Weekend update

REVIEW

The week started at SPX 2620. Volatility continued, but with market trading more balanced the slant this week was to the upside. On Monday the SPX hit 2673, pulled back to 2637 by Tuesday, rallied to 2702 by Wednesday, then continued higher for the rest of the week. For the week the SPX/DOW gained 4.30%, and the NDX/NAZ gained 5.45%. Economic reports for the week were mostly positive. On the downtick: retail sales, the NY FED, plus the budget deficit and weekly jobless claims increased. On the uptick: the CPI/PPI, business inventories, the Philly FED, industrial production, housing starts, building permits, export/import prices and consumer sentiment. Next week’s economic reports will be sparse and include existing homes sales and leading indicators.

LONG TERM: uptrend

Last Friday the Intermediate iv downtrend hit SPX 2533 for a 12% decline in only two weeks. At the low the market set up numerous positive divergences on the hourly/daily timeframes. The market responded by rallying nearly 100 SPX points in a couple of hours on Friday. Then continued that rally throughout this week. Although at a much slower pace. This week’s strong rally triggered a WROC buy signal. This suggests the Int. v uptrend, to new highs, is underway. Historically, more than 50-years, these signals have been 96% accurate.

The Major wave 1, of Primary III, bull market continues to unfold. Intermediate waves i and ii completed in the spring of 2016. Intermediate iii then began to subdivide. Minor waves 1 and 2 completed in the fall of 2016, and Minor waves 3 and 4 ended in the spring of 2017. Minor wave 5, and Int. wave iii, just ended in January 2018. Intermediate wave iv dropped 12% in just two weeks. The largest correction since the C-leg of the Primary II bear market. Keep in mind, price is always more important than time.

MEDIUM TERM: uptrend probably underway

After the technical setups last Friday we noted these types of setups have often accompanied downtrend lows. Especially after the quick, sharp, rally that followed that low on Friday. This week the market continued higher and triggered a WROC signal. Further suggesting Intermediate wave iv ended at SPX 2533. What to expect for Int. v?

That depends on how Int. v unfolds. Our ongoing target all along has been SPX 3000+ in 2 – 4 years. With this bull in its second year SPX 3000+ still remains the target. Historically, if new highs are made quickly the uptrend can make substantially more progress. If new highs are difficult to reach, the uptrend is like to end with just marginal new highs. With the first two uptrends of this bull market lasting only 2 months, let’s give this one at least until April. Medium term support is at the 2731 and 2656 pivots, with resistance at the 2780 and 2798 pivots.

SHORT TERM

The market has rallied 221 SPX points from last Friday’s 2533 low to this Friday’s 2754 high. During the advance there have been many swings of 20-30-40 points making it difficult to count short term. Quantitatively we just see one wave up from the low. This uptrend might end up being a difficult count like the end of the last uptrend.

Let’s see how it unfolds as it has only been one week from the low. Short term support is at the 2731 and 2656 pivots, with resistance at the 2780 and 2798 pivots. Short term momentum declined off a negative divergence.

FOREIGN MARKETS

Asian markets were mostly positive and gained 1.7%.

European markets were mostly positive and gained 2.1%.

The DJ World index gained 4.2%, and the NYSE gained 3.8%.

COMMODITIES

Bonds continue to downtrend and lost 0.5%.

Crude continues to downtrend but gained 4.0%.

Gold remains in an uptrend and gained 3.1%.

The USD remains in a downtrend and lost 2.0%.

NEXT WEEK

Monday: national holiday. Wednesday: existing home sales. Thursday: jobless claims and leading indicators. Best to your weekend and 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 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/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. 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 – day by day 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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Thursday update

SHORT TERM: gap up opening, pullback, then higher highs: DOW +307

Overnight the Asian markets gained 1.3%. Europe opened higher and gained 0.5%. US index futures were higher overnight. At 8:30 jobless claims were reported higher, the PPI higher, the Philly FED higher, plus the NY FED lower and industrial production lower. the market gapped up to SPX 2718 at the open, then pulled back to 2690 by 11am. The market had closed at SPX 2698 yesterday. At 10am the NAHB was reported unchanged. After the low the market rallied throughout the day. Heading into the close the SPX hit 2731 and ended the day there.

For the day the SPX/DOW gained 1.20%, and the NDX/NAZ gained 1.60%. Bonds added 1 tick, Crude rose 90 cents, Gold ticked up $1, and the USD was lower. Medium term support  remains at the 2656 and 2632 pivots, with resistance at the 2731 and 2780 pivots. Tomorrow: options expiration, housing starts, building permits and export/import prices; then consumer sentiment at 10am.

Yesterday the market had a gap down opening (2649) on rising inflation numbers. But quickly recovered to close the gap within the first hour of trading. Then the SPX hit 2702 in the afternoon. Today the market gapped up at the open, hit SPX 2718, then pulled back to 2690 by 11am. After that the market made higher highs in the afternoon and closed at SPX 2731. The market has now rallied nearly 200 SPX points from the recent 2533 downtrend low. Positive divergences setup on many timeframes at the low, and the market continues to act like it should when uptrending again. With the market closing at the 2731 pivot, the next objective would be the 2780 pivot. Short term support is at the 2656 and 2632 pivots, with resistance at the 2731 and 2780 pivots. Short term momentum ended the day with a negative divergence. Best to your Opex trading!

MEDIUM TERM: new uptrend?

LONG TERM: uptrend

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

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Tuesday update

SHORT TERM: gap down opening then reversal, DOW +39

Overnight the Asian markets gained 0.2%. Europe opened lower and lost 0.5%. US index futures were lower overnight and the market opened at SPX 2640. The SPX had closed at 2656 on Monday, after a big rally. In the opening minutes the SPX hit 2637, and then started to reverse and work its way higher. Just before 2pm the SPX hit 2668, dipped to 2659 by 2:30, bounced to 2668 in the last hour of trading, and ended the day at 2663.

For the day the SPX/DOW gained 0.20%, and the NDX/NAZ gained 0.45%. Bonds rose 6 ticks, Crude slipped 10 cents, Gold gained $7, and the USD was lower. Medium term support remains at the 2656 and 2632 pivots, with resistance at the 2731 and 2780 pivots. Tomorrow: the CPI and retail sales at 8:30, then business inventories at 10am.

The market gapped down at the open today as the volatility continued. A few minutes after the open, however, the market started to work its way back up instead of declining further. Short term sentiment changing, or just on pause? In the afternoon the market had closed the gap and turned positive on the day. Recent trading appears to be more balanced with larger lots and narrower daily price ranges. Should the market clear SPX 2673, in the coming days, Int. v may be underway. Short term support is at the 2656 and 2632 pivots, with resistance at the 2731 and 2780 pivots. Short term momentum ended the day just below overbought. Best to your trading!

MEDIUM TERM: downtrend

LONG TERM: uptrend

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

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Weekend update

REVIEW

This historic, volatile, week started at SPX 2762. After a gap down opening on Monday the market rallied back to unchanged in the first half-hour. Then the market resumed last week’s slide hitting SPX 2593 right after the gap down open on Tuesday. A rally back to SPX 2728 by Wednesday preceded more selling on Thursday/Friday when the SPX hit 2533 in early afternoon. Then the market rallied 106 SPX points (4%) in the next two hours before ending the week at 2620. For the week the SPX/DOW lost 5.2%, and the NDX/NAZ lost 5.1%. Economic reports were sparse and mixed. On the downtick: consumer credit, plus the trade deficit rose. On the uptick: ISM services, plus jobless claims declined. Next week’s reports will be highlighted by retail sales, the NY/Philly FED, and industrial production.

LONG TERM: uptrend

While many are talking about a new bear market underway, we just do not see that. The market is certainly acting like a bear market: declining prices with increasing volatility. Yet, the long term OEW wave structure does not support that scenario. It does appear some fund managers were leveraged by selling VIX – buying stocks. It has been a sound position, for the past year or so, with the VIX drifting lower and stocks rising. That is until a week ago Friday, when the market dropped below SPX 2800.

That drop signaled the largest market drop since 2016. After that those spreads started to unwind and the market became extremely volatile with a negative bias. Just look at the recent volatility. Daily range for the two weeks leading into the SPX 2873 all time high: 39, 29, 13, 12, 15, 12, 28, 18 and 26. Daily range for the two weeks since: 19, 19, 26, 23, 49, 125, 108, 46, 105 and 106.

We continue to count seven waves up in the SPX/DOW/NDX/NAZ from the 2016 bear market low. The seven waves up is now followed by an eight wave which is down. This suggests at least one more wave up, to new highs, to complete a Fibonacci nine wave sequence. The count remains unchanged. Int. i and ii ended in the spring of 2016. Minor waves 1 and 2 ended in the fall of 2016, Minor waves 3 and 4 in the spring of 2017, and Minor wave 5 and Int. iii ended in January. Intermediate wave iv is now underway.

MEDIUM TERM: downtrend

Last weekend we suspected, with the large Friday drop, an Int. iv downtrend was underway. That didn’t take long to get confirmed, as the SPX/DOW confirmed first. Then late in the week the NDX/NAZ confirmed. What we didn’t anticipate was the extent of the decline. We were expecting something like 5%, and the SPX has dropped nearly 12%. The recent decline is the largest since mid-2015. With Int. iv underway it is time to start looking for a low. As we are expecting an Int. v to new highs to follow.

Thus far the SPX has dropped 340 points, 11.8%, from the all-time high of 2873. This decline represents a near perfect 38.2% retracement of the entire Int. iii (1992-2873). It has also taken the shape of a simple zigzag: 2593-2728-2533. This alternates with the three trend irregular Int. ii correction in early 2016. At Friday’s SPX 2533 low the SPX displayed: a hourly +div, a daily +div and an oversold weekly RSI. Typically a good setup for a downtrend low. The DOW also had a hourly +div. And joined the NDX/NAZ with daily +div’s and an oversold weekly RSI’s. All four major indices are sitting on downtrend low setups. Medium term support is at 2594 and 2575, with resistance at 2632 and 2656.

SHORT TERM

The selloff for Int. iv is quite clear on the hourly charts. There was a decline to SPX 2593 for wave ‘a’, when the SPX/DOW confirmed downtrends, and the low was setup with a +div. A near 50% retracement rally to SPX 2728 for wave ‘b’. Then a decline to Friday’s SPX 2533 low for wave ‘c’, during which the NDX/NAZ confirmed downtrends. Now that low is displaying a plethora of positive divergences. Best to your trading!

FOREIGN MARKETS

Asian markets were all lower and lost 6.5%.

European markets were all lower as well and lost 4.1%.

The DJ World index lost 5.7%, and the NYSE lost 5.2%.

COMMODITIES

Bonds remain in a downtrend but gained 0.3%.

Crude is in a downtrend and lost 9.6%.

Gold appears to be in a downtrend and lost 1.6%.

The USD is still in a downtrend but gained 1.5%.

NEXT WEEK

Monday: budget deficit at 2pm. Wednesday: the CPI, retail sales, and business inventories. Thursday: jobless claims, NY/Philly FED, industrial production, and the NAHB. Friday: housing starts, building permits, export/import prices, consumer sentiment and options expiration.

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

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Thursday update

SHORT TERM: unbalanced markets continue, DOW -1033

Overnight the Asian markets gained 0.8%. Europe opened lower and lost 2.0%. US index futures were down big early, then recovered to about flat at the open. The SPX opened at 2685, three points above yesterday’s close, then immediately headed lower. At 8:30 weekly jobless claims were reported lower. By 11:30 the market had dropped to SPX 2641, rallied to 2660 by noon, then dropped to 2616 by 1pm. That is nearly 3% decline on absolutely no news, or even rumors. Then after a rally to SPX 2651 by 1:30the market dropped into the close. Ending the day at SPX 2581.

For the day the SPX/DOW lost 3.95%, and the NDX/NAZ lost 4.05%. Bonds gained 4 ticks, Crude fell $1.45, Gold added $2, and the USD was higher. Medium term support drops to the 2575 and 2525 pivots, with resistance at the 2594 and 2632 pivots.

After nine months of an uptrending market, with the SPX climbing from 2329 – 2873, 23%. A late January pullback turned into an avalanche of selling, when the market dropped more than it had at any time during 2017. What followed was an unbalanced market being fed by its own volatility. Thus far the market had dropped 9.7% in just 7 trading days. Rebounded back nearly 50% of that decline in just two days. And now is heading back down and making lower lows: [2873] 2593-2728-2581 so far. Until this market gets some stability the trend remains extremely volatile and down. Short term momentum ended the day with a positive divergence. Best to your trading!

MEDIUM TERM: downtrend

LONG TERM: uptrend

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

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Tuesday update

SHORT TERM: 4th straight gap down opening, DOW +567

Overnight the Asian markets lost 3.8%. Europe opened lower and lost 2.0%. US index futures were sharply lower overnight, in volatile trade, and the market gapped down at the open for the low of the day at SPX 2593. The SPX had closed at 2649 yesterday, after dropping 113 SPX points on Monday. The market then started to rally and hit SPX 2682 in only a 1/2 hours time. Quite a volatile market. After that it dropped to SPX 2620 by 10:30, hit 2669 by 12:30, then dropped to 2628 by 2:30. Another rally followed to SPX 2701 by 3:30. Then the market backed off to SPX 2695 at the close. This market is moving in one hour, what normally takes one week.

For the day the SPX/DOW gained 2.05% and the NDX/NAZ gained 2.65%. Bonds were flat, Crude dropped 70 cents, Gold slid $13, and the USD was higher. Medium term support is at the 2656 and 2632 pivots, with resistance at the 2731 and 2780 pivots. Tomorrow: consumer credit at 3pm.

Yesterday market volatility went into overdrive, as the DOW traded in a 1600 point range. Today the range was a bit less than 1200 points. Both days were more than the entire range of the previous week. This market is sometimes moving about 3% in one hour. This is insane activity, especially with hardly any fundamental news to drive it. Nevertheless, it only took one day after the weekend update for the SPX/DOW to confirm an Int. iv downtrend. Normally the market is close to a bottom when that occurs. While 4th waves have been fairly mild since 2016. This one has been quite violent. This is normally sign that the next run to new highs will end the bull market. In example: 1987, 2007 and 2014. For those trading this market, you are a better trader than most. Good luck!

MEDIUM TERM: downtrend

LONG TERM: uptrend

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

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