The market spent the week consolidating after last weeks strong gains, yet the Tech sector continued higher. The SPX gained +0.1%, the DOW +0.5%, while the NAZ gained +1.1% and the NDX rose +2.0%. Bonds gained +0.4%, Gold +0.6%, the Euro +1.3%, and Crude was +2.0%. As a result of this weeks activity all 9 US indices we follow are now in uptrends, as well as, all 8 foreign indices. Also, 96% of the stocks we follow are in uptrends, indicating the market is now poised to move higher.
LONG TERM: bullish
The Cycle wave bull market of October 2002 continues to progress. Primary wave 5 continues to extend from its low in August 2004, when Primary waves 1 through 4 had completed. This Cycle wave 1 bull market is similar to the last one during 1932 – 1937. This last Primary wave is subdividing into five Major waves: with each Major wave containing five Intermediate waves, and each Intermediate wave containing five Minor waves. A typical Elliott Wave progression. As noted on the SPXwkly chart below: Major waves 1 and 2, (Major wave 3 still underway), completed in April 2005; Intermediate waves i through iv, (of Major wave 3), completed in March 2007; and Minor waves 1 and 2, (of Intermediate wave v), completed at the recent lows in August 2007. Therefore, upon completion of Minor wave 3, a Minor wave 4 correction would follow before Minor wave 5 tops. Ending both Intermediate wave v and Major wave 3 in the process. In other words, the market should continue this uptrend to about SPX 1620, before a small correction occurs. Then another uptrend to approximately SPX 1702 should be followed by a much more severe correction some time early next year. After that the bull market should resume. It has much further to go long term.
MEDIUM TERM: bullish
The uptrend from the August 2007 lows continues. As noted above, we now have all 9 US indices in uptrends, as well as all 8 foreign indices. The NDX in fact, made new bull market highs every day this week. The DOW and the NAZ are about 1% away from a new high, and the SPX, which led this last correction, is only about 2%. The carry trade Yen in now downtrending, basic materials are close to new highs, and the one-year closed at 4.05%. These are all positives for the market. Thus far this uptrend appears to have completed only Minute waves i and ii, while Minute wave iii is still progressing. This entire uptrend will consist of five Minute waves, some of which may subdivide into waves of lesser degrees, as this one is now. We are still targeting SPX 1620 for this uptrend.
While the market consolidated this week, the EW pivots (1506 and 1530) again came into play. After failing to break through resistance at 1530 on monday, the market pulled back to support at 1506 on tuesday. Then the mid to late week rally carry the market to just a few points over 1530 (1534), before it slipped back a bit at the friday close (1527). Support remains at 1506, with resistance at 1530 and then 1556, the all time highs. Short term momentum closed out the week declining to just below neutral. It appears the market has a few more small waves before Minute wave iii completes. Ideally a rally up to the SPX all time highs (1556) would be a good place to end Minute iii. Then, a small pullback (Minute iv) to 1530, before a minute wave v rally to 1620, ending Minor wave 3. Let’s see how this plays out.
Bonds continued their uptrend but they appear to be weakening for now.
Crude reversed early week selling to close higher in its uptrend.
Gold surpassed its 2006 high, reaching its highest level in several decades, as its uptrend continues.
The Euro continued to rise toward its all time high of 145.64 as its uptrend continues.
Everything seems to be rising including commodity prices.
The Asian markets are all in uptrends now. Japan’s NIKK continues to be the weakest, but with the Yen now downtrending, it should gain some strength. China’s SSEC, Hong Kong’s HSI, India’s BSE, and even Australia’s ASX all made new bull market highs this week.
The European markets are a bit more subdued, but rising as well, at the start of their Primary wave 5.
Best to your week!