Weekend update

REVIEW

The week stated at SPX 2819. After a higher open on Monday the market sold off to SPX 2798 by early afternoon. A gap up opening on Tuesday carried the SPX to 2826 by Wednesday morning. Then another pullback, aided by a gap down opening Thursday, took the SPX down to 2796 that morning. After that the SPX rallied for the rest of the week, hitting 28 on Friday. For the week the SPX/DOW gained 0.4%, and the NDX/NAZ gained 1.2%. Economic reports were plentiful and mixed. On the downtick: ISM manufacturing/services, monthly payrolls, auto sales, construction spending, plus the trade deficit and jobless claims increased. On the uptick: pending home sales, personal income/spending, Case-Shiller, Chicago PMI, consumer confidence, and factory orders. Next week’s reports will be highlighted by the CPI/PPI and consumer credit.

LONG TERM: uptrend

While the NDX/NAZ/R2K have been making new all-time highs each month since June. The SPX/DOW, and for that matter the NYSE/DJW as well, have not made a new all-time high since January. Negative divergence? We don’t think so. It looks more like a trade/tariff rotation out of cyclical into growth. Remember, at the first mention of tariffs in late-January the SPX sold off nearly 12%. Then growth stocks recovered more quickly than the cyclicals.

The Major wave 1 bull market count remains the same. Four Intermediate waves completed thus far: i and ii in the spring of 2016, and iii and iv in the spring of 2018. Int. ii a zigzag, alternated with Int. iv a flat. Plus Int. iii divided into five Minor waves: waves 1 and 2 ended in the fall of 2016, and waves 3 and 4 ended in the spring of 2017. A complex wave 2, alternated with a simple wave 4. Currently Int. wave v remains underway from that Int. iv early-April low.

MEDIUM TERM: uptrend

After a three month, three-trend, Intermediate wave iv flat correction, Intermediate wave v began in early-April. For the NDX/NAZ, it has been quite impulsive looking all along. Not so for the SPX/DOW. The first three rallies, April-June, all overlapped each other. The DOW looks like a leading wave one diagonal.

The SPX a choppy, somewhat overlapping, wave one. Nevertheless, they both appeared to put in a wave 2 low in late-June. Suggesting a wave 3 is now underway.

Since third waves cannot be corrective looking, or form diagonal triangles, we have been patiently waiting for the SPX to show signs of an impulsing rally. Thus far, that appears to be occurring. From the wave two low at SPX 2692 we currently have five waves up: 2743-2699-2848-2796 (flat)-2840 (thus far). A rally to SPX 2848 would confirm the advance has been impulsing, and the third wave is clearly underway.

SHORT TERM

With a third wave underway in this Intermediate wave v uptrend, we should be looking for a potential bull market top soon. Should. The SPX would reach the minimum for a bull market high at 2873, it’s all-time high. But the DOW, NYSE and DJW indices all need to make new highs before they complete their bull markets. Each of these indices are 4% to 6% from their January high. This suggests the SPX will rise a lot more than just 1% before its bull market completes. Four percent, five percent, possibly six percent higher. Our target remains SPX 3000+ by 2018+.

Short term support is at the 2835 and 2798 pivots, with resistance at the 2858 and 2884 pivots. Short term momentum ended the week overbought. Best to your trading!

FOREIGN MARKETS

Asian markets were nearly all lower on the week and lost 1.6%.

European markets were also nearly all lower and lost 0.5%.

The DJ World index lost 0.3%, but the NYSE gained 0.2%.

COMMODITIES

Bonds are downtrending but gained 0.2%.

Crude is in a downtrend and lost 0.3%.

Gold remains in a lengthy downtrend but ended flat.

The USD is in an uptrend and gained 0.5%.

NEXT WEEK

Tuesday: consumer credit. Thursday: weekly jobless claims, the PPI, and wholesale inventories. Friday: the CPI and the budget deficit. Best to your week!

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

About tony caldaro

Investor
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415 Responses to Weekend update

  1. aahmichael says:

    FWIW, the VIX daily signal that has been mentioned the last few days was confirmed today, as the VIX put in a hammer and closed above yesterday’s close. I’ve never really paid attention to the VIX before, so I’ll be curious to see if this “signal” actually pans out. A quick scan shows that a VIX hammer from under the lower BB is an extremely rare event.

  2. emuntrader says:

    Got on the short bus. I post charts latter today early tomorrow morning. GL to all

  3. vivelaamo says:

    Has it crashed yet?

  4. E says:

    Looks like a final stand for bears to me.

  5. jobjas says:

    Spx next stop 2880 for wave 3 top

  6. rd3777 says:

    Looking pretty tired up here. Dow down all day,as well as the JPN225 futures and DAX30
    Put a fork in it.

  7. Page says:

    Longs, are u worried about gap down open tomorrow? if not you should be. 😀

  8. rally time, a little late but time to go higher

  9. E says:

    This is nothing. No volume. No impulse. Still corrective. Still no direction. Should’ve learned to sell options since February. Would’ve made millions. LOL

    • Anne Day says:

      Good for shorted straddles or narrow strangles 🙂

    • Mary773 says:

      In 1987. a Los Angeles broker named Jim Kelly was making ten percent a month selling OEX straddles. As he used to proclaim on KWHY-TV, “Easy money. If they are gonna give it to you, why not take it?” Then came the crash, and they gave it to him alright. Boy, did they give it to him. Kelly’s clients lost years of gains in just hours, he was drummed out of the business, and the brokerage ate $30 million.

      That is why I always say, “Let’s write naked options!’

      • Anne Day says:

        I suppose they were unfortunately caught in a BIG compromising position. Don’t go naked 🙂

  10. mcgcapital says:

    When I said last week we were running out of catalysts for an upside breakout in the short term, I didn’t think that would mean the market wouldn’t move at all lol. Getting close to closing out and coming back when it’s more lively, too boring to watch

    • fxaprendiz says:

      It should top tomorrow during the NY session or maybe tonight in the after hours session. Unless SPX can produce 8 points up in next 2 hours. In a normal day that should be no problem but it seems SPX doesn’t have it in it today.

      • alexh110 says:

        The Dow’s hourly MACD is still well below its recent resistance level at 150: so I don’t buy this idea the top is close.
        Think minor 3 has at least another week to go, possibly up to 3 weeks?

        Then we have minor waves 4 and 5, which will probably play out against a slow decay in the weekly MACD.

      • mcgcapital says:

        Just needs to do something, these 5 point ranges are good for nobody. Would rather get stopped and stop looking. Reminding me of the bad old days of 2017

        • alexh110 says:

          The market just needs to work off some momentum, that’s why it’s not going anywhere.
          Should turn around soon.

          • mcgcapital says:

            I’m really unclear on what the pattern is medium term. I don’t buy the bull case unless there’s something coming out on trade to give a reason to re-rate upwards, and as I’ve said before non-US markets don’t look like they’re going anywhere. And the bear case.. I can’t see a 10-15+% drop when the vol is this low either, we need to see some range expansion and an end to the higher lows since April. It’s definitely a possibility but will take some time I’d have thought. I’d favour it going down from these levels but don’t know how far. Hence I like day trading over swing or buy and hold. But when there’s so little vol you might as well not bother lol

  11. Ashley says:

    Looks like it might be “pivot time”, better bring it bulls =)

  12. micky says:

    Below 52 would be my first st sell signal since 2790(IG) , if it happens will have to see what next as I still have that line in the 2870’s on the daily and weekly charts which “should” get tested at least.

  13. Ashley says:

    CL made it to the 66.64, nice call Fiona, now if we could just get that SQQQ working =)

    • fionamargaret says:

      I had long oil to 72/73, then down to 66…but we go lower still in oil…
      This is do or die (basically) for the indices to have a nice retrace…still like 2736…but check your charts…x

  14. fxaprendiz says:

    I missed the right pattern in the charts I have been posting recently. It’s not a Shark but a much more exotic and less known Harmonic pattern… an Anti Leo. First time I have seen one actually. Will have to keep an eye on these new patterns.

    SPX is now trading within the Potential Reversal Zone marked by the Anti Leo (orange rectangle) and should take fairly soon for it to top, I’m thinking tomorrow since today there’s little time left for it to reach the top of the PRZ.
    Since I got me now a spreadsheet full of the Fibo levels for the new Harmonic patterns, there’s no lack of options for the third, and smallest Harmonic pattern forming in the 15min charts:

    SPX can top and reverse down at any of the 3 Fibonacci areas marked by the 3 yellow rectangles, although my preference is for it to go and reach the highest rectangle. Shape wise it would be better if it’s done by tomorrow at the NY open of little later. It could do it today by the close but the slope would be extremely steep. I have seen those shapes too, so I can’t rule it out…

  15. alexh110 says:

    This pullback is probably a subdivision of minute v of minor 3: so shouldn’t drop below 2790, and should more likely find support around 2831.
    Could also be minute ii of minor 3, in which case it should find support around 2790.

    • in order to be a pull back, market has to go down. Its going up still. we have unfinished business at higher levels. Call it what ever you want. but we are not going down yet.

      • alexh110 says:

        Hourly MACD and RSI are declining: so we’re probably in a b-wave here.
        Expect a bit more downside today; but not sure how deep?
        Could end up as a 3-day pullback.

  16. im still looking for 2887-2890 top of Channel from May. would make this up move 195 points at 2887. Will see .Then would be looking for a drop of .618 or .50 to 2767 or 2789.. so one more pop before we drop. with only a Max of 37 points to the upside. risk is definitely to the down side wit a 70-100 point gain from here next week. 1:30 moving window should push it one way or the other. until then i expect chop chop chop. Thanks and good luck.

  17. Ashley says:

    25541 is my line in the mud for the DOW…..

  18. fionamargaret says:

    DWT….oil down to 66….then lower..
    2858, 2835, 2798, 2780, 2767, and down to 2736….numbers still suggest regression…
    SQQQ, TVIX, VXX

  19. /NQ and /YM broke their extension LONG. /ES tested it 2X and defended both times….so far. It’s 10:00 AM EST, time… when the big boys begin trading. Lets see where they want to take the market in this 15 minute candle..

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