WEEK in REVIEW:
For the first three days of the week the routine was: at the open, the market gapped up from overnight buying created by the rallies going on in europa and the asia markets. And then, after a half hour or so, it was sold off. On wednesday the NQ futures completed a quadruple bottom while the ES futures made a new low for the correction. The market started to improve from there on out. Several secondary indices started making new highs: the TRAN/RUSS/SOX, as did the foreign markets. Bonds sold off, widening the yield curve a bit. Things started to look like the market was readying to rally. And it did! Thursday the four main indices rallied nearly 1%, even after withstanding the usual early selling pressure. Friday, displayed a gap up opening that could only be sold off for 5 minutes before the market rallied strongly. New highs again today in the TRAN/RUS/SOX/NYA and our european markets DAZ/FTSE. And, the elusive impulse wave in the futures pits appeared in the ES.
LONG TERM: BULLISH
The stock markets continue to display impulse waves since the October 2002 low. The OEW count suggests we are in minor wave 3, of intermediate wave iii, of major wave 3 of primary wave V. See chart link for all the counts on all indices. Primary wave V has been subdividing since the August 2004 low, and major wave 3 has been subdividing since the April 2005 low. Expecting the bull market to last, at least, throughout the year. As there are several more waves that need to complete before primary wave V ends. As the market moves higher, and we get closer to its conclusion, it should give us a fairly good idea as to what level to expect for a top. Right now, a NAZ level of 2900 still seems obtainable. This represents only a 45% retracement of the decline of the Supercycle bear market, and that is a fairly typical retracement level.
INTERMEDIATE TERM: NEUTRAL
Maintaining a neutral rating here only for the next few days, or until the market displays its first full impulse wave up from the recent lows. The intermediate term trend, however, continues to be UP from the December lows. That has not been violated even with nine days of selling, after the seven day rally to start the New Year. Several of the foreign markets, as well as a few of our own indices, are already displaying an extension of their third waves. It appears our four main indices: NAZ/NDX/SPX/DOW are on the verge of doing the same. This would create the explosive "three of three": the exact middle and strongest part of an impulse wave. If it doesn’t occur now on this advance, it will certainly occur on the next one. It’s just a matter of time and patience.
With todays strong advance all four indices moved above their respective 8dma/34dma’s a positive sign for the next few weeks. See chart link. There are two nice strong waves up in the NAZ/DOW from their lows, and only this two day rally displayed by the NDX/SPX. Thus far, all but the NDX appear to be displaying impulse waves on the hourly charts. The NDX will probably join in soon, but the constant selling in the NQ pit has dampened many rallies. Today was the first exception! The EW pivots continue to provide support and resistance as the market moves higher. Posted these numbers thursday: NAZ 2251, 2278 and 2333; NDX 1671, 1690 and 1717; SPX 1258, 1273 and 1291. Now that the market has moved higher we can notch up the pivots again: NAZ 2278, 2300 and 2333; NDX 1690, 1717 and 1761; SPX 1273 and 1295. The markets closed friday around the midrange of the upper/lower pivots. The lower ones should now provide support.
DAX: Appears to be extending its current impulse wave, intermediate v, with back to back days of 2% gains.
FTSE: Appears to be extending its major wave 5 making new highs today after a short term correction.
NIKK: This parabolic market has been relentless. A steady, uninterupted advance since May 2005, labeled minute wave iii, (a three of three), and has already risen nearly 60% from its minute wave ii low.
HSI: Appears to be extending its intermediate wave iii, as it approaches new highs.
BONDS: The bear market has resumed this week, as Rates started heading higher from the recent intermediate wave ii low. Expecting rates to start rising strongly as this market is now in a third wave.
GOLD: This bull market seems close to putting in an intermediate term top to end intermediate wave iii.
DOLLAR: After a few months of correcting, it now appears ready to resume its bull market. There is the possibility of a lower low short term. But the Dollar is sufficiently oversold to start impulsing upward from here.
cRUDE: Looks like oil prices will start heading higher again, and maybe at a quicker pace. This market is currently in intermediate wave iii of major wave 3, (a three of a three), and approaching the fifth wave: which is usually the strongest in commodities. cRUDE remains in a bull market.
For full chart coverage on all the markets: with daily, weekly and some hourly charts visit the chart link on the right side of the page. Best to your weekend and have a prosperous week!