The week started at SPX 2670, and ended there as well. The SPX ranged between 2684 on Tuesday to 2613 on Wednesday. Quiet compared to most recent weeks. Also, in a week that had three gap up openings, and no gap down openings, one would have thought the market would have gained about 2%. But it was simply unchanged. For the week the SPX/DOW lost 0.3%, and the NDX/NAZ lost 0.3%. Economic reports were all positive. On the uptick: Q1 GDP, existing/new home sales, Case-Shiller, consumer confidence/sentiment, durable goods, plus weekly jobless claims declined. Next week’s economic highlights: FOMC meeting, monthly payrolls, and ISM. Best to your week!
LONG TERM: uptrend
After making an Intermediate wave iii high in late January, the market has churned its way for three months in an Intermediate iv correction. Tuesday will make it the fourth month, and longest correction of this 2016-2018 bull market. It is quite easy to turn bearish after well over a year of 3% or less corrections, and then watch a nearly 12% correction unfold while dragging out for months. We see no reason to be concerned unless the SPX loses 2500.
The bull market, despite this lengthy Int. iv, continues to unfold as labeled. Intermediate waves i and ii ended in the spring of 2016. Intermediate wave iii then started to subdivide. Minor waves 1 and 2 ended in the fall of 2016, and Minor waves 3 and 4 ended in the spring of 2017. Then after a lengthy uptrend, Minor wave 5 and Int. iii ended in January 2018. Int. wave iv has been underway since then. When it concludes, Int. wave v should carry the market to all-time new highs. Still looking for SPX 3000+ between 2018-2020.
MEDIUM TERM: downtrend
This Intermediate wave iv downtrend has had many starts and stops. In February it looked like it could be done, but the following uptrend failed. In early April it looked like a double bottom, but the rally off that low has been choppy and corrective. This week, after the gap up openings, in an uptrend the market would have been up about 2%. It was unchanged.
We continue to track two possible scenarios: triangle and double three. The triangle suggests a rally about SPX 2717 before the SPX drops back to the 2550’s again. A double three suggests the market trades lower, without rallying to 2717, to complete the pattern in the low to mid 2500’s. Either way it looks like more choppy action ahead. Medium term support is at the 2656 and 2631 pivots, with resistance at the 2731 and 2780 pivots.
The month of April started with such promise. The SPX had made a double bottom. There were positive divergences everywhere. Strong earnings were expected to be reported. And the GDP was still near 3%. The market started with a strong rally from SPX 2554 – 2672. Then after a pullback to SPX 2586 still in the first week, the choppy/corrective activity began and lasted throughout the month.
Expecting more of the same until this complex Int. wave iv completes its pattern. Short term support is at the 2656 and 2632 pivots, with resistance at the 2731 and 2780 pivots. Short term momentum ended the week just above neutral. Best to your trading!
Asian markets were mostly higher and gained 0.7%.
European markets were all higher and gained 0.6%.
The DJ World index lost 0.3%, and the NYSE lost 0.1%.
Bonds remain in a downtrend and lost 0.1%.
Crude is still in an uptrend but lost 0.4%.
Gold may be in a downtrend and lost 1.1%.
The USD remains in an uptrend and gained 1.4%.
Monday: personal incoming /spending and the CPI at 8:30, then the Chicago PMI at 10am. Tuesday: ISM, construction spending, and auto sales. Wednesday: the ADP and FOMC statement. Thursday: weekly jobless claims, trade deficit, ISM services and factory orders. Friday: monthly payrolls (est. 103K). Best to your weekend and week!