Weekend update

REVIEW

The week started at SPX 2582. After a gap down opening on Monday the market rallied to SPX 2588. Then additional gap down openings on Tuesday/Wednesday took the SPX to 2557. Thursday reversed with a gap up opening, rallying the market to SPX 2590. Then on Friday the market pulled back to end the week at SPX 2579. For the week the SPX/DOW were -0.2%, and the NDX/NAZ were +0.3%. Economic reports for the week were mostly positive. On the downtick: the NY/Philly FED, plus weekly jobless claims and the budget deficit rose. On the uptick: the CPI/PPI, retail sales, import prices, industrial production, capacity utilization, the NAHB, housing starts and building permits. Next week’s reports will be highlighted by the FOMC minutes, leading indicators and durable goods. Happy Thanksgiving!

LONG TERM: uptrend

While the new administration is having a difficult time getting major legislation passed. The fact that they have pledged, and are trying to do so, has clearly changed investor confidence. A quick look at the weekly charts bares this out. After the 2016 low, prior to and right around the election the market had 5% corrections. Since the election, one year ago this month, the market has had just one 3.3% correction. A recent analysis displayed there were only 9 times in the history of the US stock market, the market has gone about this many trading days without so much as a 5% correction. All of those previous events occurred during the 1949-1966 P3 or the 1982-2000 P3. More evidence a P3 Secular bull market is underway.

Our wave count from the P2 2016 SPX 1810 low remains unchanged. This Major 1 bull market is dividing into five Intermediate waves. Int. waves i and ii completed in the spring of 2016. Int. wave iii then subdivided into five Minor waves. Minor waves 1 and 2 completed in the fall of 2016, and Minor waves 3 and 4 completed in the spring of 2017. Minor wave 5 has been underway since then. When it does complete, Int. iii will also end, and then the largest correction since 2016 could unfold. After that Int. iv correction, Int. v will carry the market to all-time new highs.

MEDIUM TERM: uptrend

The entire range for the week occurred within about 24 hours SPX: 2557-2590. Leading up to that point the market had experienced four gap down openings within five trading days. Normally we would have expected the SPX to be down 4%-5% after such selling pressure. But the market was only down 1.5%, from the all-time high at its worse level. There definitely appears to be buyers under current levels.

The current Minor wave 5 uptrend continues to extend. It started back in April at SPX 2329 and recently reached SPX 2597. We have been tracking this extended uptrend throughout as it divided into five Minute waves. With each rising Minute wave subdividing into five Micro waves, with sometimes with further subdivisions. Minute waves i and ii ended in June/July, and Minute waves iii and iv recently ended in November. It appears Minute v is now underway from Wednesday’s SPX 2557 low. Medium term support is at the 2575 and 2525 pivots, with resistance at the 2594 and 2632 pivots.

SHORT TERM

With Minute iii longer than Minute i, Minute v can now be at any length. We are initially estimating that it will be short, in time and price, like so many fifth waves in the past. Our target for Minute iii was the OEW 2594 pivot range. Where it eventually hit twice before heading into Minute iv. Minute iv appears to have bottomed above our SPX 2540’s target at SPX 2557. We are expecting Minute v to top between the 2632 and 2656 pivot ranges.

Thus far from the Minute iv low, Minute v has rallied in two waves SPX: 2590-2578. These waves may be of Pico, Nano, or even Micro degree. It is too early to tell at this time. Whatever the outcome we do expect SPX 2557 to hold for Minute iv, and the market to make new all-time highs shortly. Short term support is at the 2575 pivot and SPX 2557, with resistance at the 2594 and 2632 pivots. Short term momentum ended the week oversold. Best to your trading during the upcoming holiday shortened week.

FOREIGN MARKETS

Asian markets for the week were mostly lower losing 0.8%.

European markets were also mostly lower losing 0.9%.

The DJ World index lost 0.1%, and the NYSE lost 0.2%.

COMMODITIES

Bonds continue to downtrend but gained 0.3%.

Crude remains in an uptrend but lost 0.1%.

Gold appears to be in an uptrend and gained 1.8%.

The USD appears to be in a downtrend and lost 0.5%.

NEXT WEEK

Monday: leading indicators at 10am. Tuesday: existing homes sales. Wednesday: weekly jobless claims, durable goods, consumer sentiment and the FOMC minutes. Thursday: Thanksgiving holiday. Friday: markets close at 1pm.

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