Weekend update

REVIEW

After three weeks of trending sideways this was a wild week! The market started the week at SPX 2477. After a higher open on Monday the market rallied to all-time high on Tuesday at SPX 2491. After that what appeared to a normal pullback turned into a profit taking selloff after the NK and US engaged in saber rattling. By Thursday the SPX had dropped 2% to 2438, bounced, and retested that low again on Friday. For the week the SPX/DOW lost 1.25%, and the NDX/NAZ lost 1.35%. Economic reports were light and mixed. On the downtick: consumer credit, the PPI, the Q3 GDP estimate and weekly jobless claims rose. On the uptick: wholesale inventories, the CPI and the budget deficit improved. Next week we have industrial production, retail sales, the NY/Philly FED and the FOMC minutes. Best to your week!

LONG TERM: uptrend

With the bull market already 18 months old, and the NK/US saber rattling intensifying this week, the market pulled back immediately after making all-time new highs. Since the potential for a black swan event exists, it behooves us to review the seven major indices (SPX/DOW/NAZ/NDX/TRAN/SOX/R2K) with a worse case scenario in mind. Therefore, we are putting aside expectations and just reviewing each of these indices wave patterns to see what they are displaying.

A worse case scenario for the DOW suggests the recent uptrend just completed Intermediate wave iii, and an Intermediate wave iv correction is underway. The wave structure from the early-2016 low does not suggest the bull market is over.

The NYSE has a similar pattern, albeit it is carrying the alternate Primary V scenario. Three Major waves up from the early-2016 low, with possibly a major wave 4 correction underway. No bull market top here either.

The Transports, however, do display five Major waves up from the early-2016 low. And the bull market here may have ended with the alternate Primary wave V count. Historically the Transports have topped together, with the other indices, or were a few months early. Despite the potential bearish count this supports the DOW/NYSE scenarios.

The Semiconductor SOX also displays three waves up from the early-2016 low. The recent uptrend failed to make new highs, so the SOX is probably doing an a-b-c Intermediate wave iv. Again, no signs of a bull market top in this index either.

The Russell 2000 does look like it has done five waves up from the early-2016 low. We have labeled it a Major wave a, since the R2K has always moved in large a-b-c’s. Sometimes this index tops early like the TRAN.

The SPX can be counted five waves up from early-2016 if you are will to accept a 2% correction as all of a key 4th wave, Intermediate iv. Since there have only been two other 2% corrections in the past 100 years, and neither was a significant wave, we have trouble with this potential count. The more likely scenario is that that little correction was Minor a of an ongoing Intermediate wave iv correction. This count would align the clearly bullish DOW/NYSE/SOX. An irregular Intermediate wave iv correction would also align the charts of the NDX/NAZ.

Plenty of worse case scenario counts to choose from. Some bullish, some bearish. Decide which ones you like and go with it. It’s your money.

MEDIUM TERM: uptrend

After a miniscule correction in April, the SPX aided by the DOW which did not correct, rallied to all-time highs just this week. The uptrend looked impulsive at times, but spent the past three weeks, of a 4+week uptrend, in a 1% range before the false breakout on Tuesday was sold. What the market managed to do in three weeks, a 1% range, was accomplished, in reverse, in three hours on Tuesday.

After the pump and dump activity on Tuesday, and reviewing all the other major indices, we decided to put the irregular Intermediate wave iv scenario back on the table. Clearing the OEW 2479 pivot was certainly no breakout. In case it was, we are maintaining the Micro 1-2 scenario too. The irregular iv count aligns with the SOX, the DOW/NYSE, and if you are so inclined even the DJ World index. Medium term support is at the 2428 and 2411 pivots, with resistance at the 2444 and 2456 pivots.

SHORT TERM

We continue to carry the Micro 1-2 scenario on the SPX charts, since it looks quite similar to the Micro 1-2 during the last uptrend. In fact, this Micro 2 is as oversold as the last one. This scenario cannot be ruled out until the SPX confirms a downtrend. It is still in a uptrend.

The decline from SPX 2491 so far is three waves: 2462-2474-2438. Where the first and second decline are nearly equal. Several hourly/daily indicators are oversold, and the market is due for at least a bounce, or to setup a positive hourly divergence. With several unknowns, including option expiration, in the coming week, the market could continue its volatility. Short term support is at the 2428 and 2411 pivots, with resistance at the 2444 and 2456 pivots. Short term momentum ended the week oversold. Best to your trading!

FOREIGN MARKETS

Asian markets were all lower for the week for a net loss of 1.5%.

European stocks were also all lower for loss of 2.9%.

The DJ World index lost 1.6%, and the NYSE lost 1.9%.

COMMODITIES

Bonds continue their uptrend and gained 0.5%.

Crude is still in an uptrend but lost 1.5%.

Gold was safe haven status this week and gained 2.2% during its uptrend.

The USD is still in a downtrend and lost 0.1%.

NEXT WEEK

Tuesday: retail sales, export/import prices, the NAHB, the NY FED, and business inventories. Wednesday: housing starts, building permits and the FOMC minutes. Thursday: jobless claims, the Philly FED, industrial production and leading indicators. Friday: consumer sentiment and options expiration.

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

About tony caldaro

Investor
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180 Responses to Weekend update

  1. micky says:

    Bounce was good, took most scalps off, need to see some good action above 2473-75 to keep the bull alive.

  2. Bud Fox says:

    TWTR….3:30 om 8/14…….really nice Buy signal. I own it, prior to this signal.
    So, very pleased that the signal formed, late today 8/14….

  3. phil1247 says:

    last one

    ES 2469 next extension long target
    if that is blown out to the upside
    shorts will be screaming in pain
    as test of top should be next

    there is no overhead resistance until the extension long fails

  4. Bud Fox says:

    TWTR, apears to be on the verge of a $3-4 price advance, now approx $16….

  5. captbara says:

    Gap fill tomorrow?

  6. Yellen got S&P above the 10 and 20d(2463) EMA by a couple points to 2466.That’s not bearish action– unless it falls below it again.Amazing.

  7. 2491 to 2438 is 53 point decline for A down. B up .618 retrace is 32.75 so 2471 ish for B Wave top will be looking to short tomorrow.

  8. vivelaamo says:

    I see some random numbers are being printed by our resident bear. I’ve closed half my RUT longs here and set other half to break even. It’s been quite a decent bounce but may have ran out of steam at the 200 sma.

    I still don’t think the markets cares about North Korea. It’s a non event.

  9. gary61b says:

    ES hard to short a 4 point PB, 2462 level to break..next up after that 2459.

  10. blubrd67 says:

    Fiona, any idea why UWT is suddenly dropping so much last hour?

  11. fotis2 says:

    Whats up with CL except for mjt no one else short?

    • phil1247 says:

      bottom should start to fall out of crude soon
      plenty of time to get short for the ride down to 38 dollars
      then 14 dollars eventually
      you are short already fotis …yes ????

      • shauryagh says:

        Herein I disagree with the $14 target …to the untrained amateur eye crude seems to be forming a cup with a handle on the monthly charts…..Long term stochastics analysis do point to the possibility the feb 16 low will not be violated for quite a few years to come…short term weekly divergence suggests that $42.05 low in June is an “unresolved low” …i.e it will be tested…my guess is that crude will very likely close below $42 but that would be a very good price to accumulate for a minimum target of 55.25 and an eventual target of 85 within the next 1 – 1.5 years

  12. mcgcapital says:

    Might just be lazy journalism but North Korean public holiday tomorrow could be marked by a missile test:

    https://www.google.co.uk/amp/www.dailymail.co.uk/news/article-4788306/amp/Kim-Jong-absent-public-amid-fears-missile-test.html

    • mjtplayer says:

      The media is too busy calling Trump a racist to actually report news

      • tommyboys says:

        LOL thats right. 200 people outta 300M rally “white lives matter” and it somehow follows that Trump is a racist – even with Jewish inlaws and thousands of black employees! Media really needs to key in on this MASSIVE group! Not even sure why Trump is thrown in with these marchers. Too funny!

        • H D says:

          who cares about the media? You few Trump supporters left are really showing your true colors after a weekend like that. Trump had an opportunity to say the right thing and so did you guys. Chose otherwise. Very few Patriots left.

          • JK1987 says:

            thinking from a different angle, the true color of Trump supporters are bears
            Russia is the biggest bear, they know by electing Trump, the nation will be divided
            and destroyed one way or another. it’s war on multiple fronts..
            with Trump’s nature, he will create a massive bear market, sooner or later.
            who did created the massive bull market? #44
            bears do love #45.

          • lunker1 says:

            Trump did say the right thing. Short and sweet. Twitter messages are short. Unfortunately you and others didn’t think it was sweet. Reading into words too much. It’s all a waste of time. All just a big game.

        • aahmichael says:

          A neo-nazi uses ISIS tactics to kill an American citizen on American soil, yet Trump refuses to denounce it for what it is…and you find that “too funny”?

  13. shauryagh says:

    USDMXN Make or Break:… Nice tight divergence in the short term weekly charts makes it highly likely that the next significant move is higher i.e. depreciation of MXN…18.06 is now the line in the sand …a break above 18.06 will quickly take the currency to its 200 dma in the 19.29 – 19.35 zone which is also a 38.2% fib retracement of the entire 2017 move from 22 to 17.5.

  14. fotis2 says:

    Market suckering in longs big drop coming

    • NEWBIE says:

      2375 or 2325 on deck.

      • shauryagh says:

        If Trump manages to pass tax reform despite all odds…. then 2700 on deck faster than u can say “nuclear north Korea”…

        • gary61b says:

          Wrong branch of government, executive branch does not write or pass laws..

          • shauryagh says:

            In the above sentence trump does not represent the person but is used a symbol of the entire govt…AHCA was also passed by Congress and not Obama technically…but it is and forever will be Obamacare

    • JK1987 says:

      that will be wave 3 down.
      Aug 14 headline: Stocks surge as traders see North Korea tensions easing; Dow up triple digits

      Tomorrow Aug 15 is mid-August, turnaround Tuesday?
      North Korea Guam missile strike plan ‘ready by mid-August’

      indicator:
      North Korea recalls key ambassadors to Pyongyang amid missile row

      • fotis2 says:

        Market reminds me of the time i forgot the foot pump of my Zodiac and tried to blow it up with my mouth

    • phil1247 says:

      not until es 2459.75 fails buddy

      • JK1987 says:

        you should have known
        38.2% at 2458 was lesser degree wave iv (thought it was)
        now reaching 61.8%, that’s wave 2 level (now upgrade it to)
        next is wave 3 down, the strongest down wave of 2017.

        didn’t RJ say: ” If the past is prelude, something BIG will happen with the equity markets. ”
        that’s what RJ meant.

  15. allen1929 says:

    I see -1200 tics but es just trades 2465 ?

  16. shauryagh says:

    Previously 16.9 was the strong resistance in Silver …..now..it is support… accumulate Silver at current levels with 16.65 stop and 21 target….Will be great cheap insurance for anyone who is long any equities.

  17. shauryagh says:

    16.9 was the strong resistance in Silver now …it is support… accumulate Silver at current levels with 16.65 stop and 21 target….Will be great cheap insurance for anyone who is long any equities.

  18. shauryagh says:

    Russell bounced nicely from its 200 dma and long term trend line…the short term down trend line joining the 26th July and 8th Aug tops is a line in the sand for shorts… today the trend line resistance is approx at 1415.. 100 dma at 1398 / 10 dma at 1403…Recommend short at 1398 with 1415 stop loss with 1286 first target…112 point gain with a risk of 17 points…

  19. Lee X says:

    Wow you guys are good and the internet knows it 😉

    Hey Tony
    Hope things are going ok
    I’m headed your way for the eclipse next Monday , I’m going to mow in the dark .

  20. vipulm555 says:

    Bulls of street are back, PB is back

    Smartz

  21. “The way this seems to be set up is: nothing happens in NK over the weekend,big rally on Monday?Market loves to play that game.”
    Me,on Thursday.Easiest call in history.

  22. H D says:

    So record shorts pile into /VX futes again and it’s down 25% already…. follow the money.
    SPX did the -(55) typical hit this year. Already HWB.

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