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. fionamargaret says:

    UWT up to 18.5/19…then we shall see.

  2. gary61b says:

    ES posssible PB to 2452 then to 2468.

  3. phil1247 says:

    ding !

    /es …….. 2458 target hit !

    see ya!

  4. phil1247 says:

    /GC…

    GOLD…. as mentioned last week… sold into friday premarket spike to 1298 target
    no rebuy yet as extension long was nicked…
    questioning the validity of the extension
    it has now failed.
    . 1272 is now critical support to the bull case for 1339 … otherwise
    support drops to 1240

  5. phil1247 says:

    /ES

    in extension longs
    bullish above …….2449
    target ……………. 2458
    setting up the battleground at the daily short entry at 2459

    once the extension long fails you will know where the resistance lies

  6. travis01 says:

    Thanks Tony for great report. Got in a little early on my short but killed it last week. Out in cash mostly now but should have played the long into this morning expecting a big turn up short turn. Expecting larger pullback late Aug/Sept. Large manufacturers still holding back on buying for oil/gas/mining and most industrial sectors so I’m not a big upswing proponent just yet. Large buying contracts are good precursors on stock price and just not there yet. Datacomm looks great for amazon and really weak for others. Steel mfgs still strong with Trump.

  7. vivelaamo says:

    Jimbo thanks for the tips!

  8. Richard Glackin says:

    I’m looking at a possible 1-2 down in TLT / 1-2 up in TBT…anyone have a count?

    • phil1247 says:

      richard

      from the 143 high
      (called in real time when others espoused TLT to 165 nonsense)
      to the 116 low
      you have wave A or 1….

      everything since then has been overlapping counter trend wave B or 2

      this wave could grind up to 130 .. the 50% retracement
      or higher if stock declines
      cause a rush to ” safety”

      eventually the bond crash will continue
      in wave 3 or C when stocks have corrected and regain their footing

      TLT… bearish below 133
      target 110

  9. captbara says:

    Futs looking strong. 2460 ES next?

  10. J.Wenger says:

    Thanks Tony. Most of the recent break-outs I’ve been following have failed…seems there’s more downside ahead before the advance resumes.
    http://www.invest-safely.com/stock-market-outlook-2017-08-13.html

  11. looking for 2466-2472 for a B wave bounce, then big C wave down 2x wave 1 is 106 so 2360-2366
    Good luck all

    • Thanks finamargaret for the fascinating article penned by Nadeem. China has a long term plan to be the next global hegemon and has a well documented history of assisting all the major nuclear-armed countries that oppose the United States and its democratic allies. This is hardly a secret in foreign policy circles but Western politicians find this intellectually disagreeable. And the moment, China is currently using North Korea to commit nuclear blackmail against the US to ensure no actions are taken on possible currency manipulation, technology theft, trade barriers, sanctions and territorial expansion into the South China Sea. Separately, China must be no less than delighted Western politicians are generally aware of China’s aspirations and blithely pursue feckless policies of globalization and multiculturalism certain to weaken economic growth, sow sees of discontent and sunder social contracts.

        • fionamargaret says:

          Just Fiona please Stephen….there were more syllables required for signing in, thus the extension.
          …and we have given the Chinese quite a foothold in real estate, company buying etc.
          Do you remember my mentioning linking on to a page of the Sydney Morning Herald (Fairfax), and finding an article about setting up Chinese Internment camps and other really strange stuff, and when I went to get a link, all had disappeared….
          You probably are thinking this as weird as my mentioning numbers breaking up.
          There are true sequences with the algorithms, and if there is a faltering (like there was when I mentioned I thought we were going to get a reversal right here), that was when it was happening. I had previously said to maybe think of VXX as an insurance, just minutes before.
          I latch on to them and if it is a true sequence you can play the sequence. It does not happen ever to suddenly crash or have criteria built in…and that is where I disagree with Phil and DH (apart from Phil being rude enough to bring another method to teach Tony’s group on Tony’s website).
          The picking up of the sequences to me is the same as listening to music…oil again has the advantage…probability, but really more than that, of going up until it has reached the top of the sequence. When Phil mentions 36, or 14, that is just not helpful…the sequences are in the present and can not give you out of order numbers like that…hope this helps, but perhaps is more confusing….x

          • Richard Glackin says:

            That’s a big 10-4 and a large thumbs up fiona!

          • I think I missed you mentioning numbers breaking up but I fully agree with your statement regarding sequences which is why I log both short and longer wave lengths as there is often repetition and in the longer term (relative) predictable extensions. Not confused yet.

            • fionamargaret says:

              Go to Tuesday Update Stephen, and scroll down to almost the bottom…you will find my ramblings to you there, and you being yourself ….a perfect gentleman.x

              • fionamargaret says:

                ..and to think the lads are just looking at the legal issues pertaining to Brexit…easy peasy.

          • micky says:

            I rather think Phil is helping many traders onto a system that actually works Fiona. It does not clash with Tonys work as he does not try to count waves.Personally I dont use the DH system, as I have my own.

            • fionamargaret says:

              I know Micky, and you know I respect your work and your opinion…you are a kind soul.

  12. cj32 says:

    cr. CBZ

  13. alexhartley1 says:

    I am working cycle wise an intermediate iv into late September followed by a int. v into 2018 for a Major 1 top of PIII (3000+). Things could get ugly 2019-2021 with a 30-50% correction. Then a massive Bull Major 3 wave!

  14. opader says:

    Thank Tony and other for sharing their thoughts and comments. My thoughts: http://www.balancetrading.org/

  15. The market went nowhere for 22-23 months. See: http://schrts.co/Aip5Y1

    We are only 9 months into the advance. The advance should last another year or so.

    See for example: market gained nothing from 1965-1982. Followed by 17 years of huge gains. Market gained nothing from Feb 2011 to Nov 2012 (21 months). Followed by 22 months of huge gains into September 2014 top.

    This is another dip to buy. The dip could be over. It could extend a few more percent.

  16. phil1247 says:

    http://eminiaddict.com/?cat=5&paged=2

    /ES.. SPX . Looooooooong term… from 1929

    2266 is the most logical target for a spike down buy level

    watch the first 3 minutes of this DH video to see why

    • phil1247 says:

      its the market analysis for wed 8/9 /17
      that is the worst case scenario for the bull using /es
      SPX level is 2272

      if 2272 fails……
      support drops to 2070

      something to keep in mind for all bulls anxious to BTFD
      as always … these are potential support levels
      support can only be validated by breaking shorts

    • fionamargaret says:

      …tacky sales pitch…

      • lunker1 says:

        No more of a sales pitch than you are for Kimble 😉

        he’s not DH. and you can learn an excellent trading system from Phil and/or DH for free….as I have. phil is all help and no music videos either.

        • fionamargaret says:

          I do not have a subscription with Kimble, and when he sends his work, there is no mention of subscription….ditto for RJ…
          You would prefer no music….I thought that was you singing at the Man.U. games….x

          • lunker1 says:

            DH’s daily videos are very detailed and very free w/ out a pitch. Phil isn’t a sales pitch either he does things his own way the references the videos to helps others to see the general system which is simply an application of Fibonacci. It’s useful to share ideas and systems such as your own charts or P&F or other that’s how we all learn. Proprietary systems that aren’t explained or shared are confusing clutter.

  17. Bud Fox says:

    The Russell 2000 index, concerns me. But, in that I concur with the OEW wave
    structure. Then the R2K, merely confirms a grown Bearish pattern. NYSE breath chart,
    is also in agreement with the R2K , negative pattern.


  18. Here’s a possible problem with gold breaking 1300.if it does–booyah,but I can’t believe it will be that easy.Hasn’t been yet.The guy that posts this…Elroy,also thinks a fractal from earlier in the year could take the S&P to new highs.I’ll post that below.

  19. Hmmm let’s see based on this jumbled analysis, what would I do with my money?
    1 – Give it to a fund manager who at least makes more sense.
    2 – Follow some other EW guru.
    3 – Trade based on my own analysis.

    I think I’ll stick with 3 cause 1&2 are a guaranteed losing bet.

  20. soulsurfer says:

    Thanks for a very thorough update Tony, covering many indices.

    NYMO did something it only did 3 times prior over the past 20 years (which I have data for); rather telling: http://investingintelligent.com/2017/08/12/the-nyses-mcclellan-oscillator-did-something-unique-last-week-what-does-it-mean-for-the-stock-market/

    GL folks!

    • Richard Glackin says:

      Soul, the most interesting thing about the CBOE option put/call ratio is that the spikes do not occur in advance of a drop but at or very near the lows. I find this quite telling, in effect forecasting not much more drop ahead…I’m expecting that ‘C’ wave you mentioned but thats it.

      • soulsurfer says:

        Hi Richard, u r correct in that extreme readings (>0.90 and especially close to or >0.95) coincide closely with price lows. On Thursday the CPCE was 0.88; already getting frothy but just not conclusively there yet. But it can still very well spike to >1.0: no guarantees only likelihoods. Add all other indicators and charts and u have the weight of the evidence right there. Futures are now up 9p already 🙂 let’s see if they hold into open tomorrow!?

    • fionamargaret says:

      ..this was meant as slightly saucy, to lighten one’s thoughts…if you liked it, I have another 2 “episodes”…

  21. mtu MTU says:

    SPX, once again, presents us with a potentially meaningful high. Expect a meaningful pullback at least 2350 for wave-four-down or much lower for a wave-two pullback at one larger degree or a reversal. A decline below 2400 invalidates the (only?) near term bullish alternative.

    https://market-timing-update.blogspot.com/2017/08/mtu-weekend-ed-meaningful-high-81117.html

  22. Tony your AUD and international equity indices counts support the bull case.

  23. bouraq says:

    AS A GIFT TO FREE MEMBERS AND FOLLOWERS ALL CHARTS ARE FREE THIS WEEKEND ! http://tradingchannels.uk/weekend-post-12-charts-27/

  24. Bud Fox says:

    ref TWTR….does anyone have “price” projections for 5th wave top?

  25. Arthur Knopf says:

    SENTIMENT UPDATE: Now is Not the Time to Short
    http://sentimentsignals.blogspot.com/

  26. Thanks Tony for your time and effort behind an outstanding WE edition of OEW. The combination of counts, seasonality and geo political tensions is vastly complicating any attempt to apply rational methods to understand what the market is likely to do. And within the basket of indicators I study there is tension and conflict. Measures of breath suggest weakness; put call ratios read sell; various momentum indicators suggest the market is oversold; VIX is moving higher; and TRIN is neutral. These are just a handful of the indicators but the sample is large enough to see the internal conflict over market direction. But some indicators have a greater reaction time than others, suggesting we could easily see a bounce notwithstanding the basket of indicators generally leaning bearish. And as long as the SPX remains below its 50DMA, the downside is favored, a view supported by the seasonality indices posted this week and in prior weeks. Lastly, until tensions with North Korea are resolved the market will likely be driven events and the news cycle.

  27. bfquant says:

    Clearly, a non-objective analysis here. I think NK situation is an excuse for the mkt to selloff on some of the ineffectiveness Trump has had with HC and Tax. It is a sentiment thing. Sentiment drives the waves, so it is perfectly reasonable to expect something like an INT IV scenario based on this. The wildcard for an even more bearish scenario is, of course, NK itself (and to a lesser extent, the possibility that the “Trump bump” is unwound due to impeachment via Russia and other wildcards). I voted for Trump, so don’t construe this as any kind of partisan analysis either.

  28. ZH reports Trump says”The trade war with China starts Monday.”

  29. Page says:

    “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.”

    ha ha ha …. 😀

    Thanks Tony. Outstanding update.

    • fionamargaret says:

      …loved it too Page, also “it behooves us to review”…just like a good English lawyer…

  30. kingfrogcash says:

    BTC 3,900
    it doesn’t take the weekend off

  31. Thanks Mr C for your analysis.My thinking on the weekly gold COT chart is,gold–in spite of less than bullish open interest the last two weeks–was dragged kicking and screaming higher by fundamentals.As long as GDX is above the 10 and 20d,the traffic light is green.
    Reading other analysis:One guy said gold over 1300 completes a “W” pattern and implies 1380.Ira even mentioned it.So that’s two seeing that pattern.It won’t be easy.
    Bulkowski and Art Cashin both in agreement on stocks topping in August.Bulkowski even has quite a bear market until 2019.Then a massive move up.Avi of course thinks a drop to 2300 is likely now that 2450 has been broken.
    Good luck all.

  32. blackjak100 says:

    James Goode timing model is as good as it gets at predicting 5%+ corrections. It fired its first ‘SELL’ since July 2015. Combine that with an 8 HO signal cluster still on the clock and you get the best probability for a 5% correction at a minimum. Keep in mind if P5 chooses to be a massive multi year ED, a 20-25% correction would be the norm for major 2 of P5. 1-2-3 and A-B-C are the same until they are not and right now 3/C is a nice 1.618*1/A from 1810.

    http://stockcharts.com/h-sc/ui?s=%24SPX&p=D&st=2012-06-04&en=today&id=p90452876827&a=327814108

  33. captbara says:

    Tony infinite 1-2 scenario may work if Fed minutes show dovish again next week. In that case we can have both gold and spx up together like the good old days.

  34. mjtplayer says:

    Per Friday’s COT report, some very interesting changes:

    – Incredible, but all-time record high short interest in the VIX barely budged, only dropping by 10k contracts (from roughly 155k to 145k) – a long way to go in order to wash-out the massive short interest. Amazing. The VIX is sell when short interest is wiped-out to zero (or swings to net-long).

    – All-time record long positions in the Euro, eclipsing 2007 & 2011 levels

    – Net-longs in gold have really jumped, that’s not what the gold bulls want. Gold is a sell when net-long exposure reaches about 200k contracts, long interest has jumped from 50k to 150k in just 2 weeks.

    – Net-long positions in oil are their 3rd highest ever (Dec 2014 and March 2017)

    • phil1247 says:

      mjt….
      re: cot ..
      yes we are getting to extremes .. but they can get more extreme
      EURO .. still in extension longs … plus seasonal explodes up after august dip
      GOLD .. sold gld into am spike friday .. only token longs now .. extension nicked
      CRUDE OIL… bearish… ran up into next short entry friday as expected
      i want to see some down side momentum before i short it

    • Mjt major move in vix came wed thurs and even friday ..commitment is as of Tuesday close. I doubt its reflective

      • mjtplayer says:

        You haven’t seen the “major move” in the VIX yet, what you saw this week was just a move from ridiculous all-time low complacency up to a normal 15-ish reading. The VIX should trade 13-16 under normal market conditions.

        The major move is yet to come, 20+ and possibly 30+, fueled by a massive short squeeze

  35. vipulm555 says:

    Its too confusing on counts ,
    Smartz are king/cash.

    Keeping powder dry for trigger on buy side. Doing research is best

  36. ufa123 says:

    Thank you Tony for all your hard work. I really appreciate your guidance when there are so many conflicting signals. This period is reminding me of 2000/1 when the major indices seemed to be out of sync.
    Fingers crossed that Kim and Trump find a safe path where both can claim a victory.
    GL all

  37. phil1247 says:

    lots of hoopla about all sorts of reasons why………..

    how about its just the seasonal pattern?

  38. vivelaamo says:

    Thanks Tony. Agree bull market continues.

  39. 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 my blog post! No money, no tricks, no gimmicks!

    I know, I have been repetitive this summer, you probably got sick of me. But there was good reason for that. I had been monitoring long term negative divergences on SPX Monthly, Weekly and Daily charts, as well as market internals, breadth and participation. I also followed along giving both bullish and bearish shorter term indications utilizing SPX and VIX hourly charts along with short term moves in my Proprietary Technicals Model, despite my model topping in April it did show a nice reversal higher ahead of the July ramp up.

    To analyze the market, I look at different timeframes of SPX itself, and a supporting cast of indicators. My proprietary Volatility Model was about as low as it got since 1990 near 8/8 SPX All Time High. So too was the narrowness of the Daily SPX Bollinger Bands! The sign was there folks!

    Have you read about Hindenburg Omens? I track them for the SPX, and they showed in advance an important top was building. Now we got 2 more this week, as they can also occur during significant pullbacks and less frequently at important bottoms. I also have been talking again about the Puetz Crash Window. Its fascinating but one doesnt mean a huge drop is coming, just that conditions like these have occurred during numerous large drops in many markets over time. More reading for both topics on my site under the Techniques menu.

    So I utilize a large number of methods in order to try to really see what is most likely to happen. Technical Analysis, Modeling, Raw true and tested economic indicators, respecting other theories such as Hindenburg Omens and the Puetz Crash Window all shape my viewpoint.

    My SPX swing trade signals are still bearish (since 7/28 and 7/31). My cumulative Technicals Model topped on 8/3, 2 days after SPX A-D line did (which never confirmed the last SPX All Time High on 8/8). SPX Daily remains below its 20 and 50 dma. It also broke the 2464 support and 2 major pivot levels on Thursday. The SPX McClellan has been negative now 10 of the past 11 days, while my Technicals Model has bee lower for 5 of the past 6 days. VIX likely has topped for now. Still looking for that higher high in oil though I’m saying to be nimble as its taking longer than expected to occur.

    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.

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    • lunker1 says:

      tacky sales pitch

    • Why are you showcasing a graph with January data? And eventually you will need to publish both swing and day trading calls (15 min) and what the returns were along with the drawdowns. And it would be helpful to draw vertical lines to illustrate/define entry and exit points. And while I find your work interesting, the site is too busy to be used as a marketing tool for a trading sevice. Trying to be constructive and good luck.

    • micky says:

      Storm, I can not honestly see how you can trade by using a myriad of tools. How about some live trading calls to show that you can actually make money out of those seemingly messy charts.

  40. Lee X says:

    Thanks Sir

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