Weekend update

REVIEW

The week started at SPX 2802. After a lower open Monday, and a dip to SPX 2795, the market rallied to 2830 by Tuesday morning. A pullback quickly followed to SPX 2811 by Tuesday afternoon. Then the market rallied to SPX 2848 Wednesday. A larger pullback to SPX 2808 occurred on Friday. Then the market bounced to end the week at SPX 2819. For the week the SPX/DOW gained 1.1%, and the NDX/NAZ lost 0.9%. Economic reports for the week were mostly lower again. On the downtick: existing/new home sales, consumer sentiment, and weekly jobless claims rose. On the uptick: durable goods orders, and Q2 GDP. Next week’s reports will be highlighted by the FOMC statement, the ISMs, and payrolls.

LONG TERM: uptrend

While the leading NDX/NAZ continue to make new all-time highs, +14% and +12% YTD 2018, the lagging SPX/DOW, +5% and +3% YTD 2018, are working their way back to their January all-time highs. The SPX is about 2% shy of that level, and the DOW is about 5%. We would expect the DOW, and for that matter the NYSE and DJW, to make new all-time highs before looking for an end to this uptrend, and possibly this bull market as well. Our upside target since mid-2016 has been SPX 3000+ by 2018+.

This Major wave 1 bull market remains a simple Elliott Wave structure. A simple Int. wave i and Int. ii correction in the spring of 2016. Then a subdividing Int. wave iii. Minor waves 1 and 2 in the fall of 2016, and Minor waves 3 and 4 in the spring of 2017, then a Minor wave 5 / Int. wave iii top in January 2018. After that a three month correction for an Int. iv flat, alternating with the Int. ii zigzag. Currently an Int. wave v underway from the April low. Should Int. v be a simple structure, then the Major 1 bull market could end this year. And a Major wave 2, 15%-20%, bear market could follow. Should Int. v subdivide like Int. iii it could last into 2020. Stay tuned!

MEDIUM TERM: uptrend

This Int. wave v uptrend, which began in early-April at SPX 2554, has been making higher highs this month as it continues to extend. Even though this rally is the fourth since early-April. We are still looking for the internals to look impulsive, like all previous uptrends in this bull market. The first three rallies did not.

As noted in the recent weeks. The reason could have been that the three rallies were all part of a leading diagonal triangular first wave. Which would put this uptrend, after the wave 2 pullback by late-June, in a larger third wave now. Since third waves cannot unfold in diagonal triangles, the uptrend should start displaying impulsive internals now.

SHORT TERM

Wave 1, of this uptrend, whether a leading diagonal or the count posted on the hourly chart below, completed at SPX 2791. Then after a nearly 100-point pullback to SPX 2692 for wave 2, wave 3 was underway. Thus far, wave 3 has already advanced about 150-points. Internally, the advance has been four waves: 2743-2699-2848-2808.

At this point is where the previous three rallies failed. Instead of finding support for a 4th wave, and then rallying to a higher high. Their declines continued until they overlapped their 1st wave. If this were to occur again the current decline would continue to below SPX 2743, before rallying to SPX 2848. Impulsive or more corrective activity? We think 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 all higher and gained 1.1%

European markets were nearly all higher and gained 1.5%.

The DJ World index gained 0.8%, and the NYSE gained 1.0%.

COMMODITIES

Bonds confirmed a downtrend while losing 0.6%.

Crude appears to be in a downtrend but gained 0.6%.

Gold is still in a downtrend and lost 0.7%.

The USD is still in an uptrend and gained 0.3%.’

NEXT WEEK

Monday: pending home sales at 10am. Tuesday: personal income/spending, Case-Shiller, Chicago PMI and consumer confidence. Wednesday: ADP, ISM, FOMC, construction spending and auto sale. Thursday: weekly jobless claims and factory orders. Friday: Payrolls, the trade deficit and ISM services.

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

About tony caldaro

Investor
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300 Responses to Weekend update

  1. learnedmylesson25 says:


    Just a chart tonight of gold support levels.It’s bearish until it isn’t.GL all.

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  2. Ashley says:

    NDX wave V ending diagonal =)

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  3. emuntrader says:

    jobas, I don’t know if you are trying to help me or teach me, but I don’t trade the FTSE so i wont presume to know the inner working of it. Personally I am here because Tony’s philosophy and legacy. His teachings and hard learned emotional control has made me a profitable trader. Just so everyone knows I don’t trade all the time. In fact, for the month of July I have only traded 5 trades, 2 winners, 1 loser(gap down SPY), 1 break even, and one TBA. currently long from about 2800, and unless we open up -20, I will be fine. Not too worried about it. The more scientific a trade – the less emotion. I post charts and thoughts just like everyone else, and i don’t want to scrutinize anyone who is putting they’re capital at risk. I wish the best for all. Personally I will probably close my position before the Fed announcement. but the odds are Price and volatility will rise going into to the release.

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    • jobjas says:

      neither helping nor teaching – just explaining what I meant (just another index -principle remains same)
      Good to know you don’t want any “scrutiny” -will stay away.

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  4. fionamargaret says:
  5. learnedmylesson25 says:

    A snippet of Al Brooks
    “The bears got follow-through selling yesterday. However, the bulls rallied off the 20 day EMA, the 2800 Big Round Number, and the March high. After 2 days of climactic selling down to support, the Emini will probably go sideways to up for a couple of days. The bears will likely then get a 2nd leg down. I have been saying that the bears would get a 50 – 100 point selloff over the next 2 weeks. They now have 50 points, and a 2nd leg down is likely after a bounce.

    Today is the last day of the month. Therefore, monthly support and resistance can be important. The targets are the June high of 2796.00 and the March high of 2811.00. If the Emini is within 5 points of either in the final hour or two, it will probably get drawn to the magnet for a test.”
    LML25:Nothing much happened on gold/GDX imho.Still bearishly embedded,but RSI seems to be rising.Past GDX patterns similar to this one have led to a large one day rally,then giveback.Still waiting for GDX to get above 21.50 (or 20 on slow stochastics).Good luck all.

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  6. E says:

    Why did futures just drop through 1st support level?

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  7. thoth8 says:

    Amazon’s Monthly and Weekly charts looks pretty much “Kaput”!

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  8. Wondering. From the 2848 high, are we going to see a largere price decline, than we have seen thus far??

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  9. jobjas says:

    FTSE to 7900 in wave 3

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    • jobjas says:

      emuntrader ,in the last chart we have a leading diagonal i to v culminating in wave 1 which is followed by a wave in the opposite direction of the trend of the diagonal as wave 2

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    • mcgcapital says:

      Last chart just looks like a choppy mess like it has been, day trading market. 7800 is key.. should claim it this week if it’s bullish, if it doesn’t despite central banks and payrolls I can’t see it doing it in August

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      • jobjas says:

        1. pure EW analysis without any dose of news views and fundamentals.
        2. hindsight is always 20/20 -skill is in identifying waves in real time . After the present wave moves up one can always look back and say that there was a leading diagonal (marked here)
        3. wherever there is overlapping of waves think of either ED or LD
        4. always keep the bigger picture in mind – no wave is a stand alone wave , it is always part of a bigger wave and that is the reason fib application has to be applied to the correct previous wave.
        5.CHART 1 is a monthly chart starting from 2009 low .we have 5 black waves – looks like a gigantic leading diagonal (which will culminate in wave 1 [ light blue tentatively placed at 8250 ] of a cycle that will last decades , and the wave 2 of that cycle will correct the whole cycle from 2009 -2019 ? by around 38.2% and expected to bottom around red wave 2 of black fifth wave (around 5780)
        6. each black wave is in turn composed of 5 red waves
        7. so from chart one we are in red 5 of larger black 5 wave
        8.CHART 2 is the zoomed wave 5 red (of the black wave 5) -look for red 4 in square box .
        9. red 5 is again composed of 5 blue in brackets – fourth of which is complete (in round box)
        10. CHART 3 is the wave 5 blue in brackets zoomed -yet developing -which in turn will have 5 solid black waves.
        11.now that we have wave 4 in round box as confirmed we are looking for 5 black waves to complete the uptrend from 2009 .
        12. so in chart 3 with wave 4 in round box complete ; we see a bunch of choppy waves – think of LD as it is wave 1 of this cycle.
        13. a LD (with i -v waves ) once complete will have a drop for wave 2 as marked
        14. having established the wave 1 (LD)and wave 2 ;followed by a choppy uptrend we have to trust it is wave 3 and trade accordingly
        lengthy and tedious write up – but same principle can be applied for any instrument

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        • mcgcapital says:

          I can’t say I fully believe in EW on the basis that the counts always change so I can’t really comment on the wave structures or labelling, but it’s the same as with any technical indicators.. as long as there’s an ’if the market does x, I do y’ response to everything then it’s got a chance of being a disciplined and profitable system.

          I tend to look for patterns and given I trade FTSE almost exclusively that’s the one I’m focused on most. As for getting to 8250, I’d say that was possible but difficult especially short term. One thing to note is that FTSE rarely breaks above prior resistance then adds a big amount of points before the next period of corrective activity. I remember in 2015 we broke 7000 and it was supposed to mark the start of a huge rally because it was the breakout of a 15 year trading range. The reality is since then we’ve sold off for a minimum of 200-300 points (and sometimes 1000+) from 7100, 7365, 7440, 7600, 7800 and 7900. So basically.. new highs often is bearish on this index in the sense that sizeable pullbacks have usually followed. That would suggest that we’d probably sell off from 8000 if it got there, and might take a few goes of rally then multi month correction to get to 8250.

          On the flip side.. over the same period we’ve had impulsive rallies off notable lower lows at 5500 (Feb ‘16) and 6840 (Mar ‘18) for the two major corrections, plus rallies off either the bottom of the trading ranges or just below from 6600 (Dec ‘16), 7100 (Feb ‘17), 7100 (Apr ‘17), 7200 (Sept ‘17) and 7300 (Dec ‘17). All of those rallies started off strong and carried on making higher highs for many (usually 5-6) weeks.. they look impulsive the whole way. After those rallies there was lengthy consolidation. It’s worth noting that not once have we broken up out of consolidation for a new rally leg without beginning the impulsive part of the rally from the range bottom. In the current market we hit 7500 6 weeks ago, and have since made higher lows with a lot of chop. The current rally is nothing like any of the others I’ve referenced, it looks corrective to me, which suggests retest of 7500 is on the cards. Above 7800 and I’m unsure of the pattern but below there it seems very likely it flops back down.

          As for mentioning the news/fundamentals, I’ve observed that recently we’re getting rallies around events (earnings/opex/payrolls/meetings/window dressing) and nothing the rest of the time. Last year the market generally was rising during quiet spells for news but not this year. It’s almost as if traders provide liquidity to push the market up around events but there’s not enough liquidity when short term traders aren’t providing it (i.e. when there are no events to trade around).That’s just my feeling. And after this week we’re light on events hence my suggestion if a break upwards is coming I’d expect it now rather than in the next few weeks.

          On the fundamentals, FTSE usually only re-rates when either 1. Global markets all rallying 2. Sterling falling (overseas revenues) 3. Oil rallying (big allocation to oil and mining) 4. Bond yields falling (big allocation to bond proxies like utilities/healthcare). 1 doesn’t look to be happening with any consistency and if anything the other 3 look like headwinds rather than tailwinds unless Brexit goes really wrong. So I’m struggling to see a bullish breakout on either a fundamental or a technical level. Best guess is move back to 7500 and see how things sit at that point, would be clueless on the medium term above 7800 but probably long for a trade.

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          • jobjas says:

            Sorry , the write up was meant for any one trading / investing using EWP.
            And about fundamentals and others factors , frankly I have no clue.

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  10. jobjas says:

    Technical bias is when one keeps raising stops or adjusting trend lines …and even adding a dash of political and fundamental bias

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