While the weekly results do not display much of a change in the four major US averages. The SPX did manage to make a new bull market high on friday at 1486, and the DOW came within 12 points of its bull market high at 13,662. The NAZ, however, is still about 2% below its bull market high, and the NDX about 5%. For the week the SPX/DOW were +1.1%, and the NDX/NAZ were mixed. Asian markets gained 1.8%, European markets gained 0.4%, and the DJ World index gained 0.6%. On the economic front rising reports outpaced declining reports 10 to 5. On the uptick: retail sales, business inventories, the CPI, industrial production, capacity utilization, the NAHB, housing starts, building permits, the WLEI, and weekly jobless claims improved. On the downtick: the PPI, the NY/Philly FED, consumer sentiment and the M1 multiplier. Next week , shortened by monday’s holiday, we get more housing reports and the leading indicators.
LONG TERM: bull market
After an interesting two months of the bull/bear inflection range, our historical analysis of early bear market activity paid off. We will be adding this analysis to our lesson plan. So that the next time the bull market wave pattern suggests a potential completion we can apply it once again.
The bull market we have been tracking continues to unfold. We have been expecting five Primary waves up from the Mar09 SPX 667 low, to complete a Cycle wave  bull market. Primary waves I and II completed in 2011. Primary wave III has been underway since then. Primary I divided into five Major waves with a subdividing Major wave 1. Primary III appears to be dividing into five Major waves, however, with a subdividing Major wave 1 and Major wave 3. Major waves 1 and 2 of Primary III completed in Q2 of 2012. Major wave 3 has been underway since then.
We have been expecting this bull market to top sometime this year. Probably in Q4. The minimum trends remaining, are first the completion of the current Intermediate iii uptrend, then after an Int. iv correction, an Int. v uptrend to complete Major 3. The next uptrend, after a Major 4 correction, would then be Major wave 5 to complete Primary III. Then after a Primary IV correction, a Primary V uptrend to end the bull market. In summary we still need to complete the following rising waves: Int. iii, Major 3, Primary III and Primary V. In regard to price: we still have a wide target range between SPX 1550 and 1700. As the waves unfold we should be able to hone in at a more specific level.
MEDIUM TERM: new uptrend highs
The current uptrend, Intermediate wave iii, began in mid-November at SPX 1343. This week it made a new high at SPX 1486, which is also a new bull market high. Int. iii is unfolding in five Minor waves. Minor wave 1 ended at SPX 1424 in early December. Then we observed an irregular abc Minor wave 2 flat, which ended at SPX 1398 in late December. Minor wave 3 has been underway since that low.
With Minor wave 1 rising 81 points, (1343-1424), we have been projecting Minor 3 should rise about 130 points, (1.618 x Minor 1). This suggests Minor 3 should top within our OEW 1523 pivot range. Then after a small Minor 4 pullback, Minor wave 5 should rise to the next OEW pivot range at 1553. At this point, probably in February, the current uptrend should end and an Intermediate wave iv correction should follow. Medium term support is at the 1440 and 1386 pivots, with resistance at the 1499 and 1523 pivots.
Short term support is at SPX 1471/75 and 1462/64, with resistance at the 1499 pivot and the 1523 pivot. Short term momentum has been declining from extremely overbought. The short term OEW charts remain positive from 1420 with the swing level now 1471.
From the Minor wave 2 SPX 1398 low, this market has only had one noticeable pullback on its way to friday’s high at 1486. Quite unusual for this market, but not unusual for a third of third wave. Despite this one pullback we have been able to track the smaller waves with some degree of success. We tracked a five wave advance to SPX 1468 and labeled that Minute wave i of Minor 3. Then after that one pullback to SPX 1452, which we labeled Minute wave ii, we have been tracking Minute iii.
Thus far we have been counting Minute iii rising in five Micro waves. Micro 1 completed five smaller waves up at SPX 1473. Then after an abc Micro 2 pullback to SPX 1464, Micro 3 has been rising in five smaller waves. Currently, from that SPX 1464 low we observe five smaller waves: 1473-1468-1485-1476-1486. Since Micro 1 was 21 points, (1452-1473), and Micro 3 is currently 22 points, (1464-1486), it may have ended on friday with the hourly negative divergence. If so, we could get a pullback tuesday back into the mid-1470’s. Best to your long weekend!
The Asian markets gained 1.8% on the week, and all are uptrending.
The European markets gained 0.4% on the week, and all are uptrending.
The Commodity equity group gained 1.3% on the week, and all are uptrending.
The uptrending DJ World index gained 0.6% for the week.
Bonds continue to downtrend, rising yields, but gained 0.2% on the week.
Crude continues its uptrend gaining 2.4% on the week.
Gold is again trying to establish an uptrend gaining 1.4% on the week.
The USD remains in an uptrend, from the December low, gaining 0.6% on the week.
Monday is a holiday in the US. Tuesday: Existing home sales at 10:00. Wednesday: the FHFA housing price index. Thursday: weekly Jobless claims and Leading indicators. Then on friday: New home sales. The FED has nothing scheduled for the week. Best to your three day weekend!