The SPX started the week at 2399. After a higher open on Monday and Tuesday the SPX made a new all-time high at 2404. It then pulled back to SPX 2382 before ending the week at 2391. For the week, the SPX/DOW lost 0.45% and the NDX/NAZ gained 0.50%. Economic reports for the week were mostly positive. On the downtick: the WLEI and the Q2 GDP estimate. On the uptick: wholesale/business inventories, export/import prices, the CPI/PPI, retail sales, consumer sentiment, plus weekly jobless claims and the budget improved. Next week’s economic highlights include: industrial production, the NY/Philly FED, and housing. Best to your week!
LONG TERM: uptrend
While the long-term count has remained unchanged, the general market has made little to no progress since the day after the POTUS addressed Congress on February 28th. On March 1st the SPX hit 2401 and has since traded between 2322 and 2404, while the NDX/NAZ have gained about 4.5%. Cyclical stocks have been flat, while growth stocks have been bought. A Q1 GDP, initially reported under 1%, might explain it. However, with 90% of the SPX already reporting Q1 results, sales have been +7.3% while earnings have been +14.7%. And it is the SPX that has been flat to lower.
We continue to label a Major wave 1, of Primary wave III, bull market from February 2016. Intermediate waves i and ii completed in the spring of 2016. Minor waves 1 and 2, of Int. iii, completed in the fall of 2016. Minor waves 3 and 4 have recently completed in the spring of 2017. Minor wave 5, to complete Int. iii, appears to be reluctantly underway, but has already made a new high.
MEDIUM TERM: uptrend
In review of the NAZ, to determine a quantified short term count within its current 6-month uptrend, an additional observation was made. During the three-trend correction of Aug-Nov 2016 the NDX/NAZ both made a new high during their B wave, while the SPX/DOW did not. Since the SPX/DOW was clearly a three-trend a-b-c, we assumed the NDX/NAZ was doing the same thing. After all, all four indices had done something similar during the three-trend correction of Apr-Jun 2016.
Recently, however, there was a seemingly odd divergence between the SPX/DOW and NDX/NAZ. The cyclicals confirmed a downtrend in April, while the NDX/NAZ only pulled back and then easily made higher highs. Upon further review of that NDX/NAZ B wave, it looked like it could be counted as a small five waves up. This suggests the apparent bifurcation between the two sectors was recently cleared, and they are actually back in alignment.
Under this scenario the NDX/NAZ completed Intermediate wave i, with five Minor waves, from Feb-Sept 2016. Then had an Int. ii correction into November. And is currently in Int. iii. This would explain the lack of a downtrend in April 2017. The short term count within Int. iii suggests the recent NAZ 6133 high could have ended Minor 3. If so, then after a short term pullback for Minor 4, a Minor 5 to new highs should follow. This also fits the short term SPX/DOW count. As they both suggest at least one more new high to complete their uptrends.
The current SPX uptrend, which we are counting as Minor wave 5, has so far progressed in three short term waves. If the SPX turns down from here, and breaks through SPX 2361, then it is not Minor 5, but only a B wave of Minor 4. Then SPX 2300+ should provide support for the rest of Minor 4.
If the uptrend is Minor 5, as we suspect, then the SPX has at least one more wave up, if not more, to new highs. The uptrend can be counted as four waves so far: 2361-2345-2404-2382?, with a 5th wave to follow. Short term support is at the 2385 pivot and SPX 2361, with resistance at the 2411 and 2428 pivots. Short term momentum ended the week at neutral. Best to your trading!
Asian markets were mostly higher on the week for a net gain of 1.2%.
European markets were mostly higher and gained 0.2%.
The DJ World index gained 0.1%, and the NYSE lost 0.6%.
Bonds are in a downtrend but gained 0.2%.
Crude is in a downtrend but gained 3.5%.
Gold is in a downtrend too but gained 0.1%.
The USD is also in a downtrend but gained 1.0%.
Monday: the NY FED at 8:30, then the home builders index at 10am. Tuesday: housing starts, building permits, and industrial production. Thursday: weekly jobless claims, the Philly FED, and leading indicators. Friday: options expiration.