weekend update

REVIEW

The market started this record week at SPX 2271. After a pullback to SPX 2257 on Monday the market rallied to all-time highs at SPX 2301 by Thursday morning. Then a pullback ended the week at SPX 2295. For the week the SPX/DOW gained 1.15%, and the NDX/NAZ gained 2.0%. On the economic front reports came in even. On the downtick: existing/new home sales, durable goods orders, Q4 GDP, plus weekly jobless claims rose. On the uptick: the FHFA, leading indicators, consumer sentiment, the WLEI, and the final Q4 GDP estimate. Next week is quite a busy one on the economic front, highlighted by the FOMC meeting, monthly payrolls and the PCE. Best to your weekend and week!

LONG TERM: uptrend

Despite the short term uncertainty, at times, the long-term trend continues to exert itself on the major US indices. The SPX/DOW/NDX/NAZ/TRAN/NYSE all made all-time highs this week. For the four major indices this suggests a potential extension of the November uptrend, from SPX 2084, is underway. If so, this uptrend will have done something the previous two impulsive uptrends were not able to do. Extend beyond 2-months in duration.

spxweekly

The long-term count from the Primary wave II low in February 2016 at SPX 1810 remains unchanged. Intermediate waves i and ii completed in June. Minor waves 1 and 2, of Intermediate iii, completed in November. And a Minor wave 3 uptrend has been underway since then. Should the SPX clear resistance at 2305, then this uptrend will likely extend into February and beyond. Once SPX 2336 is exceeded, all potential bearish counts will have been technically eliminated. Then SPX 3000+ will be the target over the next 1-3 years.

MEDIUM TERM: uptrend

Every bull/bear market has its own characteristics. Identifying these characteristics early on helps one ride the medium-term trends with more conviction. Markets can be fickle at times, and do things that they have not done in recent months. But the initial characteristics generally hold up throughout the bull/bear trend.

From the November SPX 2084 low we had counted five waves up to SPX 2278 using one set of characteristics, and SPX 2282 using another. In between those two highs there was a pullback to SPX 2234. This is easier to see on the hourly chart below. After the second high the four major indices started to diverge. The SPX entered a 2254-2282 trading range, the NDX/NAZ continued to eke out higher highs, and the DOW hit its lowest level since early-December. Since the DOW had been the leader during this uptrend it suggested to us a downtrend was underway. And the market was just waiting on the NDX/NAZ to head lower. That didn’t happen. After the DOW made the lower low the market drifted up a bit into Monday of this week, and then the market took off to new highs.

spxdaily

This market action suggested one of two possible scenarios. First, the small B wave we had labeled at SPX 2282 was continuing, noted as a possibility last weekend. Second, the entire uptrend was extending with a Minute wave iii underway. To eliminate the B wave scenario the SPX needs to exceed 2305. Which represents a 1.618 relationship to the 2278-2234 decline. As of this weekend this has not occurred and both scenarios are still in play. Medium term support is at the 2286 and 2270 pivots, with resistance at the 2321 and 2336 pivots.

SHORT TERM

After following both 5-wave up counts to SPX 2278 and SPX 2282 for a while, we settled on the SPX 2278 count as being the correct one. We labeled Minute wave i at the high (2278) and, under the first scenario, a Minute ii underway. We also offered the second scenario, a Minute iii underway, on the DOW charts. SPX 2305 is, as they say, the line in the sand. All the short term activity from the SPX 2278 high was quite choppy in the SPX. Even the rally to SPX 2282 from SPX 2234. Until this week. The rally from Monday’s SPX 2257 low to 2301 was quite impulsive. And the pullback thus far, after 2-days, is only 9 points.

spxhourly

While we may be leaning towards the second scenario, the count posted on the DOW charts, we are waiting for a Fibonacci all clear before starting to look much higher. Minute wave i was 194-points (2084-2278), suggesting Minute wave iii could be just as impressive. One step at a time. Short term support is at the 2286 and 2270 pivots, with resistance at the 2321 and 2236 pivots. Short term momentum ended the week with a positive divergence. Best to your trading next week!

FOREIGN MARKETS

Asian markets were all higher on the week for a net 1.9% gain.

European markets were mixed and gained 0.4%.

The DJ World index gained 1.2%, and the NYSE gained 0.8%.

COMMODITIES

Bonds still appear to be entering an uptrend but lost 0.2% on the week.

Crude is still in an uptrend but lost 0.1%.

Gold remains in an uptrend but lost 1.4%.

The USD is in a downtrend and lost 0.1% on the week.

NEXT WEEK

Monday: personal income/spending and PCE prices at 8:30, then pending home sales at 10am. Tuesday: Chicago PMI and consumer confidence. Wednesday: the FOMC meeting, the ADP, ISM, construction spending and auto sales. Thursday: weekly jobless claims. Friday: monthly payrolls, factory orders and ISM services.

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

About tony caldaro

Investor
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194 Responses to weekend update

  1. Dex T says:

    Federal Reserve Bankers Mocked Unemployed Americans Behind Closed Doors

    “Yet according to transcripts released this month after the traditional five-year waiting period, Federal Reserve officials in November 2011 were debating whether unemployment was caused by bad work ethics and drug use – rather than by the greatest financial crisis in 80 years. This debate then factored into the argument over setting monetary policy.

    “I frequently hear of jobs going unfilled because a large number of applicants have difficulty passing basic requirements like drug tests or simply demonstrating the requisite work ethic,” said Dennis Lockhart, a former Citibank executive who ran the Atlanta Federal Reserve Bank. “One contact in the staffing industry told us that during their pretesting process, a majority—actually, 60 percent of applicants—failed to answer ‘0’ to the question of how many days a week it’s acceptable to miss work.”

    The room of central bankers then broke into laughter.”

    https://theintercept.com/2017/01/27/federal-reserve-bankers-mocked-unemployed-americans-behind-closed-doors/

  2. vivelaamo says:

    Rut has remained in this range for weeks. No reason to not keep trading it until shown otherwise.

  3. micky says:

    Interesting that gold made what seems to be an expanding triangle near the recent bottom. It may have been a 4th wave of some degree. The E wave ended at 1186 and then the 5th went down to 1179. Internals were all threes as can be seen on a 15min chart. And they were much faster than the waves in a contracting triangle.

  4. locanbbs says:

    UPDATE: Rut breaking out? Leading Indexes upwards? –

  5. phil1247 says:

    out breakeven
    try tomorrow
    hasta!

  6. vivelaamo says:

    I think a more bearish move would have been if the gap closed and then we dropped. The likelihood now is the gap will be closed sooner rather than later. Unlucky Newbie.

  7. gtoptions says:

    Thanks Tony
    SPY ~ WPP @ 227.98 in play. FOMC Week!
    GL All

  8. phil1247 says:

    spec long 2273 spx

  9. phil1247 says:

    interesting FACTOID

    /CL is trading about the same price it was 6 months ago………….

    AND the same price it was 2 years ago

    LEE ….are you still trading oil?

    also GOLD has the potential to turn into BLACK GOLD and trade sideways

    frustrating bulls and bears

    i am involved with neither of these two cash chippers at the moment

  10. fionamargaret says:

    UGAZ, UCO, DBP, DBC, TMF…. Long…

  11. “Currently, micro support in the S&P 500 resides between 2,284 and 2,291. As long as that region holds as support, we are setting up to target the 2,320-2,330 level first, and, after a pullback, the 2,350 zone. It would take a break down below 2,280 to force me into an alternative perspective, which would require another test of the 2,230-2,245 region before we head much higher.”
    –Avi’s latest call.

    • im guessing we go higher from here, make new all time highs by Friday, then bail. buy the dips

      • from 2233 we moved 68 point higher to 2301. a 50 percent correction is 34 points to 2267, pretty much where we hit today a .618 correction is 2259, less then that I agree we are going to 2235 area. break 2267 we at least drop to 2259, drop below that 2235. but I think 2267 holds. good luck everyone, go patriots

  12. kvilia says:

    Not convinced shorts should be taken here, SPX on hourly mingling with 200MA, which provided support previously.

  13. captbara says:

    Interesting spot here

  14. H D says:

    GM Tony, are you only censoring posts that don’t align/ support your theory & political views? Thought I had a decent argument for continuation of the 20 year crisis cycle and a defense stock trade idea. I respect your desire to suppress the conversation but think your readers are telling you it’s simply too important of a topic for our society.

  15. vivelaamo says:

    The indices needed this. Hopefully it’s more than just a day or two drop and we get a decent sized corrrection. 5% or so would be a lottery. Happy to wait to go long again.

  16. captbara says:

    NYMO update: -30

  17. hooloo1957 says:

    Tony, with respect, the reason you can’t see this as the fifth wave up is because you have five quantified waves up to August of 2015. Is that right? And quantified waves are never wrong? How do we rectify that with all that we know about never. i.e. there’s no such thing as never. Thanks for your work

  18. kvilia says:

    Those who are shorting gold – I am gladly accepting your donations.

Comments are closed.