The week started at SPX 2691. After a gap down opening on Monday, a SPX 2676 low, the market rose for the rest of the week. Tuesday had a gap up opening, but the opening was sold at SPX 2732 and the market declined to 2702 by Wednesday. After that the market resumed its rally and hit SPX 2787 on Friday and closed there. For the week the SPX/DOW gained 3.40%, and the NDX/NAZ gained 4.25%. Economic reports were nearly all negative. On the downtick: ISM services, factory orders, ADP, consumer credit, plus trade deficit and weekly jobless claims increased. On the uptick: monthly payrolls. Next week’s highlights: industrial production, the CPI, retail sales, and the NAHB.
LONG TERM: uptrend
While there are many views on the short term count, there are probably just as many on the long term count as well. Our OEW count suggests the following. A Super cycle bull market ended in October 2007 at SPX 1576. A Super cycle bear market followed to SPX 667 by 2009. After that low another Super cycle bull market began. The first bull market of the new SC was from SPX 667 in 2009 to SPX 2135 in 2015. We labeled that Primary I. A Primary II bear market followed to SPX 1810 in 2016. After that low a Major 1 bull market, of Primary III, began.
From that 2016 SPX 1810 low we have counted Intermediate waves i and ii completing in the spring of 2016. Minor waves 1 and 2 , of Int. iii, completing in the fall of 2016. Minor waves 3 and 4 completing in the spring of 2017. Then Minor wave 5 and Int. iii completing in January 2018. After that high at SPX 2873 the market dropped nearly 12%, its biggest correction in 2 years, bottoming at SPX 2533 in February for Int. wave iv. Since then we believe Intermediate wave v, which will carry the market to new highs, has been underway. In support of this scenario we have had WROC signals in recent weeks, and uptrend confirmations in the NDX/NAZ and SOX this week.
MEDIUM TERM: uptrend probably underway
After the selloff in February to SPX 2533, the market displayed several positive RSI divergences at the low. These divergences usually suggest a downtrend low is in progress. The market then rallied to SPX 2754 in just several trading days, and we labeled that rally Minor wave 1. A small pullback followed to SPX 2698, a rally to SPX 2789 generating a WROC signal, then a sharp drop to SPX 2647. Tricky market activity, which we eventually labeled an irregular Minor 2.
The market then had a sharp rally to SPX 2732 by Tuesday. Another pullback followed to SPX 2702 by Wednesday. Then the market rallied into week’s end. We are labeling this activity part of Minor 3: Minute i: 2732, Minute ii 2702, Minute iii currently underway. With the NDX/NAZ already making new all time highs, we expect the SPX and DOW to all make new highs shortly. Medium term support is at the 2780 and 2731 pivots, with resistance at the 2798 and 2835 pivots.
With Minute iii of Minor 3 potentially underway, we can now project a general target for Minor 3. At SPX 2868 Minor 3 would equal Minor 1. This is only 5-points below the all time high. A 1.62 relationship to Minor 1 would suggest SPX 3005. Oddly just 5-points above SPX 3000.
In either case Minor 3 should advance in five Minute waves. Only Minute waves i and ii have completed and wave iii is underway now. Short term support is at the 2780 and 2731 pivots, with resistance at the 2798 and 2835 pivots. Short term momentum ended the week extremely overbought. Best to your trading!
Asian markets were mostly higher and gained 0.5%.
European markets were all higher and gained 2.9%.
The DJ World index gained 2.7%, and the NYSE gained 2.9%.
Bonds continue to downtrend and lost 0.1%.
Crude is also in a downtrend but gained 1.3%.
Gold is in a downtrend but gained 0.1%.
The USD is also in a downtrend but gained 0.3%.
Monday: budget deficit at 2pm. Tuesday: the CPI. Wednesday: retail sales, the PPI, and business inventories. Thursday: jobless claims, export/import prices, the Philly FED, the NY FED, and the NAHB. Friday: housing starts, building permits, industrial production, and consumer sentiment.