Weekend update

REVIEW

The week started at SPX 2801. After a slightly higher open on Monday the SPX dropped to 2789 by Tuesday’s open. After that the market rallied to SPX 2817, (new uptrend high), on Wednesday, before pulling back to 2800 on Thursday/Friday. For the week the SPX/DOW were +0.1%, and the NDX/NAZ were -0.25%. Economic reports again were generally positive on the week. On the downtick: the NY FED, housing starts and building permits. On the uptick: retail sales, business inventories, industrial production, capacity utilization, the Philly FED, leading indicators, plus weekly jobless claims were at a 48-year low. Next week’s economic reports are highlighted by Q2 GDP, and more housing reports. Best to your week!

LONG TERM: uptrend

While the general market has remained in a 6-month trading range, between SPX 2500+ and 2800+, the economy was surging during Q2. The latest forecast from the Atlanta FED is +4.5%. Next/last update on Thursday. The market consensus is +3.9%. Either way this appears to be the strongest quarter since 2014, which registered Q2 and Q3 over 4%.

We continue to see the current uptrend as potentially the last of this Major wave 1 bull market. The market has already completed four Intermediate waves since the early-2016 low, with a subdivided Int. wave iii. All that is left to complete five waves up is an Int. wave v uptrend. Which has been underway since early April. Our market goal, since mid-2016, has been SPX 3000+ by 2018+. Now some of the other indices are suggesting that upside possibility as well.

MEDIUM TERM: uptrend

While this uptrend had been difficult to track in the SPX/DOW. The NDX/NAZ has been quite clear and impulsive. Recently we noticed the NYSE forming a leading diagonal first wave from its April low.

Applying that pattern to both the SPX/DOW would help in resolving the choppiness that has been noted for a few months in those indices. With the SPX starting to look impulsive that pattern seems to fit.

The minimum required then, to complete Int. wave v and the Major 1 bull market, would be new all-time highs in the SPX. The SPX is currently about 2% from the previous high at 2873. When we review the other three major indices were find the NDX/NAZ have already made new all-time highs in their 5th wave uptrend. But the DOW is drastically short by about 6%. A quick review of the NYSE and DJ World index also displays they too are 6% below their all-time highs. We would not expect the bull market to end until these latter three indices had also made new all-time highs.

This would suggest the SPX could advance 6% from here, rather 2%, before it tops. Six percent from current levels is about SPX 3000.

SHORT TERM

Counting the SPX advance from the April low at 2554 to the June high at 2791 as a leading diagonal in the SPX/DOW, or the pattern presented on the hourly chart in the SPX, leads to the same general conclusion. Minor wave 1 completed at SPX 2791, and Minor wave 2 likely ended at SPX 2692. Minor wave 3 would then be currently underway.

Since Minor 1 displayed a lot of internal choppiness which fits a leading diagonal scenario. Minor 3 should shed that choppiness and be impulsive. So far we are seeing that unfold. From the Minor 2 SPX 2692 low we see three waves up: 2743-2699-2817 so far. The first advance from SPX 2692 looks impulsive: 2711-2699-2724-2716-2743. And the advance from SPX 2699 looks impulsive too: 2737-2711-2796-2771-2817. To increase the impulsive scenario probability we would need to see a pullback of about 30-40 points, and then a rally to higher highs. Then this advance would not only look impulsive, it would be impulsive. Short term support is at the 2798 and 2780 pivots, with resistance at the 2835 and 2858 pivots. Short term momentum ended the week oversold. Best to your trading!

FOREIGN MARKETS

Asian markets were mixed on the week for a net loss of 0.1%.

European markets were mixed as well, and ended unchanged.

The DJ World index gained 0.2%, as did the NYSE.

COMMODITIES

Bonds continue to uptrend but lost 0.3%.

Crude appears to be in a downtrend and lost 3.9%.

Gold remains on a downtrend and lost 0.8%.

The USD is still in an uptrend and gained 0.5%.

NEXT WEEK

Monday: existing homes sales 10am. Wednesday: new home sales. Thursday: weekly jobless claims, and durable goods. Friday: Q2 GDP (est. +3.9%), and consumer sentiment.

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

About tony caldaro

Investor
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408 Responses to Weekend update

  1. fxaprendiz says:

    My first hedge short order at 2835 just got filled. With this my tactical fading long has been covered in half, and will be covered fully when/if SPX reaches 2840. Or I might cover it manually if I’m around when price action changes, but so far everything is going as planned.
    Actually my charting software, which is from a different broker than the one I use for trading (good trading brokers have awful charts and not-so-good trading brokers have excellent charting, go figure…) has today’s high at only 2833.3 but my broker I use for trading has the high at 2835.08
    I actually got filled right there, at 2835.08 before the tiny pullback. Yep my UK based broker fills me regularly with positive slippage, and it doesn’t flaunt it. And with super tight spreads as well, 0.48 points afterhours and usually 0.26 points during trading hours, I’m really having a hard time leaving them and moving to an Australia based broker. But ESMA is a b**ch and I’m not going to put up with their new leverage rules.

    I think what I’ll end up doing is opening a new account with the ECN/DMA broker I mentioned or it’s closest competitor, and moving most of my funds to Australia but keeping open my accounts with my 2 current UK brokers, one to keep using its charts and the other to compare its excellent execution and spreads to its Australia counterpart and see if they live up to their hype.

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  2. alexh110 says:

    After today’s action, I’m looking at this potential IHS on SPX daily RSI.
    Timing-wise it appears to have formed a titular inverse right shoulder on Monday, which would be very bullish going forwards.
    Let’s see how the market responds to this hourly -D at the 2835 pivot, but most likely I’ll be looking to rotate shorts into longs on any pullback.

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  3. phil1247 says:

    need to push above es 33.5 target
    to enter new extension and upside acceleration

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  4. fxaprendiz says:

    SPX: still going up to the confluence of medium and long term Fib levels in the 2835-40 area, which prompted me to open a tactical long position starting at 2772 which I’m still holding although not for much longer. Raised SL to 2815 and placed 2 hedge short orders at 2835 and 2840. Letting the market do its dancing first.
    Obviously still planning on reversing and going short for second leg down of this by now really big wave of just one degree below Primary. The timing for final low is still end of October, but now this leg down would take only 3 months instead of 4, so probably there will be violent shakes up and down as there’s less time for an orderly bottoming process.
    Might not post much in next few days as I’ll almost surely be busy trying to position myself for said leg down. Especially now that I’ll have to be more careful with my UK trading account because of the start of ESMA next week. Still haven’t opened an Australian account yet. Decided to try IC Markets as they are very clear in that they are using pure ECN/DMA which is the most transparent form of STP/NDD.
    We have enough to worry about trading well, not worrying about our broker trading against us as a DD…

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    • reddragonleo says:

      Interesting scenario… one that I haven’t seen many take about as a possibility. I think most are expecting a brief pullback to 2700-2750 in the coming 1-2 weeks and then up to the 3000 area into October. Personally I’m expecting a high around October 19th before a large drop in November. I have many reasons for picking that date and November 11th as the largest drop (as I posted on my blog) but I won’t go into details here.

      But I’m 50/50 on whether that high is from some big A wave down from around now with a big B wave up into that date (for a lower high) or if that date is the top for the year and the large drop to follow is the A wave. Do your best keep us up to date with your thoughts as time passes if you can as all scenario’s are worth studying. Thanks for your thoughts.

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      • fxaprendiz says:

        Red, this chart posted in here almost 2 weeks ago (the day SPX started trading above 2800) depicts my favored scenario explained previously:

        The second leg down, which in this chart is labeled wave y, may take the shape of a zigzag, which could be fast enough to finish in just 3 months from now. Its subwave b shouldn’t end nowhere near present levels and the subwave c would end the whole series down by end Oct/start Nov.
        This is my first scenario for wave y down, although I have a second scenario as alternative, a flat instead of a zigzag, which is pretty much your first scenario. A flat would probably take not 3 but 4-5 months to complete, and its wave b, could come back up almost to current levels to make a lower high, around the date you mentioned, then start your big drop as a wave c taking the whole month of Nov and probably part of Dec.
        I read regularly your daily updates as I find your short term calls and medium term thoughts very interesting. I also like the fact that you never got married to any single outcome and remain flexible.
        Thanks for reading and your feedback 🙂

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    • The dog wagging the tail or the tail wagging the dog? Seems all major drops or one day steep moves have happened purely coincidentally on trade actions. Today we will have a good clue if trump has predetermined to go all in with an EU trade war. The outcome of this days talks will be most telling. We all await the TWEETS.

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      • kingfrogcash says:

        During the financial crisis the US Fed bought US Treasuries. The EU bought corporate bonds. Merrill Lynch just sent out a message “an escalation of trade tensions could roll the European Corporate Bond market”. Translation IMO, EU gives Trump what he wants.
        $FCAU is the public stock that took a hit. $DB can’t cover their junk. Long $EWG

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        • Impossible! To do so will require them to disband. Every country in their union has specific demands and protections. never ever happen. Trump will never agree on no tariffs for autos. Our truck industry will get killed. Silly discussions, silly for people to continue to rationalize an irrational president. He wants war with everyone. in fact he instigates it. Trump wants our agriculture to be sold there even though they ban GMO’s. On and on I can go but I guess you will find out soon enough.

          Todays move just canceled one of the 2 last barriers for much higher prices. 2845 is the last resistance point. And away we go…….

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  5. Mary773 says:

    Venezuela’s Inflation to Reach 1 Million Percent, IMF Forecasts
    https://www.bloomberg.com/news/articles/2018-07-23/venezuela-s-inflation-to-reach-1-million-percent-imf-forecasts

    You show me a socialist, and I’ll show you a masochist.
    DJI is getting ready to emerge from a monthly flag/flagpole.
    The best is yet to come.

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  6. learnedmylesson25 says:

    Boring is bullish…right Mr C?

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  7. torehund says:

    https://www.investing.com/commodities/us-wheat

    Be observant of wheat on wave 3 from bottom and may continue to squeeze if lager order patterns summate on top of it…Europe is in drought.

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  8. fionamargaret says:

    DWT….short oil..down to 66, and then more down……inventory numbers not quite as they seem on the surface…most of the drawdown was to the Western US (an entity unto itself)
    TMF or TLT…..long the long bond
    TVIX, VXX
    x

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  9. alexh110 says:

    Think today will be a boring sideways day on SPX, with a sharp decline tomorrow, followed by a swift rebound on Friday for the GDP number.
    Expect further chop next week, eventually resolving to the upside.

    Like

  10. gary61b says:

    ES, has setup from a long at 2820. but I would watch 2823.5 as overhead to continue it down….

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