Weekend update

REVIEW

The week started at the all-time closing/print high of SPX 2873. After a gap down opening on Monday/Tuesday the SPX traded down to 2818. A gap up opening was sold off on Wednesday as the pullback dropped to a new low of SPX 2813. Thursday/Friday also had gap down openings, and the selling accelerated on Friday. After hitting SPX 2760 late Friday, the market ended the week at 2762 (-111 points). For the week the SPX/DOW lost 4.0%, and the NDX/NAZ lost 3.6%. On the economic front positive reports outpaced negative reports 11:3. On the downtick: the ADP, Chicago PMI and ISM. On the uptick: personal income/spending, the CPI, Case-Shiller, consumer confidence/sentiment, pending home sales, construction spending, monthly payrolls, factory orders, plus weekly jobless claims declined. Next week’s highlights: ISM services and consumer credit.

LONG TERM: uptrend

After a 10-month uptrend with nothing larger than a 1.43% weekly decline, and the market closing at its all-time high last Friday, the market sold off at the start of the week and continued declining right into the Friday close. Down 3.85% for the week. The largest weekly drop since January 2016. Intermediate iv underway? When we look back to previous corrections during this bull market we find them rather small: 72, 110 and 119 points. This decline is already 113 points, almost as large as the biggest correction of the bull market. In percentage terms the corrections have been a bit larger: 3.3%, 5.0% and 5.6%. This decline is already 3.9%. Lots of damage for just one week.

The long-term count remains unchanged. Major wave 1, of Primary III, bull market underway. Intermediate waves i and ii ended in the spring of 2016. Intermediate iii then subdivided. Minor waves 1 and 2 ended in the fall of 2016, and Minor waves 3 and 4 ended in the spring of 2017. Minor wave 5, and Intermediate iii, may have just ended a week ago Friday. If Int. iv is indeed underway, would not expect too much more than a 5% correction, before an Int. v uptrend carries the market to new highs.

MEDIUM TERM: downtrend underway ?

As noted above, the current pullback is acting more like a correction than a pullback in this bull market. Even though indices were extremely overbought, which they have been for weeks and weeks, and there were some daily negative divergences on the DOW/NAZ/NDX. There was little warning, if any, of what would happen this week.

What we did notice, as the decline was unfolding, is that on Wednesday the market confirmed 5 waves up from the Minute iv SPX 2557 low. We thought nothing of it since the five waves were clearly lopsided: 2590-2578-2658-2606-2873; wave 1 (33 pts.), wave 3 (80 pts.) and wave 5 (266 pts.). Also wave 3 was only 2 weeks, while wave 5 wave 2 months. Naturally we thought that 5th wave was actually a third wave of a larger structure. So much for that thinking. Medium term support is now at the 2731 and 2656 pivots, with resistance at the 2780 and 2798 pivots.

SHORT TERM

As you have probably noticed by now. The short term count we have been tracking is now the alternate count, posted on the hourly chart. And the primary count is that Intermediate wave iii has completed at SPX 2873, and is posted on the daily chart. Either way, short term, the market is extremely oversold and due for at least a bounce.

Short term support is at the 2731 and 2656 pivots, with resistance at the 2780 and 2798 pivots. Short term momentum ended the week extremely oversold. Best to your trading!

FOREIGN MARKETS

Asian markets were all lower and lost 1.4%.

European markets were all lower and lost 2.7%.

The DJ World index dropped 4.1%, and the NYSE dropped 4.1%.

COMMODITIES

Bonds continue to downtrend and lost 1.1% on the week.

Crude remains in an uptrend but lost 1.0% on the week.

Gold is still in an uptrend but lost 1.1%.

The USD remains in a downtrend and lost 0.4%.

NEXT WEEK

Monday: ISM services. Tuesday: the trade deficit. Wednesday: consumer credit. Thursday: weekly jobless claims.

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

About tony caldaro

Investor
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693 Responses to Weekend update

  1. STEPHEN BARTLETT says:

    Covered my short at 2535 mentioned this morning. That was luck. I may short again, if 2705 caps tmrw

  2. torehund says:

    Expanding patterns all over the place, volatility makes it dangerous. Fast and furious going forward and if trend continues upwards we are still leaving behind a long tooth…Say no more 🙂

  3. lunker1 says:

    Anyone shorting es 2700?

  4. vivelaamo says:

    Dow bounced 2000 points. Bottom is in!

    Newbie and his cronies go quiet.

    Goodnight all.

    • travis01 says:

      Cmon man. I think there was action yesterday that could be capitalized and traded and today it was too crazy/risky to trade. Unless you bought at 8am and ride it out today of course. I doubt many made $ today but best move looks to have been long at 2:00. Just out of meetings but looks to me like a decent day would be 2-4% gains, whereas yesterday was near 100%…ie less excitement. GL to ya

      • vivelaamo says:

        Yesterday was scary. Especially overnight. Many would have lost their shirts yesterday too. The rally since is a little bit more mundane and to my liking. I prefer boring grinds up. Slow and steady wins the race.

        I suspect a lot of people will be looking to short this rally. I think we will see new all time highs by end of month.

        GL to you too.

  5. Billy says:

    Market bypassed the triangle. Now trying to close above 24872. Note HOD 24858. 45 mins to go, can it do it!

    • Billy says:

      Both YM and ES at the HWB. One a little over and the other a little under. That’s one methodology. The other is a bullish reversal with a close above 24872 which will have longer lasting effects. One lower down bullish reversal already in the bag for the Howitzer today.

    • Billy says:

      Okay, closed above 24872, an Armstrong number the way. Bulls can relax somewhat. Nevertheless this market is still highly volatile and therefore treacherous.

  6. vivelaamo says:

    Dow climbs 1500 points from lows and nothing but silence. Yesterday the blog was going to explode.

    • wildmarkets says:

      Now waiting for Tony to give his views. I was looking for SPX 2700 yesterday night at some point. Forgot that market does that in less than 24 hours lol

    • wildmarkets says:

      NDX 6750 might be the next target. Need to hold strong around 6590 area for that to happen.

      • chrisk44342 says:

        The amazing thing is that we have only retrace 38.2 of the decline from SPX top. That means that it’s possible this is wave 4 of A for Int iv, need more evidence to weigh in on that or if that was all of int iv, or all of A of int iv.

  7. mcgcapital says:

    Think FTSE will pop up and finish the week in the 7300s, then probably keep trading the 7000-7400 range for a few weeks. Usually after a massive capitulation event like last night we don’t get back to the low in short order, maybe a retest after some choppy trade. Would expect a more substantial rally once the volatility ETF thing dies down and people realise it’s not systemic (yet). Very similar to August 2015 so far.. was certainly uncomfortable holding longs at the lows this morning

  8. Neely’s thots fwiw, not great over the last few years, been doing better lately, in this case i agree but that don’t mean nothin–>> I’m confident the worst is not over with this markets decline; I’m waiting for the market’s “fear factor” to increase before we attempt entry. Be patient. For subscribers, I might have some buys later today or this week but the bulk of new buying will occur only after another market “scare” occurs. <<

  9. Look at the high and low on march call activity. Wow!!

  10. quickrick38 says:

    The options market is going stark raving mad…SPY puts triple and quadruple in value while the market is going down…it’s crazy out there.

  11. phil1247 says:

    back for lunch………… still bearish below extension short 2702
    there was a second short entry at 2670
    but i did not take it
    there is a small series up that is bullish above 2615 right now

    gotta go to the beach
    see ya tomorrow

  12. H D says:

    Tony, I guess 1987 was a 4th wave? so we have some context.

  13. Once again,the overnight session gave the ECB the chance to save the markets.Around 130am,the SPX futes were down to 2530,DAX down 200.In 2 minutes,Dax was up 150.The time to reverse these selloffs–which seem to be attempted at night,are around 2am (Europe opening).Both circuit breaker style down moves and ECB reversals can be initiated with little intereference.That said,these are all future testing areas now.2530 would be a bearish area to break.A test of it sometime would seem likely.Good luck all.
    P.S.Gartman barely got the words out-“bear market’–and we rallied.He’s still got it.

  14. vivelaamo says:

    Check out the RUT. Who the hell is buying risky small caps when we are about to see a market crash? 😉

    Evening all.

  15. quickrick38 says:

    As you can see, shorting the market was not such a hot idea.

  16. vivelaamo says:

    DH traders. Dow looks like it’s trading counter longs to my amatuer eyes?

      • fionamargaret says:

        I have to wait until there is another sequence formed to ascertain direction, but until that time 2609 +/- is the top.
        I am playing long gold (UGLD,JNUG, NUGT) and short oil DWT, just because they were smashed….

        • kvilia says:

          Oil will turn up soon. Looking for a gold ETF entry as well.

          • fionamargaret says:

            My gold stuff is not based on technicals Kvilia, so be careful. I shall let you know when there is a sequence …oil has no sequence at the moment, but lots of fundies want it a bit lower, but you also have the SaudiAramco IPO, so keeping oil more or less stable is a big thing for them….flatline city…

  17. range bound 2624-2655
    thinking B wave up to 2713 crazy day.

    Good luck all

  18. One more analyst.The Gartman comment was not a buy recommendation btw,but he does tend to be wrong.Harry Dent was just on to say that because the rising wedge formation was first broken above the top trendline and now testing the lower trendline,a break below,will trigger a 40% bear market.What he’s saying,is it’s a false breakout followed by a breakdown.Food for thought.
    He didn’t give a trendline number but I’m guessing it was at the low of the day today.

  19. lunker1 says:

    low 2593
    pivot 2594
    weekly 34ema 2594

  20. vivelaamo says:

    Why has trading in SVXY been halted?

  21. Gartman was just on FOX,saying we’re going down into a bear market.Buy buy buy.

    • Page says:

      Gartman has some guts to go on FOX and call it bear market … LOL
      I think he doesn’t know FOX is Trump’s channel who is very bullish on stock market.

  22. kvilia says:

    Trying to short through SPXS here. Watching 2699 retest, 2702 stop.

  23. Reply
    asaraniti (@asaraniti) says:
    February 6, 2018 at 9:25 am

    break 2624.43 (a 61.8% micro long) by a tick or two and /ES should retest the NYSE open as a first target.

    15 Minute 61.8% LONG broke. Bottom line for me..

    1. above 2655.92 and /ES will retest this mornings high as a first target.
    2. As long as /ES stays under2655.92 I expect /ES to retest this NYSE open as a first target.

  24. quickrick38 says:

    Looks like wave 4 of ‘C’ up…it should turn up shortly.

  25. Anyone know why our markets look like they’re on steroids,while the DAX just seems to slowly do its thing.GDX breaks Avi’s 22.50–as predicted by yours truly.Now he has an article explaining where he went wrong on SPX.One of the biggest bulls I’ve seen on FOX,Shah Galani,thinks another 5% down from here,is a buy.Another 150 S&P points.Stay away until then.Later

  26. H D says:

    2678 was HWB the crash.

  27. elmer510 says:

    Most interesting question now – was 2593,07 the bottom of this IM4-correction, or just the A-wave in an even a stronger decline?. Or perhaps we will see a flat ABC – with now minor B under way.

    Where can I find a good SPX-chart with technicalities for free – Marketwatch was very good before, but now the quality is not good any more.
    As a European i just follow the SPX because of its strong effect here in the our local markets

  28. So is that it? Or is it A down to 2593
    2873-2593 280 points
    B underway
    2593- 2682
    2682- 2637
    2637- 2726 a 50 percent retrace of the 280 point decline
    then C down
    2726-280 to 2446, which would be a 427 point decline 15 percent?

    see if the 2637 level holds on this pull back

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