Weekend update

REVIEW

This roller coaster week started at SPX 2755. After a gap down opening on Monday the SPX hit 2699 before rebounding in the afternoon. A gap up opening on Tuesday carried the SPX to 2746 by Wednesday morning. After that the market headed right back down and hit SPX 2692 by Thursday morning. Friday’s gap up opening carried the SPX to 2743, before retreating late in the day to end the week at 2718. For the week the SPX/DOW lost 1.3%, and the NDX/NAZ lost 2.3%. Economic reports for the week were mixed. On the downtick: consumer confidence/sentiment, durable goods, pending home sales, Q1 GDP and weekly jobless claims rose. On the uptick: personal income/spending, Chicago PMI, Case-Shiller, and new home sales. Next week’s reports will be highlighted by Payrolls, the ISMs, and the FOMC minutes. Best to your week, and happy Independence Day!

LONG TERM: uptrend

Nothing has changed long term. A Super cycle low in 2009. Leading to a Primary I bull market high in 2015. Then a short and quick Primary II bear market low into 2016. And currently, a Major wave 1, of Primary III, bull market into 2018.

Major wave bull markets divide into five Intermediate waves. Intermediate waves i and ii completed in the spring of 2016. Then Intermediate wave iii started to subdivide into five Minor waves . Minor waves 1 and 2 completed in the fall of 2016. Minor waves 3 and 4 completed in the spring of 2017. Then Minor wave 5, to complete Intermediate wave iii, stretched out into January 2018. Since then, it appears, Intermediate wave iv has been underway. Still expecting SPX 3000+ by 2018+ before this bull market ends.

MEDIUM TERM: downtrend may be underway

The market has been in an uptrend since early April at SPX 2554. The uptrend, as we have noted, has been internally choppy and unlike previous uptrends of this bull market. Nevertheless, we gave it the benefit of doubt while its larger waves unfolded. This week the SPX broke through support levels, turning even this last rally (2677-2791) into a choppy corrective affair.

As a result we added the Intermediate wave iv triangle scenario back to the SPX daily chart. It’s been that type of market activity for most of this year. Triangles are created by five corrective waves that form a wedge. In this case it looks like a contracting wedge, with waves a, b, c, and d already completed. All that is required is a downtrend confirmation to move the e wave close to completion. Keep in mind, the e wave does not have to reach the lower trend line.

SHORT TERM

We were tracking this uptrend, despite the internal choppiness, as an impulse wave until this week. This week the SPX broke below 2742, and then traded below that for most of the week. We now have three overlapping larger waves from the uptrend low in early April. Certainly looks corrective. Unless, the market is unfolding in this new count posted on the hourly chart. It has a low probability at this time, and we’ll leave it at that for now.

Should the triangle scenario continue to unfold, a likely low would occur in the low – mid 2600’s. There are OEW pivots at 2632 and 2656. Also the low could come as early as this week. If it looks like this is occurring we will post a daily update. Short term support is at the 2656 and 2632 pivots, with resistance at the 2731 and 2780 pivots. Short term momentum ended the week nearly oversold. Best to your trading!

FOREIGN MARKETS

Asian markets were all lower for a loss of 1.1% for the week.

European markets were all lower for a loss of 1.4%.

The DJ World index lost 1.3%, and the NYSE lost 1.1%.

COMMODITIES

Bonds confirmed an uptrend and gained 0.2% on the week.

Crude confirmed an uptrend too and gained 8.1%.

Gold remains in a downtrend and lost 1.3%.

The USD is still in an uptrend and gained 1.0%.

NEXT WEEK

Monday: ISM and construction spending at 10am. Tuesday: auto sales and factory orders. Wednesday: holiday! Thursday: ADP, ISM services, jobless claims, and the FOMC minutes. Friday: monthly payrolls.

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