Weekend update

REVIEW

Wild week! The SPX started the week at 2914. After a gap up opening Monday, an inside day Tuesday, and another gap up opening on Wednesday, the SPX hit 2940. One point shy of the all-time high. After Wednesday morning’s high it was all downhill from there. By Friday the SPX was trading at 2869. For the week the SPX/DOW lost 0.5%, and the NDX/NAZ lost 3.1%. Economic reports for the week were mostly positive. On the downtick: ISM, monthly payrolls, plus the trade deficit widened. On the uptick: construction spending, auto sales, the ADP, ISM services, factory orders, consumer credit, plus jobless claims and unemployment declined. Next week’s reports will be highlighted by the CPI/PPI and export/import prices. Best to your week!

LONG TERM: uptrend weakening

For the past few weeks we have been noting that the four major indices, (SPX, DOW, NDX, NAZ) not only appear to be in their last uptrend of this bull market. But are also getting close to completing, or in some cases may have completed, that uptrend. We noted last weekend that the NDX/NAZ were already in confirmed downtrends. But the SPX/DOW appeared to have more work to do on the upside before entering their downtrends.

This week the DOW made all-time new highs on two consecutive days, falling less than 50 points short of hitting 27,000 for the first time. The SPX rallied to within one point of its 2941 all-time high before retreating. Yet the TRAN and R2K confirmed downtrends this week. As noted we scale into positions during potential bear market bottoms, and scale out during potential bull market tops. But do your own homework and make your own investment decisions.

MEDIUM TERM: uptrend weakening

We had marked last week that Minor 3 was done at SPX 2941. When the SPX rallied back to 2940, and the DOW was making new highs, for one day we thought Minor 3 might go higher. Then the SPX reversed, along with the rest of the market, and the SPX 2941 level still stands as the Minor 3 high. Minor wave 4, within this Intermediate wave v uptrend, resumed. On Friday the SPX traded down to 2869, for a 72 point drop from the all-time high. We have been projecting Minor wave 4 would drop 60-100 points.

At this point everything seems to fit quite nicely. The SPX displayed daily RSI/MACD divergences at the 2941 Minor wave 3 high. The decline since then has been an a-b-c. With the A wave 38 points and the C wave 71 points thus far. Nearly a 2:1 ratio. Time to start looking for a Minor wave 4 low. Medium term support is at the 2884 and 2858 pivots, with resistance at the 2929 and 2995 pivots.

SHORT TERM

Tricky market lately with all the cross currents. Nothing new for this bull market though. As noted earlier the Minor wave 4 decline displays a C wave nearly double the size of the A wave. Usually a good relationship in a zigzag. The decline has been 72 points, and is within our 60-100 point range. At Friday’s low the daily RSI hit oversold for the first time since Minor wave 2. And Friday’s low was within just a few points of the previous 4th wave at SPX 2864.

Overall this activity looks good for a potential Minor wave 4 low, especially when you add the positive divergence on the hourly chart at the low. Placed a tentative green label at that 2869 low. Short term support is at the 2884 and 2858 pivots, with resistance at the 2929 and 2995 pivots. Short term momentum ended the week with a positive divergence. Best to your trading!

FOREIGN MARKETS

Asian markets were mostly lower and lost 2.2%.

European markets were all lower and lost 2.0%.

The DJ World index lost 1.9%, and the NYSE lost 0.7%.

COMMODITIES

Bonds continue to downtrend and lost 1.0%.

Crude remains in an uptrend and gained 1.5%.

Gold is still in a sluggish uptrend and gained 0.8%.

The USD is also in an uptrend and gained 0.7%.

NEXT WEEK

Wednesday: PPI and wholesale inventories. Thursday: weekly jobless claims, the CPI, and the Federal budget. Friday: export/import prices and consumer sentiment. Best to your week!

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

About tony caldaro

Investor
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737 Responses to Weekend update

  1. fionamargaret says:

    I haven’t talked horses for a while, but there is a tragic story,( but perhaps with a happy ending,) all centring around a horse race later today…”The Everest” is the race (Australia), and the horse is Trapeze Artist owned by Bert Vieira.
    Bert and his wife of 43 years Gai were offered $40m for him to stud, but turned it down as he loves to run, and arguably is the best sprinter in the world.
    About 4 weeks ago, Gai’s car was t-boned by a police pursuit vehicle and she is in hospital in an induced coma, so Bert spends all his spare time at his wife’s bedside.
    Now would it not be the bucking up Bert needs if the horse who loves to run, repays Bert by winning the cup for him…and Gai x

    Thanks Tony.

  2. Ashley says:

    Looks like a Historic day, at least for this bull market =) Check the RSI reading on my daily chart zoomed way out, looks to be the LOWEST reading yet, COOL =)

  3. torehund says:

    https://lloydslist.maritimeintelligence.informa.com/markets-landing-page/demo-market-data/tankers/baltic-tanker-indices-d

    A link to oversight of chemical tanker rates. Severely beaten down sector but there is a chance of breakout after many many years of rangebound activity, dirty tank is currently at top of range standing at 900.. Equally bullish is dry bulking and today capesize did a mini-jump. I once forecasted 24 000 on the bdi index which is currently just 1500, chartwise its actually feasible. But for that to happen China has to go NUTS😜

  4. lunker1 says:

    SPX green line at 2400 on Tony’s weekly chart

  5. fxaprendiz says:

    SPX chart. (the h in the URL in previous post was missing)

  6. fxaprendiz says:

    Another crazy day. As mentioned earlier, took an overnight short at 2777 but closed it at 2765 after the NY open as initially SPX didn’t seem to gain much traction down. Like 2 hours later it did, I waited then opened a long after the 2729 dip at 2740. Then witnessed the see-saw between 2730 and 2750, I had to turn off my computer and phone and take a walk to resist the temptation to close this trade as well. Good decision as eventually the SPX bounced.
    The reasoning to open this counter-trend trade is because of the 3 possible paths the SPX can take down, 2 of them may have a counter-trade rally right about these levels. Here’s the chart posted yesterday, with a close-up and the paths modified a bit, mostly reagarding their timing. ttps://image.ibb.co/cEiBdp/spx-zigzag-or-impulse-10-12-2018.png

    If we are within an impulse (red path) then this rally would be short and only got us around the vicinity of 2800-10. If we are within the green zigzag then this counter-trend would be higher and protracted, taking us to the 2850-60 area but taking weeks to reach it, so I guess this would be a very choppy wave B of the zigzag. Because of that, I’d rather see only a 2800 tag then down again, but the market usually doesn’t bend to my wishes…
    Third option, the blue zigzag, which doesn’t require a counter-trend rally at these levels but instead would make SPX drop straight to the low 26xx. I don’t see it as very probably right now but the possibility is there…

    Whatever shape this downturn takes, it seems it will take the rest of the year to unfold and maybe into early months of 2019. Only fast choice is the impulse and even that one would take at least 4 to 6 weeks from now to complete, at the earliest. I doubt very much we’ll have a 2 week drop like February. Alternation at work…
    Have a great weekend everybody.

  7. Hi,
    different counts suggests that SP500 “wave V” is over(if it doesn’t extend?),it’s possible to count 5 waves
    but for the DOW i think that it would be better wait a little more
    https://invst.ly/8u-4-
    thanks

  8. Dex T says:

    Exclusive: Sears aims to close up to 150 stores in bankruptcy – sources

    In total, Sears has about 700 stores and roughly 90,000 employees

    https://www.reuters.com/article/us-sears-bankruptcy-talks-exclusive/exclusive-sears-aims-to-close-up-to-150-stores-in-bankruptcy-sources-idUSKCN1MM2CS

    thousands of employees soon to enter the workforce.

  9. Lee x says:

    My best to you and your family Tony
    See ya tomorrow

  10. torehund says:

    Good weekend Tony, bulls and bears😄

  11. Mark Smith says:

    Russell 2k, SPX, and Dow all filled their morning gaps, but not the NDX… Weakest filled first, and went to new lows: Russell 2k. Does the NDX have to still fill? Since the gap-fill by SPX, NDX has retraced HWB to today’s high.

  12. phil1247 says:

    can es 32.5 support?

  13. fionamargaret says:

    2598, 2450…..but if you really want crazy….through 2100…
    and yes TVIX should do well…

  14. phil1247 says:

    https://stockcharts.com/c-sc/sc?s=%24SPX&p=D&b=3&g=0&id=p11621680044&a=67199587&r=819

    Tony

    13 and 34 daily ema crossover a few days ago gave a ” sell ” signal

    reversing the ” buy ” signal given in may

    maybe this will be useful later ?

    hope all is well with you and your family

  15. elmer510 says:

    To me it seems those Major Waves II and IV last about 6 months – I looked at both the 2011 and 2014 corrections. Both were about 6 months or less.
    Perhaps the 12 months Tony mentioned is a bit long. 6 months – that’s mid april. Not so long to wait for the good times.

    I like the FDR-campaign-song: Happy days are here again.

  16. Theodore Lerts says:

    I’m on the sidelines in cash right now. Sears will likely declare bankruptcy this weekend. What happens when they don’t make their debt payment on Monday? To be continued….

  17. lml25 says:

    Europe doing nothing.PMs way above bb yesterday,correcting.SPX way below bb yesterday,correcting.Al Brooks expects a 1-3 day rally–which will be sold to 2680ish.So the question Clint Eastwood is asking,is:”How long does the rebound last?”Do you feel lucky?”If there’s one thing I never do now is jump on gold/GDX after a day like yesterday.GL all.

    • lml25 says:

      Since yesterday was another big bear day on the daily chart, the Emini will probably test the next major support at 2700 within a few weeks. Look at the 1st half of the year. What was the most important price? It was last year’s close at 2689.75. I say that because the Emini repeated oscillated around it for 6 months. After 2 strong down days, lower prices are likely. But, because the selling was climactic, the odds favor a bounce for a week or two.
      Note, last year’s close is within reach. Since it was so important for half of the year and the Emini is almost there again, it will probably get there again within a few weeks. Traders will sell rallies until then. Because it was such a strong magnet, it will probably stop the selling for at least a few days. The bulls will need a micro double bottom there if this selloff is just a higher low in a bull trend

      The S&P 500 Emini is up 34 points in the Globex session. While that is a huge number, it is modest compared to the range of the past two days. After 2 climactic bear days, the Emini will probably trade sideways to up for several days especially after yesterday’s late strong reversal up.

      The daily ranges will begin to shrink, but the swings up and down will still be much bigger than normal. Along with smaller ranges, the Emini will become more two sided. The exhausted bears will probably begin to take profits, and value oriented bulls as well as traders will begin to buy.

  18. lunker1 says:

    SPX 2776 is the .146 of Major 1
    the .236 is 2674

  19. fxaprendiz says:

    I woke up to find out my SPX 2777 short opened after London open wasn’t taken out, but the SPX didn’t go too far down either and it seems it’s finding some support. I chickened out and closed my short at 2765 for a 12 point profit. I feel like a scalper now lol but things have gotten a bit blurry for the next 2-3 trading sessions son I might sit on the sidelines until a better set-up comes along.
    If yesterday’s high at 2794 is taken out today then we would have a swing low, and yesterday would mark the end of a daily cycle, making today day 1 of a new daily cycle, and even the most bearish of cycles have at the very least 2 days of upside first. Alternatively, if 2794 holds today then 2700 may be retested in next couple sessions to make a lightly lower low, extending the daily cycle a little more.
    It seems to me like the 2785-35 area will be the new chopping zone so I’d rather trade outside of it if possible.
    GL to all

  20. lunker1 says:

    Hi Tony I hope things are going OK with the family emergency. Thank you for updating the charts. Do you have rough targets for Major 2? Thx

    • stcoleridge says:

      I’m guessing 15% down from 2941 which is around 2500. I’m sure Tony will reveal in tomorrow’s update.

      • blackjak100 says:

        Absolutely perfect target for int iv to end as a 3-3-5 flat that will surprise everyone as a bear market will ensue after retesting ATH. Yes, I did say int iv.

        from 2873…we have a clear triangle which ended at 2585 for minor A, a clear 3 wave rise to 2941 where c=1.618a for minor B, and now in C to 2475-2500.

        This also means a bigger crash wave is just around the corner once this 2nd wave completes.

        • aahmichael says:

          I’ve never heard of a contracting triangle existing in the wave A position. I don’t think that’s allowed. Nevertheless, there are other ways to count it, and it still ends up as a 3:3:5 flat. The tell has always been the chart of NYA. It went straight sideways for 8 months, while the DOW and SPX slowly crawled back to the Jan high with frequent overlaps.

          • blackjak100 says:

            That’s debatable and I couldn’t find anything yet. I’m actually leaning that you are correct on that. However, it would just change to a double three WXY. This means Y would become a ZZ instead of a 5 wave impulse

            • blackjak100 says:

              In fact you are correct. However, wave B was 1.236 of wave A. The fibs within this flat are amazing. I’m sticking with a flat, and labeling minor A as a WXY (double three) which is allowed.

              • blackjak100 says:

                Meant minor B as a WXY which started at 2533 where minor A completed

              • aahmichael says:

                Ultimately, the details of the smaller subdivisions don’t really matter, because the whole thing has been a flat since the Jan high. Whether it ends up being a 3:3:5 or a 3:3:3 doesn’t change anything.

              • blackjak100 says:

                agree, so you’re on board with an ongoing int iv as well? If so, I did not realize that.

              • aahmichael says:

                I’ve been calling it a WXY since the beginning of the year, as it was impossible for me to count the move back to the Jan highs as anything but a corrective wave.

    • fxaprendiz says:

      I have stated for months now that a 12-15% correction was possible for a wave C of 4.
      While Tony and I have different counts, it’s nice to see we share the same downside target outcome now.
      Narrowing it now that the high is in, I like the idea of a 15-16% correction.

  21. lunker1 says:

    ES looks like a wave 4 diamond continuation after the sharp wave 3 down. ES may push for a lower low and and NQ may go for a double bottom

  22. mcgcapital says:

    Would be interested to see what the stats are on daily returns when it gaps up by this much. Suspect it doesn’t usually follow through. Could be a volatile session.. think the most bullish outcome would be a big drop back towards yesterday’s low then reversal and close higher around where we are now. If we follow through to the upside it’s a huge gap to target

    • aahmichael says:

      So far, it’s a 5:3:5 down from the top, so today’s gap should be part of a 4th wave. Now that volatility is back, 50 point moves are the new 10 point move.

      • mcgcapital says:

        Good to see you back posting. Logically would think 1. 2700 area is likely to provide some support as that’s where the last larger drawdown in June bottomed. 2. Lots of oversold technical readings.. typical pattern is that we get oversold then the selling accelerates like we had Wednesday/Thursday when people panic. But usually once oversold we aren’t far off a bottom in terms of time, 2-3 days seems standard. 3. Some other indices testing Feb/March low areas so it’s a logical place to rally off initially.

        Going with retest today, and reversal higher. Would expect a retest of the breakdown area around 2850-60 at some point before this rolls over. If we head through 2700 directly it’s going to look pretty spectacular on the charts

      • blackjak100 says:

        Or just a 5 wave drop with an extended fifth. This would be wave 1 of a much larger 5 wave decline which I believe will reach 2475-2525.

    • Some gaps can tend to stick, but only those that are based on news.
      This gap is based on the “news” that the selloff of the last 10 days was a mistake.
      We’ll see about that.

  23. Jack Lad says:

    Of course it could not be due to impending Primaries and then the failure to prevent the Kavanaugh appointment that may have provoked even more of that never-ending and unbelievably intolerant attitude (within the camp of those that have suffered such unbearable loss of political power), that could have served to motivate a little bias in favor of a message from the FED of at least as many rate hikes as could be imaginable in the future and thereby trigger a rout in the markets. No, not these impartial and patriotic people, each one of which only cares to think with total impartiality in order to decide what is best for the Nation. Its not like every citizen is made to declare their political viewpoint for the census or when applying for a job or labeled with their party allegiance in ancestry.com. Politics is a respected personal matter in America, not something you wear or judge other people for. If it were like that it could become the instigator of another civil war which is of course totally preposterous.

  24. Although it seems there are at least some TA folks who hold Edwards and Magee concepts in low regard, here’s an Edwards and Magee classic, and a real eye-opener

    GLTA

    • Mark Smith says:

      And yet, there’s no reason to disregard it. Isn’t the head usually a wave 5, and the RHS is a wave B? Then comes C? And, H&S usually work….

  25. phil1247 says:

    GDX
    extension short broken
    first daily measured move complete
    thru target and in possible extension long

    above 18.58 is the key to good vs bad as previously
    pullbacks can now be bought
    especially if extension long holds support

  26. fxaprendiz says:

    SPX short @ 2777 with 2802 SL
    Small position wide stop. Tomorrow I’ll wake up to a 25 point loss or a nice run down.
    Not much more to say atm, woke up just to take a position after London open. Timezones difference is a pain. See you guys.

  27. Since Tony’s scenario and chart is wrong the crowd is clueless here. I get that. Common sense states a few things in the favor of an immediate reversal and possibly a strong one at that. Earnings season started and nothing indicates trouble. that’s should be the impetus for people on the fence to catch this move up.

    Scenario 1: A strong and steady move till end of month. if that happens “what out below”. This move is not finished and it usually takes 2 tries with a lower low on the second move.
    Scenario 2: “normal” weak recovery followed by finishing drop no lower than 2640. This one has legs.

    I have no idea how it maps out on your EW chart but personally I am hoping for scenario 1. We have elections and most likely Mueller reporting immediately after. that event will spark partisan actions and possible constitutional crisis. I would say that scenario 1 seems out of character and probably doesn’t fit any EW path but it does seem more logical given the yawn the street is probably going thru based on pavlovian conditioning from last 2 drops. My money is on a street expected recovery as earnings pile on. Rah,, rah…

    • elmer510 says:

      Rah, rah sounds like the black crows near by.

      I think Tony’s main picture has been very good – new ATHs at SPX followed by a strong correction or bear-market. Some details are not perfect though – like the expected minor wave going to 3000+. But that’s a minor mistake as well.
      Now the main question is the strength of this decline and how long it’s gonna last.
      I would say 6 months based upon earlier experience. In between there will be bear market rallies and periods with sideways movement. IMHO.

      • Minor mistakes? Seems the big moves all are minor mistakes. Sorry but Tony does not walk on water and his record is not very good on the major turns. In fact 2016 was the end of civilization that sprouted into a new multi-decade nirvana? I guess if you can excuse the corruption and immoral policies these last 2 years you can accept Tony got it right. Too bad you can’t actually back it up with hard evidence. Seems BIAS controls the charts numerous ways of drawing the future.

        HOW many here made a ton of money on this big drop? Tony did warn of a possible 60-100 point drop but even that was IGNORED by many here. Sorry but like the 2016 huge mistake this one can turn out just as bad. let time decide on this current move. One thing for me is a constant. We will experience a mega bear market and within 2 years time max. I deal in common sense. Saturated debt, demographics, greed, corruption and complacency has never been higher. Moral degradation, apathy, while at the same time finding scape goats to placate ones own misplaced hate has never been higher. EVER! Impossible to continue for decades on this path. TWO TRILLION given away to the super wealthy at a time when the disparity between rich and poor hit records. No consequences?

        My DOOM and Gloom is not some crazy idea. My assumption on how trump would cause major world problems was not a lucky guess. How bad? his own staff has to distract him from doing the unthinkable, like assassinate a leader or launch nukes. How you don’t see what’s in front of you is truly astonishing. I guess I was cursed with superb analytical skills. Please look back at my rants about TRUMP. The reality is it is worse than my own assumptions. This experiment we started a few hundred years ago will be a spectacular failure. Spectacular like fireworks. Beautiful intense but short lived.

  28. mcgcapital says:

    Think sell strength today, buy retest of lows later. That’s if it plays similar to Feb

  29. micky says:

    Ftse hit a nice support yesterday, IG overshot but seems to have turned. Should retrace with some good points with a stop below yesterday low.

  30. Jack kendo says:

    correction completed with capitulation, SPX 3000+ here we go!

    Like JK said,
    Jack kendo says:
    October 11, 2018 at 4:56 pm

    cheers!

    • CampFreddie says:

      JK – Good work recently.

    • lunker1 says:

      JK for several months you’ve been calling for the Great Crash of 2018!!! With scary charts showing the similarities to 1929. Actually I think you also called it in 2017 were wrong so you left the blog and then came back again and we’re wrong early in 2018 as well.

      So we have a 8% correction and it’s all done?
      That’s the great crash?

      So basically you were wrong again?

    • lunker1 says:

      2711 is very different than initial crash target 1700-1800. You make these massive cataclysmic end of world calls and then bail out after a couple of days. You got stopped out on the last one a couple weeks ago. And the one earlier this year and the one last year. And the one 2-3 years ago. Thx

      Jack kendo says:
      October 5, 2018 at 12:39 am

      looking for Great Crash 2018, initial target 1700~1800.

      • mcgcapital says:

        He’s trolling.. bulls have so much work to do to repair technical damage, so why would you become bullish for anything more than a counter rally if bearishly inclined now. It’s because consensus opinion on here has switched from we still have room to go on major 1 to it’s now major 2. He enjoys going against the crowd, but contrary to popular opinion trading against the crowd often doesn’t work unless at the end of trends

      • aahmichael says:

        That’s just par for the course on this blog, and is no different than the board hogg who constantly calls for rallies straight up to infinity and beyond, and then 5 minutes later calls for a crash straight down to zero. Here’s a hint: all calls are meaningless.

    • lunker1 says:

      the timestamp of your capitulation ES 2780

  31. chrisk44342 says:

    this move down likely over. Looking for 38-50% retracement highs to lows. In EW terms, the B wave

  32. SSEC
    H&S close to target
    https://invst.ly/8uoc5
    breaking monthly closing trendline,we have to wait till the end of month to see if there is confirmation or not
    https://invst.ly/8uoey

  33. @ Being away for the last couple of months. Just in time to catch the down move.
    @ tomorrow would see a zigzag bounce to 2780ish (W-4), and close at least 1% up, most likely at 2770.
    @ Mon & Tues will usher in the final down leg, which would break 2710, most likely to 2670. That lower low is going to round up the first down leg of this BEAR MARKET.
    @ Be prepared: the widow-maker 3rd of 3rd of this UGLY BEAR will come around mid-term.

  34. rc1269 says:

    Hey Tony, it’s been a while mi amigo. I hope you are well. Just thought I’d drop a line and say hello.

    Cheers to Lee, HD and all the rest of the crew. Things are finally getting (close to) interesting.
    Cheers
    RC

  35. Ashley says:

    Some hope for the Bulls (and maybe taking one for the bear team LOL) =)
    Im basing this off the fact that this count could work and the weeklys are holding the 50 MA SO FAR….. I expect a bounce, 2800 looks likely, then one more down to make an ABC from 2700-2656 then to the MOON…..

  36. chandra d says:

    AFTER 2645 U MIGHT GET RETRACE TO 2795 2810 that will be it then AGAIN ANOTHER GRINDING DOWN TO 2500 2400 LEVELS

  37. chandra d says:

    FUNNY ALL PPL TURNED BULLISH AGAIN ONCE AGAIN WARNING THIS DOWN MOVE WILL BE SERIOUS IN A YEAR TIME

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