weekend update

REVIEW

The week started at SPX 2139. The market rallied, after a gap up opening, to SPX 2154 on Monday. Then after the opening gap was closed on Monday the market finished unchanged. This sequence continued on Tuesday: gap up opening- close gap. On Wednesday another gap up opening-close gap sequence occurred, but during the FOMC statement/press conference the market rallied. The rallied continued to SPX 2180 on Thursday after another gap up opening, then pulled back to 2164 on Friday. For the week the SPX/DOW gained 1.4%, and the NDX/NAZ gained 1.4%. Economic reports for the week were sparse and mostly negative. On the downtick: housing starts, building permits, existing home sales, leading indicators and the Q3 GDP estimate. On the uptick: the NAHB, FHFA and weekly jobless claims improved. Next week’s reports will be highlighted by Q2 GDP, the PCE and the Chicago PMI. Best to your week!

LONG TERM: uptrend

Have recently come to realize there are quite a few EW counts floating around the blogosphere to define the advance from the SPX 1810 February low. We have been tracking four over the past few months, and have recently whittled it down to one with two alternates. The main count is a new bull market Primary III underway. The two alternates are basically two different views of the same irregular Primary B count. The count we eliminated is probably the most popular EW count: a Primary V underway. This count also has a few variables in the EW blogosphere. It is an interesting point in time for the stock market heading into a presidential election. New presidents seem to come along every eight years these days, instead of the customary four years. Bull markets also appear to last longer these days, than they were in the past. Connection?

Our quantitative OEW analysis suggests the bull market from 2009 ended in 2015, and it was the third longest bull market in the past 100 years. Only the 1921-1929 and 1987-2000 bull markets were longer. The bear market that followed, May 2015 – February 2016, was a bit short in time and percentage of decline. There are, however, several other quantified bear markets that were similar. One that immediately comes to mind took only six months while the market lost 17% of its value in 1984.

spxweekly

This week we updated the SPX weekly chart to display the preferred count, and moved the alternate count(s) to the NYSE daily charts. Since the NYSE has a similar 2016 pattern as the SPX, displaying the counts there appeared to be a good fit. Counting the February low as the end of the Primary wave II bear market, we have a Primary III bull market underway. The Primary I bull market lasted from 2009-2015. Since Primary III should last a number of years, Primary I was 6 years, we started off with labeling the first uptrend (1810-2111) as Intermediate wave i of Major wave 1. Then after an irregular Intermediate wave ii (2026-2121-1992) we have a shorter uptrend to 2194, and have labeled that Minor 1 of Intermediate wave iii. At this point it is much too early to speculate whether or not the next bear market will be at the end of Primary III, or the end of just Major wave 1 of Primary III. However it unfolds, we are currently expecting SPX 3000+ in the next 2 to 4 years.

MEDIUM TERM: uptrend an 80%+ probability

The last uptrend, which is labeled Minor 1, was five waves from SPX 1992-2194 (or 2188). From SPX 2194 a leading diagonal A to 2157, a B to 2188, then an ending diagonal C to 2120 could be counted. From SPX 2188 a simple, and short, A-B-C (2119-2163-2120) can be counted. Either way it appears the downtrend ended at SPX 2119/2120, as the NDX/NAZ have already confirmed new uptrends and have made new all time highs. Also, based upon a recent finding by one of our members Patrick M., there is a 80%+ probability that an uptrend is underway.

spxdaily

At the downtrend low the technicals, daily and weekly RSI/MACD, looked similar to the recent downtrend lows during this bull market. The daily RSI was quite oversold, and the MACD was negative. The weekly RSI was near oversold, just like the Br-exit downtrend low. The advance from the SPX 2119/2120 low has been a bit odd. There was first a rally to SPX 2151, then a pullback to 2131. After that there were three gap up openings that were completely closed before the latest rally from SPX 2140-2180. Will cover what this could mean in wave terms below. Medium term support is at the 2131 and 2116 pivots, with resistance at the 2177 and 2212 pivots.

SHORT TERM

After the apparent downtrend low at SPX 2120 the market had several overlapping rallies. The last three of the four rallies were created by gap up openings, that were completely sold off. Clearly there was a lot of positioning ahead of the FED’s FOMC statement on Wednesday.

spxhourly

Thus far we have the following sequence from SPX 2120: 2151-2131-2154-2136-2151-2139-2152-2140, then 2180-2164. What this suggests is that there are a series of nested 1-2’s ending at SPX 2140. Then either the third wave, or part of, ending at SPX 2180. We will track this sequence to see how it unfolds in the coming weeks. For now, the current pullback could dip to around SPX 2160 before resuming the rally. Pullbacks of 15-20 points were fairly common during the last uptrend. Short term support is the at 2131 and 2116 pivots, with resistance at the 2177 pivot and SPX 2194. Short term momentum ended the week oversold. Best to your trading!

FOREIGN MARKETS

Asian markets were all higher on the week gaining 1.6%.

European markets were also all higher gaining 2.7%.

The Commodity equity group were also higher gaining 3.1%.

The DJ World index gained 2.2%.

COMMODITIES

Bonds continue to downtrend but ended the week flat.

Crude is trying to uptrend and gained 2.0%.

Gold is also trying to uptrend and gained 2.4%.

The USD is still in a downtrend and lost 0.7%.

NEXT WEEK

Monday: new home sales at 10am. Tuesday: Case-Shiller and consumer confidence. Wednesday: durable goods orders. Thursday: weekly jobless claims, Q2 GDP (est. +1.3%), and pending home sales. Friday: personal income/spending, the PCE, Chicago PMI and consumer sentiment. It is also FED speak week. Monday: governor Tarullo at 11:45. Tuesday: vice chair Fischer. Wednesday: testimony from chair Yellen. Thursday: governor Powell and chair Yellen both have speeches. Could be another day traders week. Best to your weekend and week!

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

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Friday update

SHORT TERM: pullback ends choppy week, DOW -131

Overnight the Asian markets lost 0.4%. Europe opened lower and lost 0.3%. US index futures were lower overnight, and the market opened 5 points below yesterday’s SPX 2177 close. The market continued to decline throughout the day, with only 3 point bounces, until it hit SPX 2164 at 2pm. Then after a bounce to SPX 2171 by 3:30 the market pulled back again to end the week at 2165.

For the day the SPX/DOW lost 0.65%, and the NDX/NAZ lost 0.65%. Bonds gained 4 ticks, Crude dropped $1.60, Gold added $1, and the USD was higher. Medium term support drops to the 2131 and 2116 pivots, with resistance at the 2177 and 2212 pivots.

After yesterday’s gap up rally indicators left a short term negative divergence at the close. The market opened 5 points below yesterday’s close, declined to SPX 2164, hit short term oversold, and then bounced around into the close. Looks like a fairly normal pullback after a 40 point rally. Complete review, long, medium and short term in the weekend update. Best to your weekend!

MEDIUM TERM: uptrend probably underway

LONG TERM: uptrend

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

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Thursday update

SHORT TERM: fourth gap up opening, DOW +99

Overnight the Asian markets gained 0.5%. Europe opened higher and gained 1.9%. US index futures were higher overnight as well. At 8:30 weekly jobless claims were reported lower: 252K v 260K, then at 9am the FHFA was reported higher: 0.5% v 0.2%. The market gapped up at the open hitting SPX 2175. The market had closed at SPX 2163 yesterday. At 10am leading indicators were reported lower: -0.2% v 0.4%, and existing home sales were lower: 5.33M v 5.39M. At 10:30 the SPX hit 2180, and then started to pullback. The pullback lasted until 2:30 when the SPX hit 2172. Then the SPX hit 2180 again just before a 2177 close.

For the day the SPX/DOW gained 0.60%, and the NDX/NAZ gained 0.80%. Bonds gained 10 ticks, Crude rose 75 cents, Gold added $3, and the USD was lower. Medium term support rises to the 2177 and 2131 pivots, with resistance at the 2212 and 2252 pivots.

The market gapped up at the open for the fourth day in a row this week. The first three were completely sold off by early afternoon. This one was not. With a post-FOMC rally underway, the NDX/NAZ have already confirmed new uptrends. Would expect the SPX/DOW to do the same shortly. Thus far from last week’s SPX 2120 low there are four rallies that all had partial retracements, with the last retracement ending at SPX 2140. This rally began at that level and has already hit SPX 2180. It appears we have four nested 1-2’s and a 3rd wave underway. Quite an unusual start to an uptrend. Short term support is at the 2177 and 2131 pivots, with resistance at SPX 2194 and the 2212 pivot. Short term momentum was extremely overbought at the high, and displays a slight negative divergence at the close. Best to your trading!

MEDIUM TERM: uptrend probably underway

LONG TERM: uptrend

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

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Wednesday update

SHORT TERM: gap up, fade, then rally, DOW +164

Overnight the Asian markets gained 0.8%. Europe opened higher and gained 0.3%. US index futures were again higher overnight, and the market gapped up to SPX 2149 at the open. The SPX had closed at 2140 yesterday. At 10am the SPX hit 2152 and started to pullback. At noon the SPX closed the gap and hit 2140. Then the market started to rise ahead of the FOMC statements. At 2pm the FED released: http://www.federalreserve.gov/newsevents/press/monetary/20160921a.htm, and http://www.federalreserve.gov/newsevents/press/monetary/20160921b.htm. A few minutes after the statements the SPX hit 2154. Then it pulled back to SPX 2144 by 2:30. After that the market rallied to 2165 just before a 2163 close.

For the day the SPX/DOW gained 1.0%, and the NDX/NAZ gained 1.0%. Bonds gained 6 ticks, Crude rose $1.55, Gold rallied $19, and the USD was lower. Medium term support remains at the 2131 and 2116 pivots, with resistance at the 2177 and 2212 pivots. Tomorrow: weekly jobless claims at 8:30, the FHFA at 9am, then existing home sales at 10am.

The market gapped up at the open for the third day in a row. And just like the previous two days, it rallied until 10am, then sold off the entire gap up opening. After that there was the usual FOMC volatility on the wildest day of the week. From last week’s SPX 2120 low we now see 8 overlapping waves and a rally above them all after today’s SPX 2140 low. Generally all this activity still looks corrective, however we still can not rule out a nesting of 1-2’s. Which would be an odd beginning to an uptrend. Short term support is at the 2131 and 2116 pivots, with resistance now at the 2177 pivot and SPX 2194. Short term momentum ended the day quite overbought. Trade what is in front of you!

MEDIUM TERM: uptrend potential back on the table

LONG TERM: uptrend

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

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Tuesday update

SHORT TERM: another gap up opening sold, DOW +10

Overnight the Asian markets lost 0.2%. Europe opened higher and gained 0.1%. US index futures were higher overnight. At 8:30 building permits were reported lower: 1139K v 1152K, and housing starts were reported lower: 1142M v 1211M. The market gapped up at the open to SPX 2148, then ticked up to 2151 by 10am. The SPX had closed at 2139 yesterday. Then just like yesterday the market started to pullback after the first half hour of trading. At 1pm the SPX had closed the opening gap when going unchanged at 2139. Then after a rally to SPX 2146 by 3pm the market declined to close at 2140.

For the day the SPX/DOW gained 0.05%, and the NDX/NAZ gained 0.15%. Bonds rose 2 ticks, Crude gained 25 cents, Gold added $1, and the USD was higher. Medium term support remains at the 2131 and 2116 pivots, with resistance at the 2177 and 2212 pivots. Tomorrow: BOJ, then the FOMC at 2pm.

The market gapped up at the open like Monday, rallied to 10am like Monday, sold off to close the gap by early afternoon like Monday, bounced to 3pm like Monday, then closed almost unchanged again. We now can count six overlapping waves from the recent SPX 2120 low. This action does not look impulsive, it looks corrective and another leg down may be required to end this downtrend. Short term support is at the 2131 and 2116 pivots, with resistance at SPX 2151/2154 and the 2177 pivot. Short term momentum remained around neutral for most of the day. Trade what is in front of you during the normally volatile FOMC day!

MEDIUM TERM: downtrend still underway?

LONG TERM: uptrend

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

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Monday update

SHORT TERM: gap up opening sold, DOW -4

Overnight the Asian markets gained 0.4%. Europe opened higher and gained 1.3%. US index futures were higher overnight, and the SPX gapped up to 2147 at then open. The SPX had closed at 2139 on Friday. At 10am the SPX hit 2154 and began to pullback. Also at 10am the NAHB was reported higher: 65 v 59. The pullback continued into the afternoon with small bounces along the way. At 1:30 the SPX hit 2136, completely retracing the gap up opening rally and turning a few points negative. The market then rallied to SPX 2146 by 3pm, only to pullback and end the day unchanged at 2139.

For the day the SPX/DOW ended flat, and the NDX/NAZ lost 0.30%. Bonds lost 1 tick, Crude rose 15 cents, Gold added $3, and the USD was lower. Medium term support remains at the 2131 and 2116 pivots, with resistance at the 2177 and 2212 pivots. Tomorrow: housing starts and building permits at 8:30.

The market gapped up at the open for the first time since early this month. That gap up opening was also sold off, but eventually led to slightly higher prices a few days later. The rally took the SPX to 2154, the highest level since a week ago Monday. Then the market closed the opening gap and turned negative, hitting SPX 2136. From Wednesday’s SPX 2120 low we can now count four overlapping waves: 2151-2131-2154-2136. This could be a nesting of waves, or more corrective activity. Important support remains at the 2131 pivot range. Short term support is at the 2131 and 2116 pivots, with resistance at the 2177 pivot and SPX 2194. Short term momentum was quite overbought during today’s rally then ended at neutral. Trade what is in front you!

MEDIUM TERM: uptrend underway?

LONG TERM: uptrend

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

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weekend update

REVIEW

The week started with the SPX at 2128. After a gap down opening Monday the SPX hit 2119 then rallied to 2163 just before the close. On Tuesday another gap down opening took the SPX to 2120, then after a rally to 2141 on Wednesday the SPX hit 2120 again. On Thursday the SPX rallied to 2151, then gapped down again on Friday to 2131 before ending the week at 2139. For the week the SPX/DOW gained 0.35%, and the NDX/NAZ gained 2.60%. Three gap down openings and the market ended positive on the week. Economic reports for the week were predominantly negative. On the downtick: export prices, retail sales, NY FED, industrial production, capacity utilization, the Q3 GDP estimate, plus weekly jobless claims and the budget deficit increased. On the uptick: the Philly FED and the CPI. Next week’s reports will be highlighted by the FOMC and housing.

LONG TERM: uptrend

Markets worldwide are now seven months into the reversal off the February lows. The four major US indices have made all time new highs, as has the Wilshire 5000 an index of just US operating companies. At its recent peak the NYSE is still 3.1% below its all time high, and the DJ World index is 3.8% below. Just this week alone the four major US indices had gains ranging from 0.35% to 2.60%, while the NYSE lost 0.75% and the DJ World index lost 0.95%. It is now quite clear the NYSE composite is more of an international index, than a US index.

In OEW terms this is quite important, as the NYSE is the only US based index, of the six noted above, that quantifies with a potential Primary V underway. Suggesting an ongoing bull market from the year 2009. The other five indices, (SPX, DOW, NDX, NAZ, W5K), all quantify a new Primary III bull market, or alternately a Primary B, is underway. There is a significant difference between a Primary V scenario, and a Primary III scenario.

Under the Primary V scenario all the NYSE is required to do is to make all time new highs. Then a significant bear market would follow retracing a major portion of the entire advance from 2009. Under the Primary III scenario the bull market from the year 2009 ended in 2015, and the retracement bear market ended in 2016. This suggests a new bull market is underway that should last anywhere from two to four years, with the SPX possibly reaching 3000+. The alternate Primary B scenario is nowhere near as favorable. But will be eliminated when, and if, the SPX exceeds 2336.

As a result of this observation we will still be tracking the P5 count on the NYSE charts, but are dropping it from consideration as a viable US stock market count. The two remaining scenarios, we have been noting in recent months, will be the main and alternate counts. The Primary III scenario is now the main count, and the Primary B the alternate. The charts will now display the SPX, DOW, then NYSE, with the NAZ and NDX remaining on the second page. The DOW count displays the main P3 scenario, as well as the SPX hourly/daily charts. The alternate Primary B scenario will be displayed only on the SPX weekly chart.

MEDIUM TERM: uptrend underway?

The uptrend from SPX 1992-2194 topped in price in mid-August. But we counted that high as part of a one month expanding fifth wave diagonal triangle, which ended at SPX 2188 in early-September. Confirming that pattern the market dropped to SPX 2119 in only three days. When we count that three day decline as a zigzag, it is followed by a one day rally to SPX 2163, then a two day decline that formed a flat: 2120-2141-2120.

spxdaily

At that point we considered the downtrend potentially complete with a double three pattern. Supporting this possibility is an oversold weekly RSI similar to the last downtrend, an extremely oversold daily RSI, and an extremely oversold hourly RSI followed by a positive divergence at the SPX 2120 lows. If correct this would have been the smallest downtrend decline, in percentage terms, in the past 10 years. Which would suggest relative strength going forward. Medium term support is at the 2131 and 2116 pivots, with resistance at the 2177 and 2212 pivots.

SHORT TERM

As you probably noticed by now the daily chart above, and the hourly chart below have been updated with the main count we have been carrying on the DOW charts. Remember, this is the main count, the Primary B scenario is an alternate count, and the Primary V scenario has been left to the NYSE alone. And is not a US stock index count.

spxhourly

After the SPX 2120 low the market rallied to 2151, then pulled back to 2131. This could be counted as the first two waves off the downtrend low. As long as the OEW 2131 pivot range (2124-2138) holds for support a new uptrend should be underway. Any break below this range would obviously challenge the OEW 2116 pivot range, and a reassessment would be required. Short term support is at the 2131 and 2116 pivots, with resistance at the 2177 pivot and SPX 2194. Short term momentum ended the week at neutral. Best to your trading!

FOREIGN MARKETS

Asian markets were all lower for a net loss of 1.8%.

European markets were all lower for a net loss of 3.0%.

The Commodity group were all lower too for a net loss of 1.9%.

The DJ World index lost 0.95%.

COMMODITIES

Bonds are still downtrending but gained 0.1%.

Crude’s downtrend continues as it lost 6.2%.

Gold is still in a downtrend and lost 1.8%.

The USD may be in an uptrend and gained 0.8%.

NEXT WEEK

Monday: NAHB at 10am. Tuesday: housing starts and building permits. Wednesday: FOMC rate decision. Thursday: weekly jobless claims, FHFA, and existing home sales. Best to your weekend and week!

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

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