Monday update

SHORT TERM: flat open choppy day, DOW +29

Overnight the Asian markets lost 0.3%. Europe opened lower and lost 0.5%. US index futures were relatively unchanged, and the market opened unchanged at SPX 2426. Shortly after the open the market started to pullback. By 10:30 it had dropped below’s Friday’s low and hit SPX 2417. After that, with a positive divergence in tow, the market rallied to SPX 2431 by 12:30. A dip to SPX 2423 followed by 3pm. Then the market bounced to close at SPX 2428

For the day the SPX/DOW gained 0.10%, and the NDX/NAZ lost 0.05%. Bonds gained 3 ticks, Crude dropped $1.05, Gold rose $4, and the USD was lower. Medium term support remains at the 2411 and 2385 pivots, with resistance at the 2428 and 2444 pivots.

The market opened flat today, dropped to SPX 2417, rallied to 2431, then pulled back into the close. Not much of a rally, but not a whole lot of selling either. We fined tuned the waves during the Minor A decline (2454-2408) and found a corrective seven. Thus far, we are counting just three waves from the Minor B high at SPX 2491: 2438-2475-2417. Usually the C wave has the same number of waves in the A wave during these types of irregular complex corrections. Let’s see how this one unfolds. Short term support is at the 2411 and 2385 pivots, with resistance at the 2428 and 2444 pivots. Short term momentum rose to neutral after this morning’s positive divergence. Best to your trading!

MEDIUM TERM: downtrend probably underway

LONG TERM: uptrend

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

Posted in Updates | Tagged , , , | 52 Comments

Bull market headwinds

With the market only 2.6% off the all-time highs various indices, indicators, and the OEW count itself is suggesting the bull market is losing upside momentum. The most troubling of the indices is the Transports.

With the recent downtrend confirmation in the Transports we can now count a completed nine waves up from the 2016 low. This is simply five waves up with a subdividing third wave. Over the past 50-years whenever the Transports have topped a significant correction in the SPX has eventually followed. One was a minor 10% (1994), two others were a bit larger 15% (1984 and 2016), but most have eventually led to bear markets in the SPX. Typically, the lead time between a Transport top and a SPX top is several months. In 2015 the lead time was six months.

The next troubling index is the NYSE. It recently confirmed a downtrend, suggesting it has completed seven waves up from the 2016 low, with also a subdividing third wave. This implies, after this downtrend concludes it too will complete nine waves up during its next uptrend to new highs. Notice, both of these counts support the popular long-term Primary V scenario.

The DOW is currently in a similar position for this bull market, but it has yet to confirm a medium-term downtrend. When it does it will have completed seven waves up from the 2016 low, like the NYSE, and will also require one more uptrend to new highs to complete the nine-wave pattern.

Elsewhere the DJ World index looks similar to the DOW, and the DAX looks similar to the NYSE.

On the technical side. The SPX made a momentum peak in Q1 2017 at 2400, and upside momentum has been waning during the last 90-point rise. You can see the peak in the weekly RSI and MACD. Declining momentum can trigger a large selloff like 2011, or wane for months and months on end. It is a warning. When added to near completed five wave patterns it is its most effective warning, i.e. 2011.

Normally when these wave patterns begin to complete there are some fundamental factors at work. In 2007 the CDO’s were unwinding. In 2011 the European debt crisis. In 2015 the end of QE, and the first rate increase. In 2017, the stalled GOP/Trump economic agenda? When one adds the fact that the economy has not experienced a recession since 2009, one has to think one is long overdue. Especially with the FED planning on gradually reducing their balance sheet soon. The gradual balance sheet increase gave us the 2009-2015 bull market. Will the unwinding of that balance sheet give us a recession and a bear market? The market has risen 38% since the 2016 low, but it looks like it is time to get somewhat cautious in the weeks and months ahead. Best to your investing!

 

Posted in special report | Tagged , , , | 177 Comments

Weekend update

REVIEW

The week started out at SPX 2441. After a gap up opening on Monday the market rallied to SPX 2468. Then for the next two days it struggled to add to that gain, even though it opened higher both days. After hitting SPX 2475 on Wednesday the market started to pullback. Thursday’s gap down opening accelerated the decline into a low of SPX 2421 on Friday. The market then rallied intraday to SPX 2440, but then pulled back to close at SPX 2426. For the week the SPX/DOW lost 0.75%, and the NDX/NAZ lost 0.65%. Economic reports for the week were major positive. On the downtick: housing starts, building permits, and the Philly FED. On the uptick: retail sales, import prices, the NY FED, the NAHB, business inventories, industrial production, leading indicators, consumer sentiment, plus jobless claims improved. A quiet week ahead with new/existing home sales, durable goods and Jackson Hole highlighting the week.

LONG TERM: uptrend

The Major wave 1 bull market, from February 2016, continues. This week we update the weekly chart to display our preferred count. Nothing was changed between February 2016 and April 2017. We still have an Int. wave i, with an irregular zigzag Int. ii in the spring of 2016. Then Minor waves 1 and 2, of Int. iii, in the fall of 2016. And, Minor waves 3 and 4 in the spring of 2017.

At the June SPX 2454 high we are now fairly certain it was the end of Int. wave iii. Then a small 2% correction to SPX 2406/2408 in July, for Minor wave A of another irregular Intermediate wave correction. The recent August high at SPX 2491 appears to be all of Minor wave B. And, Minor wave C should now be underway to end Intermediate wave iv. Since Int. ii was an irregular zigzag, Int. iv should be an irregular flat. There is an outside chance at it being a triangle. But we will expect the most obvious first. When Int. iv ends, Int. v will take the bull market to all-time new highs.

MEDIUM TERM: downtrend probably underway

The daily chart displays the preferred count as noted above. An int. iii high at SPX 2454. Then a Minor A at SPX 2406/2408, a Minor B at SPX 2491, and a Minor C underway. Should this correction end as a flat, as expected, it should find support right around SPX 2400. It took the market three months, March-May, to finally break through that level. Then after doing so, it retested that level in June/July before heading to the all-time high. With Minor A around SPX 2400 it looks like a logical support level for Minor C in the days/weeks ahead.

Technically, with Friday’s lower lows across the board, the SPX/NDX/NAZ are all displaying positive daily divergences. Usually this is good for a decent rally. We had a similar setup during the ‘a’ wave of the Minor 4 correction in March/April. That positive divergence was small, but good for a significant bounce. The daily MACD has turned negative, which typically occurs during corrections. There could be another choppy week ahead. Medium term support is at the 2411 and 2385 pivots, with resistance at the 2428 and 2444 pivots.

SHORT TERM

The hourly chart illustrates our alternate count, since we still have not been able to totally eliminate this subdivision count. We will not spend much time on it as it is an alternate. What is more interesting is the symmetry for this irregular Int. wave iv. Minor A declined 48 points: 2454-2406. Minor B stretched a bit beyond the 1.618 relationship, with a false breakout, as it rallied 85 points: 2406-2491.

The first decline from the all-time high was 53 points: 2491-2438. Then after a 37 point counter rally: 2438-2475, the market declined 54 points into Friday’s low: 2475-2421. Notice Minor A, and the two declines of Minor C were all about the same size: 48, 53, and 54 points. These last two declines both occurred in a matter of just two days. If you review the NDX/NAZ chart you will observe several steep 2-day declines occurring nearly every month. This appears to be a characteristic of this bull market: quick shake outs.

Should the market continue Friday’s rebound I would expect it to run out of upside momentum in the 2444 – 2456 pivot area. This appears to be the fulcrum for positive/negative trader sentiment. This would also represent another 30+ point rally. Then another 50 point decline could setup the SPX for the downtrend low around 2400.

FOREIGN MARKETS

Despite the negative activity in the US this week, only three of the foreign markets we track were actually negative.

Asian markets were mostly higher for a net gain of 0.4%.

European markets were mostly higher for a gain of 1.0%.

The DJ World index lost 0.2%, and the NYSE lost 0.5%.

COMMODITIES

Bonds continue to uptrend but ended the week flat.

Crude is still in an uptrend but lost 0.3% on the week.

Gold has an uptrend to but lost 0.2%.

The USD remain in a downtrend but gained 0.4%.

NEXT WEEK

Wednesday: new home sales. Thursday: weekly jobless claims and existing home sales. Friday: durable goods orders and a Jackson Hole speech from FED chair Yellen.

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

Posted in weekend update | Tagged , , , | 61 Comments

Friday update

SHORT TERM: lower open then choppy day, DOW -76

Overnight the Asian markets lost 1.0%. Europe opened lower and lost 0.6%. US index futures were relatively flat overnight, and the market opened 3-points lower than yesterday’s SPX 2430 close. At 10am consumer sentiment was reported higher, the SPX hit 2421, and the market started to rally. The rally topped out at SPX 2440 by 12:30. Then the market drifted down for the rest of the day to close at SPX 2426.

For the day the SPX/DOW lost 0.25%, and the NDX/NAZ lost 0.10%. Bonds gained 1 tick, Crude rallied $1.55, Gold slipped $2, and the USD was lower. Medium term support drops to the 2411 and 2385 pivots, with resistance at the 2428 and 2444 pivots. This week the Q3 GDP estimate was reported at 3.8%.

The market opened slightly lower today, hit SPX 2421, then rallied to SPX 2440. After that the market eased back to end the day about where it opened. While the market does look like it is in a profit taking correction mode, the decline thus far has been quite orderly and symmetrical. Plus, several of the majors are displaying positive daily RSI divergences. Interesting market. More on this in the weekend update. Best to your weekend!

MEDIUM TERM: downtrend probably underway

LONG TERM: uptrend

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

Posted in Updates | Tagged , , , | 35 Comments

Thursday update

SHORT TERM: gap down opening and drop, DOW -274

Overnight the Asian markets lost 0.1%. Europe opened lower and lost 0.5%. US index futures were lower overnight as well. At 8:30 jobless claims were reported lower, and the Philly FED lower. At 9:15 industrial production was reported higher and capacity utilization flat. The market gapped down to SPX 2460 at the open, and then tried to rebound. The SPX had closed at 2468 yesterday. In the opening minutes the SPX bounced back to 2465, then headed lower. At 10am leading indicators were reported higher. Around 10:30 the SPX hit 2451, bounced to 2459 by 11am, and then headed even lower. The selling continued throughout the day, and the SPX closed at the 2430 low.

For the day the SPX/DOW lost 1.40%, and the NDX/NAZ lost 2.00%. Bonds gained 9 ticks, Crude added 25 cents, Gold rose $6, and the USD was higher. Medium term support drops to the 2428 and 2411 pivots, with resistance at the 2444 and 2456 pivots. Tomorrow: consumer sentiment and Friday’s options expiration.

The market gapped down at the open today for the first time since last Wednesday, and the third time in the past 7-trading days. This gap down sequence started the day after the all-time high at SPX 2491, 8-trading days ago. Last week’s concerns were N. Korea, this week’s protesting CEO’s. Last Wednesday, the SPX lost the 2456/2444 pivots both in the same day. Monday’s gap up opening jumped over both to start the week. Today’s gap down lost those same two pivots again. They definitely appear to be the pendulum of positive/negative trader sentiment. The potential for a slight extension, DOW to higher high, broke down today when the SPX opened below Tuesday’s low. Then when Monday’s low was lost the market continued lower and closed that upside gap and more. It does appear the worse-case scenario posted this past weekend is underway. An Int. iv correction in a bull market. Short term support is at the 2428 and 2411 pivots, with resistance at the 2444 and 2456 pivots. Short term momentum is about as oversold as it ever gets. Best to your Friday Opex trading!

MEDIUM TERM: downtrend probably be underway

LONG TERM: uptrend

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

Posted in Updates | Tagged , , , | 185 Comments

Wednesday update

SHORT TERM: higher open then choppy day, DOW +26

Overnight the Asian markets gained 0.6%. Europe opened higher and gained 0.7%. US index futures were higher overnight, and at 8:30 building permits and housing starts were both reported lower. The market opened at SPX 2471 and continued higher. The SPX had closed at 2465 yesterday. By 12:30 the market had worked its way to SPX 2475, and then began to  pullback. At 2pm the FED released its FOMC minutes: https://www.federalreserve.gov/newsevents/pressreleases/monetary20170816a.htm. The pullback hit a low at SPX 2464 by 2:30, tried to rebound, and closed at 2468.

For the day the SPX/DOW gained 0.10%, and the NDX/NAZ gained 0.15%. Bonds gained 9 ticks, Crude slid 80 cents, Gold rallied $9, and the USD was lower. Medium term support remains at the 2456 and 2444 pivots, with resistance at the 2479 and 2525 pivots. Tomorrow: jobless claims and the Philly FED at 8:30, industrial production at 9:15, and leading indicators at 10am.

Since Monday’s “NK reconsidering options” gap up opening the market has failed to make much upside progress on Tuesday/Wednesday. Even though the market opened at higher highs both days. Sound familiar? The DOW, however, has already risen to within 0.5% of its all-time high. It does appear when the DOW does make a new high this market will need to make a make/break decision. For now we still have three waves down from 2491: 2462-2474-2438, and one wave up: 2475. Should get interesting with option expiration Thursday/Friday. Short term support remains at the 2456 and 2444 pivots, with resistance at the 2479 and 2525 pivots. Short term momentum ended the day below neutral after a negative divergence. Best to your Opex trading!

MEDIUM TERM: uptrend

LONG TERM: uptrend

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

Posted in Updates | Tagged , , , | 157 Comments

Tuesday update

SHORT TERM: higher open then pullback, DOW +5

Overnight the Asian markets gained 0.3%. Europe opened lower but gained 0.3%. US index futures were higher overnight. At 8:30 retail sales, import prices and the NY FED were all reported higher. The market opened three points above yesterday’s SPX 2466 close, and then began to pullback. At 10am business inventories and the NAHB were both reported higher. By 1pm the SPX had reached 2462, and then tried to rally. In the last hour of trading the SPX hit 2469, then pulled back to close at 2465.

For the day the SPX/DOW were mixed, and the NDX/NAZ lost 0.05%. Bonds lost 13 ticks, Crude was flat, Gold dropped $9, and the USD was higher. Medium term support remains at the 2456 and 2444 pivots, with resistance at the 2479 and 2525 pivots. Tomorrow: housing starts, building permits and the FOMC minutes.

The market opened today one-point above yesterday’s high at SPX 2469, then immediately began to pullback. After touching SPX 2462 at 10:30, and then again at 1pm, the market started to rally. The market rallied back to the highs of the day in the last half hour of trading. Then pulled back to end the day at SPX 2465. We still have only one wave up: SPX 2438 to 2469. Short term support remains at the 2456 and 2444 pivots, with resistance at the 2479 and 2525 pivots. Short term momentum ended the day above neutral. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: uptrend

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

Posted in Updates | Tagged , , , | 132 Comments