Weekend update

REVIEW

The week started at SPX 2596. After a gap down opening on Monday to SPX 2570 the market rallied to SPX 2589. Tuesday and Wednesday the rally continued to SPX 2626. Another gap down opening on Thursday dropped the SPX to 2606 at the open. But then the market reversed, and rallied to SPX 2675 by Friday. For the week the SPX/DOW gained 2.95%, and the NDX/NAZ gained 2.75%. Economic reports for the week were mixed. On the downtick: the PPI, NY FED, import prices, and consumer sentiment. On the uptick: the NAHB, Philly FED, industrial production, capacity utilization, plus jobless claims improved. Next week’s reports will be highlighted by durable goods orders and housing. The ECRI ticked up 0.3% this week from -6.5% to -6.2%.

LONG TERM: uptrend 60% probability

After writing this blog for over 13 years, and reading over 200 emails a day, it is often hard to remember who said what and when, including oneself. That’s why I keep notes. My notes. Week of Sept 17th: mentioned after two year bull run it was time to get cautious. Scale out during bull market tops, and scale in during bear market bottoms came next. Week of October 22nd: consistent weakness in most of the foreign markets, with Canada, China, Germany and Spain already in confirmed bear markets. Week of November 26th: after a bear market rally many US indices looked ready to enter the next downtrend. Week of December 3rd: after the POTUS Tariff Man tweet sensed a potential mini-crash. Week of December 17th: the market needed some sort of event to halt the decline, i.e a PWG event. Week of December 24th: many of the foreign markets appeared to be in their last downtrend of their bear markets. This week: we offered on Wednesday, and will repeat below, the five criteria to help in determining the probabilities of the market retesting the December lows or already in a new bull market.

The long term count remains unchanged with the exception of the recent low around Christmas. Primary I unfolded from 2009-2015. Primary II was a moderate bear market from 2015-2016. Major wave 1 of Primary III advanced from 2016-2018. And now probabilities suggest a Major 2 bear market lasted from September/October until December of 2018. If this works out to be correct an Intermediate I, of Major wave 3, bull market should be underway.

MEDIUM TERM: uptrend 60% probability

In Wednesday’s update we published the following. We’re using five criteria to hopefully determine if the market will still retest the low to end Major 2, or the bear market has already ended. The criteria are: the size of rally, NDX/NAZ and SPX/DOW wave patterns, rebound percentage from the low, and breadth rise from the low.

First, this rally is the largest rally since the bear market began: a positive. Second, the NDX/NAZ look like they have done five waves up from the Christmas low: another positive. Third, the SPX/DOW look like they have done three waves up from the low: a negative so far. Fourth, the largest rebound for B waves, under similar conditions, in the past three decades has been 13%. The rally reached 14% on Friday: turning this positive. Fifth, the maximum percentage rise in breath for a B wave has been 26%. Thus far breadth has risen 24%: a negative.

Since the market now has reached three of the five criteria this would raises the probabilities in favor a new bull market to 60%. A fourth positive would increase those probabilities, and a fifth would almost assure them.

SHORT TERM

Quite a strong rally from the Christmas low. We can clearly see five waves up on the NDX/NAZ charts. But the SPX/DOW charts still look like three waves. The first two waves we have noted in previous updates [2347] 2520-2444. Last week we noted a lot of rising but choppy activity, and thought a possible ending diagonal was forming. That idea was blown away this week, especially in the latter part. That rising choppy activity now looks like a series of 1-2’s before the SPX 2570 low.

Looking ahead we see a wave 1 (2347-2520), a wave 2 (2520-2444), and a wave 3 underway (2444-2675). Currently wave 3 is 1.34% wave 1. At SPX 2704 wave 3 would equal 1.5 wave 1, and at SPX 2724 wave 3 would equal 1.62% wave 1. There is also an unlikely wave 3 double wave 1 at SPX 2790. With wave 3 starting off with a choppy rising series of 1-2’s, it is likely to end with a choppy rising series of 4-5’s. Then after a significant decline for the wave iv of this rally, a push to higher highs should follow. Short term support is at SPX 2656 and 2632, with resistance at SPX 2731 and 2780. Short term momentum hit its highest level since July 2018. Enjoy the three day weekend!

FOREIGN MARKETS

Asian markets were all higher on the week and gained 1.7%.

European markets were mostly higher and gained 1.3%.

The DJ World index gained 2.1%, and the NYSE gained 2.6%.

COMMODITIES

Bonds appear to be in a new downtrend and lost 0.8% on the week.

Crude is in a new uptrend and gained 4.8% on the week.

Gold is still in an uptrend but lost 0.5%.

The USD is in a downtrend but gained 0.8%.

Bitcoin remains in a downtrend and lost 1.0%.

NEXT WEEK

Monday: MLK holiday. Tuesday: existing home sales. Thursday: weekly jobless claims and leading indicators. Friday: durable goods and new home sales.

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. The in mid-2016 the current bull market to new highs. And, the recent bull market top in 2018.

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 and liquidity. 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: higher open new rally highs, DOW +142

For the first three days of the week the Asian markets gained 0.7%, and the European markets gained 0.1%. The SPX has rallied from Friday’s close at 2596 to 2626 today, before closing at 2616. The US market has hit an inflection point. One that determines whether or not this rally is a B wave, or the Christmas low was the end of the bear market.

We’re using five criteria to hopefully determine which is the most probable outcome: size of rally, NDX/NAZ and SPX/DOW wave patterns, rebound percentage from the low, and breadth rise from the low. First, this rally is the largest rally since the bear market began, a positive. Second, the NDX/NAZ look like they have done five waves up from the Christmas low, another positive. Third, the SPX/DOW look like they have done three waves up from the low, a negative so far. Fourth, the largest rebound for B waves, under similar conditions, in the past three decades has been 13%. The rally has already reached 12%, close to turning positive. Fifth, the maximum percentage rise in breath for a B wave has been 25%. Thus far breadth has risen 19%, a negative.

Since we already have two positives, a third would raise the probabilities in favor a new bull market. A fourth would increase those probabilities, and a fifth would almost assure them. Short term support is at the 2594 and 2575 pivots, with resistance at the 2632 and 2656 pivots. Short term momentum ended the day with a negative divergence. Best to your Opex trading!

MEDIUM TERM: downtrend

LONG TERM: downtrend probable

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

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Weekend Update

REVIEW

The week started at SPX 2532. After a small pullback to the SPX 2525 pivot early Monday it rallied to SPX 2580 early Tuesday. Then after a Tuesday pullback to SPX 2548 it rallied to SPX 2598 by Thursday. Friday was the second straight gap down opening, and just like Thursday it had minimal impact on the close. For the week the SPX/DOW gained 2.5%, and the NDX/NAZ gained 2.5%. Economic reports for the week were sparse due to the government shutdown. On the downtick: the CPI, ISM services and consumer credit. On the uptick: weekly jobless claims improved. Next week’s reports will be highlighted by industrial production, retail sales, and the NY/Philly FED. The ECRI has now declined to 2011 levels.

LONG TERM: downtrend probable

The foreign markets, as we noted on December 29th, have been displaying signs of improvement after entering what appears to be their last bear market downtrend. While Germany and Spain have rallied a little off their late December lows. The Asian markets are doing a lot better. Hong Kong and the Kospi both appear to be in an uptrend, and Singapore has already confirmed its uptrend. China has had a small rally off its January low. Elsewhere, Brazil continues to make new bull market highs.

On the home front. Nothing has changed in the long term count for the US major indices. A Primary I bull market ran from 2009-2015. Primary II lasted 9 months but did little damage ending in February 2016. Major 1 of Primary III rose from that low to September – October 2018. A Major 2 bear market, having dropped 20% already, has been underway since then. When it concludes, if it hasn’t already, an Intermediate I bull market will be underway. Intermediate I, of Major 3, of Primary III.

MEDIUM TERM: downtrend

After the bull market high in October 2018 at SPX 2941 the market headed into a bear market. The decline appeared ordinary until December. Then the market went into avalanche mode. Was it the POTUS I’m the Tariff Man tweet? The market dropped from SPX 2800 to SPX 2347 by Christmas, a 16.2% decline, for the worse December since the year 1931. After that the market reversed and changed characteristics. While nearly every rally was sold in December, nearly every decline is currently being bought. The SPX in 12 trading days has rallied from 2347 to 2598, a 10.7% gain. Was it the POTUS Stocks are Cheap tweet?

While all this was going on we were doing some research into historical market activity that is similar to this. We found five events, not much, since, and including the 1987 crash. In every one of the five instances the market rallied between 7.5% to 13% after the significant low. In four of the five instances, when the rally concluded, the market retested the lows. The one exception still had a 61.8% pullback, before moving higher. The pivots highlighted in green 2632 and 2656 are the 12% and 13% levels.

We also looked into momentum measures. This data is only available since the turn of this century. And there are only three instances. In each of the three instances momentum rose 20% to 25% before the market reversed and went back to retest the lows. It is currently up 17%. The chart for this is located on page 17 of the charts. Probabilities suggest a decline soon that mostly likely retests the lows.

SHORT TERM

During the bull market it was fairly easy to track the five wave movements as volatility was low and the rise was generally slow. With volatility still high it has been somewhat difficult to track the smaller waves with our normal approach. With this in mind we all have been working to quantify short term waves just on price alone.

There are a few potential counts floating around in our group. Nearly all are corrective. The approach I am using displays 5 impulsive waves up (SPX 2347-2520), a choppy pullback to SPX 2444, then 5 overlapping waves (possibly an expanding diagonal) to SPX 2598. Waiting to see how this unfolds in the days ahead. Short term support is at the 2594 and 2575 pivots, with resistance at the 2632 and 2656 pivots. Short term momentum ended the week above neutral. Best to your trading Opex week!

FOREIGN MARKETS

Asian markets were all higher on the week and gained 3.0%.

European markets were all higher and gained 1.9%.

The DJ World index gained 3.0%, and the NYSE gained 2.7%.

COMMODITIES

Bonds continue to uptrend but lost 0.3% on the week.

Crude continues to look like it is in an uptrend and gained 7.6% on the week.

Gold is in an uptrend and gained 0.3%.

The USD is in a downtrend and lost 0.5%

Bitcoin is in a downtrend and lost 2.8%.

NEXT WEEK

Tuesday: the PPI and NY FED. Wednesday: retail sales, export/import prices, business inventories and the NAHB. Thursday: jobless claims, housing starts, building permits, and the Philly FED. Options expiration Friday: industrial production, capacity utilization, and consumer sentiment. Best to your week!

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

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Wednesday update

SHORT TERM: rally continues, DOW +92

For the first three days of the week the Asian markets have gained 2.9%, and the European markets have gained 1.2%. The SPX started the week at 2532 and hit 2595 today for a 2.5% gain so far this week. When reviewing the charts of the SPX, DOW, NAZ and NDX we do not see them as choppy as we would have expected for a B wave rally. The SPX, DOW, and NDX look like three waves up, and the NAZ is one wave up thus far. Could be corrective, could be impulsive, too early to tell. With that in mind we did a bit of research.

Whenever the Presidents Working Group (PWG) gets involved in the markets through their Primary Dealers. The market generally rallies 10% to 13% before turning over and heading back down again. One time, 1990, it never did fully return to the recent lows. Was that the outlier? Or is that a possibility this time around too? The three levels to watch going forward actually fit with three OEW pivots. These are highlighted in green on the daily chart. SPX 2575, 2632 and 2656. The first is a 10% rally, which has already been achieved. The second a 12% rally, and the third a 13% rally. We would not expect a PWG B wave to exceed that third level. We are also watching market breadth, and have some parameters there too. Interesting juncture.

Short term support is at the 2575 and 2525 pivots, with resistance at the 2594 and 2632 pivots. Short term momentum displays a negative divergence at today’s high. Best to your trading!

After observing TESLA  for a few years we have determined it trades more like a commodity stock (abc’s) than a growth stock, and have dropped it from our charts. In its place we have added a few things. Fed-Ex (pg. 13), Intelsat (pg. 14), and GBTC (pg. 13) the pink sheet Bitcoin ETF. Under commodities on page 8 we have added to Gold and Crude, the CME Bitcoin index and Soybeans. Biotech remains on that page. The Housing index has been moved to page 15 with the housing stats. New Year improvement? Possible.

MEDIUM TERM: downtrend

LONG TERM: downtrend probable

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

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Weekend update

REVIEW

This volatile week started at SPX 2486. After a gap up opening Monday and rally to SPX 2509, the market went into chop mode ahead of the NY Day holiday. A gap down open started the action on Wednesday. After hitting SPX 2467 early the market rallied to SPX 2519. Thursday had another gap down opening. The market quickly dropped to SPX 2448, rallied to 2488, then dropped to 2444 just before the close. Friday a totally different story. After a gap up opening to SPX 2482 the market just kept on rising, hitting SPX 2538 before closing at SPX 2532. For the week the SPX/DOW gained 1.75%, and the NDX/NAZ gained 2.25%. Economic reports for the week were light and mixed. On the downtick: ISM manufacturing, plus both jobless claims and the unemployment rate rose. On the uptick: the ADP, monthly payrolls, and auto sales. Next week’s reports will be highlighted by the FOMC minutes, the CPI, and ISM services. Best to your week!

LONG TERM: downtrend probable

After the worse December since the year 1931 many of the market pundits capitulated and turned bearish. The SPX lost 9.2% on the month. It is probably best to describe 2018 as a bull sandwich: two three month corrections, with a six month uptrend in the middle. Net loss YoY 6.2%. Economically, the ECRI was making lower lows this week.

Last weekend we noted that just when many were turning bearish several foreign markets looked like they were in the last bear market downtrends: China, Germany, Hong Kong, Singapore, S. Korea, and Spain. This week China made a new bear market low, Hong Kong confirmed its last downtrend, S. Korea confirmed its last downtrend and made a new bear market low. S. Korea looks like it could be bottoming now.

An emerging market that is enjoying the fruits of its economic and political recovery is going mostly unnoticed. It just made new bull market highs in the first three days of this new year. The market: Brazil. After a market crash, along with nearly every other market, in 2008, the BVSP rose in a P1 bull market until 2010. Then economic/political trouble set in and a six year P2 bear market followed until the worldwide low in 2016. It has been rising in a P3 every since. Short term charts are on page 5 of the stock charts link below.

Nothing has changed on the long term count or the weekly chart. You can read last weekends update for more detail.

MEDIUM TERM: downtrend

Made some notes on the daily chart to prove a point. For those that think the POTUS and FED cannot move markets, think again. Note the four instances in December when the POTUS or FED did something market noteworthy. December 4th, Trumps tariff man morning tweet. The market was at SPX 2786. By December 26th the market had dropped to SPX 2347: -15.8%. Along the way Powell stated that rates and QT were on auto pilot during the rate hike pressor on December 19th. If you recall the SPX dropped 100 points between the time the FED raised rates and he finished his pressor one hour later. On December 24th the Presidents Working Group convened. Then on Christmas day, December 25th, Trump tweeted stocks are cheap. The SPX had closed at 2351 on the 24th, and has since rallied 8.0% at Friday’s high. Clearly Powell and Trump can move markets.

With the best surge in market breadth since the downtrend began it is possible Int. A ended at SPX 2347 and Int. B is currently underway. A 38.2% to 61.8% retracement would be normal for a B wave of this degree: SPX 2574 to 2714. It’s a large range but nothing this volatile market couldn’t handle in a couple of days.

We also see the possibility, as noted in the DOW charts, that Int. C is still underway. This was detailed in last weekends update. Either way we should be seeing a retest of the December lows before this bear market ends.

SHORT TERM

The pattern for this downtrend remains the same. An abc down to late October, a November B wave, then another abc down to late December. While the pattern has been unchanged, the wave degree has been a bit difficult to determine. Ideally, as noted last week, a drop to SPX 2310 would ideally fit the SPX and DOW.

Short term support is at the 2525 and 2479 pivots, with resistance at the 2575 and 2594 pivots. Short term momentum ended the week overbought. Best to your trading in the NY.

FOREIGN MARKETS

Asian markets were mostly lower and lost 0.8%.

European markets were all higher and gained 2.1%.

The DJ World index gained 1.5%, and the NYSE gained 2.2%.

COMMODITIES

Bonds continue to uptrend and gained 0.6%.

Crude appears to be trying to get an uptrend going and gained 5.8%.

Gold remains in an uptrend and gained 0.2%.

The USD is in a downtrend and lost 0.2%.

NEXT WEEK

Monday: ISM services and factory orders at 10am. Tuesday: consumer credit. Wednesday: the FOMC minutes. Thursday: weekly jobless claims and wholesale inventories. Friday: the CPI and the Budget deficit. Best to your week!

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

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Wednesday update

SHORT TERM: gap down opening then rebound, DOW +19

For the first three days of this holiday shortened week the Asian markets lost 0.9%, and the European markets gained 0.5%. The US market after doing two zigzags up from the SPX 2347 downtrend low, may have started the third zigzag at today’s SPX 2467 low. The previous zigzags were: [2367] 2414-2394-2468 and [2398] 2508-2473-2520. This third one could be: [2467] 2519-2495-xxxx. Had the first leg up of this potential zigzag exceeded SPX 2520 we would feel better that another one is underway.

A market maker in the making. Bernanke, Powell and Yellen get together on Friday morning for a round table discussion. Will Powell announce a QT freeze? Short term support remains at the 2479 and 2456 pivots, with resistance at the 2525 and 2575 pivots. Short term momentum ended the day around neutral. Best to your trading and Happy New Year!

MEDIUM TERM: downtrend

LONG TERM: downtrend probable

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

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