Weekend update

REVIEW

The week started at SPX 2620. Volatility continued, but with market trading more balanced the slant this week was to the upside. On Monday the SPX hit 2673, pulled back to 2637 by Tuesday, rallied to 2702 by Wednesday, then continued higher for the rest of the week. For the week the SPX/DOW gained 4.30%, and the NDX/NAZ gained 5.45%. Economic reports for the week were mostly positive. On the downtick: retail sales, the NY FED, plus the budget deficit and weekly jobless claims increased. On the uptick: the CPI/PPI, business inventories, the Philly FED, industrial production, housing starts, building permits, export/import prices and consumer sentiment. Next week’s economic reports will be sparse and include existing homes sales and leading indicators.

LONG TERM: uptrend

Last Friday the Intermediate iv downtrend hit SPX 2533 for a 12% decline in only two weeks. At the low the market set up numerous positive divergences on the hourly/daily timeframes. The market responded by rallying nearly 100 SPX points in a couple of hours on Friday. Then continued that rally throughout this week. Although at a much slower pace. This week’s strong rally triggered a WROC buy signal. This suggests the Int. v uptrend, to new highs, is underway. Historically, more than 50-years, these signals have been 96% accurate.

The Major wave 1, of Primary III, bull market continues to unfold. Intermediate waves i and ii completed in the spring of 2016. Intermediate iii then began to subdivide. Minor waves 1 and 2 completed in the fall of 2016, and Minor waves 3 and 4 ended in the spring of 2017. Minor wave 5, and Int. wave iii, just ended in January 2018. Intermediate wave iv dropped 12% in just two weeks. The largest correction since the C-leg of the Primary II bear market. Keep in mind, price is always more important than time.

MEDIUM TERM: uptrend probably underway

After the technical setups last Friday we noted these types of setups have often accompanied downtrend lows. Especially after the quick, sharp, rally that followed that low on Friday. This week the market continued higher and triggered a WROC signal. Further suggesting Intermediate wave iv ended at SPX 2533. What to expect for Int. v?

That depends on how Int. v unfolds. Our ongoing target all along has been SPX 3000+ in 2 – 4 years. With this bull in its second year SPX 3000+ still remains the target. Historically, if new highs are made quickly the uptrend can make substantially more progress. If new highs are difficult to reach, the uptrend is like to end with just marginal new highs. With the first two uptrends of this bull market lasting only 2 months, let’s give this one at least until April. Medium term support is at the 2731 and 2656 pivots, with resistance at the 2780 and 2798 pivots.

SHORT TERM

The market has rallied 221 SPX points from last Friday’s 2533 low to this Friday’s 2754 high. During the advance there have been many swings of 20-30-40 points making it difficult to count short term. Quantitatively we just see one wave up from the low. This uptrend might end up being a difficult count like the end of the last uptrend.

Let’s see how it unfolds as it has only been one week from the low. Short term support is at the 2731 and 2656 pivots, with resistance at the 2780 and 2798 pivots. Short term momentum declined off a negative divergence.

FOREIGN MARKETS

Asian markets were mostly positive and gained 1.7%.

European markets were mostly positive and gained 2.1%.

The DJ World index gained 4.2%, and the NYSE gained 3.8%.

COMMODITIES

Bonds continue to downtrend and lost 0.5%.

Crude continues to downtrend but gained 4.0%.

Gold remains in an uptrend and gained 3.1%.

The USD remains in a downtrend and lost 2.0%.

NEXT WEEK

Monday: national holiday. Wednesday: existing home sales. Thursday: jobless claims and leading indicators. Best to your weekend and week!

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