REVIEW
The market started the week at SPX 2052. After a small pullback to SPX 2047 on Monday the market started to rally. Tuesday and Wednesday had gap up openings as the SPX reached 2095. Then for the remainder of the week the SPX only managed to tack on four points, and ended the week at 2099. For the week the SPX/DOW gained 2.2%, and the NDX/NAZ gained 3.4%. Economic reports for the week were nearly all positive. On the downtick: consumer sentiment. On the uptick: new/pending home sales, the FHFA, durable goods orders, Q1 GDP and the Q2 GDP estimate. Next week’s reports will be highlighted by monthly Payrolls, ISM, and the FED’s Beige book.
LONG TERM: bear market rally
Despite the relative strength of this market since mid-February we continue to maintain the view that the market has been in a bear market rally. We counted five Primary waves from 2009-2015 to end the Cycle wave [1] bull market. Primary waves I and II in 2011, and primary waves III, IV and V in 2015.
The first downtrend took the SPX to 1810 in mid-February which we labeled Major wave A. The uptrend that followed to SPX 2111 by mid-April we labeled Major wave B. Since that high the market confirmed a downtrend, but only dropped to SPX 2026 (4%) before rallying again. This would suggest, if a new uptrend is confirmed, that Major wave B has subdivided. Under this scenario the SPX 2111 and 2026 levels would be Intermediate waves a and b of Major B, with a rising Int. c underway now.
MEDIUM TERM: downtrend weakening
From the mid-February Major wave A downtrend low at SPX 1810 we counted an a-b-c Major wave B rally to SPX 2111 by mid-April. Then the market entered a downtrend which hit SPX 2026 just over a week ago. Since that low the market has rallied virtually straight up to SPX 2099 in just 6+ days. We had been expecting a rally off the SPX 2026 low into the 2070 pivot range, or possibly the 2085 pivot range. The market has clearly risen above both.
As noted above, unless the market starts declining soon there is a chance that a new uptrend is underway. This could carry the SPX back to 2111 and even higher. Based upon our analysis this would still be considered a Major B wave that has subdivided. Irregular B waves can make new highs, rising above the previous fifth wave and retracing more than the entire A wave. Should the market turn down next week, and close below the SPX 2026 level, the downturn could be quite severe. Medium term support is at the 2085 and 2070 pivots, with resistance at the 2131 pivot.
SHORT TERM
After doing a somewhat complex a-b-c decline from SPX 2111 to 2026 the market has rallied virtually straight up from that low to 2099. The b wave during the SPX 2111 to 2026 decline was also a quick straight up affair, albeit much shorter. It appears, as of Friday’s close, the market either breaks out to confirm a new uptrend or breaks down to resume the downtrend next week. Turning points often occur over holidays.
Short term support is at the 2085 and 2070 pivots, with resistance at SPX 2111 and the 2131 pivot. Short term momentum ended the week with a negative divergence. Enjoy the Holiday weekend!
FOREIGN MARKETS
Asian markets were mostly higher on the week for a net gain of 2.0%.
European markets were also mostly higher and gained 2.5%.
The Commodity equity group was mixed but gained 1.4%.
The DJ World index gained 2.1%.
COMMODITIES
Bonds appear to be in a downtrend and lost 0.1% on the week.
Crude remains in an uptrend and gained 1.8% on the week.
Gold is in a downtrend and lost 2.9% on the week.
The USD is in an uptrend and gained 0.5% on the week.
NEXT WEEK
Monday: holiday. Tuesday: Personal income/spending and PCE prices at 8:30, Case-Shiller at 9am, the Chicago PMI at 9:45, then Consumer confidence at 10am. Wednesday: Construction spending, ISM manufacturing, Auto sales and the FED’s Beige book. Thursday: weekly Jobless claims, and the ADP. Friday: monthly Payrolls, the Trade deficit, Factory orders, ISM services, and FED governor Brainard speaks at the CFR. Best to your weekend and week!
As stated earlier, resistance 2103 and flat closing today. Primary B is over in my opinion.
Fun starts from tomorrow. Let’s see.
Again good call Ajay.
Today was EOM/Window Dressing. If that’s all they could muster to make the month of May look good…look out.
Thanks.
new closing high for the year on the sp. so much for the bear case.
I lied. no new high today.
Was it a new closing high?
Submitted with no further comment
A nice stick save by the 3 o’clock boys!
is that you in the video 🙂
don’t yell at her!
9:30 – 3:00 corrective slow selling
3:00 to 4:00 impulsive buying
sure doesn’t look bearish to me
For those who are wondering .. there are only three waves down from the high on an SP500 5-min chart. The EWO never made a third wave signature of a lower low.
TJ
Thanks TJ.
Another dip to buy oil, tight stops
I noticed that too – good man Captbara x
http://stockcharts.com/h-sc/ui?s=USO&p=D&yr=0&mn=6&dy=0&id=t23682219970&a=453300820&r=1464723630027&cmd=print
Beautiful…trade whats in front of you….lol
http://stockcharts.com/h-sc/ui?s=SCO&p=60&yr=0&mn=5&dy=0&id=p89201718617&a=459256047&r=1464723646219&cmd=print
Too many people posting the wedge so I don’t believe it 🙂 Daily channel up looks orderly on linear scale.
Either way I’m not trading big on it. Will wait for the huge IHS RS later this summer.
Tmf, that oil chart looks more like a Leading structure to my eye.
all I know is the BTDRC (Buy the Dip Retarded Crowd) is relentless so lets see how the day closes. I will believe it when I see it as encouraging as today has been so far
I may be retarded, but that hasn’t stopped my account getting huge on these rallys 😀
Thanks Tony
SPY ~ Failure at R & outside day.
What more do the Bears need?
GL All
seems like the first 5 wave structure is complete now
NOTE. The SP failed to extend to the 2108 level, where
the critical, lateral trend line is located. As a rule, the more
failures at a price/trendline the stronger it tends to be….fyi
I find it’s the opposite actually. 3rd time usually doesn’t hold, 4th even less chance.
-D on the F5 2104 aye? SPX -10 at 20(89), monthly range friendly 77. I’m sure those numbers are buried in the 525+ comments. Mondays have been BTD, bulls? where are you now?
I see the bulls coming back in after 10 handle ramp off the 89’s. classic. never on the lows. You guys have a good 1.
record number of comments today, interpret as you see fit.
no record comments HD
anyway extra day with holiday
Fotis
spx 2086 and our trendline today
I thought it was a given suprised it hasnt hit it yet tuff Market lets see EOD
the ext long supported but sloppy
2097 es short is in the way of 2111 ext long target
and what was 2097 es previously???
the last ext long target !
Small but valid H&S on 15 min…
http://invst.ly/1t8yw
A real nice broadening top in the NDX futures….a reverse of the P rally should take out the low by a healthy margin.
That’s a bad azz looking top and the P did reverse down….fast!
This market hasn’t even begin to fall…..
Do not be deceived this baby will take off to the downside…..
rd3777,
I love your Nasdaq 100 charts, please keep posting updates … really appreciate it. When you mention downside can your specify the downside target > Ty
Well if we are now in the 28/55 day analog it is a possibility that this market will decline into July 6th or 7th and loose as much as 35 to 40 pct of it’s value. I expect Asia will start the waterfall Friday into next week….the bottom line this is a historical top. IMHO
Thank u so much into your insight …
Crude Oil is topping out, price decline next,
Using OIL, $6.50 should fall to $5.50, before next
rally, resumes….fyi
…thanks Bud..yes, I am out….
sees like we completed the first down- if this count is correct selling should pick up toward the end…if there is a strong then i need jump off from my bed
and i need to learn how to type. first wave down now correction up and third wave to start later in the afternoon for further selling
Rotation at it’s best. When Small Caps are strong, no chance for bears!
I hate to admit but you’re right.
Russell just does not give a f**. Wow
Rut going into a W-3 if it isn’t a high b, some x stuff fluff or a Complex 3 (working on the 3rd leg) ending shy of 130. Market knows how to pretend in many ways, as are the options in EW. Knowing more sometimes means knowing less, and only tons of experience can make you feel whats right considering the options. And I am not there yet.
Seeing whats half baked as the finished product, well thats difficult as we stick to a pre-conceived structure too long, when its actually molding itself into something else on the go…. Thats life, and thats the allure of patterns, and of Elliot wave, amen.
Polls suggest Brexit more likely than Bremain.
bremain – I like that
Brexit very unlikely. People will make a lot of noise about voting No but when its comes to the crunch the majority will shit it and vote to stay.
..the gentleman who correctly gave the numbers for Scotland leaving the UK, said his numbers …wait for it….only 19% to leave….
Fiona, ordinary folks dont know their own best, all university educated brainiacs knows that…..LOL.
I have to admire the ingenuity of the migrants and refugees alike; think of what immense skills it takes to flee their former home grounds. Thats highly developed social and survivalist skills, much more complex than one would call pure survival instincts.
I think we have to give credit to the market for knowing whats in its best interest, heck even the Chinese have been walking on the banana peel of planning society with less than good results (through the years). Just look at Venezuela, rigging the price of food (to help the poor), emptied supplies, as farmers could not any longer afford to buy seeds.
Hope they stop rigging the elections, listen to nature for once and it sorts itself out, or it eventually piggies back in an unnatural way.
……Don’t stop writing Tore……
+5
hoping to have closed all my shorts by then anyway.
Want the best prediction? Check the betting odds – wouldnt bet against Bremain…
ECB meeting on Thursday…wait..
Flat close likely.
Ajay wins the prize today! Well done Ajay.
For those who care about such things. we just put in an hourly 3BR. It’s a mirror image of the hourly 3BR that was put in at the 4/20 high. If the market can build on it the rest of the day, and close below 2090.06, then that will be a daily bearish engulfing pattern. Also, as I have mentioned several times throughout this month, every wave since the 4/20 high has been 8 days in duration, and today is the 8th day from the 2026 low.
2111-2052 (4/20-4/29)
2052-2085 (4/29-5/10)
2085-2026 (5/10-5/19)
2026-2103 (5/19-5/31)
Putting it all together, if the bearish scenario continues to play out, then the market has provided a gift to everyone today, and given everyone one last chance to sell in May.
(On the flip side, a move above 2103.22 in SPX will invalidate the hourly 3BR.)
I am interested dude… thanks for the post.
Thanks Michael …..good stuff.
If you have time speak with Fotis – he has a nice chart… he would like input….3BR stuff…
Glad your back. I was hoping you did not ditch us. Thanks for the update.
Now there’s a honest statement! We do not get to see a lot of those these days….! I was hoping for the same myself!
Not completely gone, but will be visiting and posting much less. I’ve OD’d on the noise and BS that fills most of the comments section here.
friggin Russell has been impressive today and I don’t see the market closing below 2090 today.
You mean nice window dressing in the Russell for month end? I’ll be shorting it at the close.
sheeeeeet could AAMikey be on to something here?
Thanks.
do you use the hourly 3 BR on individual stocks, too? BTW, isn’t 8 days up the set up count that Tom DeMark uses for trend reversal patterns?
I don’t trade individual stocks, and I know nothing about Tom DeMark.
Good start too the week but still early days.
An hour in to this trading session SPY made a perfect bounce on the steady trendline from above. If it breaks, bearish sentiments are weakening imo. Great Risk/Reward for shorting it.
/GC
bullish above 1208
added more GLD……now 20% long
..balls…x
not really.
..my stops are breakeven now
phil you could be right but i’m still looking for a lower low bottom around 1180. need to get to 38 – 50% retrace
OKE, one to watch. Nice steady price rally,
possible time to pause, and refresh, buy lower.
4/20 and 5/31 at aprox. 2 resistance levels.
No, breakout as yet….
Stopped out. Downtrend beginning!?
DJII (hourly):
with all due respect you found a bullish signal and traded it before markets had even re-opened following the holiday break. Was always going to be very risky.
Thanks. Obviously a bull trap. Typical opening shenanigans. I was surprised at the massive reaction – a planned trap for sure. Luckily I had a close stop and a small trade. Only lost an Euro or two. Openings really a waste of time and money!
11:54 est – not yet, that I can see….
short BA with a stop
Fotis
our favorite trendline sits at SPX 2086 todat
can we hit it today????
Thanks Phil….and if it goes below…. 2079…x
the aggressive ext long has failed
but es is still bullish above 2084
if that ext long fails then next support is at 2074
there is a bearish trade present now
bearish below /ES 2099.5
TARGET at 2090 about to be hit
see how our numbers don’t mesh though close……no worries as you said…thanks Phil
welcome
weird day today
Russell rallying in last hour with bonds while DOW and S&P selling off to slightly negative/flat.
Risk on?
wammy Number 1 – declining productivity
wammy number 2 – increasing wage pressure
wammy number 3 – continued cut in long term investment supplanted by buybacks
wammy number 4 – the buybacks were made possible by increased debt levels which will become more of a drag as rates rise
You could get more profits with cost pressures if demand skyrocketed or productivity increased but revenue numbers are barely over flat and with those cost pressures and a FED that wants to normalize it spells more of a squeeze for the S&P.
Back to the SP500 30-min cash .. wave (iii) has nicely crossed the 1.618 x (i) level; making this most likely a fourth wave down. That’s primarily because 1.618 was slightly ‘exceeded’. In other words price keeps ‘making’ it’s upside targets — not missing them.
TJ
only under 2047 the count is nom ore valid…………then……..is that so? thx
correct.
hi trader joe daily graph it is doing the III of last phaseV?
TRADER JOE’S ON IS IN THE PRIMARY AND V IN PHASE 2 IS COMPLETED?
Hi klur .. I have answered this question many times. I don’t know that (2), down, is completed. (Please stop asking me for the ‘daily count’ because there are still several that apply until a new high is made.) Thanks, TJ
HELLO JOE I try to understand what phase is that’s why I’m asking
Tony,
When was the last time a bull market went over a year with no new ATH? Thanks, in advance.
Short term analysis: Market reaction muted. Not yet ready for another big surge. Looks like a more controlled move here. Should not get lower than 2058 on SPX during this run. Gold still holding at key areas and that too looks like a fight to hold. Do not see the next Bradley Date causing a deep slide. Sold my options for small loss. Market reaction against my assumptions .
That makes no sense…. you are advocating “moonshot” yet you seem to be trading nervously…. Are you not more of a position traders vs swing/day trader, if so, then why not trade what you preach?
Well Mat, it seems the 55 we talked about for oil is low-balling – the Saudi minister and various oil gurus said 60 and this is conservative…… UWTI….
…think this is a fourth wave down to 2079….so bought UVXY……
fourth wave to 2079……have you moved to the dark side….the pull is very strong of the side
dark
Phil suggested 2087, which is the first number…..if it goes down further 2079….
UVXY @10.5
don’t you think we should see a sizable pullback say to 40 before 55?
no, I said if oil broke 50, oil would go to 55…..and then short….oil traders here saying they are going long to 60…..so maybe I have to do that too…..we’ll see…
…in hindsight that makes a lot of sense Mat….
El Mat, her trading strategies are the complete opposite of her analysis. She writes long and endless dissertations on macro economics and fundamentals, but her trades never last longer than 3 days. She’s a scalper. She’s in and out of her trades in less time than it takes to read one of her posts.
I was think something along the lines of this;
https://pbs.twimg.com/media/CjypILdXEAAlMvJ.jpg:large
😉
Be nice, I like you guys…..the dissertations were probably from a link……
well regardless of whether this goes up more these next two days or so hourlys, dailys, and weeklys all overbought now. Last time weeklys up here we were at 2111 and before that 2116. I would expect some drop short term to work off some of this
So far, another total snoozer on super light volume. Could be more of the same tomorrow as we await the ECB on Thursday and jobs print on Friday. ZZZzzzz…..
The market needs to put in a red candle today for the analog. So far we have a reversal opening.
Some nice reversals today…should be the start of a wild week…
Don’t want to Jinx the decline….but it looks darn good for the analog….when crude reverses down out of it’s diagonal should thrust and then probabably kiss the trendline and then slam lower after OPEC. Short…..
The DoW daily
Vast majority of stocks now in some degree of their 3rd waves…..
JPN225 with a nice reversal down should drop fairly quickly down to the base of the EDT
Looks good, the market should accelerate down after a bounce? IBM has a reversal and AMZN looks to be topping….
Anyone else still holding some shorts like this bozo? What are your lines in the sand?
Turns happens on holidays except when they dont
To whom are your referring?
?
To all the fellow poor punters on the blog of course
This bozo still is. Its rich coming for you though, easily the most disliked person on this blog, or a least a strong candidate.
The bozo I was referring to was myself.
read carefully before you post.
ohhhhh, sorry mate. My bad.
I seem to be the most disliked person because I did not agree with a H&S and gave a W count….this is the second time….if you agree personal attacks are not fine on this site….then…..
I don’t think you are disliked Fiona.
I didn’t think so either….but late in the evening …..x
late in the evening where?
late in the evening on the site….
$SSEC, observation: From top there is an abc relation spotted. A,-inverted X,-B,-and C done prior to the 3,3 percent rally last night. This “might” be as far as it goes to the downside.
Gov in China is paying a hoard of professional bloggers to utter something positive about life and society (in order to change the mood of the public) according to “news”. Maybe they ingest the bait…or maybe the rumor is fabricated by misanthropists. Maybe world is turning great all by itself, who knows ?
ES Morning Update May 31st 2016 – http://reddragonleo.com/2016/05/31/es-morning-update-may-31st-2016/
Now the real test begins. The momentum indicators show a very powerful setup for SPX to hit around 2170. The fundamental data, as I have been shouting over, is signaling a strong economic resurgence and as such it is unlikely we are in a critical crash mode. How technicians can ignore fundamental analysis during such make or break levels is beyond me. I have stated forever that the charts are ugly but the fundamentals paint a different story. The income to outlays was much more than I wanted, and the street is not too happy with this notion of a strong acceleration. There better be more tempered news on the consumer or the dollar and yields can move up much faster than wanted. All about competition. Where to park your money. Gold should break down as Equities breaks up. Good week for determining the pulse of investors.
Agree.
fundamentals are strong huh. what color is the sky in your wold ?
blue skies, nothing but blue skies. Jobs, housing, discretionary income, spending, wages, low inflation, low costs, cheap lending. did you just ignore the data over the last 6 to 12 months that showed the consumer was actually getting healthier as the world economies struggled to stay afloat? I guess you either ignored or dismissed the hundreds of economic data points. Can’t do that especially when the market looks like it’s about to fall over. Leeson learnt? Probably not since we are a creature of habit and do not change very often.
Do you actually live in the US?
it is very typical for a recession to begin after full employment because of the wage pressure that corporations face which follow cuts in cap ex and jobs. Productivity is declining not accelerating but you don’t bring this up. profits are declining not accelerating but you don’t bring this up. You can talk about great jobs and wages and incomes all you want but you neglect the fact that coporations are facing a quadruple wammy.
wammy Number 1 – declining productivity
wammy number 2 – increasing wage pressure
wammy number 3 – continued cut in long term investment supplanted by buybacks
wammy number 4 – the buybacks were made possible by increased debt levels which will become more of a drag as rates rise
You could get more profits with cost pressures if demand skyrocketed or productivity increased but revenue numbers are barely over flat and with those cost pressures and a FED that wants to normalize it spells more of a squeeze for the S&P. This is simple simple economics Holly. Corporations are not investing they are mortgaging their future to prop up short term numbers which still show declines after their engineering! Recessions start when rates start to rise and their is full employment like there is now. Its ironic but it happens all the time. Slack is good. When things are at their best is when it begins to unravel. Your indicators are lagging
+1 great post. Bulls need new highs to even have anything to brag about, and even then they will still be faced with the issues you outline
UPDATE: Spx (hourly) –
New buy signal!
Stopped out (here DJII – hourly):
New moon on Sunday. Middle of June 3 months cycle low.
One thing that is interesting is that we are already past 2007 valuation top as measured by P/cycle peak EPS. SPX topped at 17.2x in 2007 and 27x in 2000 (all time bubble high). Cycle peak EPS this time is 114.50, so currently we are already>18x and based on that range above SPX could be 1970-3100. So implicitly, we are already in lower level bubble territory and also confirms that Wave 5s are purely based on speculation which is subsequently wiped out by the next bear market.
This is a very tough environment for traditional PMs and could only make it more difficult for the active AM industry to compete against ETFs.
Using GAAP earnings, the SPX is currently trading over 24x earnings
http://stockcharts.com/h-sc/ui?s=!PESPX
The only problem is that corporations are not using GAAP earnings any longer. Pie in the sky B.S. numbers no longer get you thrown in jail, so it no longer matters if earnings are real or not. I continue to wonder why I risk capital in this “made up” environment we call a market!
Further – the SP500 price pattern from the May 2015 high.
Has a significant trend line, extending in a slightly down
to right sideways position. Which implies. Price resistance is
from the 2135 high, now to 2106, and falling slowly from there.
Implication is a break above 2108 would lead to 2208, being the next
resistance level…
Investment in MU, is my choice for 5/31….
Bradley Turn Date, June 1st
Small, short-term date, almost insignificant. The real turn date was last Wed, but has a several day band on either side.
hi from EU surroundings
so far quite…………….but soon shuld see some action………………;)
meant quiet…..
pfm, what sort action are you suggesting. DAX. …..I can see some impulsive selling on short term timeframes, quick close of the gap up, then likely reversal to new highs for the month. What are you thinking ?
that is the most likely
but i dont do much swing trading
mostly short on italian stocks amongst the weakest in EU and for now waiting and hoping ES doesnt spoils the party 😉
Most of the posts in response to the weekend update are bullish yet the fundamentals are awful for EM & US equities , the only reason people own equities is TINA there is no alternative, but there always is an alternative. Meanwhile technical analysts debate the unpredictable, eventually reality will catchup with those who purely trend trade off technical analysis. Remember there are few technical analysts who are independently wealthy and but many wealthy individuals who employ fundamental analysis and technical analysis who are independently wealthy. Tony does a great job at giving us some technical clues as to future market direction but this can only be resolved with sensible understanding of the fundamental facts. Remember the majority of money is managed by fudamentalists.
Whoever has been hammering my twitter account so I can’t login, FK U and the broken EW count you rode in on.
Just catching up ! Lol
Bitcoin exploded as expected. Hopefully some on the board made some $.
https://markets.blockchain.info
ETF was a good buy last week at $60. Solid trend line / 50/65dma.
http://stockcharts.com/h-sc/ui?s=GBTC&p=D&yr=0&mn=10&dy=0&id=p47065382593&a=458226559&r=1464662368162&cmd=print
Weekly. Why not test the high tick at $95 ?
http://stockcharts.com/h-sc/ui?s=GBTC&p=W&yr=1&mn=5&dy=0&id=p52823870804&a=431115676&r=1464662419041&cmd=print
The yen could be a tailwind for stocks soon if it breaks Friday’s low. Still looks like a long term bottom but a test of breakout around 86 seems reasonable.
http://stockcharts.com/h-sc/ui?s=%24XJY&p=D&yr=2&mn=0&dy=0&id=p51280160726&a=433781062&r=1464661909816&cmd=print
The transports are signaling a short term correction is coming. Rising wedge into moving averages. Hopefully it can break above that and the downtrend line soon.
http://stockcharts.com/h-sc/ui?s=IYT&p=D&b=3&g=0&id=p86521851521&a=400721821&r=1464661718446&cmd=print