Weekend update

REVIEW

The week started at SPX 2432. After a decline to SPX 2420 on Monday the market rallied to 2444 by Wednesday. The market dropped to SPX 2419 on Thursday, then rallied to 2433 to end the week. For the week the SPX/DOW gained 0.3%, and the NDX/NAZ lost 1.0%. Economic reports continue to be weak. On the downtick: retail sales, the CPI, business inventories, import prices, the Philly FED, capacity utilization, the NAHB, housing starts, building permits, consumer sentiment, the Q2 GDP estimate, the WLEI, and the budget deficit widened. On the uptick: the NY FED and jobless claims improved. Next week’s reports will be highlighted by leading indicators and more housing.

LONG TERM: uptrend

The long-term wave count we have been tracking had remained unchanged for about a year. There will probably be some minor adjustments as time goes on: project-monitor-adjust. Overall, however, we do expect this to continue to least 2018 and possibly 2020. The longer-term pattern appears more and more probable into the foreseeable future. More on this in a soon to be released special report.

We continue to label the SPX 667 low in 2009 as the end of Super cycle wave 2. Suggesting a Super cycle wave 3, multi-generational bull market began at that time. Primary wave I, of the first of five Cycles waves, began at that time and concluded in 2015 at SPX 2135. Then after a short and swift bear market Primary II bottomed at SPX 1810 in 2016. A Primary wave III bull market began at that time. Currently the market is rising in Major wave 1 of that Primary III. And, if our estimates are correct for SPX 3000+, it appears to be about halfway done at this point in time.

MEDIUM TERM: uptrend may have topped

The NDX/NAZ, which have been leading the SPX/DOW higher in recent months, display indications that their 7-month, 13-wave uptrend may have recently ended. Should this be the case the downside pressure created should eventually pull the general market down as well. The NAZ in particular has a fairly uniform pattern since 2016.

It advanced in 13-waves, 5-trends, 1100+ points over 7-months to complete its Intermediate wave i. Then after a 2-month decline, where it lost 5.8%, it ended Int. wave ii. After that it rallied in 13-waves, one trend, 1300+ points over 7-months for Int. iii.

After last week’s selloff it has rebounded then consolidated into this week’s options expiration. The weekly RSI is displaying a negative divergence, just like it did at the end of Int. i. And, there has been relatively heavy volume during the recent decline. A correction down to NAZ 5900-6000 would not surprise at this time

The SPX has been rising in five Minute waves from its recent downtrend low at 2329 in mid-April. Different count than the NDX/NAZ but both leading to a potential Int. iii conclusion. Minute waves i thru iv have completed: 2406-2353-2446-2416. And, Minute wave v may have already completed this week with a slight failure at 2444. A negative RSI divergence appears on this chart as well. Medium term support is at the 2428 and 2411 pivots, with resistance at the 2444 and 2456 pivots.

SHORT TERM

While Minute i advanced in five Micro waves as displayed in orange on the chart. Minute iii also advanced in five waves, but on a much smaller scale: 2419-2404-2440-2425-2446. Then the decline for Minute iv to SPX 2416, set up the recent rally to 2444, decline to 2419, then rally to 2434. Minute wave iv triangle underway? Or a failed Minute v at SPX 2444?

Either way we have some important levels to watch. For a breakout to continue the uptrend SPX 2444 and 2446. For a breakdown, to join the NDX/NAZ, and potentially enter a downtrend SPX 2416 and 2406. Until one or the other occurs this mixed market continues. Short term support is at the 2428 and 2411 pivots, with resistance at the 2444 and 2456 pivots. Short term momentum ended the week nearing overbought. Trade what’s in front of you!

FOREIGN MARKETS

Asian markets were nearly all lower on the week losing 0.4%.

European markets were also nearly all lower losing 0.5%.

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

COMMODITIES

Bonds continue to uptrend and gained 0.4% on the week. It looks like the 6-month decline in 10YR rates may be coming to an end soon. Long-term rates have been declining while the FED has been raising short term rates 75 bps, (Dec., Mar., and Jun). With the economy weakening some, and inflation rolling over, the likelihood of another rate increase is at best 6 months away.

Crude remains in a downtrend and lost 1.9% on the week. Time for the Saudi’s and Russia to talk it up again.

Gold is in an uptrend but lost 1.2% on the week. If stocks enter a downtrend Gold could catch a bid.

The USD remains in a downtrend but gained 0.1% on the week. The USD has also been in a decline since December. Since the FED started raising rates in December: USD down, Crude down and Bonds up.

NEXT WEEK

Light schedule for economic reports this week. Wednesday: existing home sales. Thursday: jobless claims and leading indicators. Friday: new home sales. Best to your week!

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

About tony caldaro

Investor
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214 Responses to Weekend update

  1. H D says:

    Range 2,441.79 – 2,452.25

  2. pooch77 says:

    Small caps weak,QQQ’s are the play

  3. Lee X says:

    You guys need a vacation

    • H D says:

      roger that! have a good 1 all.

    • rcun says:

      Hey Lee,
      Miss the good old days and your pivot calls! Just for giggles, what is your take on CL here? Support in or close?
      Thanks. Randy

      • Lee X says:

        Hey Randy !

        Sorry for the late response but hey it got closer to support .
        I think short term risk to the downside is 7-10%
        Upside risk is 50-70%
        😐
        Ahhhhhhh the good ole days
        I miss em also dude
        Good to see ya !

  4. fotis2 says:

    Here’s the break for the bulls now go in all long and don’t forget the kitchen sink guys remember you heard it here first!

  5. Because the US shot down a Syrian war plane,Russia says it is declaring US planes “as targets.”
    Any analysis on this –and its effect on equities?Obviously no effect today,but the first US plane shot at by Russia would have to be a gamechanger in many ways.
    (Even PPT would have its hands full with that one).

  6. phil1247 says:

    SPX

    long from 2429 on friday

    looking for my steve miller band playbook at 2449.5 SPX target
    20 points is good enough……
    dont hang around for the last pennies
    da boyze like to pull the plug just before target

  7. vivelaamo says:

    Hey Kvilla am I insane or still too early to judge?

  8. captbara says:

    And there’s the pop we are expecting on Fri. Tech rebalancing on the Russell this week must be showing some effects today. Article with details posted below.

  9. phil1247 says:

    /esu7

    2443 then 2447 next targets

  10. phil1247 says:

    DXY

    bullish above 96.80 …… target 97.86
    coincidentally that is the extension short .618 resistance
    above 97.86 opens the door to 100 plus
    cant be good for gold….. .. right ?

  11. phil1247 says:

    /GC

    downside targets keep getting hit
    potential support at 1247
    if it doesnt hold support drops to 1212

    • Phil:
      It appears to me that your 2 bond charts are the 2-year note yield and the 20 year bond price. Is that correct?
      I believe that the 10-year yield is not going to go up much and, indeed, may fall below 2.0%.. The Fed is going to be constrained by moderating growth, low inflation, and a flattening yield curve from raising short terms rates much more, if at all.
      The combination of low inflation and continued low interest rates with the recent increase in earnings will soon revive this rally and keep the long-term bull in good shape.
      The NDX will lead the market higher, as it has all year, as soon as it pulls out of it’s consolidation, which may happen today. If we see a confirmation with strong A-D performance in the NASDAQ and NYSE, even if it lags the NDX by a day, then we should see the SPX go to a new high and continue doing so. Regardless of DH method targets or lack of targets.

      • phil1247 says:

        egeorge
        i see why u may be confused
        both charts are of / zb the 30 yr bond future
        the daily march contract zbm7 …. its daily for 2 years
        and the weekly continuation zb
        think of it as TLT.
        ..but i use the futures because they work to the tick with my method
        i also look at the TYX ..30 yr yield …
        . because i am trading cash 30 yr bonds ..not TLT which is around a 24 yr blend

      • phil1247 says:

        also …

        RE fed
        fed will do what the market tells it to do

        market is saying keep raising rates

  12. NEWBIE says:

    David Stockman said, “You want to pay twenty-five times earnings going into a world where the Fed yesterday said ‘we’re going to shrink the balance sheet by $2 trillion over the next several years?’

    Where we have a government that is in total chaos. A president that they’re trying to unseat. A debt ceiling that can’t be raised. A tax bill that will never pass. Going into all of that, to say nothing of the red Ponzi in China that one of these days will spill its guts all over the world economy.

    And you want to pay twenty-five times earnings for today’s stock? Be my guest. This is a mania.”

  13. vivelaamo says:

    Yet another terror attack in London! Not a very good year for the city at all. Prayers for the victims.

    • After watching the US Open, I flipped channels and was appalled to here of yet another terrorist attack though anchors were careful to use measured words until more is known. We must be PC. But with 23K known jihadists, the current strategy of intercepting events before the fact is doomed to fail owing to insufficient police and intelligence resources. So the people of London will need to accept this as the new normal until politicians recognize this for what it is and start taking bold measures to confront what is essentially war. I do not believe they will but in the unlikely event they do, they should, at a minimum, allocate more resources to their strategy of preemptive intervention; arm the police; and employ the SAS to break down a few doors in areas described as no go zones. To degree, London is integrated but it is also Balkanized…..the latter the larger problem.

      • vivelaamo says:

        I agree but you do know this was an attack on Muslims right?

      • fotis2 says:

        Parasitical European politicians will do ABSOLUTELY NOTHING because they simply don’t give a rats ass to what happens to the masses.Now if and only if jihadists start targeting lets say the parliament then yes red alert ”hopefully” across the board personally I believe they will triple their bodyguard detail and upgrade their own security till then its the same old ”Je suis Charlie”, candlelight vigil and wait for the next hit at a theater near your area.

  14. Here’s an interesting late night snack:
    The average annualized total return for the S&P 500 index over the past 90 years is 9.8 percent.
    Yet from 1928 to 2016, only six years finished with a gain within five and 10 percent, according to LPL Financial.
    Which way do we go?
    Later.

  15. vipulm555 says:

    All green for gap up

  16. kvilia says:

    http://wallstreetwindow.com/node/13420
    Good article about gold. Can’t wait to hear screaming gold is going down to drain as it happens on every 10-20 points pullback. Someone’s gonna loose his pants 🙂

    • Read that on “Market Oracle” last week.Adam Hamilton is the opposite of Harry Dent.Personally,I don’t think the same set-up is there for a gold rally–yet.Now that everyone thinks they have the post rate hike reaction of gold figured out–it might not work,meaning,no rally.But we’ll see this week.Should happen soon if it’s going to happen at all this month.Good luck.

    • phil1247 says:

      how about some help?
      think or swim is flaky with its picture sharing

      right click the image
      open image in new tab
      hit + to magnify

      it should be full screen and clear

      let me know

  17. phil1247 says:

    file:///C:/Users/philip/Desktop/2017-06-18-TOS_CHARTS.gif

  18. liborval says:

    Hi Tony, from your comment regarding bonds you think the uptrend may conclude soon? TLT down?

  19. phil1247 says:

    http://tos.mx/tosmx/item?id=A6vgMu&image

    ESU7

    2447 TARGET..

    WHY is market stalled at 2436 ????
    its a profit target…….
    ..so boyze will probably leapfrog it overnite
    abracadabra…. ( steve miller band) ……….. new highs

  20. torehund says:

    Sunday and shoulders down…

  21. Interesting charts from Callum Thomas, particularly two and three which offer yet another take on seasonality: https://twitter.com/i/moments/876145670498811905

  22. phil1247 says:

    DA BOYZE

    lets see if watching their tricks for years has sunk in yet…..
    they will most likely open it up at target …. ie /ESU7 2454

    if they do…
    you will most likely not be hearing them playing any steve miller band songs

    • Jack Sparrow says:

      meaning sell off or to the moon- sorry i havent paid attention to steve miller

    • vipulm555 says:

      That’s right looking at 2443 open and closed around 2351

    • stcoleridge says:

      You think it’ll open up 20 points?

      • phil1247 says:

        at least 13 points up….then they may take it to 20

        they need suckers to sell their positions to…..

    • fotis2 says:

      What’s the reason behind it?They don’t care about the big moves why bother with peanut moves.

      • phil1247 says:

        fotis …
        . are you saying the big boys dont care about taking all your money?
        au contraire buddy…
        there are no higher targets
        so its the perfect place to suck people in

        • fotis2 says:

          If I’m reading your statement correctly you’re implying that ”they” somehow ”know” there is a bunch of shorts at the 2440 area and they will open above it to create a short squeeze.Lets look at the price action 2 months ago there was a DB confirm at the close above 2380 on ES, it’s target has been hit, there are no other visible price patterns with upside OR downside targets on the daily chart.We spend the whole of last week inside the previous week’s range so its either a daily close above highs or a close bellow lows for new short/medium term positions to be entered.Looking at the technicals however I personally would not enter longs on a close above high.

  23. mjtplayer says:

    2-10 spread is currently 81bps, just 5bps from making fresh 10yr lows. TIPS spread is currently 1.67% and continues to drop. Both indicators are in downtrends.

    Low growth and low inflation seen ahead

  24. Jack Sparrow says:

    for mid term out look- i think it leaves two options…if the 4th wave is conunted as triangle which it can be then this 5th leg has one more move to upside left (i dont think there has been truncation of the 5th)….if we read the 4th wave has expanded flat (which it can be) then the fifth wave seems to have been completed by doing 5 moves up so far (slight possibilty we have seen 1 of 5) –
    this whole move from november election results should be contained with 2500 either way with a sizable correction

  25. vivelaamo says:

    Gap up tonight. Will get filled by the close.

  26. captbara says:

    Has this already been baked in?
    http://www.reuters.com/article/us-usa-stocks-weekahead-idUSKBN19801X

    Tech to see bump in growth weighting in Russell rejig

    The largecap technology sector is expected to see a bump in its growth weighting when index provider FTSE Russell completes the annual refresh of its benchmarks next Friday, a move that could lift tech shares targeted in the rejig.

    The increased significance of tech comes on the heels of an around twenty percent gain in the sector this year which led to a pullback over the last week.

    FTSE Russell finalizes its annual refresh of its widely-followed indexes on June 23, a move that prompts fund managers to adjust their portfolios to reflect new weightings.

    Largecap tech is expected to see a more than 3 percent weighting increase in Russell’s growth index, a major benchmark for portfolio managers. After a brief classification as a partial value stock last year, Apple Inc is set to be once again classified as 100 percent growth.

  27. COT chart for gold continues to be “not bullish”.Not horribly bearish–just not bullish.I’d be very surprised at a gold rally here.Will not complain if there is one though.Later.

    • mjtplayer says:

      We are entering the turn window for gold now, I’d like to see a continued decline in the days ahead and for gold to mark a low, perhaps in the mid $1,230’s or even lower. We’ll see, but the miners and silver are doing their job in leading lower.

  28. dingo342014 says:

    Hi Tony,
    Been a long time since I posted on here.

    I was reading up on your take on reflating the US dollar. Very interesting and as always very thorough.

    On the topic of the USD, I found something which I was hoping you might explain for me. According to your stockcharts, the US dollar compared to 2001 high is still 20-25% off those highs. I looked at a trade weighted USD chart and it shows something altogether different, with USD essentially at the same highs (down a few %).

    https://fred.stlouisfed.org/series/TWEXB

    What I wanted to ask you is why are they so different, and which one should we really be following? I noticed that on the TWI chart there was no truncation at the SC low

    Cheers
    Dean Whittingham

  29. torehund says:

    Mortality rate on the rise in Uk, and austerity is being blamed. And thats partly true, more state workers in healthcare and social service will bring about even more stagflation and the pound will eventually reach a level where manufacturing of real goods will be financially feasible. In the mean time poverty will make life difficult, Uk vil be a lacmus test for a Financial crisis in Nortern Europe. I hope that solidarity will prevail, and a default mode structure fascist/communism style will be averted. It seem to run in favor of Corbyn, just hope he doesnt go too far into the red ink making an excessively coercive society. If thats his only solution, its best to flee the place beforehand.

    • fionamargaret says:

      Now I know you will all be interested in what Bernstein had to say of Berlioz Symphonie Fantastique…”the first musical expedition into psychedelia because of the hallucinatory and dream-like nature”…maybe perhaps because history suggests Berlioz composed a goodly part of it under the influence of opium…and if that isn’t enough…Bernstein goes on to say”Berlioz tells it like it is – you take a trip, you wind up screaming at your own funeral”.
      And I just liked the music…..x

      Remember to kiss your Dad and thank him…..Happy Father’s Day.
      And for all the older boys who like real country….funnily enough like me….

      • kvilia says:

        Fiona,
        You are making everyone here better – here is my 2c – unlike robokids, and you must not misidentify present time Horowitz – maybe better? At the beginning of the road:

            • fionamargaret says:

              I totally love Evgeny Kissin’s interpretations Kvilia…I post him quite often.
              Horowitz I love for his devilish grin and his unbelievable electric rapport with his audience…..apart from his interpretations.
              Maybe I am not understanding your suggestion….?x

              • fionamargaret says:

                First you have soloists who are good enough to be in the soloist category, but only more experience can take them to the next level…like the Capucon brothers, Lang Lang, Yuja Wang etc.
                It is rather a brutal process.so sometimes Kvilia we will listen to the not so well known players, if they have the musicality to make it, and offer encouragement….x

              • kvilia says:

                Either you got it or not, Fiona. Those you mentioned, I dont think they will be on the different level in 5-10 years, it’s not tennis. That concert Kissin played at 12, I dont think Lang Langs/Hahns can get any close to that. One young violinist I like is Janine Jansen – great potential. Here is a fun one for you:

    • Fiona:
      Thanks for the the very interesting RJ post.

  30. UPDATE: Are we already in a (hidden) BEAR MARKET? – I have just developed two types of market programms, one for Bull and one for Bear markets. In testing, the bull market programm was strongly successful until the end of May. Since the beginning of June the bear market programm has suddenly become greatly superior!

  31. phil1247 says:

    http://tos.mx/tosmx/item?id=NBCu0l&image

    /ZBM7
    BONDS

    despite the tremendous rally in bonds wednesday they still could not get to target
    or stay above the upper trendline
    sold 75% of cash bonds at the trendline
    waiting to hit target to sell the rest
    about 3/4 of a point higher

  32. Arthur Knopf says:

    SENTIMENT UPDATE: No One Can Predict the Future
    http://sentimentsignals.blogspot.com/

  33. captbara says:

    Nas looking good here

  34. mjtplayer says:

    As of Friday’s close, the COT shows:

    – VIX short interest fell slightly, but still near an all-time record
    – Euro longs largest since Q2 2011 and 3rd highest net-long exposure…ever (Q3 ’07, Q2 2011)
    – Largest net-long exposure to the 10yr Treasury note since Q4 2007
    – Long exposure to oil is still not dropping

    So, who’s ready to short the Euro and Treasuries? Certainly getting close. I wouldn’t go long the VIX until the July 4th holiday weekend, perhaps Monday the 3rd or Wed the 5th.

    • aahmichael says:

      All of those people who were long the 10yr in Q4 2007 made a killing, as the yield went from 4.40 down to 1.40 over the next 4 1/2 years.

      • mjtplayer says:

        I know, point being when long positions in Treasuries are this high, it either means massive stock drop ahead or massive bond drop ahead as yields reverse higher.

        I’m looking for a sizable drop ahead in stocks (major 4) but probably won’t start till July, after the holiday weekend. The Aug-Oct time period is notorious for major drops in stocks, crashes, panic, etc. Good time for a major 4 plunge. Volatility cycles are pointing to Aug.

  35. bfquant says:

    $USD and 10yr yields are lower than when the FED began raising interest rates at the end of ’15. This, despite the rest of the world maintaining or increasing their versions of QE. When I mistakenly mentioned that the market was calling Yellen’s “bluff” (mistaken…because, after all, she HAS delivered), perhaps on a longer term basis, this might start to not seem so mistaken.

  36. bfquant says:

    Happy Father’s Day Weekend to all the Dadas out there. I love my daughters. They will be looking at charts soon enough. Wait, No… Don’t do it!

  37. stormchaser80llc says:

    My complete blog post today is open to the public to read. If you like the post, you can sign up for a FREE subscription to view this analysis daily at the bottom of today’s blog post!

    Very little to go on for SPX direction as its been in a trading range for the past 11 days! Other markets such as NASDAQ and Small Caps are breaking down. They usually lead. VIX has had little direction of late as well.

    My favorite trading signal remains BULLISH, while the trading signal based on my proprietary Technicals Model turned NEUTRAL on Monday. There is a full suite of negative divergences on SPX Daily as of the June 9th All Time High, however I’m inclined to believe SPX makes a final high. Breadth is off its highs, but still mainly BULLISH. SPX A-D line made another All Time High today.

    Though I don’t see much momentum for the BULLS. Stock participation has been weakening all week. The Yeild Curve is lower than election day (10Y-2Y). TLT:TIP shows an explosion of deflationary action in the past few weeks. HYG:IEF continues to be weak. Oil looks like it needs one more lower low before a sustainable turn higher. And of course, my proprietary Technicals Model has had 5 negative divergences vs. SPX since mid April, strongly suggesting an important top is imminent.

    Supporting charts and much more FREE analysis at my site (http://navigatethemarketstorm.com) However be advised that I do ask folks to take a few seconds to register for a log-in, making sure you agree to my legal documents. On my site, be sure to check out the real-time Trading Platform (look for it on the top menu). I am taking feedback!

  38. Mr C,theoretically,we could do up to 92 points or anywhere between here and 2508?I’m thinking with the C&H,2480.On the Nasdaq weekly,we might go for a triple -div? (Since the daily RSI is already at 30).Have to be on your toes here.Thanks for the WU.

  39. Thanks Tony for your time and valuable comments. I found your discussion of rates, bonds and the economy particularly insightful. And you know I agree with your guidance on rates.

    While I fully appreciate your analysis is largely based upon wave counts, its hard for me to completely dismiss past market responses to recent rate increases notwithstanding other instruments largely ignoring Wednesday’s Fed decision. With that in mind, current price patterns strongly resemble those of last December at which time prices went sideways before an abrupt drop around two weeks after the Fed increase on December 14th.

    But unlike December, this sideways mess (chop suey) has been in place longer vis a vis Fed increases than in December suggesting the correction will come sooner. This is particularly so given the NDX pullback (max) of around 4.5% combined with the fact its not uncommon for SPX corrections to lag those of NDX appreciating the lag is difficult to quantify.

    And as you suggest, should the NDX languish or fall further I think the SPX will correct…POSSIBLY next week given historical patterns following June OPEX. The maximum weekly pullback has been around 3.5% whereas 2% is not unusual. Some of of today’s Twitter reads:

    Urban Carmel‏ @ukarlewitz

    Week after June OpX has been down 74% of the time in the last 27 years (from Stock Almanac)

    Urban Carmel‏ @ukarlewitz

    $NDX fell 4% from uptrend high (blue line). That’s corresponded w/ at least a 3% fall in $SPX (red line). Lagged two times (yellow shading)

    Urban Carmel‏ @ukarlewitz

    If $NDX (blue) breaks mid-May low (equal to 6% fall) then $SPX (red) likely to have first 5% fall since November. Lags (in green)

    • torehund says:

      The sunny side of the naz correction is that it was abrupt and without resistance, didnt have the slow rollover look to itself. Thats indicative of pure corrective action. That said a lot of larger corrective disasters also starts with an abrupt drop. As its sell in May and go Away time correction could be much deeper, what halts it in price is that all larger timeframes are favorable on the macd lines. A Cannon is needed to reverse that.

      • We’re speaking of a modest correction, not a reversal in prices. By the time it reveals itself in, say, a weekly chart it may have run its course. Tony has made this point on more than one occasion. And how a correction is displayed in momentum oscillators depends speed, depth and duration. This what the 2 week 5% correction in COMPQ of last October looks like: https://invst.ly/44nqv

  40. mcgcapital says:

    The week after June opex the market has been down 13 out of the last 14 years:

    https://mobile.twitter.com/ukarlewitz/status/875887376358227968/photo/1

    Don’t particularly like Fridays candlestick from a bearish perspective as we closed at the highs but everything still looks toppy to me so hopefully we can get a much needed correction soon.

  41. cj32 says:

    Cr. CBZ

  42. 123 abc says:

    Stellar weekend update and roadmap; particularly appreciable Nasdaq analysis; thank you Tony et OEW team.
    Taking a guess that Minute-v may already be underway from the 2419 low.



  43. Millan Tomic says:

    Morning, should have a tiny bit more upside I think:
    https://www.tradingview.com/chart/SPX/Aj60cyZe-SPX-Short-term-June-2017/

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