Weekend update

REVIEW

The week started at SPX 2670. After a gap up opening on Monday the SPX hit its high for the week at 2683. Then it pulled back to SPX 2625 on Tuesday, rallied to 2661 on Wednesday, then dropped to 2595 on Thursday. On Friday it hit SPX 2671 before dipping to end the week at 2663. For the week the SPX/DOW lost 0.2%, and the NDX/NAZ gained 1.5%. Economic reports for the week were mostly positive. On the downtick: ISM manufacturing/services, construction spending, auto sales, and the ADP. On the uptick: personal income/spending, the Chicago PMI, factory orders, monthly payrolls, plus weekly jobless claims, the trade deficit and unemployment rate all improved. Next week’s reports include the CPI/PPI and export/import prices. Best to your week!

LONG TERM: uptrend

With this Intermediate wave iv correction still lingering on. Some are thinking we may already be in a bear market. For some sectors of the market that may be true. But for many others it is not. Regardless of counts and wave structures, the DOW, NYSE and DJ Global index still require at least one more new high to end their bull markets. Plus FANG stocks, i.e. AAPL, AMZN, GOOG, and NFLX are still in bull markets. And market breadth indicators, the NYSE A/D and the SPX A/D, both made new highs last month. No bear market yet!

The long term count remains unchanged. Primary waves I and II of a new Cycle wave bull market completed in 2015 and 2016. Primary III began then and should complete some time around the year 2034. Its first bull market is Major wave 1 from the 2016 low. Major waves divide into five Intermediate waves. Int. i and ii completed in the spring of 2016. Int. iii then subdivided into five Minor waves. Minor waves 1 and 2 completed in the fall of 2016, and Minor waves 3 and 4 completed in the spring of 2017. Minor wave 5 and Int. iii recently completed in January 2018. Int. wave iv has been underway since then. When it concludes the bull market should resume, and Int. v should carry the market to new highs.

MEDIUM TERM: downtrend

We have been tracking two possible medium term counts: triangle and double three. The first is posted on the SPX daily and the other on the SPX hourly. The triangle pattern suggest a rally to exceed SPX 2717 in the coming days/weeks to complete a wave D. Then a decline to about the mid-2550 level to end wave E and a triangular Int. wave iv. The double three pattern suggests a drop to the mid-2550’s or so without ever rallying above SPX 2717 to complete a 3-3-3 pattern. Either way it appears the mid-2550’s would be hit before the market enters a new uptrend.

Today we throw one more possibility into the mix. This one seems to be quite far fetched at the moment, but with this choppy market you never know. How about an ending diagonal triangle for Intermediate wave v, starting from SPX 2553? This would suggest the market could remain in its choppy pattern, but the bias would be positive rather than negative like it has been for three months. Right now this has the lowest probability. Medium term support is at the 2656 and 2632 pivots, with resistance at the 2731 and 2780 pivots.

SHORT TERM

The short term patterns during this correction have displayed signs of impulsiveness activity, but have all ended in corrective activity. Even Thursday/Friday’s rally from SPX 2595 looks impulsive. But will it hold? Recent market activity suggests not likely.

Going back to the beginning of April you can clearly see from the above chart the price activity has been corrective. There was a rally early that looked positive (2553-2672), but it failed with a choppy follow up.

Technically Thursday’s low did provide some positive RSI divergences on the hourly and daily charts. And the market responded with a good rally. SPX 2683/84 is the next resistance, then SPX 2717. A failure at SPX 2670 might lead to another three waves down into the final low. Stay tuned. Short term support is at the 2656 and 2532 pivots, with resistance at the 2731 and 2780 pivots. Short term momentum ended the week overbought.

FOREIGN MARKETS

Asian markets were mostly lower on the week for a lost of 0.2%.

European markets were mostly higher and gained 0.4%.

The DJW index lost 0.5%, and the NYSE lost 0.8%.

COMMODITIES

Bonds remain in a downtrend and lost 0.2%.

Crude nearly hit $70 and gained 2.4% in its uptrend.

Gold is back in a downtrend and lost 0.7%.

The USD continues its uptrend and gained 1.2%.

NEXT WEEK

Monday: consumer credit. Wednesday: the PPI and wholesale inventories. Thursday: weekly jobless claims, the CPI and the federal budget. Friday: export/import prices and consumer sentiment.

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