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. alexh110 says:

    IHS reversal pattern is possible here on SPX (currently in its right shoulder).
    Though it could also roll over into a deeper low.

    Hourly MACD has been bottoming near the end of the month recently.
    Hasn’t bottomed at the beginning of the month since March.

    Like

  2. Page says:

    Expecting strong Gold rally either today or tomorrow.

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  3. alexh110 says:

    The market could be in the midst of a minute iv flat, to alternate with the minute ii zigzag?
    Hard to tell at the moment.

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  4. mcgcapital says:

    Would be careful with longs here across the board now. FTSE reversal looks underway as fully retraced yesterday’s short covering rally and some more. After this week can’t see any catalysts for more upside.. possible treasury yields break out and we see selling on NFP rather than the usual ramp, so would be cautious

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    • alexh110 says:

      Trade War resolution could be a catalyst, or maybe even something to do with the Mueller probe.

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      • mcgcapital says:

        Trade is the curve ball, anything can happen there, but I think US and Chinese interests are diametrically opposed so it’s probably not going away overnight. Plus the EU won’t give it up easily as their whole purpose is to create a protectionist market for their goods and services.. it’s a really complicated issue.

        The Mueller thing I don’t see as relevant really.. it’s not like it’s weighing on the market and we don’t react when news about it comes out. If something bad happens then maybe we pullback on it with some risk aversion but if they just announce no collusion or whatever, can’t see that making it rally.

        Just looking at the momentum.. Think it’s falling away now and path of least resistance is down. SPX needs to hold 2800 but don’t think it does

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  5. gary61b says:

    ES, if 2822 does not hold support then I see 2820, 2819.2818 , 2816 then 2814.

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  6. phil1247 says:

    BONDS tanking

    maybe the bond boys were given a heads up
    on the coming news flash …

    FED raises rates today in surprise move !

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    • Ashley says:

      FED QT today??? Id say 2809-2811 might be a good place to try a long to 2830….

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    • FFR was trading at a 94% probability of a rate hike at the September meeting. Powell didn’t warn the market of a August hike…doubt they would tank the market with a hike today. To me it seems as though the equity markets rise and then Trump/Minuchin makes a public statement of increasing tariffs against China. Yesterday was a perfect example.

      Phil, you are correct…”SSO” is impossible to trade today. Wouldn’t r/o a change in the tapering program or a reaffirmation of a rate hike in September, December and 2-3 rate hikes in 2019….that could spoke the equity markets but could be bullish for the bond market as these rate increase will act as a drag on the economy (headwind) once they are fully “absorbed by the market.

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      • Ashley says:

        Could short here but Id rather wait for a run at the 2835 pivot, but I think the best course of action is to go back to bed…. MUST not try to trade on FOMC day, it almost never works out for me LOL G/L

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        • fionamargaret says:

          Think a decline of about 65 points is more likely than higher…

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          • Ashley says:

            If my count is correct thats exactly what should happen swiftly, like right about now, I’ll pass though because FOMC and thats just 1 of 3, should be able to short 2 for 3 of 3 =)

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    • chrisk44342 says:

      waiting/watching for CL to develop https://invst.ly/85e7f

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  7. gary61b says:

    ES, looks to have 2829.75 in its sights before a pb… some overhead at 2823,2825. long in play from 2798.25,T=2869.25..

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  8. phil1247 says:

    es

    short traded at 2822

    but 2809 long from lows must fail
    in order to reach the 2786 target

    zb .
    .. nice profits available to be taken again now
    whether or not ext short target is hit

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