Weekend update

REVIEW

An interesting end to a mostly choppy week. The market started the week at SPX 2439. After a tick up to the all-time high at SPX 2440 on Monday, the market pulled back to 2425 by Wednesday. Then after the ECB meeting, the much awaited Comey testimony, and the UK election fiasco, the SPX hit an all-time high at 2446 on Friday. After the high, however, the Tech sector went into freefall, pulling down the SPX to end the week at 2432. For the week the SPX/DOW were mixed, and the NDX/NAZ lost 2.0%. Economic reports for the week were mostly negative. On the downtick: ISM, factory orders, consumer credit, the WLEI and the Q2 GDP estimate. On the uptick: weekly jobless claims improved. Next week’s reports will be highlighted by the FOMC meeting, retail sales, and industrial production. Best to your week!

LONG TERM: uptrend

The long-term count remains unchanged. Super cycle wave 2 ended in 2009 at SPX 667. Primary I of Cycle wave I, during this new Super cycle wave 3, topped in 2015 at SPX 2135. Then after a bear market Primary wave II to SPX 1810 by early 2016, Primary wave III was underway.

Primary wave III is currently unfolding with Major 1 of the five Major waves. Major wave 1 has thus far divided into three of the five Intermediate waves. Intermediate waves i and ii ended in the spring of 2016. Then Intermediate iii started to subdivide into five Minor waves. Minor waves 1 and 2 ended in the fall of 2016, and Minor wave 3 and 4 ended in the spring of 2017. Minor wave 5 of Intermediate iii has been underway since April 2017.

MEDIUM TERM: uptrend

The Minor 5 uptrend has been rising since April at SPX 2329. It is subdividing into five Minute waves, as did Minor waves 1 and 3. Minute wave i ended in May at SPX 2406, and Minute wave ii also ended in May at SPX 2353. Minute wave iii appears to have just ended on Friday at SPX 2446, and Minute wave iv is likely underway now. When it concludes the SPX should again rally to all-time highs. There does appear to be, however, a slight problem.

The Tech sector, which has been driving the general market high since November appears to have ended its uptrend on Friday. We can count 13-waves up from Nov-Jun for its Intermediate wave iii. Certainly it could extend further, but this would be more of an exception to a normal probability. The NDX/NAZ both have weekly/daily negative divergences, have completed 13-waves up during a lengthy seven-month uptrend, and were down more than 3% from their all-time high at one point just on Friday.

This potential activity suggests the SPX/DOW can complete their uptrends, and their Intermediate wave iii, but without much support from the Tech sector. The likely outcome is limited new highs, while the NDX/NAZ rebound off their lows. As a result we are adding in one more pivot we had planned to ignore until Friday’s events: SPX 2456. Medium term support is now at the 2428 and 2411 pivots, with resistance at the 2444 and 2456 pivots.

SHORT TERM

From the Minor wave 4 downtrend low at SPX 2329 in April the market has progressed in three Minute waves up to SPX 2446. The first wave Minute i advanced in 9-waves on our shortest time-frame, and the third advanced in 5-waves on the same timeframe. Plus, wave i was 77 points (2329-2406), and wave iii was longer at 93 points (2353-2446). On Friday, after that SPX 2446 high, the market sold off to SPX 2416 in a matter of hours. This selloff looks like Minute wave iv underway.

During Minute ii the market declined from a SPX 2406 all-time high to 2353 in just two-days. Then Minute iii was underway. This suggests Minute wave iv may end quite quickly as well. Possibly Monday/Tuesday. Then Minute wave v should be underway to new highs. With the Tech sector unlikely to make new highs in the weeks ahead. The Cyclical sector is unlikely to get very far in its Minute wave v. Short term support is at the 2428 and 2411 pivots, with resistance at the 2444 and 2456 pivots. Short term momentum ended the week just below neutral. Trade what’s in front of you!

FOREIGN MARKETS

Asian markets for the week were mixed ending collectively unchanged.

European markets for the week were also mixed ending with a 0.1% loss.

The DJ World index lost 0.5%, while the NYSE gained 0.2%.

COMMODITIES

Bonds remain in an uptrend but lost 0.3%.

Crude remains in a downtrend and lost 3.8%.

Gold is in an uptrend but lost 0.7%.

The USD is in a downtrend but gained 0.2%.

NEXT WEEK

Monday: Budget deficit at 2pm. Tuesday: the PPI. Wednesday: the CPI, retail sales, business inventories, and the FED is expected to raise rates 25 bps. Thursday: jobless claims, import/export prices, NY/Philly FED, industrial production, and the NAHB. Friday: housing starts, building permits, options expiration, and consumer sentiment. Best to your week.

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

About tony caldaro

Investor
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207 Responses to Weekend update

  1. UPDATE: Markets losing ground after hours (sell signal – see vertical red line on chart) – TODAY/TOMORROW CYCLIC BOTTOM!
    SPX hourly futures:
    http://imgur.com/a/qVEa8

  2. cj32 says:

    cr. CBZ

    • chrisk44342 says:

      You know what cracks me up? BTC bugs really will become like gold bugs. As soon as the ‘financializing’ effect takes place, it will become manipulated just like gold. Go long physical BTC and short the paper version? LOL

  3. mcgcapital says:

    FTSE activity is reminding me of last October. 7130 was the high, initial move down to 6930 then a retrace to 7070 followed by range bound trading for a week or two with an eventual short sharp break down to 6650 before the US election. This time around 7600 is looking like an intermediate top, move to 7380 and now a retrace to 7540. Think a break under 7380-400 could see a quick move to 7130 before more bull. Following last week’s UK election Sterling has come off somewhat with uncertainty but the outcome means a hard Brexit is less likely now which is sterling positive… think Sterling will rally again once the Queen’s speech passes parliament sometime next week.

  4. tommyboys says:

    Whoever is calling for BTFD is correct imho. After watching for two days smells suspiciously like a correction vs. trend reversal. Quick, sharp, deep and scary – the hallmark of a pullback. NYAD tilted just slightly negative and NAS A/D about 1.1/1.7 negative – nothing to nuts.

    • mcgcapital says:

      None of the pullbacks we’ve had this year have been deep or scary.. we’re due one where it feels doubtful that we’ll get back to the highs anytime soon to flush out the weaker hands.. and for that to happen we’re talking 5+% and at least a couple of weeks of corrective activity

      • stockop says:

        i’ve been in this camp for weeks, but i’m thinking differently now. i’ve still got capital and if these intraday H&S break today/tomorrow i’m diving in and adding if it goes my way. lot of underlying strength. i dont think we get that 5% correction until later this summer after int 3 is done and everyone is patting themselves on the back for buying the dips. perfect time for the bears to come out and call for the end of the bull market. dont see that happening rn with the way financials and energy look and to be honest, this tech pullback has to be scaring some holders, anytime the leaders start to falter its gonna cause some amount of fear.

  5. H D says:

    Tony’s 2428 pivot kind of a big deal. Amazing it’s been there even before price traded there.

  6. stockop says:

    while i would really like to see the S&P and Dow take out their supposed wave 1 highs so we can get a reset (neely says this strong of a wave b that there is NO way a c wave would take out the b wave start), tech stocks are looking like theyre going to bottom on a retest of lows, some may break slightly lower, others, one in particular, i hope just makes a close retest. This is looking like a clear BTFD. really really want to knock out wave 1 highs as that would signal a strong wave 5 up to break 2500 which i dont see how that doesnt happen if energy and financials are finally joining the party, but look for tech to be finishing up this down move and “reverse rotation” to potentially happen if the S&P/Dow/Rut go lower.

    • H D says:

      Are you using the Neely method?

      • stockop says:

        no, but i’m familiar with his work and the things that make a lot of conceptual sense i keep in mind, this being a big one. trend is way too strong rn and it would cause a lot of pain to stop short like that to both sides imo (weak handed bulls jumping ship expecting more downside, bears adding more thinking more downside). we shall see.

        • H D says:

          agree, there’s some great additions to EW in his method but a little to reactive, hindsight for most compared with the predictive value of EW. I think I understand your b wave comment and Neely would say it took more time than the previous trend. OK to rule out. There’s the hindsight.

          • stockop says:

            i’m obsessed with the psychological nature of EW as that is essentially what wave theory is based on. i try to think of everything in regards to that and not just “it took more time than the previous trend” like Neely so often does. not that its right and it definitely doesnt follow Occam’s razor, but the above combined with the already strong trend in place, to me, better explains why the move afterwards can be so violent and strong, the final shakedown. all hypothetical, but i think the odds are getting higher that we see this c wave failure. debunks tony’s count (don’t know what his alternate is/OEW will do if this occurs) and would absolutely manhandle the bears.

            • H D says:

              I don’t think that debunks his count at all actually. And yes the psychological nature of hoping the bears get roasted again has been a very successful state of mind. Not sure it has anything to do with EW though…. :mrgreen:

              • stockop says:

                below 2405.8, im fairly confident falsifies it. can’t be an ED as wave 3>wave 1 any way you count it and that would be in the price territory of wave 1 so i don’t see how it doesnt tho it wouldnt be the first time i was wrong.

              • H D says:

                huh? oh well I guess I didn’t understand ur b wave comment? No worries.

              • stockop says:

                irregular failure, BTFD is the gist.

  7. pooch77 says:

    Hard to believe rut only down 2 points

  8. mjtplayer says:

    TLT starting wave 5 of C, still targeting $128+, should get there within the next week or so

  9. kvilia says:

    Bonds did it again – prepare for juicy C.

  10. UPDATE: Cyclic market lows Tuesday (tomorrow) and Wednesday-Thursday. Then probably up (if not then beginning July).

  11. captbara says:

    Up into Fed then let’s see the QE fireworks.

  12. stockop says:

    potential A-B-1-2 in the Qs…or will the bulls get out of these past two days completely unscathed? come on mr. market let me buy into fear and not just a dip

  13. Two questions:Can PPT pull Nasdaq into + territory.Second one.Why would this drop to the 34d ma be any different than the one in late May,or the one before that?

  14. H D says:

    GM all, 5:5 in June from our friendly BOT set up. Right on time today too. >90% odds
    The EW, needs a LL to get a C wave going. Typical of this bull is 1 wave hit and resume the rally.
    Plenty of data on deck and OPEX rules this week. GL

  15. Mary773 says:

    Tony,

    On your Stockcharts public page, you are projecting $70-$85 for WTIC, which is a contrarian call at a time when the news and trader sentiment are so pessimistic. This article provides a fundamental thesis for a big rise in prices.

    If This Oil Guru Is Right, Oil Is In For A ‘Sharp Move’ Higher

    …While the world seems to think oil supply is abundant, Goehring and Rozencwajg point out the market has been in deficit for two months, and they see an oil market that has undersupplied and will remain that way for quite a while. And with that, they are “wildly bullish,” especially given that OPEC has now extended cuts into a market that’s already undersupplied.

    They think prices can run to above $100 again (as was the case in 2008, when OPEC cut into an undersupplied market), especially given the very negative sentiment on oil prices at the moment–what they call “maximum bearishness.” They say the “peak oil” supply obsession has turned into an obsession with the theory of “peak oil demand…”

    https://www.forbes.com/sites/bryanrich/2017/05/30/if-this-oil-guru-is-right-oil-is-in-for-a-sharp-move-higher/#2100c0b41e7b

    Thank you for sharing your analysis.

  16. vivelaamo says:

    RUT could drop hard today. I think.

    • stockop says:

      what makes u say that?

      • vivelaamo says:

        Seems like a really battle going on. I’ve seen this near tops before where bears win. When I say drop I’m talking 15 points or so when in the grand scheme of things is quite small I guess.

        • stockop says:

          yeah H&S says 20 points so that sounds realistic. thought u were seeing something bigger, appreciate the response

  17. stockop says:

    starting to look like we are indeed in wave 5, and based on that and the fact that neither 1 or 3 look extended, and with banks and energy joining the fray, this could very well see an extended wave 5 of 5…or it could be a massive headfake before the S&P and Dow join downward. Regardless, gimme some of those techs. Not looking likely but if we were to see new local lows on the S&P, delta hedging could do some serious damage today. Dow and Rut H&S aren’t probably H&S, but worth keeping an eye on

    • stockop says:

      my biggest qualm with the market movements the past few days is how obvious the rotation into energy and financials has been. when cnbc is talking about it, i mean how legitimate can it be? the kind of people hopping aboard the train are not people that i want to join. i think we will all have our answer this week/early next.

  18. Well,the party’s over if it breaks 2417…then down to 2365.

  19. mjtplayer says:

    Fed meeting Wed and OPEX on Friday, could see some volatility this week

Comments are closed.