, the ensuing 2002-2007 bull market, the 2007-2009 bear market, then the recent bull market as well. After a decade long bull market in many of the commodities: we pinpointed the bull market high in Crude at $148 in 2008, and identified a new bear market in Gold not too far from its 2011 $1900 high. In currencies: we tracked the bear market in the USD until 2011, then identified a new bull market in the USD and bear markets in most other currencies. In real estate: we identified the bull market top in 2005, and then the bear market bottom in 2011.

Bull and bear markets usually last for years. Uptrends and downtrends last for 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 often projects them ahead of time allowing one to follow the bull or bear market as its unfolds. If you are interested in learning how to do this type of analysis yourself, and joining our private international OEW group, please contact us at caldaro@msn.com for details. Best to your trading/investing.

The possession of knowledge, unless accompanied by the manifestation and expression in sharing, benefits no one. The Law of Sharing is universal. And he who violates it, suffers by reason of their conflict with natural laws within their own illusions.”

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weekend update

REVIEW

The market started the week at SPX 2080. After a gap down opening on Monday the market hit SPX 2064. It then doubled bottomed and hit SPX 2111 by Wednesday. After a gap down opening Thursday to SPX 2095, the market then rallied to close out the week at 2104. For the week the SPX/DOW were +0.95%, the NDX/NAZ were +0.75%, and the DJ World index was +0.70%. Economic reports for the week were generally negative. On the uptick: durable goods orders, Q2 GDP and the Chicago PMI. On the downtick: consumer confidence/sentiment, pending homes sales, the WLEI, plus weekly jobless claims rose. Next week will be highlighted by monthly Payrolls, ISM and the PCE.

LONG TERM: bull market

Another month has come and gone and the market is still in a trading range. From the first few days in February through Friday’s close, nearly six months, the market has been in a 95 point (4+%) trading range (2040-2135). The market has had two declines into the SPX 2040’s (March and July), and four rallies that have failed at the OEW 2131 pivot (April, May, June, and July). The first trading day in the month of August starts Monday.

TRANweekly

While this sideways consolidation/distribution has unfolded there has been some technical damage in some fairly important indices. The Transports, for example, look like they have been in Primary IV since late 2014. Observe the steady decline of three waves into the recent low, and the drop of the MACD into negative territory just like Primary II.

NYSEweekly

The NYSE composite has not had as much of a drop, but its MACD has just turned negative following what appears to be an ending diagonal triangle Major wave 5 to complete its Primary wave III.

DOWweekly

The DOW may have ended its Primary III early this year, but has stayed afloat due to the relative strength in the NDX/NAZ/SPX. Notice its MACD is getting close to turning negative too. It does appear the general market is giving some hints, while the popular SPX/NDX/NAX remain close to the all time highs.

SPXweekly

While we await the outcome of this lengthy trading range, the count on the SPX chart is offering two possibilities. First, Primary III ended in May with an ending diagonal triangle, just like the NYSE, and only the recent strength in the NDX/NAZ has been keeping Primary IV from kicking in to the downside. Second, the trading range is only an upper level consolidation and Major wave 5 will eventually extend into five Intermediate waves.

Whichever count does win out in the end it does not mean the end of the bull market. If the market is already in Primary IV, it will still make all time new highs after it completes. If Major wave 5 is going to extend Primary III will likely continue into 2016. Then after a Primary IV correction, Primary V will still take the market to new highs. Either way the bull market is not over. Currently we give both counts an even 50/50 probability with a clearing of the 2131 pivot range a positive, and a breakdown below SPX 2044 a negative.

MEDIUM TERM: uptrend remains above SPX 2100

After the irregular flat (December – February) Major wave 4 the market rallied strongly to SPX 2120. Then the DOW started to weaken, but the NDX/NAZ continued to work their way higher. As a result the SPX uptrend, which lasted from early-February to mid-May, took the form of a five wave (a-b-c-d-e) diagonal triangle. This pattern could be a leading or ending diagonal depending upon whether or not one was bullish or bearish. With the ECB’s EQE underway, and the Fibonacci years pattern, we remained bullish.

SPXdaily

The downtrend that followed did not look like the typical selloff after a diagonal triangle, which is usually quite steep. It was a somewhat complex a-b-c into early-July, which retraced nearly exactly 61.8% of the previous uptrend. Up until that point everything looked quite normal for the bullish leading diagonal scenario. However, the uptrend that followed into mid-July began to look corrective. It should have looked impulsive, especially since we were expecting an Intermediate wave iii breakout of the trading range.

After the uptrend came within two points of the all time high, while the NDX/NAZ were making all time highs, it started to pullback. Meanwhile the DOW was more than 2% from its all time highs, and didn’t even confirm an uptrend when it started to pullback. As the pullback progressed in the SPX the entire uptrend started to look choppy, and the DOW actually made lower lows suggesting its downtrend from mid-May was still underway. This activity suggested the uptrend in the SPX/NDX/NAZ could be a B wave. As a result we had to give the bearish ending diagonal triangle scenario a higher probability. Medium term support is at the 2085 and 2070 pivots, with resistance at the 2131 and 2198 pivots.

SHORT TERM

After the downtrend low at SPX 2045 we counted several wave reversals during the rally to 2133. However, we could only quantify three waves: 2074-2051-2133. We were expecting five waves before a decent pullback. The pullback that followed, down to SPX 2064, was also three waves: 2110-2119-2064. This somewhat confirmed that the uptrend rally was again corrective. This week the market made a double bottom low at SPX 2064 on Monday, with a positive short term divergence. And, it rallied into Friday, hitting SPX 2114. Even this week’s rally is beginning to look like three waves: 2111-2095-2114.

SPXhourly

The bullish scenario, would suggest a three wave Intermediate wave ii is still underway. The recent downtrend low at SPX 2044/45 was Minor a, and the current uptrend high at SPX 2133 Minor b, with Minor c currently underway. The bearish scenario, would suggest the recent downtrend low was Intermediate a, the uptrend high Intermediate b, and Intermediate c of Major A is currently underway. Either way, we would expect the market to at least retest the SPX 2040’s before making substantial all time new highs. Should the market clear the OEW 2131 pivot range it could move a lot higher. Should the market drop well below SPX 2040 it could move a lot lower. Short term support is at the 2085 and 2070 pivots, with resistance at SPX 2114 and the 2131 pivot. Short term momentum ended the week with a negative divergence.

FOREIGN MARKETS

Asian markets were mostly lower on the week for a net loss of 2.0%.

European markets were mostly higher gained 0.3%.

The Commodity equity group were also mostly higher and gained 1.8%.

The DJ World index is still in a downtrend, but gained 0.7% on the week.

COMMODITIES

Bonds confirmed an uptrend and gained 0.5% on the week.

Crude continues to downtrend and lost 1.8%.

Gold is also in a downtrend and lost 0.3%.

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

NEXT WEEK

Monday: Personal income/spending, the PCE, and Auto sales at 8:30; ISM manufacturing and Construction spending at 10am; then a speech from FED governor Powell at 11am. Tuesday: Factory orders. Wednesday: the ADP, the Trade deficit, and ISM services. Thursday: weekly Jobless claims. Friday: Payrolls, the Unemployment rate and Consumer credit. Best to your weekend and week!

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

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Friday update

SHORT TERM: higher open then pullback, DOW -56

Overnight the Asian markets gained 0.7%. Europe opened higher and gained 0.5%. US index futures were lower overnight, but turned higher after the ECI was reported lower than expected. The market opened three points above yesterday’s SPX 2109 close, hit SPX 2114, then pulled back to 2106 all in the opening minutes. Then it started to drift higher. At 12:30 the SPX hit 2114 again, and started to pullback. Heading into the close the SPX hit 2102, then ended the week at 2104.

For the day the SPX/DOW were -0.25%, and the NDX/NAZ were -0.10%. Bonds gained 23 ticks, Crude lost $1.60, Gold added $7, and the USD was lower. Medium term support remains at the 2085 and 2070 pivots, with resistance at the 2131 and 2198 pivots. Today the WLEI was reported lower: 50.2% v 50.3%.

The market opened higher today, after the USD sold off and Bonds/Equities/Gold rallied following the ECI report before the open. After hitting SPX 2114 in the opening minutes, the market pulled back to 2106, then hit 2114 again in early afternoon before pulling back further heading into the close. A second choppy day during what appears to be continuing corrective market activity. More on this in the weekend update. Short term support is now at SPX 2095 and the 2085 pivot, with resistance at SPX 2114 and the 2131 pivot. Short term momentum displayed a negative divergence today before the market pulled back in the afternoon. Best to your weekend!

MEDIUM TERM: uptrend remains above SPX 2100

LONG TERM: bull market

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

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Thursday update

SHORT TERM: gap down opening but rebound, DOW -5

Overnight the Asian markets gained 0.4%. Europe opened higher and gained 0.5%. US index futures were lower overnight. At 8:30 Q2 GDP was reported higher:+2.3% v -0.2%, and weekly Jobless claims were higher: 267k v 255k. The market gapped down at the open to SPX 2104, and continued down to the low for the day at SPX 2095 by 10am. After that the market rallied to SPX 2103 by 10:30, dipped to 2097 by 11am, and then rallied to close the gap in the afternoon. Heading into the close the SPX hit 2110, then dipped to end the day unchanged at 2109.

For the day the SPX/DOW were mixed, and the NDX/NAZ were +0.35%. Bonds gained 1 tick, Crude lost 30 cents, Gold dropped $9, and the USD was higher. Medium term support remains at the 2085 and 2070 pivots, with resistance at the 2131 and 2198 pivots. Tomorrow: the Chicago PMI and Consumer sentiment around 10am.

The market gapped down at the open today, second time this week, dropped to SPX 2095, then reversed and closed the gap. Today’s decline was the first notable reversal since the rally began on Monday from SPX 2064: 2111-2095-2110. Not much to go on there so far. Yesterday’s short term negative divergence worked out fine. Yet if the market can make it back to SPX 2111 the RSI could set up even a larger divergence. Only one of the three levels noted over the weekend (2074, 2044, and 1981) have been broken this week. So probabilities for a Primary IV decline remain at 50/50. Short term support is now at SPX 2095 and the 2085 pivot, with resistance at SPX 2111 and the 2131 pivot. Short term momentum ended the day just below overbought. Best to your trading!

MEDIUM TERM: uptrend holding above SPX 2100

LONG TERM: bull market

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

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Wednesday update

SHORT TERM: rally continues, DOW +121

Overnight the Asian markets gained 0.3%. Europe opened higher and gained 0.8%. US index futures were higher overnight, and the market opened three points above yesterday’s SPX 2093 close. After a dip to SPX 2094, in the opening minutes, the market started to move higher. At 10am Pending home sales were reported lower: -1.8% v +0.9%. The market continued to rally until it hit SPX 2106 by 11:30. Then it drifted down to SPX 2102 just before the FED released their FOMC statement at 2pm: http://www.federalreserve.gov/newsevents/press/monetary/20150729a.htm. Right after the statement the market popped to SPX 2108, dropped to 2099, and then resumed its rally. At 3pm the SPX hit 2111, then bounced around to close at 2109.

For the day the SPX/DOW were +0.70%, and the NDX/NAZ were +0.45%. Bonds lost 8 ticks, Crude gained 85 cents, Gold added $2, and the USD was higher. Medium term support remains at the 2085 and 2070 pivots, with resistance at the 2131 and 2198 pivots. Tomorrow: Q2 GDP (est. +1.9%) and weekly Jobless claims at 8:30.

The market opened three points higher today, dipped, rallied to SPX 2108, dropped to 2099, and then hit 2111. Nice rally off the recent SPX 2064 low, for day traders, as the market has now retraced a bit more than 61.8% of that decline. While the recent decline was clearly three waves, and that rally before that, this rally has not displayed any quant reversals. On a real small scale, which is not dependable, it looks like five waves: 2078-2069-2108-2099-2111. Since there have not been any quant subdivisions we will assume, for now, that it’s just another corrective rally. Short term support remains at the 2085 and 2070 pivots, with resistance at the 2131 and 2198 pivots. Short term momentum displays a potential negative divergence at today’s high. Best to your Q2 GDP trading!

MEDIUM TERM: uptrend back over SPX 2100

LONG TERM: bull market

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

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