weekend update

REVIEW

The market opened the week at SPX 2123. It then made marginal new all time highs on Monday, Tuesday, and also Wednesday, before going into a trading range for the rest of the week. The entire range for the week was only 15 points. For the week the SPX/DOW were mixed, the NDX/NAZ gained 0.75%, and the DJ World index gained 0.80%. On the economic front reports for the week were mixed. On the uptick: housing starts, building permits, leading indicators, the WLEI, and the CPI. On the downtick: existing homes sales, the Philly FED, the NAHB, plus weekly jobless claims rose. Next week starts with a Monday holiday, then durable goods and housing sales during the week followed by Q1 GDP and the Chicago PMI on Friday.

LONG TERM: bull market

On Wednesday we concluded a series of special reports over the past week and a half. The reports were on Currencies, Bonds, US Housing, Commodities, Shipping, plus the European and Asian stock markets. If you missed any, and are interested, they were published daily, in order, starting Monday May 11th.

The market started the year at SPX 2059. Thus far it has traded only 78 points below that level in early-February, and 76 points above that level this week. Not much of a range for nearly five months. During this period of time the market made a downtrend low at that SPX 1981 level in early-February, and has been in a choppy uptrend ever since.

SPXweekly

Longer term, we continue to label this bull market as Cycle wave [1]. The previous Cycle [1] was between the years 1932 and 1937. That lasted five years. This one is already in its sixth year, and likely heading toward an eight year bull market. Cycle wave bull markets consist of five Primary waves. Primary waves I and II completed in 2011. Primary wave III has been underway ever since. When Primary III concludes, probably next year at SPX 2500+, the largest correction since 2011 will occur for Primary IV. Then a short-lived Primary V should take the market again to new highs to conclude the bull market.

MEDIUM TERM: still an uptrend

When the current uptrend began in early-February the market impulsed from SPX 1981 to 2120 by late-February. Then after a pullback to SPX 2040 by mid-March, it went into a very choppy pattern: 2115-2046-2126-2068-2135. The most obvious pattern for this choppy activity is an overlapping five wave leading diagonal, rising wedge, which should be terminating at the upper trend line soon. Should this be the correct count, the market should sell off soon and find support around the SPX 2040’s, or the 2019 pivot range, for the correction. After that the market should start a new uptrend to new highs.

SPXdaily

Currently we are still seeing negative divergences on the weekly charts, with new price highs. A negative RSI divergence and MACD crossover on the monthly chart. Plus a small negative RSI divergence on the daily chart, but the daily MACD has nearly cleared to a new high. Fortunately there is an alternative count which will be discussed below. Medium term support remains at the 2085 and 2070 pivots, with resistance at the 2131 and 2198 pivots.

SHORT TERM

This week when the market traded above the OEW 2131 pivot, but still within its +/- seven point range, we took a closer look at the SPX and DOW. After the review we did find a potential impulsive pattern that might unravel the choppiness of the past few months. We posted this count on the DOW hourly chart during the week. Now we move the count over to the SPX hourly chart.

SPXhourly

With this count, and the leading diagonal noted above, the market is certainly at an inflection point: breakout or breakdown. In fact, in either scenario, we see less than 5% on the upside and less than 5% on the downside, however the outcome. Short term support is at SPX 2123/2118 and SPX 2110, with resistance at the 2131 and 2198 pivots. Short term momentum ended the week around oversold.

FOREIGN MARKETS

The Asian markets were mostly higher on the week for a net gain of 2.0%.

The European markets were also mostly higher for a net gain of 1.8%.

The Commodity equity group were mostly lower for a net loss of 2.2%.

The DJ World index is still in an uptrend and gained -0.8%.

COMMODITIES

Bonds have been in a downtrend and lost 0.6% on the week.

Crude has been in an uptrend and gained 0.4%.

Gold has also been in an uptrend but lost 1.6%.

The USD has been in a downtrend, but it looks to have reversed, as the USD gained 3.3% on the week, its largest weekly gain since the bull market kicked off in 2011.

NEXT WEEK

Tuesday: Durable goods at 8:30, Case-Shiller and FHFA housing at 9am, New home sales and Consumer confidence at 10am, then a speech from FED vice chair Fischer at 12:30. Thursday: weekly Jobless claims and Pending home sales. Friday: Q1 GDP (est. -0.9%), then the Chicago PMI and Consumer sentiment. Best to your holiday weekend and week!

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

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Friday update

SHORT TERM: trendless pre-holiday trading, DOW -54

Overnight the Asian markets gained 0.8%. Europe opened lower and lost 0.1%. US index futures were lower overnight, and at 8:30 the CPI was reported higher: +0.1% v +0.2%. The market opened two points below yesterday’s SPX 2131 close, dipped to 2127, then hit 2131 by 10:30. After a pullback to SPX 2126 by 11:30 the market rallied to SPX 2132 by 1pm during FED chair Yellen’s speech: http://www.federalreserve.gov/newsevents/speech/yellen20150522a.htm. After that the market pulled back to end the week at SPX 2126.

For the day the SPX/DOW were -0.25%, and the NDX/NAZ were mixed. Bonds lost 9 ticks, Crude dropped 80 cents, Gold slipped $1, and the USD rallied. Medium term support remains at the 2085 and 2070 pivots, with resistance at the 2131 and 2198 pivots. Today the WLEI was reported higher: 51.5% v 51.2%.

The market opened a bit lower, rallied twice over SPX 2130, then ended the week at 2126. A fairly quiet 6 point trading range day to end a narrow 15 point trading range week. With the market failing to rally over SPX 2135, and failing to drop below 2123, we remain at an inflection point. That is, until next week. Enjoy your extended weekend!

MEDIUM TERM: still an uptrend

LONG TERM: bull market

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

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Thursday update

SHORT TERM: drift higher continues, DOW unchanged

Overnight the Asian markets were mixed. Europe opened lower but gained 0.2%. US index futures were lower overnight, and at 8:30 weekly Jobless claims were reported higher: 274k v 264k. The market opened three points below yesterday’s SPX 2126 close, then began to rally. At 10am Existing home sales were reported lower: 5.04mn v 5.19mn, the Philly FED was reported lower: 6.7 v 7.5, but Leading indicators were reported higher: +0.7% v +0.2%. At 12:30 the SPX hit 2133, then pulled back to 2129 by 2pm. At 2pm FED vice chair Fischer’s speech was released: http://www.federalreserve.gov/newsevents/speech/fischer20150521.htm. The market then remained in that range until the last hour of trading when it hit SPX 2134. Then a pullback into the close ended the day at SPX 2131.

For the day the SPX/DOW were +0.15%, and the NDX/NAZ were +0.45%. Bonds gained 14 ticks, Crude rallied $1.65, Gold dropped $4, and the USD was lower. Medium term support remains at the 2085 and 2070 pivots, with resistance at the 2131 and 2198 pivots. Tomorrow: the CPI at 8:30, and a speech from FED chair Yellen at 1pm.

The market opened at yesterday’s low today, SPX 2123, but that again was the low for the day. After the opening the market rallied to SPX 2133, pulled back, then hit 2134 in the last hour of trading. Today’s pullback, from yesterday’s SPX 2135, found support at 2123. This is the fourth wave of the advance from 2086: 2110-2096-2133-2123-2135. With the market closing close to the SPX 2135 all time high, there is a possibility for the first impulse wave unfolding since February: 2118-2086-2135-2123-xxxx. Inflection point continues. Short term support now at SPX 2118/2123 and SPX 2110, with resistance at the 2131 and 2198 pivots. Short term momentum remained around neutral most of the day. Best to your pre-holiday trading!

MEDIUM TERM: still an uptrend

LONG TERM: bull market

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

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Wednesday update

SHORT TERM: marginal new highs again, DOW -27

Overnight the Asian markets gained 0.4%. Europe opened higher and gained 0.2%. US index futures were higher overnight, and the market opened one point above yesterday’s SPX 2128 close. After the open the market dipped to SPX 2123 by 10am, bounced to 2129 by 10:30, dipped to 2124 by noon, and then started to rise heading into the FOMC minutes: http://www.federalreserve.gov/monetarypolicy/fomcminutes20150429.htm. Then the market rallied to a new high at SPX 2135 by 2:30, dropped to 2125 by 3:30, then ticked up to close at 2126.

For the day the SPX/DOW were -0.10%, and the NDX/NAZ were +0.05%. Bonds gained 5 ticks, Crude rebound 75 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: weekly Jobless claims at 8:30; Existing home sales, the Philly FED and Leading indicators at 10am; then a speech from FED vice chair Fischer at 2pm.

The market opened slightly higher today, had its first notable pullback since SPX 2096, rallied to a new high at 2135, then immediately had another notable pullback. Interesting juncture. Since we now consider the May 6th low at SPX 2068 a key level: either wave D of the leading diagonal, or Minute wave ii of an uptrend that is trying to kick into impulse mode. From that low we can now count three waves up: 2118-2086-2135, and 2086-2135 was a clear five waves. So the advance from SPX 2068 was either an a-b-c E wave, or the 1-2-3 part of an impulse wave. If an E the market should soon drop below 2118, 2086, and then 2068. If part of an impulse wave the market should hold 2118 as support, worse case 2110 or 2096, but certainly not drop to 2086 again. The uptrend inflection point has arrived. Short term support is now at SPX 2118 and 2110, with resistance at the 2131 and 2198 pivots. Short term momentum displayed another negative divergence at today’s high. Best to your trading this potential inflation point.

MEDIUM TERM: still an uptrend

LONG TERM: bull market

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

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Asian market update 2015

We track eight country indices in the Asian group. Generally they all bottomed around 2008/2009, surged higher into 2010/2011, corrected, and then most turned quite choppy. A few in the group emerged out of the choppiness and actually started impulsing after beginning EQE or a change in government. We will cover them first.

iNifty

India’s Nifty made a bear market low in 2008. After a rally nearly back to the 2007 high, at 6357, in 2010 it corrected into 2011. At first we had a difficult time deciphering an impulse wave from 2008-2010. However, after diagonal triangles started appearing in many markets, worldwide, we found that it was indeed a bullish rise. Making things even more difficult the Nifty started Primary III with about an 18 month diagonal triangle Major wave 1. Then after an a-b-c Major wave 2, it started seriously impulsing in Major wave 3. Currently we have the Nifty in an irregular Major wave 4, which may have bottomed around 8000 or should bottom around 7700.

iNIKK

Japan’s Nikkei had even a worse beginning from its 2009 low: a diagonal triangle Primary I into early-2010. Then it spent about 18 months correcting in a complex Primary II. Only when Primary III began this index start really impulsing. Then after simple Major waves 1 and 2, it went into a subdividing Major 3 and more complex Major 4. Currently it is in a subdividing Major 5. Still a long way from the 1989 38,900 all time high. But if it can clear the secondary high at 22,800 in 1996 it could reach it during this bull market.

iASX

Australia’s ASX made an all time high in 2007 at 6873. After that it fell with most of the world’s indices into a 2009 low at 3053. The advance off that low into 2011 was a bit choppy and we labeled it a Primary A. After a Primary B decline into a 2011 low, we have been tracking this four year advance as a Primary C. However, it is possible, due to the extreme choppiness in most of the Asian indices, for a more bullish count. A Primary I high in 2010, then an irregular Primary II low in 2011 like some other foreign indices, and Primary III under way from the low. Either way the long term trend is up from 2011, and the all time high appears to be within reach.

iKospi

S. Korea’s KOSPI is on a long term count that is quite different than many of the International indices. From a 1998 Cycle [2] low, post the Asian currency crisis, this market has progressed in five Primary waves, with Primary waves III and IV completing in 2011. After that low the KOSPI remained in a trading range for three years. Which appears to have been a large diagonal triangle Major wave 1. After the early-2015 low, Major 2, the KOSPI broke out of the trading range with one solid uptrend. It appears that Major wave 3 of Primary wave V has just begun. New highs should be easily achieved in the coming months.

iSTI

Singapore’s STI, and the indices to follow, display extreme choppy activity over the past several years. As a result it is quite difficult to determine exactly what long term pattern they are displaying. Nevertheless, we will give it our best shot from the data currently available. The STI made an all time high in 2007 at 3906. After the sharp decline to 1455 by 2009 it had a very strong advance to 3314 by 2010. After that it has been in a very choppy drift up mode for the past four plus years. While the 2009-2010 surge was quite strong it looks like an a-b-c. In fact, all the activity since then looks like a-b-c’s as well. We are labeling its bull market as a huge Cycle wave [B] diagonal triangle which is yet to complete. When it does, it is likely to experience a drop back to the 2009 lows.

iIDDOW

Indonesia’s IDDOW, has another complex long term wave pattern. From its 2008 bear market low it rallied in five waves to all time highs at 1096 by 2011. Then after a decline into a 2011 low the market activity became quite choppy. We have labeled the 2011 low as a Primary A, then the three wave advance to the recent 2015 high as a Primary B. It would appear, unless the current Major wave C extends, that this index should be heading back down to the 2011 lows.

iHSI

Hong Kong’s HSI has a similar pattern. From its 2008 bear market low it advanced in five waves to a 2010 high. It then corrected into a 2011 low, but has been rising in a very choppy pattern ever since. We believe when its current Primary wave B advance concludes it too should drop back to its 2011 lows.

iSSEC

We saved China’s SSEC for last due to the recent complexity of its long term pattern. This planned economy does not appear to have been planned very effectively over the past decade. From 1991-2005 the SSEC moved in a predictable impulse pattern. Then within three years it spiked up six-fold, and then lost 73% of that advance. The selloff ended in 2008 and the market rallied into 2009. But just as most of the world’s markets were doubling into 2013, the SSEC was declining. Then over the past year it has gone into spike up mode again. From an OEW perspective, this market looks fine into the 2007 Primary III high. The selloff into the 2008 low overlapped Primary wave I, suggesting a Primary IV triangle was underway. During fourth wave triangles the internal waves of the triangle can overlap the previous first waves, as long as the triangle ends above the first wave. Normally fourth wave triangles accomplish this by being contracting triangles. This one, however, appears to be an expanding triangle: wave d higher than wave b. We have calculated a potential wave d high at 4783 (d = 1.618 b). This should be followed by an e wave lower to complete the Primary IV triangle above 2245, the high of Primary I. Then Primary V should begin to all time new highs.

You can follow all the International indices on pages 5 – 8 using this link: http://stockcharts.com/public/1269446/tenpp/5

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Tuesday update

SHORT TERM: marginal new high, DOW +14

Overnight the Asian market gained 0.3%. European markets rallied on the decline in the Euro gaining 1.6%. US index futures were higher overnight. At 8:30 Housing starts were reported higher: 1135k v 926k, and Building permits hit a seven year high as well: 1143k v 1039k. The market opened one point above yesterday’s SPX 2129 record close. After a dip in the opening minutes to SPX 2126, it worked its way to a marginal new high at 2133 by 1:30. Then a pullback to SPX 2125 followed, just past 3pm, before a bounce to close at 2128.

For the day the SPX/DOW were mixed, and the NDX/NAZ were -0.15%. Bonds lost 17 ticks, Crude dropped $2.15, Gold slid $16, and the USD rallied. Medium term support remains at the 2085 and 2070 pivots, with resistance at the 2131 and 2198 pivots. Tomorrow: the FOMC minutes at 2pm.

The market opened slightly higher today, dipped, then made an all time new high at SPX 2133. After that the market pulled back to SPX 2125. When the futures had rallied to 2134 overnight, (SPX 2138), we took a look at the short term patterns in the SPX and DOW. Just in case the market does breakout above the 2131 pivot range (2124-2138). We arrived with a count that fits both the SPX and DOW, and posted it on the DOW hourly chart. It is the only potentially bullish count we could find to describe the past three months of choppy activity. You can view it using the link below. Should the market breakout, we would count the advance from early May as Micro wave 3 of Minor 3. The breakout would have to be fairly strong to justify this count. Until the market clears the OEW 2131 pivot range we still see all this activity as an Intermediate wave i uptrend, leading to an Intermediate wave ii correction soon. Short term support remains at the 2085 and 2070 pivots, with resistance at the 2131 and 2198 pivots. Short term momentum put in a negative divergence at today’s high. Best to your trading the often volatile FOMC minutes!

MEDIUM TERM: still an uptrend

LONG TERM: bull market

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

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Europe plus Commodity group update 2015

We continue the International indices update with the European indices that made bear market lows in 2012. These three indices were the most severely impacted by the European debt crisis of 2011/2012. While most of Europe was bottoming in 2009, with the US, these three indices only made wave A lows. Then after a B wave rally into 2009/2010 then declined again into 2012 to end their bear markets.

iIBEX

Spain’s IBEX displays a generally choppy pattern since its 2012 low. We have a complex irregular flat for Major wave 2, a simple Major 4, then a Primary I high in early 2014. After that another complex irregular flat for Primary wave II. Since then, with the help of the ECB’s EQE, the IBEX has nearly risen back to its 2010 high, in a Major wave 1 of Primary III. A Major wave 2 correction is underway now. We estimate when this bull market completes the IBEX should be back to its 2007 all time high at 16,040.

iMIB

Italy’s MIB displays a less choppy Primary I pattern from its 2012 low. It also had an irregular Major wave 2, and simple Major wave 4. But its Major wave 5 subdivided into five Intermediate waves, before entering a complex Primary II during 2014. Since then its Major wave 1 of Primary III has also spiked higher, completed, and is now in Major wave 2. Unlike Spain its all time high was in 2000 at 51,300, and a second high in 2007 at 44,300. It is still quite a way from even that secondary high. We estimate, however, the 2007 high could be a good target for the current bull market.

iATG

Greece’s ATG also displays a somewhat choppy pattern from its 2012 low. Its Major wave 2 was a large irregular flat, and oddly its Major wave 4 was a smaller irregular flat. Since there is very little alternation between waves 2 and 4 this entire rise might be considered corrective. From the early-2014 high, we labeled Primary I, there has been  steady series of declining a-b-c’s, with a potential Primary II low in place. Since Greece has not benefitted from the ECB’s EQE, due to its economic and debt problems. We are less convinced, than at the beginning of the year, that this labeling is correct. With the ATG currently selling at about 10% of its all time high in 2000 at 7420, we prefer to wait until their debt situation is resolved. It appears, from our perspective, their best option is to leave the Euro, but remain in the EU. This would give them control of their own currency, like England and Switzerland, and remain part of the European union.

iTSX

Canada’s TSX is part of what we consider the commodity equity group. This also includes Brazil and Russia. While all three are very sensitive to commodity prices Canada has a fairly extensive banking system that helps offset some of the cyclicality of commodities. The TSX bear market bottomed in 2009, had Primary waves I and II in 2011, and has been in Primary III since then. Its Primary III pattern was also a bit choppy until mid-2013, when it started impulsing higher. It currently appears to be in Intermediate wave iii of Major wave 5. However, just like the FTSE, the current uptrend may only be a b wave of a complex Intermediate wave ii. We could project a high of about 17,600 for Primary III, where III equals I.

iBVSP

Brazil’s BVSP has had quite a volatile run since its all time high at 73,900 in 2007. A commodity bear market, political scandals and currency gyrations have contributed to this volatility. After making a bear market low in 2008 the BVSP completed a Primary wave I in 2010. Then it went into a four year bear market, which appears to have bottomed in early-2014. Since that low it has had a very strong Major wave 1, a huge retracement for Major wave 2, and since early-2015 a big rally to start Major wave 3. The current uptrend may only be Intermediate wave i of Major 3. Should our count be correct the BVSP should easily exceed all time highs before Primary III ends.

iRTSI

Russia’s RTSI is an index that is quite levered to energy and geopolitical events. Unless one understands where it is in its long term trend, investing in it is much akin to playing Russian roulette. When one compares this chart to Crude oil they look quite similar. Except the RTSI rose from about 40 in 1998 to 2500 by 2008, while Crude rose from $10 to $150 during the same period. After that all time high at 2500 in 2008, the RTSI dropped to around 500 by 2009. That low appears to be only part of a large ongoing bear market. Then the RTSI rallied, in an a-b-c, to 2100 by 2011 to complete a Cycle B wave. After that it plunged again, in an a-b-c, to the recent low near 700. We are labeling this entire decline from 2011 as Primary waves A-B-C. Since that low we are now anticipating a choppy X wave advance, just like Crude, for the next couple of years. After that completes we expect, eventually, a revisit to the 2014 low, and even the 2009 low, and lower, before this multi-year bear market concludes. This is a very risky index for the average investor.

You can follow all the International indices on pages 5 – 8 using this link: http://stockcharts.com/public/1269446/tenpp/5

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