Weekend update

REVIEW

The week started at SPX 2833. After a slightly higher open on Monday the SPX rallied to 2843, dropped down to 2820 in the afternoon, and then rallied back to 2843 on Tuesday. Wednesday’s gap down opening took the SPX to 2802. Then a Wednesday rebound and gap up opening on Thursday took the SPX to 2850. Friday the market opened a bit lower on options expiration. The market dipped to SPX 2834, then rallied to 2856, before ending the week at 2850. For the week the SPX/DOW gained 1.0%, and the NDX/NAZ lost 0.35%. Economic reports for the week were plentiful and mostly higher. On the downtick: the Philly FED, the NAHB and consumer sentiment. On the uptick: import prices, retail sales, the NY FED, industrial production, business inventories, housing starts, building permits, leading indicators, plus weekly jobless claims declined. Next week’s reports will be highlighted by the FOMC minutes and Jackson Hole.

LONG TERM: uptrend

The following is a follow up to last week’s write up on the US – China trade dispute. A Chinese delegation will discuss trade with the US on Tuesday and Wednesday in Washington DC this week. This is just before another round of tariffs are scheduled to kick in on Thursday. Meanwhile, the SSEC continues to makes new lows for the year after hitting a 2 year high in January. It is down 25% for the year. In the charts that follow you will observe that the SPX also made a 2 year high in January, sold off in February, doubled bottomed in April, and is now only 1% below its all-time high.

The Major wave 1 bull market continues to unfold. Intermediate waves i and ii completed in the spring of 2016, and Intermediate waves iii and iv completed in the spring of 2018. Int. wave i was simple, and Int. wave iii subdivided into five Minor waves. Int. wave ii was a zigzag, and Int. wave iv was a flat. Textbook Elliott Wave. Intermediate wave v, of Major wave 1, has been underway since early-April. When it concludes the bull market could end with a Major wave 2 bear market. We are still expecting SPX 3000+ by 2018+ before this bull market ends.

MEDIUM TERM: uptrend

After the April SPX 2554 low the market rallied to SPX 2791 by June. We labeled this Minor wave 1 of the Intermediate wave v uptrend. The pullback to SPX 2692 that followed into late June we labeled Minor wave 2. Minor wave 3 has been underway since then. Early last week the SPX made a new uptrend high at 2863, we saw five waves up from the Minor 2 low, and expected a significant pullback if the market declined more than 7 points. The pullback started last Thursday, and continued into Wednesday of this week when the SPX hit 2802. At that low the DOW displayed clear positive divergences. While the SPX was just oversold. The market then rallied for the rest of the week.

At the recent SPX 2863 high we decided to label that high Minute wave i of Minor 3. We did this because it was a simple five waves up, and similar in length to the three previous Minute degree rallies during Minor 1. The low that followed, SPX 2802, was quite naturally labeled Minute wave ii.

At Wednesday’s SPX 2802 low the SPX was 2.5% away from its all-time high. What makes this important is that not only does the SPX need to make at least all-time highs to end its bull market. The DOW, NYSE and DJ World index need to do so as well. And they were much further way than SPX 2.5%: DOW 6%, NYSE 8%, and DJW 9%. If the SPX were to rally 9% from Wednesday’s 2802 low, it could hit 3054 when the DJW makes new highs. We don’t see this bull market ending until all four of these indices make new highs.

SHORT TERM

After the SPX 2692 low in late June, we were expecting to observe a nice clear impulse wave to continue the uptrend. And we got it: 2743-2699-2848-2796-2863. Then we expected a pullback to the lower-upper SPX 2790’s, and the 2798 pivot range. That concluded on Wednesday at SPX 2802. From Wednesday’s low the market has now rallied straight up to SPX 2856. It appears the SPX is heading to all-time new highs (2873) in the coming weeks. The NDX/NAZ hit all-time new highs in this uptrend back in June, and are still rising.

If Minute iii, of Minor 3, equals Minute i, then the SPX should hit 2973 in the next few weeks. Short term support is at the 2835 and 2798 pivots, with resistance at the 2858 and 2884 pivots. Short term momentum ended the week just below overbought. Best to your trading!

FOREIGN INDICES

The Asian markets were mostly lower on the week for a net loss of 1.6%.

The European markets were all lower and lost 1.9%.

The DJ World index lost 0.4%, while the NYSE gained 0.5%.

COMMODITIES

Bonds are uptrending again but lost 0.1% on the week.

Crude remains in a downtrend and lost 3.6%.

Gold continues to downtrend and lost 2.9%.

The USD is still in an uptrend and gained 0.3%.

NEXT WEEK

Wednesday: existing home sales, FOMC minutes, and conclusion to China-US trade meeting. Thursday: weekly jobless claims, and new home sales. Friday: durable good orders.

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

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Wednesday update

SHORT TERM: gap down opening, DOW -138

For the first three days of the week the Asian markets have declined 1.4%, and the European markets have declined 2.1%. It has been a volatile week in the US so far. Monday: a rally to SPX 2843 was quickly followed by a decline to 2820. On Tuesday the market gapped up, hit SPX 2843 again, and then gapped down on Wednesday hitting SPX 2802. Then before the day was over the SPX rallied to 2822, and closed at 2818.

The decline from last Tuesday’s uptrend high at SPX 2863 continues to work its way lower. First we had three waves down to SPX 2820: 2826-2843-2820. Then a rally to SPX 2843. Now a straight line down to SPX 2802. If we count the first decline, 2863-2820, as an A. The rally to 2843 as a B. Now this decline as a C. C equals A at SPX 2800. Which is also close to our pullback targets of the low-upper 2790’s, and right in the range of the 2798 OEW pivot. The short term chart indicators suggest a bit more downside. But the decline is already sufficient for a Minute ii wave of Minor 3.

Short term support is at the 2798 and 2780 pivots, with resistance at the 2835 and 2858 pivots. Short term momentum ended the day at neutral. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: uptrend

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

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Weekend update

REVIEW

The week started at SPX 2840. After a flat opening on Monday the market rallied to a new uptrend high at SPX 2863 by Tuesday morning. After that the market went sideways for two days before heading lower late Thursday into Friday. For the week the SPX/DOW lost 0.45%, and the NDX/NAZ gained 0.30%. Economic reports for the week were light and mixed. On the downtick: consumer credit, plus the budget deficit widened. On the uptick: wholesale inventories, the CPI, plus jobless claims improved. Next week’s multitude of reports will be highlighted by industrial production, retail sales, and housing starts/building permits. Best to your week!

LONG TERM: uptrend

At the beginning of the new administration the US started working with our trade partners to re-write trade agreements. None of them have been too interested. This year the US has tried to get things moving along by enforcing tariffs on some imported goods. Still not much progress has been made on trade, except for countries initiating counter-tariffs. Our biggest trading partner, China, has been quick in initiating counter-tariffs. Also has refused to even discuss trade, and has been quite vocal in criticizing the US for even suggesting change. We decided to look further into this trade relationship to see why China is determined to fight any changes.

Internationally, China imported from around the globe in 2017 $1.841 trillion worth of goods. They exported globally in 2017 $2.272 trillion worth of goods. Simple math equates to a trade surplus of $431 billion in 2017. http://www.worldstopexports.com/chinas-top-10-imports/, and http://www.worldstopexports.com/chinas-top-10-exports/.

From 1985-2017 China has run a trade surplus with the US. This trade surplus has increased every year except for three: 2001, 2009, and 2016. All bear market years for equities. In 2017 China exported to the US $505.47 billion worth of goods. China imported from the US $129.89 worth of goods. Simple math equates to a trade surplus of $376 billion of goods with the US. https://www.census.gov/foreign-trade/balance/c5700.html. As you can clearly see nearly all of China’s worldwide trade surplus (88%) is with the US. It is no wonder they are absolutely unwilling to change anything. This trade dispute is likely to become front page news in the months ahead.

The long term count remains unchanged. A Major wave 1 bull market underway since early 2016. Bullish major waves divide into five Intermediate waves. Intermediate waves i and ii completed in the spring of 2016, and Intermediate waves iii and iv in the spring of 2018. Int. wave i was simple, and Int. wave iii subdivided into five Minor waves 5. Int. wave ii was an irregular zigzag, and Int. wave iv a flat. A classic Elliott wave pattern of extensions and alternation. Intermediate wave v has been underway since early April. Still expecting a bull market high of SPX 3000+ by 2018+.

MEDIUM TERM: uptrend

After four Intermediate waves, Intermediate wave v began with little fanfare in early April. The activity from the SPX 2554 low to mid-June’s SPX 2791 was a choppy five waves up that looked more correctional than impulsive. Other indices like the DOW and the NYSE, suggested that entire advance was a leading diagonal triangle. We have maintained that count on those charts, but decided on a more creative count for the SPX. Nevertheless, both counts imply the same thing: a Minor wave 1 up until mid-June, then a Minor 2 into late-June.

After the Minor 2 low at SPX 2692 we were looking for an impulsive Minor wave 3 to begin. We were not disappointed, as the early stages of Minor 3 rallied in five waves from SPX 2692-2863. At Tuesday’s SPX 2863 high there were negative divergences on the SPX hourly/daily charts, and we suspected a significant pullback was next. The market held up until late Thursday before heading lower into Friday. When this decline concludes the uptrend should make new highs, and the SPX new all-time highs.

SHORT TERM

After completing Minor wave 2 in late-June, the SPX rallied in five waves to 2863: 2743-2699-2848-2796-2863. This looks like it was just Minute wave i of Minor wave 3, and the recent decline is Minute wave ii. Significant pullbacks during this uptrend have been between 65 and 122 points. This would suggest a minimum decline into the SPX 2790’s is underway. SPX 2796-2798 was also the 4th wave of a lesser degree, and 2791 was the high of Minor wave 1. Technically there would appear to be, in addition to the 2798 pivot, lots of support in the SPX 2790’s.

Current short term support is at the 2798 and 2780 pivots, with resistance at the 2835 and 2858 pivots. Short term momentum ended the week oversold. Best to your trading!

FOREIGN MARKETS

Asian markets were mixed on the week but gained 1.1%.

European markets were all lower and lost 1.6%.

The DJ World index lost 0.8%, and the NYSE lost 0.8% as well.

COMMODITIES

Bonds appear to be in an uptrend and gained 0.6%.

Crude is in a downtrend and lost 1.3%.

Gold remains in a downtrend and lost 0.3%.

The USD is in an uptrend and gained 1.3%.

NEXT WEEK

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

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

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OEW tutoring

All markets are driven by long term investor confidence 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 can historically analyze any market to define its most probable wave structure, and determine what the past is projecting for 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, mathematically, they never change, past or 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 quantified the Elliott Wave Theory.

Over the decades 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 2002-2007 bull market, the 2007-2009 bear market, then the 2009-2115 bull market, and the current bull market as well. OEW 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: OEW tracked the bear market in the USD until 2011, then signaled a new bull market in the USD and bear markets in most other currencies. Now the USD is bearish again. In real estate: OEW identified the bull market top in 2005, and then the bear market bottom in 2011. All of our projections since the year 2005 are detailed – unedited – on this blog.

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. OEW tutoring covers the various indices in the US stock market and most foreign markets, along with various technical indicators. It also covers individual stocks, currencies, bonds, commodities, housing, long term asset cycles and the Saeculum. 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 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: flat opening then lower, DOW -45

So far this week the Asian markets gained 1.2%, and the European markets have gained 0.6%. The SPX started the week at 2840, then rallied to 2863 by Tuesday. Just 10-points shy of an all-time high it started to pullback.

The Monday rally took the SPX over 2848, quantifying an impulse wave from SPX 2692: 2743-2699-2848-2796-2863. This is the first internal impulse wave we have seen since the early-April low. It suggests the activity prior to the late-June SPX 2692 low was indeed a leading diagonal Minor wave 1 followed by a Minor wave 2. Minor 3 is now underway.

As noted earlier the rally from SPX 2692 displays 5 waves up, suggesting there could be a significant pullback at any time. Previous significant pullbacks, during this uptrend, have been between 65 and 122 points. Also of note, during the entire SPX 2796 advance to 2863, the largest pullback has only been 7-points. Anything more than that could suggest a significant pullback has just started. Today the market pushed the current pullback to 10 points early, before rebounding the rest of the day. On the SPX hourly/daily charts we have negative divergences at Tuesday’s SPX 2863 high. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: uptrend

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

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Weekend update

REVIEW

The week stated at SPX 2819. After a higher open on Monday the market sold off to SPX 2798 by early afternoon. A gap up opening on Tuesday carried the SPX to 2826 by Wednesday morning. Then another pullback, aided by a gap down opening Thursday, took the SPX down to 2796 that morning. After that the SPX rallied for the rest of the week, hitting 28 on Friday. For the week the SPX/DOW gained 0.4%, and the NDX/NAZ gained 1.2%. Economic reports were plentiful and mixed. On the downtick: ISM manufacturing/services, monthly payrolls, auto sales, construction spending, plus the trade deficit and jobless claims increased. On the uptick: pending home sales, personal income/spending, Case-Shiller, Chicago PMI, consumer confidence, and factory orders. Next week’s reports will be highlighted by the CPI/PPI and consumer credit.

LONG TERM: uptrend

While the NDX/NAZ/R2K have been making new all-time highs each month since June. The SPX/DOW, and for that matter the NYSE/DJW as well, have not made a new all-time high since January. Negative divergence? We don’t think so. It looks more like a trade/tariff rotation out of cyclical into growth. Remember, at the first mention of tariffs in late-January the SPX sold off nearly 12%. Then growth stocks recovered more quickly than the cyclicals.

The Major wave 1 bull market count remains the same. Four Intermediate waves completed thus far: i and ii in the spring of 2016, and iii and iv in the spring of 2018. Int. ii a zigzag, alternated with Int. iv a flat. Plus Int. iii divided into five Minor waves: waves 1 and 2 ended in the fall of 2016, and waves 3 and 4 ended in the spring of 2017. A complex wave 2, alternated with a simple wave 4. Currently Int. wave v remains underway from that Int. iv early-April low.

MEDIUM TERM: uptrend

After a three month, three-trend, Intermediate wave iv flat correction, Intermediate wave v began in early-April. For the NDX/NAZ, it has been quite impulsive looking all along. Not so for the SPX/DOW. The first three rallies, April-June, all overlapped each other. The DOW looks like a leading wave one diagonal.

The SPX a choppy, somewhat overlapping, wave one. Nevertheless, they both appeared to put in a wave 2 low in late-June. Suggesting a wave 3 is now underway.

Since third waves cannot be corrective looking, or form diagonal triangles, we have been patiently waiting for the SPX to show signs of an impulsing rally. Thus far, that appears to be occurring. From the wave two low at SPX 2692 we currently have five waves up: 2743-2699-2848-2796 (flat)-2840 (thus far). A rally to SPX 2848 would confirm the advance has been impulsing, and the third wave is clearly underway.

SHORT TERM

With a third wave underway in this Intermediate wave v uptrend, we should be looking for a potential bull market top soon. Should. The SPX would reach the minimum for a bull market high at 2873, it’s all-time high. But the DOW, NYSE and DJW indices all need to make new highs before they complete their bull markets. Each of these indices are 4% to 6% from their January high. This suggests the SPX will rise a lot more than just 1% before its bull market completes. Four percent, five percent, possibly six percent higher. Our target remains SPX 3000+ by 2018+.

Short term support is at the 2835 and 2798 pivots, with resistance at the 2858 and 2884 pivots. Short term momentum ended the week overbought. Best to your trading!

FOREIGN MARKETS

Asian markets were nearly all lower on the week and lost 1.6%.

European markets were also nearly all lower and lost 0.5%.

The DJ World index lost 0.3%, but the NYSE gained 0.2%.

COMMODITIES

Bonds are downtrending but gained 0.2%.

Crude is in a downtrend and lost 0.3%.

Gold remains in a lengthy downtrend but ended flat.

The USD is in an uptrend and gained 0.5%.

NEXT WEEK

Tuesday: consumer credit. Thursday: weekly jobless claims, the PPI, 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: higher open – then decline, DOW -81

So far this week the Asian markets have lost 0.3%, and the European markets have lost 0.5%. US markets started the week at SPX 2819, dropped to 2798 on Monday, hit 2826 today, and then dropped to 2806 in the afternoon before closing at 2813. Not much progress here, or elsewhere this week.

We continue to look for the elusive impulse wave. The rally from late-June at SPX 2692 offers our best opportunity to date. Thus far we have four waves: 2743-2699-2848-2798, and a rally to 2826. If the rally can continue, before dropping back to 2798, and hit 2848 or higher we have out first impulse wave of the April uptrend. If the SPX fails to make higher highs, then a drop back to 2743, and lower, will likely follow. Inflection point.

Short term support is at the 2798 and 2780 pivots, with resistance at the 2835 and 2858 pivots. Short term momentum ended the day around neutral. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: uptrend

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

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