Weekend update

REVIEW

The week started at SPX 2519. After a higher opened on Monday the market rallied everyday until hitting SPX 2553 on Thursday. On Friday monthly NFP surprisingly was reported negative, and the market pulled back to SPX 2544. Then a bounce into the close ended the week at SPX 2549. For the week the SPX/DOW gained 1.45%, and the NDX/NAZ gained 1.45%. Economic reports for the week were mostly higher. On the downtick: the ADP, NFP, consumer credit and the Q3 GDP estimate. On the uptick: ISM manufacturing/services, construction spending, auto sales, factory orders, wholesale inventories, plus, jobless claims, trade deficit, and unemployment rate all improved. Next week’s reports will be highlighted by the FOMC minutes and the CPI/PPI. Best to your week!

LONG TERM: uptrend

Back in August we were closely monitoring the TRANsports, and the NDX/NYSE. The TRAN had potentially ended its bull market in July, and was currently in a downtrend. Generally this index is a leading/coincident indicator for the general market. In September it found support above a critical level, and entered an uptrend. Now in October it is making all time new highs, along with the NDX/NYSE, as its bull market is now subdividing and extending.

The SPX, along with the DOW/NAZ, all appear to have the same bull market wave count. This Major wave 1 bull market should unfold in five Intermediate waves. Intermediate waves i and ii ended in the spring of 2016. Then Intermediate iii started to subdivide. Minor waves 1 and 2 ended in the fall of 2016. Minor waves 3 and 4 completed in the spring of 2017. Minor wave 5 has been underway since April. Longest uptrend, in time, of the entire bull market. When it concludes, Int. iii should end, and the market could experience its largest correction since 2016. After that the bull market will resume.

MEDIUM TERM: uptrend

As noted above this uptrend is the longest uptrend, in time, since the bull market began. The other three uptrends were 2 months, 2 months, and 4 months respectively. Normally, the longest and strongest uptrend in a bull market is the third of a third wave. Not a fifth wave as we are counting it. Something to keep in mind going forward.

Minor 5 began in April at SPX 2329. It first unfolded in the five Micro waves (orange) to complete Minute wave i at SPX 2454 in June. Then after a small decline to SPX 2408 in July for Minute ii, Minute iii was underway. Thus far, Minute iii has completed Micro waves 1 and 2, with 3 underway since the August 2417 low. This week Micro 3 easily cleared previous highs as it hit SPX 2553. Next target the OEW 2575 pivot. Medium term support is at the 2525 and 2479 pivots, with resistance at the 2575 and 2594 pivots.

SHORT TERM

We have been tracking the nano and pico waves quantitatively that create each of the Micro waves as they unfold. We have not added this labeling to the hourly chart, to avoid clutter. But we do discuss the wave pattern of each unfolding Micro wave in the daily/weekly write up.

Micro wave 3 from the SPX 2417 low has continued to unfold in a relatively simple pattern. Nano 1. 2455, Nano 2. 2428, Nano 3. 2480-2447-2509-2488-2553 so far. We still need to see an end to Nano 3. Then after a Nano 4 pullback, another push to new highs to complete Nan0 5 and Micro 3. But this still doesn’t end the Minor 5 uptrend. We continue to take it just one wave at a time. Short term support is at the 2525 and 2479 pivots, with resistance at the 2575 and 2594 pivots. Short term momentum spent 5-days  extremely overbought, then broke below neutral on Friday. Best to your trading!

FOREIGN MARKETS

The Asian markets were all higher this week, especially H.K. +3.3%, for a net gain of 1.4%.

The European markets were mixed and ended the week mixed.

The DJ World index gained 0.9%, and the NYSE also gained 0.9%.

COMMODITIES

Bonds are in a downtrend and lost 0.2%.

Crude is still in an uptrend but lost 4.5% on the week.

Gold is in a downtrend and lost 0.8%.

The USD is in an uptrend and gained 1.0%.

NEXT WEEK

Monday: bank holiday markets open. Wednesday: the FOMC minutes. Thursday: jobless claims and the PPI. Friday: the CPI, consumer sentiment, retail sales and business inventories. Best to your extended weekend, if you have one.

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