weekend update

REVIEW

The market started the week at SPX 2164. After a bounce to SPX 2171 on Monday the market pulled back to 2156. On Tuesday the SPX hit 2181, but this was followed by a pullback to 2171 on Wednesday. On Thursday/Friday the SPX made a new uptrend high at 2190, then dipped to end the week at 2182. For the week the SPX/DOW gained 0.45%, and the NDX/NAZ gained 1.40%. Economic reports for the week were mostly positive. On the downtick: import prices, capacity utilization and the WLEI. On the uptick: retail sales, export prices, NY/Philly FED, business inventories, the CPI, housing starts, building permits, the Q4 GDP estimate, plus weekly jobless claims improved. Next week will be highlighted by the FOMC minutes, more housing reports and the Thanksgiving holiday.

LONG TERM: uptrend

Some observations. Since the election the DOW, NAZ, R2K, SOX and TRAN have all made new yearly highs. The DOW and R2K highs were also all time highs. The NDX, NYSE and the SPX have been the laggards. While the NDX and SPX made all time new highs earlier in the year, the NYSE has still not made a higher high than 2015. Neither has any foreign index that we track with the exception of the FTSE. The NYSE continues to act more like an international index, than a US index.

spxweekly

After a long term downtrend low in February 2016, the first since March 2009, the market embarked on a long term uptrend. Since 2011 did not quantify as a long term trend change, and the May 2015 – February 2016 decline was only 16%, we have labeled the long term trends as follows. Primary I May 2015, Primary II February 2016, and Primary III underway. From the February low the SPX has rallied to 2111, did a three wave decline to 1992, rallied to 2194, done another three wave decline to 2084, and is now rallying in a new uptrend.

MEDIUM TERM: uptrend

We labeled the SPX 2111 high Intermediate wave i, and the 1992 low Intermediate wave ii. Then the SPX 2194 high Minor wave 1 of Int. iii, and the 2084 low Minor wave 2. The current uptrend should be Minor wave 3 of Intermediate wave iii. Since Primary waves unfold in five Major waves, you can see we are in the very early stages of Primary III. In fact, only in the subdivisions of Major wave 1.

spxdaily

At the Minor wave 2 low of SPX 2084 the market displayed the usual characteristics of a downtrend low. The daily/weekly RSI were quite oversold, and the hourly RSI had a positive divergence. Since that low the market has rallied 106 points, 5.1%, in just two weeks. And a few of the earlier mentioned indices have done even better: TRAN +9%, SOX +9% and R2K +13%. The recent action certainly looks like the kick off to a third degree wave.

As each new bull market unfolds, and we believe this is a new bull market, it develops its own characteristics. Thus far this bull market has displayed two month uptrends followed by multi-month corrections. As noted last weekend it looks similar to the 1984 period. Since this uptrend began this month we should expect it to last until at least January. Santa rally underway! Also the first two uptrends were 300 and 200 points respectively. This suggests this uptrend should be about 300 points, and reach the SPX 2380’s before it concludes. Medium term support is at the 2177 and 2131 pivots, with resistance at the 2212 and 2270 pivots.

SHORT TERM

Early this week we noticed another short term count unfolding, and it has worked out quite well thus far. From the SPX 2084 downtrend low we counted four waves up: 2147-2125-2182-2152, with a fifth wave underway. The fifth wave was counted as follows: 2171-2156-2181-2172-2190. This entire advance, SPX 2084-2190, is only Minute wave i of Minor wave 3. There will be five Minute waves during this Minor 3 uptrend.

spxhourly

Approaching the high, we noted on Thursday, there were negative divergences on the hourly/daily RSI. This typically occurs during a top of some degree. We also noted, due to the configuration of the waves, there was three resistance levels overhead: SPX 2194, SPX 2200 and SPX 2209. Two levels and then the 2212 pivot range. When the rally does end the pullback could take the SPX back to the 2150’s for Minute wave ii. After that Minute iii should kick in to the upside. Short term support is at the 2177 pivot and SPX 2151, with resistance at SPX 2194, SPX 2200 and the 2212 pivot. Short term momentum ended the week under neutral.

FOREIGN MARKETS

Asian markets were mostly lower but ended the week mixed.

European markets were mixed and ended with a 0.3% loss.

The DJ World index ended the week -0.2%.

COMMODITIES

Bonds continue their downtrend and lost 1.2%.

Crude appears to be uptrending again and gained 6.8%.

Gold continues its downtrend and lost 1.3%.

The USD reached 13 year highs while gaining 2.4% on the week.

NEXT WEEK

Tuesday: existing home sales. Wednesday: weekly jobless claims, durable goods, the FHFA, consumer sentiment, new home sales and the FOMC minutes. Thursday: Thanksgiving holiday. Friday: markets open but closing at 1pm. Happy holidays!

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

About tony caldaro

Investor
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135 Responses to weekend update

  1. Dollar sold off…then rallied in the last 10 minutes and SPX shot up 4 pts.So much for -divs on the daily. (I’m trying to use reverse psychology..lol)Tomorrow all.

  2. NEWBIE says:

    I do not know one Bear, even the biggest bears on the planet have thrown in the towel.

  3. CB says:

    Bad news…they still have that radioactive stuff sitting there https://twitter.com/W7VOA

  4. johnnymagicmoney says:

    triple neg divergence on hourly, triple negative divergence on daily, negative divergence on weekly.

    2200 and 19,000 round numbers which provide resistance

    divergence on breadth

    money flowing into defensive sectors today including utilities, while both bonds and gold up today

    if there isn’t a retracement here I throw my hands up lol

  5. captbara says:

    Looks like Dax will be the last one to join the party. Probably starts up when US is off celebrating turkey day.

  6. johnnymagicmoney says:

    Russell up now 12 days in a row (record btw). No we definitely are not overextended here. It should go up 37 days in a row. BUY!!!!

    Also I love the OPEC guys. They said look the US FED does nothing except jawbone and the silly market listens!! we have no intent on doing any deal that’s meaningful and supply continues to be at record levels but it doesn’t matter we will keep saying there is a deal and keep having meaningless meetings!!!! It works for the FED it can work for us!!!! lol

  7. phil1247 says:

    sold half spx 2196

  8. If the -divs don’t kick in….the powers that be would have to push the indexes a fair amount higher to negate those divergences.The monthly,I’m guessing…50-60 SPX points?
    Wouldn’t put it past them though.They can’t have a -div on the monthly sittIng around can they?The monthly +div last December was what set up this years rally,in theory…so the CBs need to kick it in gear if they want to avoid a similar signal in reverse.10 days to do it.

    • fionamargaret says:

      2196/7 is resistance, but I think we will go through it… to 2203/4…

    • fionamargaret says:

      What is your take on gold here Learned…..my pattern hadn’t broken, but have to go up from here….if not then down where there is a multi-bottom…..your ideas are much more nuanced than mine…

      • Just holding what I’ve had for a while.Getting above 25.5 on GDX would indicate ANOTHER false breakdown.Not counting on that(23% chance).+weekly div on gold AND GDX.When(if?)that kicks in will be interesting to see how high price gets.Very iffy right now.A breakdown below previous lows is not my preference to see–unless there are more technical divergences.So I wait.

  9. captbara says:

    For the James Bond fans

    • fionamargaret says:

      S&P 2203…oil up to 60’s

      • blubrd67 says:

        Fiona, do you have alternative to UWTI, since it will be delisted soon?
        I sold mine too soon.

        • fionamargaret says:

          UCO long SCO short….do check I have never used them…I have UWTI, but watching timeframe…

        • fionamargaret says:

          Blue, take profits when you have them in oil…every profit is a blessing.
          Oil is a “deal or no deal” situation, and even experienced oil traders can get caught..
          Be careful…

          • fionamargaret says:

            …and then I read your thoughtful reply to Schumann….
            Here’s the thing about that Lang Lang video – the connection between the conductor and pianist….they both believed in magic, and that is what happened. x

  10. scottycj1 says:

    Make the jump to Light Speed

  11. phil1247 says:

    /ES
    extension long target is near at 2196

    raising stops on longs and dumping half if target resists

  12. phil1247 says:

    /CL

    thru 48.15 target
    raised stops
    added more UCO

  13. tommyboys says:

    SP hits a new ATH this morning – albeit by a fraction for now – but a high is a high and technically a bullish development.

  14. johnnymagicmoney says:

    People who think this is going on for years will be disappointed. From a short term and intermediate term I always believe it is technical. No if and or buts but when bulls start thinking fundamentals don’t matter at all and its only price it tells me you have no clue. In the very long term it is fundamentals that lead price contrary to your beliefs. I have heard people on here say well the charts say this so it must mean corporate earnings are going to increase significantly. Sorry to disappoint you but you are wrong. The fundamentals will dictate price in the long run and if the fundamentals decline over the next couple years your overly optimistic counts will get changed and then magically you will ay “oh yes the charts really were saying something else we just didn’t have the needed information yet”.

    1) Recessions start at full employment
    2) Recessions are often induced by a tightening of monetary policy
    3) We have distorted yields and risk through unprecedented monetary policy that eclipses all other previous FED intervention ever and we are now unwinding that distortion
    4) Higher dollar prices and higher interest rates do not help multinational US firms, the housing market, or the manufacturing sector, or emerging markets
    5) Global debt levels are at peak levels and in some key countries at levels that are unsustainable

    I haven’t even gone into the Euro region or Ponzi China mind you. Just simply look at cycles and their inevitable link to yields, currencies, rates, inflation, employment, and debt. Sorry perma bulls although the ball is in your court for now for the trend is up this bull market is near its completion and I cant wait for the day that all of you say oh my its over and many can all remind you how you talked about a bull market for years and years and years. I cant believe I’m saying this but Golly is sounding smarter and smarter and smarter these days.

    • scottycj1 says:

      You said the bull market is “NEAR”..the end…..What is your definition of near ?
      A day a week a year …..3 years…..? Rather vague for someone who knows whats going to happen.

    • H D says:

      But the VIX…. JK “fundamentals decline over the next couple years” Why would they decline? We have the business friendly, job creating, uber growth GOP full throttle on deck. The entire ideology and platform is one of growth. There won’t be a way to even check their powers. Majority of states also R Governors. States and Federal in sync. 1T$ stimulus on top of that… I don’t see any reason to think fundamentals and price would diverge. USA!

    • None of your points have any basis for a terminal point. I was told 5 years ago the debt level was unsustainable then. Interest rates aren’t even where it was 3 or 5 years ago? no way interest rates are yet showing a breakout. the 30 year trend is still down. We hit rock bottom supposedly and any spike higher might seem large but in historic contents it is at very low levels. the pressure from dollar on earnings should be seen. the argument one year ago was that the chart was topping and about to fall over. No many saw the domestic underlying strength until I pointed it out. We see what we want and stop looking.
      The market has been very rational over these 7 years and earnings have been stretching but so has the economic engine. A stall here is serious. no sigh of one yet. A squeeze in earnings due to higher costs is a concern. the way companies have managed to keep earnings growth over last 10 to 15 years is also a concern. The one thing going for the market is the deflationary pressure on costs and salaries. If that dynamics changes a deep drop is warranted. no clear evidence yet.

      • I expect higher costs and tighter financial conditions to occur soon but if it doesn’t I stay with the bull. I never lock myself in. We should know if the double digit profit potential holds come January. For now the odds of market forming a top is small. I expected all along for the economy to pick up and I called the next deep correction based on stretched earnings alone. in fact I suggested the consumer will have the upper hand in 2017 even as the market drops over 25 percent. No end game yet. Can’t push the natural flow of market topping pattern. it doesn’t not look like this is the final wave.

        • 2196 and climbing. A clear breakout pattern that should hold thru end of year. not ruling out corrective moves but it looks to b small in nature. Have not yet reached the top of wave structure. once we do (2220-50?) , then we should see some steeper swings. Holiday rally with a potentially explosive government spending package that should keep the bulls happy this whole year.

  15. Mr C…so if we ended the week & month today,we’d have -div on weekly and monthly SPX?Thanks.

  16. CampFreddie says:

    Cash is in a bubble !!!

    • mjtplayer says:

      Too bad most of it is trapped overseas. Perhaps we get a repatriation deal to unleash it.

      If we do get a deal, it will be the beginning of the end for EU, UK & Irish banks

    • tommyboys says:

      Great chart Fred. More evidence we’ve been in a 4th turning and are possibly encroaching on a new 1st…! Very exciting for sure.

    • scottycj1 says:

      Freddie….whos cash is this ?…investment companies, hedge funds, mutual funds or corporate cash ?

  17. Oil is not my “field”,but thought that the Obama plan,to punish Russia’s economy, by having Saudi Arabia produce crude at full throttle–would disappear with Trump–thereby allowing a natural rise in price.Any agreement?
    New S&P highs.Now for some downside fun…I hope.Later.

    • Correction…SPX missed a new high by a tenth of a point.Algos didn’t want the other -divs kicking in yet,I guess.Smart machines.DXY finally pulling back a bit.GDX 20 d sma at 23.3.Hoping for that number minimum in the next couple weeks…hopefully 25.5.Good luck all.

    • tony caldaro says:

      Obama had nothing to do with it.
      Flooding the market with crude was all about the US becoming independent and an exporter for the first time in decades.
      The Saudi’s needed to shut down the frackers and the rigs. Their breakeven is $65.

      • I know I HEARD at the time,some kind of unsaid agreement was bandied about between US and Saudis to punish Russia for their Ukraine actions,by plunging oil.Not to say Saudi’s couldn’t try to kill two birds with one stone…but that was the rumor I remember.

  18. phil1247 says:

    EURO

    broke most aggressive extension short and now retesting

    look away dollar bulls……nothing to see here

    • manunidhi21 says:

      without correction ?

    • Correction, maybe coming when a new sets of policies will be in place. Next year…? For now, we are still under old policies and can’t see any rates hike for December. They will wait the new gov. and it will be a situation to be seen. Growth has to kick in first.
      Market is acting on fundamentals at present, and also on his usual forward looking.

  19. locanbbs says:

    UPDATE: Spx breaking out (trending)? –

    • fionamargaret says:

      Well Locan, I was expecting a kiss at the upper Bollinger band at 2203 a couple of days ago, but better late……
      Do you think the US might consider 50/100 year bonds….borrow and invest…
      My gold pattern is still not broken, but it has to make a move from here….or down to a multi-bottom….
      Oil seems to be tracking up to Opec – making Russia great again….
      What about Prechter’s last tick call….
      Glad you are back.x.

      • locanbbs says:

        Sorry, I’m not really up to date on all these. Just working on my charts, indicators and “robots”. Latest/best robot “earned” (in Strategy-Tester) $/€ 5300 in first ten months of 2016 with 0.01 lot increments (smallest possible) without HFT. Over 98% winning trades; max. drawdown $/€ 800; only one losing trade of $/€ 2.17. I am looking to sell USB-sticks with automatic code for $/€ 6000. Anyone interested?
        Btw, I’m still bearish on Gold as long as interest rate rise is in the air. Weak chart.

  20. kevinm76 says:

    Yes

  21. General consensus for bulls and bears is a correction is due here. I agree. 2150 seems logical. lets see if the market obliges. I sold my calls and wait for the timing of puts. As for long term I find it strange that people who switched from a 5th wave terminal move this year to a wave 3 and believe we have a decade more to finish a 5th wave move. I do not know the rules of the TA everyone here follows so perhaps my expectation will be invalidated. For now I still see a top forming in first third of 2017 followed by a 20 to 30 percent drop lasting most of 2017. I guess you can call that wave 4. I do not however see a wave 5 lasting move than 18 months. if that violates the rules that people follow than I will go it along.

    There are so many glaring fundamental problems to push this stock market bull run out further than a few years. A given: huge massive spending and even if ALL the Trump cuts happen in a fast timely fashion it is IMPOSSIBLE not to mushroom the deficits even higher. Tax cuts are also a given. Anyone’s math from 5th grade understanding should know the end result.

    The glaring assumption on an all republican mandate is simple. Huge spending, huge tax cut, attempt at dismantling all social programs, huge buildup in military spending. Even if ever single mandate is met the end result is a devastated balance sheet. The current makeup of our political situation actually fits belter with my Macro view than had the Democrats won.

    I am as confident today as I was last year in making the following statement. We are about to finish up wave 3 of 5. Wave 4 will hit early 2017 and last up to one year. The largest and steepest move will occur in wave 5 BUT it should not last more than 2 years. it will set the stage for a very long nasty winter here. I see no scenario that can change that assumption. I mean NONE. the fundamental financial situation can not support a decade long stock market rally from here. You can’t keep increasing spending and reducing government money inlays from where we ALREADY are and expect a positive outcome. Fundamentals do matter and this imbalance will be so huge that a naked emperor will be exposed. My warning to all that get emotionally attached to a notion of a decade long bull story. The global reaction to the last 50 year trend is one that will set up final surge with borrowed money. Politicians will try to pull a rabbit out of their hat by accelerating spending, tax cuts, and continue the shift of power and money to the wealthy. It will make the 30’s look like a small problem compared to today. KISS. I urge everyone to project their best guess scenario going forward and come up with a decade long bull case.

    Enjoy the show over next few years and wild gyrations. In 2020 do a retrospective and reflect on how emotional bias influenced your assumptions. The winter that has been elusive has become lazar focused as a result of world political reaction. The slow and steady healing needed for long term prosperity has been wiped out. Illogical to expect good times and excess spending going forward when our 50 year problem has been accelerated debt. I am 100 percent sure of the outcome and long winter that will dog us. As clear as the consumer upside heathy has been over the 2 year period when the stock market looked like it was about to fall to oblivion. Another long winded proclamation that I hope some will heed and go forward with a sober attitude.

    • mcgcapital says:

      Thanks for this Holly, I’m in agreement with your medium term view and believe a bear market is coming next year. The main driver of this market has been low interest rates and not growth for a long time. I see this summer’s trough in yields as being a secular low and that’s not good for all asset prices.

      As for the short term, I think 2194 holds as a top for now and we will correct into the 2110-2140 area. Moving averages are still positioned bullishly so it’s going to take some time to turn around. However, if the bear call is right we should see a pick up in volatility going forward. I can see similarities between where we are now and December 2014, where we topped around 2090 and proceeded to advance a further 2% over a number of months with lots of volatility inbetween before the August 2015 plunge. Thinking next spring might be time to place the big shorts.

    • 1 When Economy is booming and taxes are fair there it matter to pay public debts.
      2 Disproportioned Taxes kills the Taxes. (hold say)

    • tommyboys says:

      Market is 95% psychological. Never analyze with too many “rational” thoughts. Market feeling huge sigh of relief from a decade of stifling and failed economic policies, and there is always the chance it sees something completely different than individual players. Ration and markets don’t mix.

      • The markets have not been emotional thru the 7 year move. Very rational. the 2 year correction based on plunge in OIL and commodities, along with China and EU problems hit the mark perfectly. proved to be correct after all. The move higher after that stall in no way seems irrational. the stretched earnings either get reigned in or market drops. We certainly have cause for the stretched earnings. It’s not as if the move turned out to be irrational. matter of living up to expectations. I think we will not hit the expected mark and todays move is over promising.

  22. In my blog I’ve recently noted that:

    – 17 of 30 Dow component stocks failed to make new 2016 highs along with the Dow.
    – a mere 5 stocks made new all-time highs (JP Morgan, Merck, Microsoft, United Healthcare, and Visa)
    – exactly one-half of stocks in the Dow made their all-time highs before 2016.

  23. bouraq says:

    Chart of the weekend is SILVER. Join http://www.tradingchannels.uk for more.

    • phil1247 says:

      this is just what im looking for …..

      no hope for pm

      gold and silver doomed as us dollar soars!

      abandon hope all ye who enter here !

      looking for buy entry in gold and silver net week

      tight leash on euro shorts as dollar peak approaches

      • captbara says:

        Dollar peak already Phil? Still a ways to go, impulse shows no sign of completion yet.

        Hope everyone caught the low at 96, as I called it in real time on election night🙂

        • phil1247 says:

          dollar cycle peak due feb ( when is inauguration?)
          trading euo….not dollar….too many variables
          euro has not made new low yet

          i am ASsuming is we are in post triangle thrust down in euro
          which may not be true
          the triangle may not be complete yet
          or it may not be a triangle at all but a 1 2 1 2 up
          which is what failed triangles can morph into
          wouldnt that be a kick in the pants for dollar bulls ?
          see 2001 “triangle?” that blasted upwards
          http://stockcharts.com/public/1269446/chartbook/175038890;
          but that is all speculation

          and ” trading what i have in front of me ” is….

          until the extension short breaks in euro.
          .. down is the way to bet
          but i have my eyes on the exits

          • captbara says:

            Inauguration is Jan 20. I believe early 2017 will mark the top in equities, maybe for the dollar as well, but I doubt they will be perfectly in sync.

            • phil1247 says:

              capt……

              agree

              i am expecting
              similar to my previous bond market mantra…. ….” sell into any rally”

              to soon become the dollar mantra

              but not yet

        • Linda West says:

          Yes, How did you know $96 would be low? what indicator did you use. thanks

          • captbara says:

            Hi Linda, if you go back to the election night post you’ll see my chart. 96 was a clear retest of a previous breakout line. I’ve found those kind of retests to be very successful in my trading experience and always try to look for them when the price is correcting to get the turn around. Gl

  24. Thanks Tony
    DB target is 20600
    19k is 61,8% of 2007 top(other indices have already reached this value)
    http://invst.ly/2sva5
    http://invst.ly/2sv7x
    http://invst.ly/2sv8m

  25. blackjak100 says:

    If we are close to peak employment, which I’ve thought for 6+ months, where are the workers going to come from to support a P3 rise from here? There are ‘Now Hiring’ signs everywhere in the Twin Cities albeit lower paying jobs. I believe Trump is going to tighten which should not support a P3 rise. Housing stocks are telling us this as they’ve been massively underperforming for awhile now. Banks are telling us this with outperformance.

    Still think a P5 ED is underway will complete early 2017. We will find out soon

    • BJ, your bear stance insistence is pitiful, so sorry for you and fellows.

      Now hiring al over the places it means: wages increasing. And wages increase means grow and deflation pressure easing, etc…… And so, P3.

      • mcgcapital says:

        It also means rising inflation expectations, rising interest rates which will put pressure on historically high valuation multiples. It’s also unclear whether higher growth and inflation will result in higher earnings as rising wages will put pressure on corporate profit margins, and higher borrowing costs may hamper the consumer. The long term bullish case (I.e. P3) relies on earnings coming through strongly which is still doubtful. If earnings don’t rise, and multiples fall, then price will also fall.

        • Labor Market it is like any others market, equilibrated by offers and demand. How do I explain grow to my kids:

          A worker earns $10 more per week, he will spend it to the local grocery shop. The grocery shop owner will have better incomes and will by a new pair of jeans and snicker for his son. The cloth shop owner will see sensible increase and will please his wife with a new remodelled kitchen. The kitchen producer will buy a brand new luxury car and the car people a new house and so on and on and on.

          Now it is time for the policies makers to establish where and why the corporate earnings have to be distributed. If all will goes to other countries’s investment or to the distribution of taxes for social issues, you know the story very well. If a sensible part have to go to reinvest in US there is hope the grow will last many years to come. Also, if the labor market have to stay cheap because the immigrants are happy with low wages and there are more low cost immigrants than the market can absorb, the stagflation will be forever. Thats why the market is reacting to the recent changes in a positive way, there is hope the Reps. will address some if not all. Globalisation is failing all over the world.

      • blackjak100 says:

        Never said I was a bear. In fact, I’ve been calling 2400-2500 for bull market top if P5 is an impulse. It will be lower with an ED. We should know soon as an ED should stop at 2230ish where TC’s count/impulse should blow right through it.

      • blackjak100 says:

        By the way, now hiring all over the place is just in the metro area. I travel outside the metro a fair amount and see small businesses dropping like flies in smaller towns. It all started in 2009. I travel same routes and just yesterday saw another place boarded up. Just add it to the list.

    • scottycj1 says:

      The bond market is determining interest rates right now

  26. stormchaser80llc says:

    Welcome to another Log-in Free Post. If you like this sort of analysis, please take a few seconds to sign up for a FREE login using the form at the bottom of this post, and after I complete the process (within 12 hours), you’ll be able to see every post past and future!

    No real changes on Friday. I again show negative divergences on SPX Daily, SPX Hourly, Breadth, HYG:IEF. Also shown were positive divergences on the $VIX. This all tells me a turn lower on the SPX is coming, risk off.

    My proprietary Technicals Model remains quite bullish. It usually gives advanced notice of turns, especially when something big is coming. So my conclusion is this, expect a turn lower, it may spook the market a bit. But I continue to hold a LONG position which is consistent with my Technicals Model and signals. I also want to point out that the cumulative Technicals Model is back (slightly) above its 200 dma, something we will continue to watch closely.

    I am also currently testing out a new method for signals using 999 ensemble members which takes my market Volatility Model into account. A side note, it also incorporates a Gaussian Distribution of randomness to create the ensemble. Well, today it gave a SELL signal with only 105 members currently bullish. I am not yet using it in practice, I want to monitor it for a few months first.

    Speaking of my Volatility Model, I have a new version which accounts for 50 market factors as opposed to the 10 that the original had. I will run them in parallel for now.

    As I was looking at my SPX hourly chart Thursday, I said to myself that if I were the market, no matter if a bull or bear run is ahead for us, that I would like the tag the bottom extension of the triangle we watched in September which broke down in early October. That line is the yellow line on the SPX hourly chart, which as of today sits at 2112.

    Finally, I wanted to discuss a little bit how I tend to view the market. The market is made up of forces from a very small scale (1-min chart) to the very large scale (monthly chart). The more of these forces that align higher, the better the bull run (and the converse is true too). I have talked about the SPX Monthly stalling, as has the Weekly. The Daily chart has had a run higher since the election, but the Hourly has stalled. So naturally, the forces will favor shorts at least in the very short term. But the key is to look to whether the very short term (1, 5 ,15, 60 minute charts) can then recover before the Daily chart breaks down. Only this can dictate if the move higher since the election is ending, or just resting before another move higher later this year.

    More discussion and charts here: http://navigatethemarketstorm.com

    My site is 100% free. If you are visiting for the first time, be advised that I do ask new users register for a free login to see daily posts. This takes 15 seconds. This is to protect myself, ensuring that everyone agrees to my legal documents.

  27. Always insightful! Great observation regarding the following: ” Thus far this bull market has displayed two month uptrends followed by multi-month corrections.” Thanks for sharing, Tony.

  28. fotis2 says:

    Great stuff thanks Mr.C
    Go Trump!

    ”Trump makes the Dollar and the stock market great again” Investing .com

  29. 123 abc says:

    Thank you Tony et al for the outstanding weekend update and roadmap.

    Q: Does OEW incorporate the use Fractals by Bill Williams? Starting to revisit this method for swing trading and possibly day trading. Here are a couple of excellent resources for anybody else interested:

    Franz Emmrich: https://fractaltrading.wordpress.com/




    • jobjas says:

      Agree fully with the speaker ( in the clip 9.00-11.00)
      In technical analysis …..the underlying assumption is false ..& that assumption is that future will be like the past ……in fact the future is never going to be like the past.

    • fbender7 says:

      Awesome video. Thanks for sharing.

    • micky says:

      Interesting 123, let us know how it goes once you start trading the fractal system. As far as I am concerned nothing beats OEW if its on track, which I think it is, at least the medium term. I fully agree on the count from Feb low. The easy part of it is you know where it will be wrong. Like if the origin of minute one is taken out something is wrong. When minute two is done, it will be a fantastic time to take part in the money wave of minute degree. What better road map can there be.

      • micky says:

        At the time there was quite a bit of hysteria on the board, with some ridiculous targets down to the depths of near zero. By familiarising one with the nature of corrections and impulses you can stay calm and get targets and know where you are wrong

        micky says:

        September 10, 2016 at 5:16 am

        That’s possible Tore, but I think if a bigger correction is underway we might be in a bigger wave A with a wave B to follow, and then a C wave down . In that case we would prolly take out the 1990 low.Would like to see what Tony has in store for us today.

        • micky says:

          20150 area, then we have to rethink in a major way

          micky says:

          September 10, 2016 at 4:08 am

          I see this as an abc with the b at 2186 as stated before and c in progress with targets at 2120 for c= 1,6 or 2090 c= 2,6 of a. It fits with a slow a followed by a fast c scenario. It is an abc until its not is my way of counting. Below 2068 my count of 2194 being a wave 1 from the low of 1990 may be in jeopardy .

  30. The way I see the markets, is that we are in the late stages of a bull market not near the beginning of a multi-decade bull market. The fact that as Tony pointed out that the S&P and the NYSE have been laggards is perhaps a sign of things to come. Even more importantly the percentage of S&P stocks above their 200 day moving average is WELL BELOW their August peak:

    Bonds are dropping. Gold is dropping. The dollar is soaring. The post election stock rally seems more like a head fake and a last second gasp than anything.

    • true we are in the later stages of a bull market but the core problem is the US economy is accerating without the Trump policies to hit it, the infrastruture spend should hit late 2017. Wages rate growth has to 3% and needs to be sustained to hurt profit margins, the Fed nows appears to have been running monetary policy too easy based on recent economic data, there is no investor eurphoria i.e large tech ipos such as snapchat the only negative is a strong USD for large corporate profits . A strong USD is very bad for the USD indebted emerging msrkey countries who owe 7 trillion in USD.

      • What I think will be an economy killer would be rising interest rates. 30 year bond prices have slid 14 percent since the July peak. The folks at EWI think that bond prices have topped. If that’s the case, then the economy is in real trouble. What has propped it up for so long were low interest rates.

    • Another major divergence is between the Dow Industrials and it’s components:


      The post Trump rally is almost assuredly not a kickoff to new multi-year highs but likely the opposite. Also I’m not sure why so many analysis are ignoring the plunge in bonds. The fact they are ignoring it means bonds have a long ways to go before they hit bottom.

  31. jobjas says:

    DXY EW analysis

  32. manunidhi21 says:

    Namaste Tony.
    Long weekend generally brings trend change. Does 2189 qualify for minute i ?

  33. kvilia says:

    Thank you, Tony. This is very interesting work of yours and I maybe converting into a bull if markets soon approve your road map. Now I’m interested in your (and others!) opinion on the following. I think I found smth interesting – was under impression that Trump would put pressure on Fed to raise rates and strengthen dollar. Maybe not after all – excerpting from here: http://www.hollywoodreporter.com/news/steve-bannon-trump-tower-interview-trumps-strategist-plots-new-political-movement-948747
    That’s what Bannon is saying: “…I’m the guy pushing a trillion-dollar infrastructure plan. With negative interest rates throughout the world, it’s the greatest opportunity to rebuild everything. Ship yards, iron works, get them all jacked up. We’re just going to throw it up against the wall and see if it sticks. It will be as exciting as the 1930s, greater than the Reagan revolution — conservatives, plus populists, in an economic nationalist movement.”
    So if this is true, this will translate in very few rate hikes and Fed switching to the dovish tone in order to support these massive spendings. For gold lingering around hwb retracement from 2016 high it maybe a very good news. As I mentioned before, DXY is measured against a basket of foreign currencies, also there is a huge DXY/GLD divergence – you can simply compare gld/dxy charts to confirm that. So I would not even worry about DXY moving up as gold my very well join it. I’ve been flipping my view on gold several times over past few weeks and you may have witnessed this. However the more I think, the more I’m getting inclined in accumulating gold positions at these levels. Please comment, I’m eager to hear educated views on this subject.
    Cheers,

    • tony caldaro says:

      The FED will follow its dual mandate, and the market will dictate interest rates.
      Gold has no place in this scenario, as it only enters bull market during inflationary and deflationary secular cycles. We are entering a secular growth cycle, i.e. 1949-1967

  34. I do have one more question Mr C.When and if DXY hits 120,would you buy gold then…or is there a chance that DXY could be revised higher in some kind of extension?Thanks.

  35. fbender7 says:

    Thanks Tony for an outstanding weekend update.
    According to the count: wave 1 of minute i was 63 points in length and wave 3 was 57 points.
    Since wave 3 cannot be the shortest wave, wave 5 must be shorter than 57 points in length. This means that if wave 5 of minute i is still ongoing, it must end shy of 2209. Am I correct in this?

  36. Thanks Mr C…happy holidays.The previous – divs this year on SPX,seemed to take 3 weeks to drop about 70 points,from peak to trough.Do you see similar in time and price…or less this time?Thanks.
    Not sure what part the dollar plays in this upcoming SPX pullback or whether gold drops with SPX.There IS a +div on weekly gold and GDX.Maybe that kicks in around December’s Fed meeting?Or a little earlier.Or if gold/GDX keep dropping because of the dollar ramp-up…the div is lost.
    Gold seems to want SPX to drop,but we need to see that happen first.COT report on gold appeared to be similar to late May–when a rally occurred.But that was a different bullish time for gold.Right now I’m just hoping for some PM bounce short term.Later all.

    • tony caldaro says:

      SPX does not appear to have too much upside left before the Minute ii pullback
      Gold had its run. Crude probably getting its track shoes on now.

      • Agree on SPX and gold…idk on crude.Thanks again.Though an interesting viewpoint on gold from someone was that gold went through a mini-bull market this year,followed by,what might be a mini-bear…leading to a regular bull in gold.But the dollar will dictate that–and price action.

  37. Thanks Tony for your always useful insight and taking time to patiently paint the larger picture.

    The CNN Fear and Greed index is in a moderate stage of greed, having moved from 48 to 63 in the past week. This might suggest selling versus buying, but the case is not strong. And short term volatility as measured VXST is very low and at levels typically associated with minor future losses. Put/Call ratios, which act inversely as does the CNN F&G index, are fairly neutral. But the NAAIM exposure index has not confirmed recent prices and the Goldman Sachs measure of financial conditions is falling while stocks have been rising, introducing a diversion. In looking at these measures and others, cross market analysis is suggesting a MODERATE case for selling rather than buying. We will learn much Monday.

    Yesterday I offered some price levels based upon the mathematical relationship between wave 3 and the ongoing wave 5 which suggested we may have approached a high at 2190. Then reader 123 offered a relationship between wave 5 and wave 1: Wave5 = Wave1 * 0.618. Wave 1 was around 64 points and after doing the math we get around 40 points. 2152 plus 40 equals 2192. Tony mentions, among other levels, 2200, which is the upper limit of what I said yesterday. And a decent case made can be made for 2190.

    Not shockingly, the magic number is LIKELY between 2190 and 2200. Before shorting, I will wait to see signs of the market rollong over. Any my stops are very tight because points are expensive whereas commissions are cheap.

    Lastly, as Tony suggests, the imminent correction is likely to be both shallow and fast to provide space and time for the Santa rally.

  38. micky says:

    thanks Tony(one of my few thanks so as not to clutter the board) every report is appreciated.

  39. llerias7 says:

    Thanks, Mr. TC. I am following close your EW Count. The intermediate top in January (spx2380) should be the end of minor wave 3 or Intermediate (III)?

  40. floyd drummer says:

    great work tony, ….thanks!

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