Weekend update

REVIEW

The market started the week at SPX 2502. After pullback to SPX 2488, on another N.K. event, the market rebounded for the rest of the week. By Friday the SPX was making new highs at 2519. For the week the SPX/DOW gained 0.50%, and the NDX/NAZ gained 0.95%. Economic reports for the week were mostly positive. On the downtick: consumer confidence/sentiment, new/pending home sales, and weekly jobless claims rose. On the uptick: Case-Shiller, durable goods, Q2 GDP, personal income/spending, the PCE, the Q3 GDP estimate, and the Chicago PMI. Next week’s economic highlights are the ISMs and monthly Payrolls.

LONG TERM: uptrend

For the past couple of months we have been tracking a few indices, especially the Transports, to determine if the general bull market will run into some trouble in the next few months. The Transports had completed a potential five wave structure at 9764 in July and entered a downtrend. If that downtrend broke below the May 8744 low it would have confirmed the five waves up, and since the Transports is often a leading/coincident indicator, it would have suggested a general bull market top in the next several months.

The downtrend, however, held above that low at 9010, and the Transports started a new uptrend. This week the uptrend rallied to new all-time highs, suggesting Major wave 5 is extending. The labeling was updated during the week to display this extension. For now, we can put the Transports on the back burner until the next potential five wave event occurs.

The Major wave 1 bull market has been underway since early 2016. Intermediate waves i and ii completed in the spring of 2016. Minor waves 1 and 2, of Int. iii, completed in the fall of 2016. Minor waves 3 and 4 completed in 2017. And Minor wave 5, in the SPX/DOW/NAZ, continues to be underway. When it ends Int. wave iii will end as well. Then after an Int. wave iv correction, Int. wave v will carry the market to all-time new highs. We continue to estimate a SPX 3000+ between 2018 and 2020.

MEDIUM TERM: uptrend

With such a lengthy uptrend the wave pattern at times can look a bit complex. We are counting the SPX/DOW Minor 5 uptrend having started in April. From the Minor 4 low at SPX 2329 the market rallied in five Micro waves (orange) to complete Minute wave i at 2454. Then after a Minute ii decline to SPX 2406/08 the market has rallied in a Minute wave iii.

When Minute iii ends, there will be a Minute iv decline. Then a Minute v rally will take the market to new highs before completing Minor5/Int. iii. We’re estimating this will occur around SPX 2650. Medium term support is at the 2479 and 2456 pivots, with resistance at the 2525 pivot.

SHORT TERM

Minute waves i and iii of this Minor 5 uptrend look quite similar. Minute i had a strong Micro 1, a steep Micro 2, a strong Micro 3, then shallow Micro waves 4 and 5. Look how favorably Minute iii compares. In fact, Minute iii will equal Minute i at SPX 2531, (within the 2525 pivot range).

The Micro 3 short term count from SPX 2417: 1. 2455, 2. 2428, 3. 2480-2447-2509-2488-2519 so far. After the current rally ends there should be about a 20 point pullback, then one more rally to new highs to complete Micro wave 3’s five waves. Then after a smallish Micro 4 and Micro 5, Minute wave iii will end. Short term support is at the 2479 and 2456 pivots, with resistance at the 2525 pivot. Short term momentum ended the week quite overbought. Best to your trading!

FOREIGN MARKETS

Asian markets were mostly lower for the week losing 0.4%.

European markets were all higher gaining 0.9%.

The DJ World index gained 0.1%, while the NYSE gained 0.5%.

COMMODITIES

Bonds are in a downtrend and lost 0.6% on the week.

Crude continues to uptrend and gained 2.0%.

Gold appears to be in a downtrend and lost 1.0%.

The USD looks to be uptrending for the first time in many months and gained 1.1%.

NEXT WEEK

Monday: ISM and construction spending at 10am. Tuesday: auto sales. Wednesday: ADP and ISM services. Thursday: jobless claims, the trade deficit and factory orders. Friday: monthly payrolls (+156K), wholesale inventories and consumer credit.

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

About tony caldaro

Investor
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181 Responses to Weekend update

  1. CampFreddie says:

    Another most excellent swing Long trade set-up from “The Fredster”
    Of note is the +div and the recent capitulation shake out. (Target 1700) Good luck all.
    Lyxor msci INDIA etf – Daily

  2. fotis2 says:

    Crude waiting for thumbs up from daily CCI for potential long entry invalidation and stop 45.50 TARGET 47.00

    https://invst.ly/5bn1u

  3. Bud Fox says:

    last 100 SP points, an impressive advance

  4. Thank you Mr Caldaro you do a great job.
    Regards.
    Nybis

  5. tommyboys says:

    Total P/C ratio… See y’all later in the week.
    http://stockcharts.com/freecharts/gallery.html?%24CPC

  6. tommyboys says:

    Quotes from Barrons’ article…”So many investors are buying puts on the S&P 500 that the cost is going too high.

    “Meanwhile, certain pricing patterns that are invisible to most investors exist within the SPDR S&P 500 Trust (ticker: SPY) options market. So many investors have bought defensive puts, which increase in value should the fund decline, that the puts are priced with a fear premium. Investors are starting to take advantage of that skew—the difference between the implied volatility of certain puts and calls—by selling bearish put options and buying upside calls. In plain words, this basically means that puts are more expensive than calls.”

  7. tommyboys says:

    Market in melt up mode – think Tore called this. With A/D continuing to bust new highs, sentiment about neutral (last week’s AAII bullishness dropped 8 points while neutral & bearishness picked up a few – solidly neutral and NOTHING of what top’s are made of – and has been the same most of the year), record corporate cash hoards to the tune of $2.3T – that’s TRILLION with a T – looking for homes, and money manager’s holding lots of cash and needing to play catch up I smell a powerful Q4 – maybe 8-10% higher by EOY… ATB!

    • NEWBIE says:

      U smell complacency.

      • jwmcbride says:

        Watch this instead: The Conference Board Consumer Confidence Index®, which had improved marginally in August, declined slightly in September. The Index now stands at 119.8 last 3 market crashes this index hit 145-148 be patiient

      • tommyboys says:

        Look up the word complacency. You’ve been complacently bearish for 6 years. This market is not complacent – its on edge. Managers are holding way too much cash this far into a bull – they’re nervous and caution rules the day. They’ll be fully invested near the top. Regardless we need euphoria to end an 8 year bull and we got nuth’in close bud – Sorry…

  8. stcoleridge says:

    Tony does that RUT count still look right to you? Major B is only 0.20 of A. Can int i be moved up to where minor 1 is with int iii at 1452 and int iv at 1349?

  9. Don Jenver says:

    How about Transports now?

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