Weekend update

REVIEW

The market started the week at SPX 2500, and didn’t stray too much from that level all week. On Monday the market opened higher, hit a new high in the opening minutes at SPX 2508. Then after only an 8-point pullback, eked out a SPX 2509 print on Wednesday. After the Wednesday FOMC statement/conference, the market pulled back to SPX 2497 then rallied back to 2509 near the close. Then the market pulled back to SPX 2497 again by Friday’s open, then ended the week at 2502. For the week the SPX/DOW gained 0.25%, and the NDX/NAZ lost 0.60%. Economic reports for the week were mostly positive. On the downtick: the NAHB, housing starts, and existing home sales. On the uptick: building permits, import prices, the Philly FED, leading indicators and weekly jobless claims declined. Next week will be highlighted by Q2 GDP, personal income/spending, and the Chicago PMI.

LONG TERM: uptrend

We continue to monitor the DOW and TRAN for potential headwinds to the bull market scenario. As you can observe from the DOW chart, it shows no signs of weakening as it is still in Minor 5 of Int. wave iii. Like the SPX, it still requires an Int. iii top, an Int. iv correction, then new highs during Int. v to potentially end the bull market.

The Transport continue to improve after ending a downtrend low at 9010 in August. The current uptrend is closing in on the all-time high at 9764. Should that high be exceeded, then Major wave 5, from the Major 4 8744 low, is subdividing an extending. This would provide an all clear in 2018.

As noted above, the SPX and DOW are on the same waves count. Intermediate waves i and ii ended in the spring of 2016. Minor waves 1, 2, 3, and 4 have completed, with Minor 5 underway. When it concludes Int. iii will end. Then after an Int. iv correction, Int. v will take the SPX to new highs.

MEDIUM TERM: uptrend

This lengthy Minor 5 uptrend, from the Minor 4 low at SPX 2429 in April, has been quite complex. At times it has looked corrective, but continues to unfold impulsively. Minor 5 is dividing into five Minute waves (i-v). And the rising Minute waves (i, iii, v) are subdividing into five Micro waves (orange).

Minute i ended in June, after 5 Micro waves up, at SPX 2454. Minute ii corrected into July and bottomed at SPX 2408. Since then Minute iii has been underway. Thus far, Micro waves 1 and 2, of Minute iii, have completed at SPX 2491 and 2417 respectively. Micro 3 has been underway since that August low. We would expect the market to at least reach the 2525 pivot before Micro 3 ends. Medium term support is at the 2479 and 2456 pivots, with resistance at the 2525 pivot.

SHORT TERM

The hourly chart provides a closer look at this Minor 5 uptrend. In fact, one could see the similarities between Micro waves 1, 2, and 3 of Minute i, and Micro waves 1, 2, and 3 of the current Minute iii. And yes, we are expecting a relatively small Micro 4 when the current Micro 3 ends.

The short term wave structure from the Micro 2 SPX 2417 low remains unchanged: (1) 2455, (2) 2428, (3) 2480-2447-2509. Micro 3 clearly has some more work to do to the upside, with a couple of pullbacks along the way. Then after a Micro 4 pullback, Micro 5 should only end Minute iii of Minor 5. Then after Minute iv pullback, Minute v should take the SPX into, after recent calculations, the 2650 area. Best to your trading!

FOREIGN MARKETS

Asian markets were mixed on the week and gained 0.1%.

European markets were mostly higher and gained 0.7%.

The DJ World index gained 0.2%, while the NYSE gained 0.6%.

COMMODITIES

Bonds nearly confirmed a downtrend while losing 0.6% on the week.

Crude remains in an uptrend and gained 1.5%.

Gold looks to be in a downtrend and lost 2.1%.

The USD remains in a downtrend but gained 0.4%.

NEXT WEEK

Tuesday: Case-Shiller, consumer confidence, and new home sales. Wednesday: durable goods and pending home sales. Thursday: Q2 GDP (Est. 3.2%) and jobless claims. Friday: personal income/spending, the Chicago PMI and consumer sentiment.

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