REVIEW
The week started at SPX 2930. After a gap down opening on Monday the market hit SPX 2913. Then it rallied to 2931 right after the FED raised rates on Wednesday. Immediately after that the SPX dropped to 2903 before a 2906 close. On Thursday the market gapped up and rallied to SPX 2927, before heading down in the afternoon. Friday the market hit SPX 2908, before ending the week at 2914. For the week the SPX/DOW lost 0.8%, and the NDX/NAZ gained 1.0%. On the economic front positive reports were even with negative ones. On the downtick: Case-Shiller, pending home sales, Chicago PMI, consumer sentiment, plus jobless claims rose. On the uptick: consumer confidence, new home sales, durable goods, and personal income/spending. Next week’s highlights: monthly payrolls, the ISMs and auto sales. Best to your week!
LONG TERM: uptrend inflection point
Last weekend we discussed why we feel this bull market is in its late stages. While our target all along has been SPX 3000+ by 2018+, and it still may get there, we’re not one to try and pick the exact top. We scale in when we think a bull market is underway, and scale out when we think it is close to ending.
Since the low in early-April, Intermediate wave iv, the market has struggled to make new highs. It was not until August that the SPX made new highs, and September for the DOW. Typically this is a sign of a weakening trend and impending top. With four Intermediate waves already in the books, and this Intermediate wave v up entering its late stages, a bull market high may occur in the next few weeks/months.
MEDIUM TERM: uptrend
This Intermediate wave v uptrend began in early-April at SPX 2554. Minor waves 1 and 2 completed in June at SPX 2791 and SPX 2692 respectively. Minor wave 3 appears to have completed less than two weeks ago at SPX 2941. And, Minor wave 4, which could drop about 60-100 points, should be underway. Normal support is the previous 4th wave near the low 2860’s, and the 2858 pivot. Once Minor 4 concludes, Minor wave 5 should take the market to new highs to complete Int. v and the Major 1 bull market. After that we are expecting a short-lived, and moderate, bear market to unfold.
Supporting this potential scenario are the negative RSI/MACD divergences in several US indices. A negative divergence on the NYAD breadth. US sectors that look like they have already topped, i.e. NDX/NAZ and R2K. Foreign markets that have already turned down, 12 of the 14 we track, with 3 of them already in confirmed bear markets. It is quite odd that the US has been making new highs, while the rest of the world is heading lower.
SHORT TERM
The recent Minor wave 3 unfolded in five Minute waves: 2863-2802-2917-2864-2941. Notice the third wave was shorter than the first, which limited the upside potential for the fifth wave. If you review the entire uptrend you will observe pullbacks have ranged from 53 to 100+ points. With three of the five pullbacks around 50+ to 60+ points. This is why we expect Minor 4 to range from 60-100 points.
Also of note, the NDX/NAZ have confirmed downtrends. We believe the recent highs were the high for their bull market. However, some in our group prefer the count posted on the NDX charts, suggesting one more bull market uptrend. Either way these two indices are looking toppish as well. Short term support is at the 2884 and 2858 pivots, with resistance at the 2929 and 2995 pivots. Short term momentum ended the week around neutral. Best to your trading!
FOREIGN MARKETS
Asian markets were mostly higher on the week but gained only 0.1%.
European markets were mostly lower and lost 0.7%.
The DJ World index lost 0.7%, and the NYSE lost 1.2%.
COMMODITIES
Bonds continue to downtrend but gained 0.1%.
Crude is still in an uptrend and gained 3.5%.
Gold is in an uptrend too but lost 0.4%.
The USD remains in a downtrend but gained 0.8%.
NEXT WEEK
Monday: ISM and construction spending at 10am. Tuesday: auto sales. Wednesday: ADP and ISM services. Thursday: jobless claims and factory orders. Friday: monthly payrolls, the trade deficit and consumer credit.
CHARTS: https://stockcharts.com/public/1269446/tenpp
Thanks Tony. I’d guess we test those support levels before Q3 earnings being us to that 3000+ high we’re looking for…
https://www.invest-safely.com/stock-market-outlook-2018-09-30.html
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Will be interesting to see if SPX goes above 2947 in RTH session in the days ahead.
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SPX futes are in full,first of the month rally mode.
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DEC CRUDE
this is why i use the individual month contract … dead stop at .50 retrace on dec
daily close up
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same monthly chart on CL continuous ….
stuck in the middle of nowhere
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Brent is breaking through the 61,8% fib retracement from the 2014/2015 top (115 dollar) to the january 2016 bottom (27 dollar)
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Chart of the weekend is #ES at http://www.tradingchannels.uk #SPX
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Razor sharp trendlines, thanks. Praying for a bounce🤔
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Thanks, Tony…quite an important post last week and now…I saw the neg. divergences with the RSI and MACD which I have seen on very long term weeklies (RSI) has often called the busts very nicely…appreciate your OEW and your pivots a LOT !
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Thank you Tony, great analysis, appreciate the varying NASDAQ counts.
An interpretation of the popular EW count could suggest a more bullish outlook:
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Looks like a squeeze is at hand😏
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Can someone explain to me how Tony (on his NDX chart) can state that the NDX is in a downtrend when the whole chart is upward sloping?
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It’s proprietary, but also (confusingly) tomorrow is looking like it will confirm an uptrend.
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New high in NDX.
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Hi,thanks Tony
~27350 represents 2,618% of first wave lenght ,it’s also the triangle target
probably will be tested
i have no idea if it’s rare wave 3 to be 2,618% of wave 1
in this case wave 5 should be a short wave
maybe something like 2000/01 might happen(long congestion)
till ~29,5k is possible by projecting the pattern as an expanding triangle,but,as always,is not guaranteed
as the index in question is the DOW the chance of this happening is much greater
https://invst.ly/8qya0
https://invst.ly/8qyi1
https://invst.ly/8qz05
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I do the same thing in S&P and 2,618% of first wave is already reached
second chart shows a possible ED for wave 5 in grey count on for v of 3 on blue count
could be the entire wave or not as we didn’t know if it will extend
thanks
https://invst.ly/8r1hy
https://invst.ly/8qzoq
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Watch TSLA panic short covering on Monday.
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Mr. C, thank you very much for sharing your thoughts and knowledge during the past years. You are a generous man. Have you ever thought of writing an OEW book about your approach and method?
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write a book? no not at all
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Second that Wisconsindoctor.
Message for Tony . Just browsing through All the public charts after a very long spell. Something incongruous jumped up at me.
GDX is labelled “Downtrend ” by Arnout S.
GOLD is labelled “Uptrend ” by Patrick M.
However Both have been in parallel Downtrends since end April ’18. Thanks
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Gold is in a weak uptrend
GDX may be in an uptrend, but not yet confirmed
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Copper making a similar effort as it attempts to escape the largest correction since the cycle degree turn of Jan 2016. But too many extended 2nd waves are clogging up all sorts of pipework. Sort of like the jungle desperately trying to take back the man made clearings. Affable Gold futures charts here…
https://jsecharts.blogspot.com/2018/10/gold-futures-usoz.html
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