Weekend update

REVIEW

The week started at SPX 2604. After a gap up opening on Monday the market rallied to SPX 2654. Then sold off to SPX 2611 in the last two hours of trading. On Tuesday another gap up opening carried the SPX to 2663. Then a 27 point decline occurred within one hour. But the market recovered to close near the highs of the day. On Wednesday a gap down opening, there were gap openings every day, took the SPX into the low 2640’s where it ended the day. Gap up openings on Thursday and Friday, carried the SPX to 2680. And yes, that was sold too as the SPX ended the week at the 2656 pivot. For the week the SPX/DOW gained 1.9%, and the NDX/NAZ gained 2.9%. Economic reports for the week were mixed. On  the downtick: the CPI, consumer sentiment, plus the budget deficit increased. On the uptick: the PPI, wholesale inventories, plus weekly jobless claims declined. Next week’s reports are highlighted by the Beige book, industrial production, housing and Options expiration.

LONG TERM: uptrend

With many new participants in the blog, some history may be required. Between the early-1700’s and the year 1929 a two century GSC unfolded, topped, and then crashed into the year 1932. After that, with the DOW around 40, a new two century GSC began. The first wave of this GSC was SC1 (super cycle one) from 1932-2007. Then the market had its biggest crash since 1929-1932: 2007-2009 the great recession. In March 2009 the great recession and SC2 ended. From that low a new 70-80 year SC3 began. The first bull market of SC3 was 2009-2015, and first bear market 2015-2016. We have labeled them as Primary waves I and II. The bull market currently underway is part of Primary III. We are counting it as Major wave 1.

With the above background it is easy to see how the Major wave 1 bull market is unfolding. Major waves divide into five Intermediate waves. Intermediate waves i and ii completed in the spring of 2016. Intermediate wave iii then started to divide into five Minor waves. 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 Int. iii recently ended in January 2018, and Int. wave iv began at that time. Before this bull market ends, Intermediate wave v should be making new all-time highs. The wave structures of the DOW, the NYSE, and even the DJW index suggest at least one more wave higher.

MEDIUM TERM: downtrend may have bottomed

When we look back at Intermediate wave ii in 2016. We find it lasted two months, and was an irregular zigzag correction [2111]: 2026-2121-1992. The current Intermediate wave iv correction is also three waves [2873] 2533-2802-2554, is just a bit more than two months, and appears to be a flat. The alternation setup, between the significant second and fourth waves of a bull market is clear.

After the SPX 2554 low the market rallied. The first rally looked impulsive (2554-2672) and we labeled it Minor wave 1. The pullback that followed to SPX 2586 we labeled Minor 2. Next we expected a Minor wave 3 liftoff. But all we have seen this week is a lot of choppy, buy the dip-sell the rip activity. Five gap openings, four higher, a 2% weekly gain, but a lot of chop. Medium term support is at the 2656 and 2632, with resistance at the 2731 and 2780 pivots.

SHORT TERM

As noted last weekend, the Minor wave 1 rally looked quite impulsive. Minor wave 2 was steep, but most second waves have been steep in this bull market. The rally from the Minor 2 low looks like a leading diagonal triangle to SPX 2665. After that the rest of the week was quite sloppy: pullback to 2639, three waves to 2680, now another pullback to 2645. A decline to SPX 2639 would make that three days looks like an irregular flat. Lower, an irregular zigzag. Much lower, and the entire advance from SPX 2586 starts looking corrective.

Short term support is at the 2656 and 2632 pivots, with resistance at the 2731 and 2780 pivots. Short term momentum ended the week with an ongoing negative divergence. It has been a day traders market for a couple of months now. Best to your trading!

FOREIGN MARKETS

Asian markets were all higher on the week and gained 1.3%.

European markets were also all higher and gained 1.2%.

The DJ World index  (DJW) gained 1.5%, and the NYSE gained 1.6%.

COMMODITIES

Bonds continue to uptrend but lost 0.5%.

Crude continues to uptrend and gained 8.6%.

Gold is in an uptrend and gained 0.9%.

The USD remains in an uptrend but lost 0.4%.

NEXT WEEK

Monday: retail sales and the NYV FED at 8:30, the NAHB and business inventories at 10am. Tuesday: housing starts, building permits, and industrial production. Wednesday: beige book. Thursday: jobless claims, Philly FED and leading indicators. Friday: options expiration. Plus, lots of FED speeches during the week.

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

 

About tony caldaro

Investor
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457 Responses to Weekend update

  1. fxaprendiz says:

    With all due respect to Tony’s great work, I happen to have a different Long Term count:

    GSC1 1453-1720
    GSC2. 1720-1784
    GSC3. 1784-ongoing
    SC1. 1784-1919
    SC2. 1919-1932
    SC3. 1932-ongoing
    C1. 1932-1937
    C2. 1937-1942
    C3. 1942-2000
    C4. 2000-2009
    C5. 2009-ongoing

    For people with a investing timeframe of months or a few years, the differences in counts don’t matter. We are either in Tony’s GSC3-SC3-C1 or in my GSC3-SC3-C5
    It will matter though when his C1 / my C5 ends. But he says his C1 will last decades. I have my C5 scheduled to end circa 2032-35 so we still have plenty of time to figure it out and prepare for either outcome.

    Two empirical observations: while the Great Recession was the most severe downturn since the Great Depression, imho it still fell short of a correction of SC degree. It should have been closer to a +70% retracement than the 57% we got in 2009. Secondly, while the stock market has been soaring since then, the economy has mostly stagnated at the household and small business levels, and salaries have basically gone nowhere. All signs imho of a Cycle 5 rather than a Cycle 1. The stocks can and will go up for many more years to come, but without the real economy going along with them, I don’t see how a C3 can come after the next significant downturn. More like we need to crash and burn first to get a clean slate again, which didn’t really happen in 2009. We got close though… The second time will be the charm.

  2. rd3777 says:

    JP225 has a nice reversal and has broke it’s trend line. A 3rd wave decline should be swift out of this large triangle.

  3. Still stick with my wave count that the market is going to drop sharply tomorrow, most likely to 2604 area to fill the gap. Reason: (1), it is the 3rd of W-5 of C. (2), my timing indicator which correctly gave me the turning dates of 2/9, 3/2, 3/23, 4/5, pointing 4/13 as a turning date. It must be a high. (3) after 4/13, the next turning date is THE crash low. Very near.

    • E says:

      When are you expecting the crash low? Around May 11 by any chance? Start of Bear market low or rebound turning point?

    • I agree with the direction (I won’t comment on the wave count as that really is not my strength). I felt it was clear at the open that this opening exuberance was likely to be sold, at least initially.

    • Mark Lucas says:

      I admire a guy who stick to his guns even if he is wrong. No one is right all the time, Xu Wu. Hang in there.

  4. Holly Silver says:

    Without theatrics over weekend earnings should hold the market up this week. Looks like we will have an up week barring any major external event. Will sell my Puts and wait it out once again.

    • lunker1 says:

      how much did you lose because you guessed wrong about the news?

      • Holly Silver says:

        Lost 6K. All since Friday. The setup calls for a HUGE move one way or other. Todays Banks didn’t surprise on the downside but no action so far. After 2 months and earnings out we should be spiking higher. Instead we fall into a tighter range bound move. This tight coil will move one way or other soon. I make on average 200K on the fast drops and willing to keep giving back trying to time it. I still look for external news to break market. Trade War is inevitable. Expected a breakout move to at least 2720 after it held. Just hit 2678 finally. I am convinced we are only half way towards the bottom.

  5. Tony:
    You must be feeling stronger because you are responding to many more posts than you had been recently.
    Thanks for the excellent weekend update and the historical OEW overview.

  6. torehund says:

    Thanks Donald🌅

  7. pooch77 says:

    2850 next,don’t be dumbass bear

    • Calm down, pooch, lol! It is still more than 14 hours until the NY Open! How many times has a Sunday Globex open proven to be “prescient?” Not enough to give anyone any clue as to where the cash will open in NY tomorrow at 9:30 AM EDT, much less where the market will close at 4:00 PM EDT.

      • pooch77 says:

        Ok C.N

        • I’m still a bit short, you know. The “dumbass bear” comment hit a little to close to home lol. Been a tough market to get a grip on these last few weeks, for me at least.

          • CN, you’re probably one of the better short term swing traders here. Me, I just look longer term. But if you could occasionally specify whether your BU/BD is a set up or trigger, and if it’s daily or weekly, that would be great. A BU weekly is what I look for. Best regards, Rick

          • floyd drummer says:

            CN,

            thx for posts, …any suggested readings/resources on swing trading?

    • phil1247 says:

      pooch

      ya gotta be humble or Ms Market gonna slap ya !

      bulls are in total control
      with the 3rd long from 2584 created with the opening gap tonite
      three targets are at 2685 , 2686 and 2687………….

      formidable resistance is at the 2680 short entry
      which gave a scalded cat reversal friday morning …
      as you may well remember

      bottom line….

      bull above 2657
      see you in the am

      • Phil:
        If there is formidable resistance at the 2680 short entry, do you mean there is resistance for the market to go down from that point?

        • phil1247 says:

          “resistance ” to go thru
          once thru 2680 the targets can be hit
          then its a pullback
          or blast thru targets in extension longs
          which would imply wave 3 up per tony

    • fionamargaret says:

      I had a look at the banks that I think are reporting next…
      BAC in a bullish format up to 50…really…
      MS is bearish down to 45
      GS is bearish down to 212
      C is bearish down to 58
      Check your waves and use stops…

      **If you are reading this and would like to know how to count waves, contact Tony by clicking on OEW tutoring…he will teach you one-on-one until you feel completely confident….I hope you do well…

    • fionamargaret says:

      FAZ (short banks), I have going to 15.5…

  8. Tony:
    Thanks for the great overview but what is the DJW?

  9. RD3777:
    Which neocons are back and what new positions are they occupying?

  10. bouraq says:

    Chart of the weekend is #GOLD at http://www.tradingchannels.uk

  11. learnedmylesson25 says:

    BitCon says “risk on”.HYG says “risk on”.Minimal Syrian attack says “risk on.”
    Anyone know what Gartman says?Last I heard,he covered half his shorts.That was a while back.The world awaits.

  12. Jack kendo says:

    very bullish market: VIX divergence with SPX
    but might need to test the low one more time, then be a great buying opportunity.
    was double bottoms, might need now.
    that’s why the sloppy, choppiness in recent sessions.
    https://gyazo.com/e86c6894e983dd65b3adeb14bf063f07
    cheers!

  13. rd3777 says:

    Everything points to a quick drop down to the floor. Will Putin continue to be bitch slapped by new sanctions Monday? The Neocons are back…and Rex is out….could be a historical sea change of negativity for U.S. Russia politick relations.

  14. J.Wenger says:

    Thanks Tony. Still watching the descending triangle as well…have to wait and see at this point.
    http://www.invest-safely.com/stock-market-outlook-2018-04-15.html

  15. zvyezda says:

    Thanks, Tony, have a great weekend!

  16. phil1247 says:

    nice review of the weekly charts by ira

  17. phil1247 says:

    JUNE GOLD

    sideways range continues
    but advantage to the bulls while above 1332

  18. Amit Tiwary says:

    Hello Tony,
    its choppy because int.iv is still going on in form of triangle…with d(ongoing) and e to go..and blast off…to int v and finish well above 3300 spx..jut dont see a world ending event..
    as regards to vix if it goes any lower from here…it will start cooling off significantly and go in bear market…

  19. stormchaser80llc says:

    Hello everyone! My complete blog post at http://navigatethemarketstorm.com is open to the public each weekend. If you like the post, you can sign up for a FREE subscription for access to Monday through Thursday posts at the bottom my blog post!

    Swing trading signal is a BUY.

    * 21 Hindenburg Omens occurred in the 7 months leading up to the major peak in early February 2018, and that was always well broadcasted on my site
    * Will have to see if SPX hourly can remain above triangle after testing it twice since Thursday. VIX positively diverged into today’s lows
    * The SPX McClellan Oscillator was positive for 7 of the past 8 days in a row, but is now negatively diverging along with the SPX A-D line
    * Small and Mid caps are seeing better participation than SPX
    * VIX seems to be of excess in the market (unless its turning into a BEAR market)
    * My proprietary Technicals Daily Model shows increasing strength despite Friday’s sell-off
    * No negative divergences before Friday looking at the SPX vs. Utilities ratio
    * My proprietary Volatility Model shows a declining 5 dma since late March, nearing its 20 dma
    * My proprietary Yield Curve slope shows some of the strongest values since the 2008-2009 Great Recession, though there was a recent peak on April 2nd

    Please come by for my full market analysis and consider signing up for a FREE log-in to see Monday-Thursday posts.

    Have a great weekend!

  20. alexh110 says:

    Think the most likely option is a return to 2586 to make a minor 2 flat. Probably by Tuesday.
    Hourly MACD looks like it’s rolling over to make the head of an IHS, having just completed a very misshapen left shoulder.
    Would guess the head will correspond to 2586, and the right shoulder ought to be something like minute ii of minor 3.

  21. fionamargaret says:

    https://www.mcoscillator.com/learning_center/weekly_chart/fed_is_behind_but_still_screwing_up/
    Thanks Tom McClellan….really interesting.


    Thanks Chris Kimble

    https://raymondjames.bluematrix.com/docs/pdf/c7f33cf5-ddce-4fe5-9479-4ab3023a44c1.pdf
    Thanks Raymond James

    Thanks and love to Tony…..and everyone xx

  22. willi2001 says:

    Cancel crash 1987.

    wish only the best for you Tony.

  23. 123 abc says:

    Tony, thank you for the great OEW weekend update.

    Appreciate the overall historical context as part of the long-term section; and, furthermore especially appreciative of the detail in regards to the various Irregular correction scenarios provided in the short-term section —superb clarity of analysis from a choppy confusion!

    As you may already be aware, the Leading Diagonal Triangle from the Minor-2 low doesn’t work well in the DOW since the last leg ended with a failed-fifth. The DOW has thus far been the bellwether to signify failing impulsive counts. Hence, still inclined with an ongoing Intermediate-iv count until a solid clearance of the 2656 pivot range.

    Q: At what point would OEW consider Major-2 wave underway? Taking out the 2456 pivot range perhaps?

    P.S. Delighted to see you in the comments section! 🙂

  24. Thanks TC. Have a nice weekend.

  25. SENTIMENT UPDATE: Blah Markets Ahead?
    sentimentsignals.blogspot.com/

  26. jobjas says:

    A different long term perspective

      • jobjas says:

        Thanks Tony for the update. I think the main reason for this different count is that I use an analog scale for the 2009 -2018 bull where as Tony probably uses a log scale .( If I use log scale for the said period , I have the same count as Tony )

    • Ashley says:

      That’s all I’ve been trying to say here LOL Sorry I cant do charts that nice , thanks!!!

      • Ashley says:

        Except for the B wave in 2007 that is and I think the last wave 5 is done… Now I see BIG mess of a triangle that will be in a fairly tight range until after the bottom wave 2 correction and then liftoff in 2024 once the mess created over the last 30-40 years gets fixed…

  27. merovix says:

    Thank You Tony
    All the best, stai bene !

  28. Thanks Tony for your always valuable insight

  29. torehund says:

    Thanks Tony, P III ahead and it will only turn more steep, either up or down. Is what we SAW in Syria the ghost reappearing for the very last time. Trends dying on its own exuberance like always in nature. The grandiose Trump and his stive for peak performance, did it again✌️✌✌Trends picked him out and created the opposite effect, amazing.

  30. kingfrogcash says:

    When was the “Futures Market” invented? It has appeared for years that the market direction is determined before we individual investors can trade, by a few people known as Future Traders.
    We are left with the “Gaps”.
    Note, that BTC peaked the weekend the CBOE started trading BTC.
    I expect a YUGE lift off to the market Monday. The Syria event is OVER.
    Cohen denied the story about Prague this morning.
    A Government committee on Post Office, will take many months.
    The flood of Corporate and IRA cash hits by Wednesday.

  31. cj32 says:

    Cr. to CBZ

  32. Mary773 says:

    Jeff Gundlach, who currently manages over $100B at DoubleLine Capital, said “Gold is negatively correlated with the dollar. We see that gold broke above its downtrend line. But now we see a massive base building in gold. Massive. It’s a four-year, five-year base in gold. If we break above this resistance line one can expect gold to go up by, like, a thousand dollars.

    https://goldsilver.com/blog/gundlach-gold-on-the-verge-of-thousand-dollar-breakout/

  33. searchme2017 says:

    Thank you Tony for all you do. I’ve been a “Lurker” for years…. but now have a question;
    Is it possible the count from the 4/2 low can be a series of “Ones and Twos”…..thereby explaining the lack of follow through and breadth until the initial “Three” is approached?

    The Fibonacci numbers seem to fit……

    But……search me.

  34. learnedmylesson25 says:

    Mr C,by the way,I heard the editor of the “Dow Theory Report” on WBBM Chicago yesterday warn that Dow Theory is officially in a bear market aell signal.Do you take Dow Theory under advisement in your analysis?Comment on the signal?Thanks.

    • tony caldaro says:

      the DOW has been in a downtrend since January
      the TRAN made its low in February and has not dropped any further
      a sell signal occurs when one drops further than the other after both have made tops
      do not see that occurring yet

      • The DJ Transports actually did close 16 points below their Feb low last Monday but on that day the Industrials closed above their Feb lows. That all made for a murky bear market signal.

  35. learnedmylesson25 says:

    If gold doesn’t sell $20 minimum on that “crisis” zipping by,I’ll be shocked.Throw in more upside for SPX.That’s as of now–it’s only Sat–still time for Trump to fire someone by Monday.GL all.Thanks Mr C.

  36. Gregg Thompson says:

    Thanks Tony!

  37. phil1247 says:

    Doc Thailand

    hope all went well with your placement

  38. Thanks, Tony. Some perspective. The Dow trendline from 1900 on a log scale. The S&P 500
    quarterly and its last 2 bearmarkets.

    http://www.traderscrossover.com/store/index.php?p=intra

  39. tommyboys says:

    Thanks Tony for WU and tolerating all us nut jobs & collusionists! Have a great weekend and let’s hope for some sustained sunshine – one of these weeks 🙄

  40. Holly Silver says:

    Without a decidedly negative open Monday I exit positions and wait till the market decides. Syria was a non-issue since we do what we can only do which is to send warnings and disrupt their program for a few months. China is going to be front and center soon. The Tariffs seem to be on again. Rosenstein might not get the can after all since the case is now with the NY prosecutors over Cohens files.

    This is a bipolar market. Which one will show up next week?

  41. E says:

    Thank you so much for sharing that background Tony. Much appreciated and I have a much better understanding of the counts now. I cannot find a 200 year chart of the indexes anywhere. Do you have one? Just a throw out there question, is it possible that we are still in the fifth Wave of the Grand super cycle? That would also dramatically change any long term outlook. Thanks again.

    • tony caldaro says:

      Expecting something bigger than 1929-1932?
      That’s what happens when the Gov’t does not intervene in a selloff.

      • Ashley says:

        Hi Tony thanks for the update. This has been a VERY challenging market to trade!!! Im actually not new here and I’ve been following and trading against your calls for years and surprise I still am, You were right, I was wrong so I felt no need to comment…

        My thoughts on the recent high @2872 are again different from your view that 2007 was the correction of the long bull market that started in the 80’s. I believe wave 3 of that bull ended in 2000 and from 2000-2007 was the B wave in a flat ABC correction I call the big wave 4. I believe the bull market from the 2008 low was wave 5 and we just saw a major high at the end of SC3….

        I see a potential leading diagonal in wave A in SC 4 that will end soon with one more wave down followed by a short lived B wave going into mid term elections and then a C wave down into 2020 that will be the beginning of SC5 up…

        “Leading Diagonal

        When diagonal triangles occur in the fifth or C wave position, they take the 3-3-3-3-3 shape that Elliott described. However, it has recently come to light that a variation on this pattern occasionally appears in the first wave position of impulses and in the A wave position of zigzags. The characteristic overlapping of waves one and four and the convergence of boundary lines into a wedge shape remain as in the ending diagonal triangle. However, the subdivisions are different, tracing out a 5-3-5, or 5-3-5-3-5 pattern. The structure of this formation (see Figure 10) does fit the spirit of the Wave Principle in that the five-wave subdivisions in the direction of the larger trend communicate a “continuation” message as opposed to the “termination” implication of the three-wave subdivisions in the ending diagonal. This pattern must be noted because the analyst could mistake it for a far more common development, a series of first and second waves, as illustrated in Figure 5.

        The main key to recognizing this pattern is the decided slowing of momentum in the fifth subwave relative to the third. By contrast, in developing first and second waves, phenomena such as short term speed of movement and breadth (i.e., the number of stocks or subindexes participating) often expands.”
        http://www.elliottwave.net/educational/basictenets/basics2.htm

        Wave 1 of SC4, wave A was a clear 5 down, 3 up and either 5 or 9 waves on 3 down, ABC up in 4 and now Im looking for 5 down before we start the B wave that will likely fill that pesky gap up there near the high that’s been bothering me all along during this correction…

        The impuse waves of this large correction have been down so far…

      • E says:

        Hmmm…I thought there are some theorists who postulate the extent of the great depression was the result of government intervention. Central Banks lowering interest rates resulting in credit bubble, then tightening resulting in crash. Same as we did again. One such is the Austrian theory.

        • Ashley says:

          So I think we fill the gap and make a double top around the end of May/June followed by C to 2430 into midterms and then kick of the ABC B wave up around 2700 December/Jan 2018… Then down in wave C to around 2200 to complete the big A wave around the 2020 elections. Then the big B wave to a lower high and the C wave to a low of 1600-1800 4 years later and the BIG three up starts when all BS ends…

          So a long slow grind down for the next 6-7 years with a lot of chop choppy waves up/down but no huge crash… This complex correction also follows the rule of alteration contrasting with the 29 top and crash…

        • tony caldaro says:

          The crash occurred because of many factors. 1987 had a crash too.
          But the POTUS/FED did not intervene after the crash and just let it run its course.
          FDR intervened in 1933 with many programs.
          But by then much of the damage had been done, and it took a war to get back on track economically.

          • Hi Tony,
            Just to add a few technical facets:

            In 1929 Reg T was 10%. Investor could purchase $100K of margin-able stock with $10K cash.
            Reg T has been 50% since 1974.

            The triple leveraged ETFs seems to skirt the Regs
            3x ETF (e.g. TQQQ or SPXL) take Reg T down to 33%,
            Less than 50%, but higher than 10%
            Nobody says much though.
            Maybe somebody knows how they do it?
            ***
            In 1987, rarely talked about now is the high volatility of the the bond market.
            10 Year Treasury Note went from 7.00 beginning of 1987 to 10.00% by Oct, 1987.
            That’s almost a 50% drop in bond prices.

            The day of the stock crash, Treasuries had a huge move up (up in price, down in yield).
            So, stock and bonds were re-aligning, on one day, plus a little bit the next 2 or 3 days.
            Fed Chairman Alan Greenspan came on the job Aug 11. 1987.
            Seems he was having some rough OJT.
            I know previous Fed Chair Paul Volker was a very taciturn type.
            Maybe he took it to an extreme.

            GLTA

  42. Lee X says:

    Consider me informed sir , good read

    Thx Tony

  43. Thanks Tony. Have a healthy blessed weekend!

  44. Thanks, Tony, very much appreciated.

  45. phil1247 says:

    thanks Tony

    hope you continue to do well

Comments are closed.