Weekend update

REVIEW

The week started off at SPX 2905. After a dip down to SPX 2886 by Monday afternoon the market started to rally. Higher opens took the SPX to 2911 on Tuesday, 2912 on Wednesday, a new all-time high of 2935 on Thursday, and 2941 on Friday. For the week the SPX/DOW gained 1.6%, and the NDX/NAZ lost 0.25%. Economic reports for the week were mostly positive. On the downtick: the NY FED and building permits. On the uptick: the Philly FED, housing starts, leading indicators, plus weekly jobless claims and the account deficit both improved. Next weeks reports will be highlighted by the FOMC meeting, Q2 GDP and more housing. Another rate hike on Wednesday probable.

LONG TERM: uptrend inflection point

The Major wave 1 bull market extended into its 31st month for the DOW this week, as it made all-time new highs on Thursday. The SPX made all-time new highs as well. The NDX and NAZ had made their new highs in August. Now that the four major indices have registered five Intermediate waves up from the February 2016 low, it’s time to review the technicals.

The first observation is the building negative divergences on the SPX/DOW weekly and monthly RSI. Not a problem until new highs were hit. Now that they have, it’s a potential warning of a bull market high in the making. We can add that the R2K may also be in its last uptrend of its bull market.

Typically nearing a bull market top various sectors begin to displays negative divergences as well. The banking index BKX, and the housing index HGX are doing just that. Plus, the four major indices breadth, as measured by the percentage of stocks above their 200 dma, are all displaying negative divergences. As well as the NYAD.

Last, the weakness in the foreign markets. Which most have been noticing for a while. Eleven of the fourteen indices we track appear to have topped. Three have already confirmed bear markets: China, Spain and Switzerland. And we know Switzerland usually tops within a year of an SPX top. After more than two years of riding the bull we think its time to get cautious.

MEDIUM TERM: uptrend

For the past couple of weeks the SPX has had a short term inflection point to resolve. There were three possible counts. With this week’s new high one count was totally eliminated, one downgraded, and the other made the primary count. That count is on the daily chart below. This suggests the uptrend is in Minor wave 3 of Intermediate wave v, with Minor waves 4 and 5 still to unfold.

The NDX/NAZ continue to display weakness as the cyclicals make new high. In fact if they do not make new highs next week they will likely confirm a downtrend. And that might be it for their bull market. The only other thing that would alter this scenario is if Intermediate wave v were to subdivide into five Minor wave trends. Just like Int. iii. Other than that we continue to believe this is the last uptrend of the 2016-2018 bull market.

SHORT TERM

We have been labeling this Int. v uptrend, from the early-April low, with five Minor waves. Minor waves 1 and 2 completed at 2791 and 2692 in June. Minor wave 3 has been underway since that low. Minor 3 has been labeled with five Minute waves: 2863-2802-2917-2864-2941 so far. Since Minute iii is shorter than Minute i, Minute v has to be the shortest up wave. This give us a maximum for Minor 3 at SPX 2979.

We have a similar situation with the DOW. You can check the hourly chart using the link below for that. Short term support is at the 2929 and 2884 pivots, with resistance at the 2995 pivot. Short term momentum ended the week at neutral. Best to your week!

FOREIGN MARKETS

Asian markets were mostly higher on the week and gained 1.3%.

European markets were all higher on the week and gained 2.1%.

The DJ World index gained 1.6%, while the NYSE gained 1.4%.

COMMODITIES

Bonds are downtrending and lost 0.5% on the week.

Crude is uptrending and gained 2.6%.

Gold looks like its uptrending but ended flat.

The USD is downtrending and lost 1.5% during the week.

NEXT WEEK

Tuesday: Case-Shiller and consumer confidence. Wednesday: FOMC statement and new home sales. Thursday: Q2 GDP (est. 4.3%), weekly jobless claims, durable goods, and pending home sales. Friday: personal income/spending, consumer sentiment, and the Chicago PMI.

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

About tony caldaro

Investor
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275 Responses to Weekend update

  1. phil1247 says:

    clx8

    71.32 next
    extension long kaput

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  2. Page says:

    Watch Gold to collapse. SPX will also sell off.

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  3. phil1247 says:

    gary how about a post triangle thrust up to new highs ?

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  4. fxaprendiz says:

    My areas of interest for the rest of the week are depicted by the two yellow rectangles and especially the red strip.

    Still expecting a medium term low in the 2864-02 area though, even in the event of a marginal new high above 2942.

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  5. Looks like the SPX wants to do the very bare minimum in corrections.
    Looks like it will not even close that small gap from a few weeks ago.

    What President Trump said at the U.N. yesterday is probably a game changer.
    He has been talking like that for some time, but never said it at that forum.

    GLTA

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  6. lml25 says:

    GDX is sitting on its 10 and 20d averages (18.62).Also could bullishly embed if the Fed is even slightly dovish.If they are,the dollar continues down–like it should–with a H&S breakdown,and GDX reverses todays 1% losses.So a big break of 18.60 (after 2pm)is bearish and a rally up from here is bullish.It’s all up to Janet Powell.GL all.

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  7. fxaprendiz says:

    When I used to trade the forex market most NFP and FOMC days were wild rides, on top of that the brokers would not honor one’s SL or pull tricks like freezing their trading platforms, so I learned to avoid trading those days.
    Trading the stocks market is much easier as reactions to those events are much more subdued, therefore I’m keeping my SPX 2915 long but raising my SL to BE just as a precaution. In any event, if there’s an initial jerk reaction to the downside it should be brief and shallow, to around 2910-05 and then the real move to the upside. Either that or we already had the low for the day and there may be only one move up after the announcement. In either case I expect today and tomorrow to end in the green. Friday/Monday though it may be a different story.

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  8. tough call on were we are at.
    if in minor 4 camp, Maybe A finished yesterday working on 3 small waves up for B then C down can only guess at this point. I had thought we would hit the 2900 level for A bounce to 2930 then down to 2870 area. Anyway will have to see. I believe that 2930 should hold for the B wave if in fact thats the correct count

    Good luck all

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    • gary61b says:

      I would agree, but make it a little difficult and use 2936 as the top of B. but with the ES it could go either way still in micro 5 or in minor 4?

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      • phil1247 says:

        gary

        step back and look at january

        gap down…. three sideways days … then swoosh

        now we cant get above 38% retrace from high
        could top be in and swoosh ahead ?

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        • gary61b says:

          2935/18 is the range, yes so far every long SU has failed but none of the short SU have completed either. above 29 and look for a LSU then over 36 and this is over.

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      • Either way risk is to the downside. If in micro 5 up at the moment. Max upside is 2956. were micro 5 equals micro 1. how ever most 5th wave are weak. so i would say max risk to the up side is 2950. then a .38 retrace brings you back down to 2856 area. . so max upside from here is 27 points before 50-100 point lower.
        Or if 2924 cant be taken out as phil just mentioned something else may be going on.

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    • fxaprendiz says:

      tryingto, I like how you are capable of seeing both sides of the market. And I appreciate the fact that you are unemotional about your trades/views, unlike a few others in here.

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  9. scottycj1 says:

    Smackdown….. post FOMC

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