Weekend update

REVIEW

The week started out at SPX 2441. After a gap up opening on Monday the market rallied to SPX 2468. Then for the next two days it struggled to add to that gain, even though it opened higher both days. After hitting SPX 2475 on Wednesday the market started to pullback. Thursday’s gap down opening accelerated the decline into a low of SPX 2421 on Friday. The market then rallied intraday to SPX 2440, but then pulled back to close at SPX 2426. For the week the SPX/DOW lost 0.75%, and the NDX/NAZ lost 0.65%. Economic reports for the week were major positive. On the downtick: housing starts, building permits, and the Philly FED. On the uptick: retail sales, import prices, the NY FED, the NAHB, business inventories, industrial production, leading indicators, consumer sentiment, plus jobless claims improved. A quiet week ahead with new/existing home sales, durable goods and Jackson Hole highlighting the week.

LONG TERM: uptrend

The Major wave 1 bull market, from February 2016, continues. This week we update the weekly chart to display our preferred count. Nothing was changed between February 2016 and April 2017. We still have an Int. wave i, with an irregular zigzag Int. ii in the spring of 2016. Then Minor waves 1 and 2, of Int. iii, in the fall of 2016. And, Minor waves 3 and 4 in the spring of 2017.

At the June SPX 2454 high we are now fairly certain it was the end of Int. wave iii. Then a small 2% correction to SPX 2406/2408 in July, for Minor wave A of another irregular Intermediate wave correction. The recent August high at SPX 2491 appears to be all of Minor wave B. And, Minor wave C should now be underway to end Intermediate wave iv. Since Int. ii was an irregular zigzag, Int. iv should be an irregular flat. There is an outside chance at it being a triangle. But we will expect the most obvious first. When Int. iv ends, Int. v will take the bull market to all-time new highs.

MEDIUM TERM: downtrend probably underway

The daily chart displays the preferred count as noted above. An int. iii high at SPX 2454. Then a Minor A at SPX 2406/2408, a Minor B at SPX 2491, and a Minor C underway. Should this correction end as a flat, as expected, it should find support right around SPX 2400. It took the market three months, March-May, to finally break through that level. Then after doing so, it retested that level in June/July before heading to the all-time high. With Minor A around SPX 2400 it looks like a logical support level for Minor C in the days/weeks ahead.

Technically, with Friday’s lower lows across the board, the SPX/NDX/NAZ are all displaying positive daily divergences. Usually this is good for a decent rally. We had a similar setup during the ‘a’ wave of the Minor 4 correction in March/April. That positive divergence was small, but good for a significant bounce. The daily MACD has turned negative, which typically occurs during corrections. There could be another choppy week ahead. Medium term support is at the 2411 and 2385 pivots, with resistance at the 2428 and 2444 pivots.

SHORT TERM

The hourly chart illustrates our alternate count, since we still have not been able to totally eliminate this subdivision count. We will not spend much time on it as it is an alternate. What is more interesting is the symmetry for this irregular Int. wave iv. Minor A declined 48 points: 2454-2406. Minor B stretched a bit beyond the 1.618 relationship, with a false breakout, as it rallied 85 points: 2406-2491.

The first decline from the all-time high was 53 points: 2491-2438. Then after a 37 point counter rally: 2438-2475, the market declined 54 points into Friday’s low: 2475-2421. Notice Minor A, and the two declines of Minor C were all about the same size: 48, 53, and 54 points. These last two declines both occurred in a matter of just two days. If you review the NDX/NAZ chart you will observe several steep 2-day declines occurring nearly every month. This appears to be a characteristic of this bull market: quick shake outs.

Should the market continue Friday’s rebound I would expect it to run out of upside momentum in the 2444 – 2456 pivot area. This appears to be the fulcrum for positive/negative trader sentiment. This would also represent another 30+ point rally. Then another 50 point decline could setup the SPX for the downtrend low around 2400.

FOREIGN MARKETS

Despite the negative activity in the US this week, only three of the foreign markets we track were actually negative.

Asian markets were mostly higher for a net gain of 0.4%.

European markets were mostly higher for a gain of 1.0%.

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

COMMODITIES

Bonds continue to uptrend but ended the week flat.

Crude is still in an uptrend but lost 0.3% on the week.

Gold has an uptrend to but lost 0.2%.

The USD remain in a downtrend but gained 0.4%.

NEXT WEEK

Wednesday: new home sales. Thursday: weekly jobless claims and existing home sales. Friday: durable goods orders and a Jackson Hole speech from FED chair Yellen.

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

About tony caldaro

Investor
This entry was posted in weekend update and tagged , , , . Bookmark the permalink.

61 Responses to Weekend update

  1. torehund says:

    Gentlemen buy canned food 🙂

  2. bouraq says:

    Chart of the weekend is $RUT at http://www.tradingchannels.uk

  3. J.Wenger says:

    Still a downtrend from where I sit…Survivor white house LOL!
    http://www.invest-safely.com/stock-market-outlook-2017-08-20.html

  4. phil1247 says:

    http://money.cnn.com/data/fear-and-greed/

    getting there …………
    but can go from extreme fear…
    to panic……… .
    …( not shown )
    😉

  5. vivelaamo says:

    Thanks Tony for a great update. Also some very interesting and helpful posts this weekend. Plenty to ponder. Thank you all.

  6. torehund says:

    Leftist won, its hard to stir up any meaningful resistance to their agenda; as it has already been adopted by the majority. Only a few remaining opposers exist, but not enough to keep the fight going. Movement has lost steam as their thoughts are now mainstream. Then what 🙂

  7. 2460-2440-2480…then the big drop. Went long at the close looking for a nice leg up early in the week.

  8. Thanks Tony
    Maybe 5 of III is extending in blue Channel?in this case 5 of III is now about 1,68% of 1
    In square “alternate” count,V not already done,lasting one wave up (if it doesn’t extends)
    V is now 61,8% of I
    https://invst.ly/4v10a

  9. JK1987 says:

    Mary, thank you so much for the explanation of 185 cycle, I value your work very much.
    here is JK 185 cycle presentation.
    the cycle has a low-low-high cycle (those blue arrows are at the exact/precise weekly bases).
    we just experienced a high on the week of Aug 7, next should be a low, and 185 away, then another cycle low should be for another 185 away.

    initial “short term” target would be the black mid pitch fork channel, also a test of the red break-out level.
    then the following next low cycle should reached the bottom of the black pitch fork channel.
    rsi is below 50, meaning it should trip toward the low end.

    0818 2017 indu LT cycle pitch fork channel

    PS. I posted some work on Friday’s update.
    I was hoping for a consideration of the out of box thinking as Tony claimed to predict the 1987 crash. maybe using the same rationale and analysis would yield something. but looks like was not into consideration at all.
    imho, it should not to be labeled as bull or bear work and to be excluded for a different angle of thinking. imho, more importantly, is to do it right.

    very short term, I am hoping spx can fill the 2468 (an “Interesting numbers” from Fiona 😉 so that there is no complain about a gap to be filled in the future.

      • JK1987 says:

        Mary, that’s another nice cycle work to learn and study. Thank you.
        I believe Tony predicted the 1987 crash too, was just hoping him to using the same rationale to consider to do some work on current situation. If he does find out something, the credit is to Tony and oew, as I posted on Friday’s update.

      • JK1987 says:

        Mary, does 158 week cycle has any meaning to you?
        Oct 2011 – Oct 2014 – Oct 2017
        it match your October cycle low.
        it also coincides with Oct 1987 crash anniversary.
        0818 2017 158 week cycle posted

        • JK1987 says:

          and prior to Oct 2011 was Oct 2008
          Oct 2008 – Oct 2011 – Oct 2014 – Oct 2017

          • Mary773 says:

            I had viewed that as being a seasonal phenomenon, but in doing a cursory check from the beginning of the SPX chart that weekly cycle seems to resurface more frequently than would be coincidental.The S & P index was created in 1923, but did not become the S& P 500 until 1957, so I will also check the DJI going back to 1885. Thank you. Well done.

            • JK1987 says:

              the pleasure is mine. you are my teacher on cycle, You inspired me, I learned from you. thank you.
              talk about season. once the season high is confirmed, the turn out of the cycle low won’t be small, and never small. I have checked back to 1957 with spx and dji.
              once current Aug 8 top is confirmed (I believe it did already with my many other studies and 3 Major Major historical patterns in many ways), certainly the decline won’t stop at current dji -2.5%, spx -2.9%.
              people talked about year ending with 7.
              but I am thinking this 158 cycle with ten-fold power, meaning 2017, 1987, 1957, 1927, it’s very interesting.

  10. Mary773 says:

    Thank you, Tony.

    JK1987 says:
    August 17, 2017 at 7:58 pm
    Hi Mary, Can I interpret your 185 cycle as the next cycle will be a low and 185 away? Appreciate learning the cycle from you. Thank you.

    The 185 trading day cycle is a subsidiary of the 132 week cycle which is a subdivision of the dominant 91 month cycle. The next occurrence of the daily cycle coincides with the arrival of the weekly cycle in October, Theoretically, it should be a significant low, but as they say, “Monitor and adjust.” The most recent occurrence of the daily cycle happened on 8/2, which was within three SPX points of the 8/7 closing high that preceded the fake out on 8/8. The cycle was impossible to interpret real time because it was in a congestion area as opposed to being a distinct high or low. In retrospect (which is always just Monday Morning Quarterbacking). it does support Tony’s analysis that 8/8 was more significant than merely being a reflex high.

    Hope it helps. This wonderful blog is most enjoyable for me when traders are trying to help each other succeed. Good luck.

    http://stockcharts.com/h-sc/ui?s=%24SPX&p=M&yr=20&mn=0&dy=0&id=p35463509373&listNum=82&a=540325077

    • Mary thanks to you and JK for your fascinating contributions. I have played around with the different cycle lengths and using simple math am unable to breakdown the longer cycle lengths into shorter cycles and make them match. Anyway, you say “The next occurrence of the daily cycle coincides with the arrival of the weekly cycle in October, Theoretically, it should be a significant low, but as they say, “Monitor and adjust.” The most recent occurrence of the daily cycle happened on 8/2” How can can a daily occurrence coincide with the weekly when the daily will only be around 55 days old in mid October? This is a genuine question, not any type of challenge. Finally, if its not proprietary, what follows October by way of significant occurrences? Thanks again.

      • Mary773 says:

        Challenges are welcome.

        The 185 trading day cycle is static as you correctly note, but it is also dynamic which is a very involved subject that would require a lengthy explanation, However, it happily relates to your request:

        “Finally, if its not proprietary, what follows October by way of significant occurrences? Thanks again.”

        The 18 month SPX cycle is due in March 2018. If you plot this cycle from the 2000 high, you will note two things. One, it is imperfect. Two, it has captured major long term turning points including the lows of 2003 and 2009. It also came within nine trading days of nailing the 2007 high and within 17 SPX points of identifying the 2016 high. Since you enjoy researching the market, this is one to study closely because the risk/reward is exceptionally favorable.

        Not coincidentally, 185 trading days x 2 = 370 trading days. There are an average of 21 trading days per month, therefore 370 trading days = 17.62 months.

        • aahmichael says:

          In regards to the 18 month cycle, if you split it in half and start at the May 2015 high, then 9 months after that was the Feb 2016 low, and 9 months after that was the November 2016 low, and 9 months after that takes you to August 2017. I’ve never used monthly cycles, but I do always track a couple of trading day cycles, because they are so much more precise. The 9 month cycle corresponds to the 94 TD cycle x 2, which can been seen in the following dates.
          5/15/15 H
          9/28/15 L
          2/11/16 L
          6/27/16 L
          11/08/16 L
          3/22/17 L
          8/08/17 H
          There are 93 TD between the 1st 2 dates, and 93 TD between the last 2 dates, but all of the other dates were exactly 94 TD apart. I also split this cycle in half (47 TD) and for most of the last 2 years, that shorter cycle also nailed important swing points. Of course, cycles come and go, and they usually work perfectly…until you put money on them.

    • fionamargaret says:

      Thanks Mary, JK, and Stephen….really interesting stuff. Nice. x

  11. Thanks Tony. You could easily be right in saying we retrace to the 2455 to 2460 level and then fall to the 2400 level but I have a sinking feeling we eventually go lower owing to the unraveling of the Trump presidency and the dim prospects for any legislative accomplishments including tax reform. It will likely be a volatile affair and the immediate a question is to do we go higher from here or from slightly lower levels. After looking at countless seasonality charts, it would not be unusual to lose 50% to 60% of the gains realized this year before the market rebounds in mid-late October. I calculate YTD gains, beginning at 2258, to be 233 points at the peak of 2491, suggesting a 50% loss would be 116 points and and a 60% loss would be 140 points. (For the punctilious, I could have started the year at the low on the 3rd of 2245 but it would have only changed my analysis by a few points.) In terms of price, this would equate to 2375 and 2351, respectively. Having invested 406 points in the Trump presidency, a draw down of 140 points is comparatively little but would allow us to test the 200 DMA (currently 2349), tag the channel and realize a long overdue correction of around 5.6% which could reset investor expectations and possibly underwrite a decent year end rally barring tail risk. My chart: https://invst.ly/4v04f Scary composite seasonality chart: https://www.seeitmarket.com/investing-strategy-outlook-cyclical-rally-gains-broad-support-16589/2/

    • Richard Glackin says:

      Arthur, what I find particularly interesting is that there is not a single comment on this. It’s what I am expecting…not forecasting…but expecting.

  12. Bud Fox says:

    WKHS….I like it for a trade. I own it. Take a look for yourself….

  13. Page says:

    Excellent update. Thanks Tony.

  14. phil1247 says:

    GC

    sold 2/3 GLD near 1305 friday am
    when we got within 1 dollar of 1308 target
    and saw that first bearish below
    could not be surpassed after the 1307 peak

    bullish above 1285.6 which is next long in series
    but since target was not hit
    a retest of the last long at 1272.5 is still possible

    mjt…

    i see commitment of trader data looks like prior peaks
    but i am trading GLD .. not COT 😉

    • phil1247 says:

      da boyze like to pull the rug just before target is hit !

    • captbara says:

      I like GC above 1250. Have to respect the break of the 6 year TL.

      The sharp correction for wave 4 should coincide with the blast upward for gold. Then we may start to see it decouple from DXY and equities.

  15. mcgcapital says:

    Thanks TC. Personally think this is going to be the biggest correction of 2017, so even at 2400 it’s still only 3.8% which would be very shallow by historical standards. That being said, it wouldn’t surprise me as it’s been that kind of market for a while. Monday’s have been generally bullish for the last few months so entirely possible we get the bounce to start the week given positive divergences. However, I’m expecting a break of 2400 in the next couple of weeks and for the market to find support in the 2320-50 area. Things are about to get interesting.. there aren’t many catalysts apparent at the moment for us to break out above 2500. Earnings season was great, but I don’t buy into the thesis that the uptick in growth is sustainable. Also don’t think the Trump agenda is going to make much difference to GDP, even once passed so not seeing that giving things a further boost. For me it’s simple – the bull market will end a few months in advance of the economy going into recession. We aren’t there yet but the fed are tightening and some macro indicators are moderating in strength, so think that there’s not much left for this cycle. My base case is decent correction now, with volatility being significantly higher going forward and a final price high in the next 6 months or so. Not married to that but watching the economic data closely

  16. Richard Glackin says:

    The way I’m counting this market since the minor 3-4 is 1-2, 1-2, 3-4, 3-4, and the next rally would be wave 5 which would then complete a minute wave i (of Minor 3). We’ll see how this plays out. I’m not buying the double ‘a-b’ between Minor 3 and 4. Several EW gurus have that double ‘a-b’ but then I’m sure they all follow each other’s counts. So, in effect, shared ideas on the counts -but not intentionally 🙂

    • Richard Glackin says:

      If we get the double ‘a-b’ right here, as many are forecasting, then my count is blown. That would mean we finished wave 5 – but I’m just not seeing that at this point.

  17. Gold COT appears to be in an area where there should be corrective activity.A month ago it was bullish–and gold prices rose.Now with commercials up to 76% bullish–a top is in again at 1300.Imho.Scottycj1 chart farther down is pretty convincing evidence of a bottom.+div aplenty.But all this gets thrown out if the +div doesn’t work and the trendline breaks.The question Is:Why would that happen THIS time?Seasonal and year ending in 7 is all I have.A gold selloff would probably correlate to a stock rally.Avi was bearish to 2360 or worst case 2300 he said,”if 2450 broke convincingly.”That it has.So that’s the setup in my view.Good luck all.

    • mjtplayer says:

      Yeah, gold spec longs are now in an area where one should be looking to sell or at least start hedging their longs. The jump in gold long exposure over the past 1.5 months has been extreme.

  18. 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! Plus those who subscribe to this FREE service will have full access to the entire website including real-time models!

    NavigateTheMarketStorm has I believe done a great job of warning on the lead-up to the new SPX All Time High that a major top was coming. This was based on my proprietary Technicals Model which had been negatively diverging at times since mid April, and about 10 pre-top Hindenburg Omens. Also spoken about the historically narrow SPX Daily Bollinger Bands (going back to 1970) and very low readings coming from my statistically driven Volatility Model. Low volatility like this can proceed large moves. Then came a sweet SPX reversal candle on August 8th.

    I am neither BEAR nor BULL. Just trying to do some detective work to lead us to the next move. I have been showing for months the deterioration in internals, breadth, and participation at both the SPX Weekly and Daily scales. Yes there were more gains to be made, but we were ready mentally that a turn was going to come.

    Today was a breather day for the markets, allowing VIX to decline. SPX daily made a large whiskered doji, but the thing I found most interesting was the positive divergences across the board on SPX hourly.

    3 Hindenburg Omens on the SPX this week but none Friday. Read more about it under the Techniques menu at the top of my website. But just as a refresher, they mainly come before major tops, can occur during significant downdrafts and rarely do trigger at important bottoms. I am classifying the 5 that came after SPX ATH as the second category, the 5th such type since the All Time High.

    There is a total solar eclipse on August 21st (Monday) as well as a Black Moon: Aug 21 (third New Moon in a season with four New Moons), read about Puetz Crash Windows under the Techniques menu at the top of my website. It doesn’t say a crash must occur in these conditions, just that the more significant ones tend to across all markets. The previous FULL moon was on 8/7 which was 1 day before the SPX ATH, and the next one is Sept 6th.

    Both my swing trading signals remain BEARISH (since 7/28 and 7/31). Some slight improvement in internals today, but remember they are maintaining a downward trend yet yes, some are coming off their bottoms. Participation was slightly lower for all but small caps. SPX A-D line remains below its descending 20 dma, remember it did not confirm the last SPX All Time High. The SPX McClellan made its 15th negative reading in the past 16. Looks like VIX needs a new high due to lack of negative divergences at Thursday’s highs.

    Noteworthy for my BULL friends, the SPX McClellan and my proprietary Technicals Model are currently positively diverging with SPX. These will have to be watched carefully, but to be clear, both of my swing trading indicators remain solidly BEARISH.

    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.

    I want you to know I am quite serious about developing my site the right way, I am in this for the long haul, and I will improve my services at every opportunity I have. Traders this next part is for you! I recently uploaded a significant upgrade to the Trading Platform (see top menu of my site for the link). I offer 3 diverse models for the SPX AND the consensus of all 3 models, at time-periods of 1 min/5 min/10 min/15 min/30 min/1 hr and soon longer periods. No matter how frequently you like to trade, I will have you covered. I even have the ETF GLD (gold) available at the 1 min timeframe. These timeframes, available trading vehicles (why not oil, why not china etf?), and models will continue to expand over time! If you are an active trader, you will view my site as something more than just a daily analysis of the markets. I want traders to live here during market hours! I want us all to make money!

  19. blackjak100 says:

    Nothing in the way until 2460 per james Goode. Gap up over resistance Sun???

    https://mobile.twitter.com/OntheMoneyUK/status/898646824415879169

  20. scottycj1 says:

    You be the judge…….These are the Gann major turn dates for the last 3 years. The next were last week and the coming week. Why 2 possible weeks ? Depends on where you measure from. The extreme print price or closing price of a high or low. An example of this is the Jan/Feb low of 2014. Based on the RSI reading it would appear to be a low……could it be a high ? Time will tell. GLTA

    2017-08-19_0835

    • mjtplayer says:

      With the ATH last week, wouldn’t a high make more sense?

      Don’t expect a low until mid Sept at the earliest, probably Oct

      • mcgcapital says:

        He’s been calling a low since 2475 two weeks ago based on superstition, so it’s nice to have something backed up by more than what the moon’s doing. Would say looking at that chart we’re just hitting 30 on the RSI.. most of the other examples appear to show the drop accelerating at that point, not marking a bottom immediately. Another 2-3% on the downside would seem to fit before a tradable bottom. Plus the channel drawn only has 1 hit on the upside so it’s not really a channel so would discard that

    • Supposed to draw your parallel channels across the top peaks first, then the bottom. Totally changes the picture.

      • scottycj1 says:

        WRONG…..Up treands are from lows and downtrends from highs……..read Edwards and McGee MCG KMA Last week was the Moon cycle this week Gann…….You’ve been a perma bear for awhile now ….

        • mcgcapital says:

          I’ve been bearishly inclined since summer 2015, not going to deny that. That doesn’t mean I’ve shorted the whole way up, the worst spell for me was the March-June 2016 period.. once we made new all time highs above 2135 I respected the trend for what it is.. any of my shorts are countertrend hence entries need to be good and kept on a tight leash. Plus I’ve gone long a fair few times too, and it’s still been a profitable period. That being said, the 40% rally we’ve had since Feb 2016 is about 20% fundamentally driven and 80% sentiment. No change to me in the longer term macro picture so it’s built entirely on the premise that growth will pick up forever more.. just doesn’t look feesible mathematically and once the cracks appear we’re going down significantly

    • captbara says:

      Rut and Nikkei have already broken this Feb 2016 TL.

    • Page says:

      Nice chart, Scotty.

Comments are closed.