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.

    Like

  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 =)

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  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😜

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  4. lunker1 says:

    SPX green line at 2400 on Tony’s weekly chart

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  5. fxaprendiz says:

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

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  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.

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  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

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  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.

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  9. Lee x says:

    My best to you and your family Tony
    See ya tomorrow

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